Sucha Ram, C/o Sh. M.S. Vohra Advocate, Chandigarh V. ITO, Chandigarh

ITA 378/CHANDI/2010

• Counselvise Citation: 37821514 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 09-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA
• Assessee Lawyers: VOHRA
• Keywords: Principle of natural justice; Additional evidence
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BEN CH B BEFORE SHRI H.L. KARWA, V.P. AND SHRI MEHAR SINGH, AM ITA NO. 378/CHD/2010 ASSESSMENT YEAR 2006-07 SUCHA RAM, C/O M.S. VOHRA V. I.T.O. WARD 4(3), CH ANDIGARH ADVOCATE SCO 353-354-355 (3 RD FLOOR) SECTOR 34-A, CHANDIGARH AESPR 0583 B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.S. VOHRA RESPONDENT BY: SHRI AKHILESH GUPTA DATE OF HEARING: 23.2.2012 DATE OF PRONOUNCEMENT: 20 .03.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE, FOR ASSE SSMENT YEAR 2006-07, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A ), CHANDIGARH DATED 16.12.2009 U/S 250(6) OF THE INCOME-TAX ACT (IN SHO RT THE ACT). 2. THE ASSESSEE RAISED THE FOLLOWING REVISED GROUND S OF APPEAL: 1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) CHANDIGARHS APPELLATE ORDER IS UNJUST AND A GAINST THE NATURAL JUSTICE BECAUSE SHE HAS NOT CONSIDERED THE DOCUMENTARY EVIDENCE FURNISHED BEFORE HER. 2. THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE A DDITION OF RS. 4,96,214/- ON ACCOUNT OF DISALLOWANCE OF TRANS PORT EXPENSES. 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMI NG THE DISALLOWANCE OF RS. 5,80,693/- OUT OF THE SALARY PA ID TO WORKERS BY THE APPELLANT. 4. ANY OTHER GROUND OF APPEAL WHICH THE APPELLANT M AY PRAY TO ADD OR AMEND BEFORE THE FINAL HEARING OF THE APPEAL . 3. GROUND NOS. 1 AND 4 RAISED BY THE ASSESSEE ARE G ENERAL IN NATURE AND NEED NO SEPARATE ADJUDICATION. HENCE, T HE SAME ARE DISMISSED. 2 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LABOUR CONTRACTOR WHO DOES THE JOB OF LOADING AND UNLOADIN G OF GOODS. 5. ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT, IT IS NOTICED THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 4,96,214/- UN DER THE HEAD FREIGHT CHARGES. THE ASSESSEE WAS REQUIRED TO FU RNISH COMPLETE DETAILS OF FREIGHT CHARGES SUPPORTED BY DOCUMENTARY EVIDENCE IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE DETAILS FILE D BY THE ASSESSEE HAS BEEN INCORPORATED BY THE AO IN PARA 2 OF THE AS SESSMENT ORDER. ON APPRECIATION OF THE DETAILS FILED BY THE ASSESSE E, THE AO DISALLOWED RS. 4,96,214/- U/S 40(A)(IA) OF THE ACT. RELEVANT FINDINGS OF THE AO ARE REPRODUCED HEREUNDER: THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO TRANSPORT CONTRACTORS MENTIONED AB OVE AS THE PAYMENTS MADE DURING THE YEAR EXCEEDS THE LIMIT PRE SCRIBED U/S 194C OF THE IT ACT, 1961. DURING THE COURSE OF HEA RING THE COUNSEL OF THE ASSESSEE WAS ASKED TO GIVE EXPLANATI ON FOR NOT DEDUCTING TAX AT SOURCE ON PAYMENTS MADE TO THESE T RANSPORT CONTRACTORS. THE COUNSEL OF THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION BUT HE SIMPLY STATED THAT THESE PAYMENT S WERE MADE ON ACCOUNT OF CARRIAGES OF LABOURS FROM DERABASSI T O BADDI TO AND FRO. AS PER THE RECORD AVAILABLE WITH THIS OFF ICE, PROVISIONS OF SECTION 194-C OF THE IT ACT ARE APPLICABLE IN THIS CASE. AS ADMITTED BY THE ASSESSEE WHOLE OF THE AMOUNT HAVE B EEN PAID IN CASH WITHOUT DEDUCTING THE TDS. THEREFORE, THE PROV ISIONS OF SECTION 40(A)(IA) ARE APPLICABLE IN THIS CASE. WHO LE OF THE EXPENDITURE OF RS. 4,96,214/- IS HEREBY DISALLOWED AND ADDED BACK TO THE TOTAL TAXABLE INCOME. 6. THE AO ALSO DISALLOWED 5% OF EXPENSES CLAIMED UN DER THE HEAD SALARY AND WAGES ON THE GROUND THAT NO RECORD WAS MAINTAINED BY THE ASSESSEE IN THE MATTER NOR ANY RECORD WAS PRODUCED BY THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF HIS EXPENDITURE. 7. THE FINDINGS OF THE LD. CIT(A) GIVEN IN HIS ORDE R ARE REPRODUCED HEREUNDER: 7 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S AND MATERIAL ON RECORD. I AM OF THE CONSIDERED OPINION THAT AS PER THE PROVISIONS OF SECTION 194C(3) OF THE IT ACT, 19 61, TDS WAS DEFINITELY DEDUCTIBLE IN THOSE FOR THE FOLLOWING RE ASONS: 8. THE VERY FACT THAT THE BILLS WERE RAISED BY THE TAXI/TEMPO- SERVICES/STANDS SHOWS THAT THE ASSESSEE IS HIRING T HEM FROM THE STAND OWNERS AND NOT INDEPENDENTLY AND INDIVIDUALLY . THIS ESTABLISHES A CONTRACT BETWEEN THE ASSESSEE AND THE SE SERVICE 3 PROVIDERS NEGATING THE STAND OF THE ASSESSEE THAT T HEY HAD HOWEVER, VITAL ROLE TO PLAY ROLE TO PLAY IN TRANSPO RTATION OF LABOUR. IN FACT, TEMPO/TAXI OWNERS ARE THE AGENTS OF THE TA XI STANDS FOR TRANSPORTATION OF LABOUR. AS IS CLEAR, THE PAYMENT S ARE MADE IN CASH TO THE TAXI STANDS BY THE ASSESSEE AND EVEN IF THESE ARE DISBURSED OR COLLECTED ON BEHALF OF TAXI OWNERS WIL L NOT MAKE A DIFFERENCE SO FAR AS THE LIABILITY TO DEDUCT TAX ON SOURCE IS CONCERNED. IT IS CLEAR THAT PAYMENT TO THE AGENT IS PAYMENT TO THE PRINCIPAL FOR WHOM HE WORKS. 9. AFTER EXAMINING ALL MATERIAL EVIDENCE AS WELL AS ADDITIONAL EVIDENCE AND CONSIDERING THIS ARGUMENT OF THE ASSES SEES COUNSEL, I CONCLUDE THAT ONCE THE BILL IS RAISED BY THE TAXI STAND AND THE TOTAL PAYMENTS MADE IN PURSUANCE OF THE BIL LSL EXCEED RS. 50,000/-, IT COMES WITHIN THE AMBIT OF SECTION 194C AND FOR NON-COMPLIANCE OF THAT, SECTION 40(A)(IA) BECOMES O PERATIONAL. 10. IN VIEW OF THE DISCUSSION ABOVE, I AGREE WITH T HE AO THAT ASSESSEE WAS LIABLE TO DEDUCT TDS ON THESE PAYMENT S WHERE THE AGGREGATE AMOUNTS OF ETH BILLS TO THESE SERVICE PRO VIDES EXCEEDED RS. 50,000/-. AS CLEAR FROM THE INFORMATI ON FILED BY THE ASSESSEE HIMSELF (SUPRA), PAYMENTS TO ALL THE 8 TAX I/TEMPO STANDS EXCEED THE LIMIT PRESCRIBED U/S 194(C). AS SUCH, T HE EXPENDITURE TO THE EXTENT CLAIMED ON ACCOUNT OF FREIGHT CHARGES AT RS. 4,96,214/- HAS BEEN RIGHTLY ADDED BACK TO INCOME. THE ASSESSEES APPEAL ON THIS GROUND IS, THEREFORE, DI SMISSED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, FACTS OF T HE CASE AND THE RELEVANT RECORD. THE LD 'AR', FOR THE ASSESSEE REFE RRED TO VARIOUS DOCUMENTS FILED BY HIM TO SUPPORT HIS CONTENTION. THE LD 'AR', FOR THE ASSESSEE STATED THAT BILLS WERE PROCURED FROM TAXI OPERATIONS AND THE SAME WERE PRODUCED BEFORE AO. THE ASSESSEE HAD FILE D WRITTEN SUBMISSIONS IN RESPECT OF GROUNDS OF APPEAL RAISED BY HIM. WE HAVE ALSO PERUSED THE PAPER BOOK AND WRITTEN SUBMISSIONS . THE FINDINGS GIVEN BY THE AO AND THE LD. CIT(A) ARE IN CONSONANC E WITH THE FACT SITUATION OF THE CASE AND RELEVANT PROVISIONS OF TH E ACT. THE LD. CIT(A) HAS UPHELD THE ADDITION MADE BY THE AO WHICH CANNOT BE ASSAILED AS THERE IS NO INFIRMITY THEREIN. ACCORDINGLY GROUND NO. 2 IS DISMISSED. 9. IN GROUND NO. 3, IT IS CONTENDED BY THE LD 'AR', FOR THE ASSESSEE THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DISALLOWI NG RS. 580693/- OUT OF SALARY PAID TO WORKERS BY THE APPELLANT. 4 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, FACTS OF T HE CASE AND THE RELEVANT RECORD. THE AO HAD DISALLOWED 5% OF THE SA LARY EXPENDITURE AS NO DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE CLAI M WAS PRODUCED BY THE ASSESSEE. CONSEQUENTLY, THE LD. CIT(A) UPHELD THE ADDITION MADE BY THE AO. HOWEVER, HAVING REGARD TO THE SUBMISSIO NS MADE BY THE ASSESSEE AND TO MEET THE ENDS OF JUSTICE, THE DISAL LOWANCE IS REDUCED TO 3%. THUS THE ASSESSEE GETS RELIEF OF 2%. THE A O IS DIRECTED TO RECOMPUTE THE DISALLOWANCE OF 3% OF SUCH EXPENSES. THIS GROUND IS PARTLY ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 20 .03.2012 SD/- SD/- (H. L. KARWA) (M EHAR SINGH) VICE PRESIDENT ACCOUNANT MEMBER CHANDIGARH, THE 20.03.2012 SURESH COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR