The Income Tax Officer, Srinagar (J&K) V. M/s. Zogilla Roadways, Srinagar

ITA 388/ASR/2013

• Counselvise Citation: 38820914 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.388(ASR)/2013 ASSESSMENT YEAR:2008-09 PAN :AAAFZ23769K INCOME TAX OFFICER, VS. M/S. ZOGILLA ROADWAYS, WARD 3(3), SRINAGAR. RAWALPORA, SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. MAHAVIR SINGH, DR RESPONDENT BY: NONE DATE OF HEARING:23/01/2014 DATE OF PRONOUNCEMENT:30/01/2013 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A), JAMMU, DATED 20.03.2013 RELATING TO ASSESSMENT YEAR 2008-09. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.32,640/- MADE ON ACCOUNT OF LESS RECEIPTS BOOKED WHEN NO BASIS HAS BEEN GIVEN A S HOW THE RECEIPTS HAS BEEN BOOKED NOR ANY CALCULATION HAS BE EN GIVEN SHOWING BOOKING OF RECEIPTS OF RS.32,640/-. ITA NO.388(ASR)/2013 2 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE DISALLOWANCE MADE U/S 40(A)(I A) UNDER THE HEAD FREIGHT PAID TO THE RETURNED INCOME, TO ARRIV E AT A NET PROFIT RATE WHEN THE DISALLOWANCE U/S 40(A)(IA) HAS BEEN INCORPORATED IN THE ACT TO CURB THE MENACE OF BOGUS EXPENDITURE THROUGH THE TDS PROVISIONS. THE ADDITIO N FOR VIOLATION OF THIS PROVISION IS TREATED AS DEEMED I NCOME WHICH IS FICTION OF LAW IS NOT ORDINARILY THE REAL INCOME . WHEN IT COME TO NOTICE THAT THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 40(A)(IA) THEN IT IS LIABLE FOR ADDITION AL INCOME IRRESPECTIVE OF THE FACT THAT WHAT IS THE TOTAL QUA NTUM OF RECEIPT AND WHAT SHOULD HAVE BEEN THE REASONABLE PROFIT OUT OF IT. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE DISALLOWANCE MADE U/S 40(A)(I A) UNDER THE HEAD FREIGHT PAID BY ADMITTING THE ADDITIONAL EVI DENCES IN THE SHAPE OF COPY OF DECLARATION FORMS OF TRUCK OWNER S, FILED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS WHEN THE ASSESSEE DURING ASSESSMENT PROCEEDINGS DID NOT FURNISH ANY E XPLANATION, NEVER PRODUCED ANY SUCH COPY OF DECLARATION FORM AN D NOR FURNISHED THE SAME TO THE PRESCRIBED INCOME TAX AUT HORITY. 4. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE DISALLOWANCE MADE U/S 40(A)(I A) UNDER THE HEAD FREIGHT PAID BY ADMITTING THE ADDITIONAL EVID ENCES FILED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS IN THE SHAPE OF COPY OF DECLARATION FORMS OF TRUCK OWNERS WITHOUT A FFORDING OPPORTUNITY TO THE AO UNDER RULE 46A OF THE INCOME TAX RULES, 1962 TO EXAMINE THE EVIDENCES/DOCUMENTS. 5. THAT THE APPELLANT CRAVES TO AMEND OR ADD ANY ON OR MORE GROUNDS OF APPEAL. 2. AS REGARDS GROUND NO.1, THE BRIEF FACTS OF THE C ASE AS ARISING FROM THE ORDER OF THE AO ARE REPRODUCED AS UNDER: ITA NO.388(ASR)/2013 3 WITH REGARD TO FORM NO.16A, THE ASSESSEE WAS ASKED TO MATCH THE PAYMENTS AS SHOWN IN THE FORM NO.16A AND AS DECLARE D BY HIM IN THE TRADING RESULTS. THE RECEIPTS AS PER FORM NO.16A AR E SHOWN AS UNDER: S.NO. NAME/ADDRESS OF THE DEDUCTOR AMOUNT PAID/CREDITED AMOUNT OF INCOME TAX DEDUCTED TOTAL (1) (2) (3) (4) (5) 1. OFFICIATING COL. TRANSPORT HQ. 15 CORPUS 3479152/- 118729/- 3597881/- 2. ACCOUNTS OFFICER 140-WEU C/O 56APO 475298/- 14700/- 489998/- 3. CDA NORTHERN COMMAND HQR. SECTOR RR 543644/- 17940/- 561584/- TOTAL 4649463/- THIS MEANS THAT THE RECEIPTS AT RS.151369/- (I.E. R S.4649463/-- 4498094/-) HAVE BEEN DECLARED LESS BY THE ASSESSEE FOR WHICH NO EXPLANATION HAS BEEN FURNISHED AND BOOKS OF ACCOUNT PRODUCED . IN VIEW OF THIS, AN AMOUNT OF RS.1,51,369/- IS ADDED B ACK TO THE TOTAL INCOME OF THE ASSESSEE AS INCOME FROM UNDISCLOSED S OURCES. 3. THE LD. CIT(A) SUSTAINED THE ADDITION OF RS.1,1 8,729/- AND ALLOWED RELIEF OF RS.32,640/-. THE RELEVANT ORDER OF THE LD . CIT(A) FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: THE ADDITION OF RS.1,51,369/- ON THE GROUNDS THAT THE NET RECEIPTS AFTER DEDUCTION OF TDS TAKEN IN THE BOOKS OF ACCOUN TS INSTEAD OF GROSS RECEIPTS. THE APPELLANT HAS ARGUED THAT OUT OF THRE E TDS CERTIFICATES AND ONLY IN ONE CASE THE NET RECEIPT INSTEAD OF GR OSS RECEIPT ARE TAKEN INADVERTENTLY THEREBY BOOKING LESS TURNOVER BY RS.1 ,18,729/- AND REGARDING THE BALANCE OF RS.32,640/- FOR OTHER TWO CERTIFICATES, THE GROSS RECEIPTS HAVE BEEN BOOKED. THE CLAIM OF THE A PPELLANT IS FOUND ITA NO.388(ASR)/2013 4 APPARENTLY CORRECT. ACCORDINGLY, THE ADDITION OF RS .1,18,729/- IS UPHELD AND A RELIEF OF RS.32,640/- IS ALLOWED. THI S GROUND OF APPEAL OF THE APPELLANT IS PARTLY ALLOWED. 4. NONE ATTENDED ON BEHALF OF THE ASSESSEE. THOUGH ADJOURNMENT APPLICATION WAS SENT BY THE ASSESSEE WHICH REMAINED UNREPRESENTED AND ACCORDINGLY THE SAME WAS REJECTED WITHOUT ANY SUBS TANCE AND THEREFORE, WE PROCEED TO DECIDE THE APPEAL EX-PARTE AFTER HEARING THE LD. DR AND MATERIAL AVAILABLE ON RECORD. 5. THE LD. JCIT(DR), MR. MAHAVIR SINGH, ON THE OTHE R HAND, RELIED UPON THE ORDER OF THE A.O. AND ARGUED THAT THE LD.CIT(A) HAS ALLOWED THE RELIEF WITHOUT GIVING ANY OPPORTUNITY TO THE A.O. WHEREAS THE A.O. HAS VERY CLEARLY GIVEN THE FINDINGS WITH REGARD TO THE SAID ADDITION OF RS.1,51,369/-. THEREFORE, THE LD. DR PRAYED TO RESTORE THE ORDER O F THE A.O. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PE RUSED THE FACTS OF THE CASE . ON THE BASIS OF THE FINDINGS OF THE A.O. AN D THE DETAILS WHICH ARE PART OF THE ORDER AT PARA 4 REPRODUCED HEREINABOVE, THER E IS A DIFFERENCE OF RS.1,51,369/-. IN FACT, RS.1,18,729/- HAS BEEN ADMI TTED BY THE ASSESSEE BEFORE THE LD. CIT(A). AS REGARDS RS.32,640/-, THER E IS NO DOCUMENTARY EVIDENCE ON RECORD AND THE LD. CIT(A) HAS GIVEN THE FINDINGS IN FAVOUR OF THE ASSESSEE WITHOUT CONFRONTING THE SAME TO THE A.O. T HIS APPROACH OF THE LD. ITA NO.388(ASR)/2013 5 CIT(A) CANNOT BE ACCEPTED AND ACCORDINGLY RELIEF G IVEN TO THE TUNE OF RS.32,640/- IS DIRECTED TO REVERSED AND THE ORDER O F THE AO IS RESTORED. THUS, GROUND NO.1 OF THE REVENUE IS ALLOWED. 7. AS REGARDS GROUNDS NO. 2, 3 & 4, THE BRIEF FACTS OF THE CASE ARE AS PER AOS ORDER AT PAGES 4 TO 11, WHICH ARE BEING REPROD UCED FOR THE SAKE OF CONVENIENCE: A3) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A SSESSEE FURNISHED LEDGER ACCOUNTS OF PERSONS/PARTIES WHOSE VEHICLES WERE HIRED BY THE ASSESSEE AND TO WHOM THE PAYMENTS EXCE EDING TO RS.20,000/- WERE MADE AS ADMITTED BY THE COUNSEL OF THE ASSEEE VIDE ORDER SHEET DATED 1.12.10. THE ASSESSEE WAS ASKED V IDE ORDER SHEET DATED 01.12.2010 TO EXPLAIN AS TO WHY ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE UNDER SECTION 194C OF THE ACT ON THESE PAYME NTS. HE WAS ALSO INFORMED THAT THIS EXPENDITURE IS HIT UNDER SUB SEC TION (IA) OF SECTION 40 OF THE ACT AND AS TO WHY ADDITION ON THIS ACCOUN T IS NOT MADE TO THE TOTAL INCOME. AR EXPLAINED THAT THE PAYMENTS ( AS S HOWN IN THE BELOW TABLE) HAVE BEEN MADE IN CASH AND WITH REGARD TO TD S ON THESE PAYMENTS NO EXPLANATION HAS BEEN FURNISHED. SURPRIS INGLY, ASSESSEE DOES NOT EVEN BEAR THE TAN. THE DETAILS OF SUCH PAYMENTS, PERSON/PARTY WISE AS PER THEIR INDIVIDUAL LEDGER ACCOUNTS FURNISHED BEFORE THE UND ERSIGNED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ARE REPROD UCED VERBATIM: AB HAMID (JKOIA-7641) DATE PARTICULAR VEHICLE NO. DEBIT CREDIT 4.4.2007 VEHICLE HIRING CHARGES 2,548 5.4.2007 JK BANK CD 484 2840566 8,500 6.4.2007 VEHICLE HIRING CHARGES 3,545 18.4.2007 VEHICLE HIRING 2,689 ITA NO.388(ASR)/2013 6 CHARGES 28.4.2007 VEHICLE HIRING CHARGES 3,689 5.5.2007 VEHICLE HIRING CHARGES 4,875 18.5.2007 VEHICLE HIRING CHARGES 2,200 22.6.2007 VEHICLE HIRING CHARGES 5,485 27.6.2007 JK BANK CD 484 17782437 15,000 28.6.2007 VEHICLE HIRING CHARGES 3,145 2.7.2007 VEHICLE HIRING CHARGES 2,587 15.7.2007 VEHICLE HIRING CHARGES 4,985 18.7.2007 VEHICLE HIRING CHARGES 3,698 19.7.2007 VEHICLE HIRING CHARGES 38,000 25.7.2007 VEHICLE HIRING CHARGES 4,870 4.8.2007 VEHICLE HIRING CHARGES 2,985 15.8.2007 VEHICLE HIRING CHARGES 4,500 20.8.2007 JK BANK CD 484 6,000 15.9.2007 VEHICLE HIRING CHARGES 4,279 25.9.2007 VEHICLE HIRING CHARGES 3,460 29.9.2007 VEHICLE HIRING CHARGES 4,780 4.10.2007 VEHICLE HIRING CHARGES 3,400 5.10.2007 VEHICLE HIRING CHARGES 2,700 15.10.2007 JK BANK CD 484 3,000 ITA NO.388(ASR)/2013 7 MOHD. SULANA BHAT JK01ID-8741 DATE PARTICULAR VEHICLE NO. DEBIT CREDIT 8.4.2007 VEHICLE HIRING CHARGES 7,000 9.4.2007 JK BANK CD 484 7,000 10.4.2007 JK BANK CD 484 JK BANK CD 484 2840569 17782401 22,600 2,000 5.5.2007 VEHICLE HIRING CHARGES 12,500 25.5.2007 VEHICLE HIRING CHARGES 25,600 2.6.2007 VEHICLE HIRING CHARGES 31,520 18.6.2007 VEHICLE HIRING CHARGES 15,200 25.7.2007 VEHICLE HIRING CHARGES 23,980 27.7.2007 JK BANK CD 484 65,000 5.8.2007 JK BANK CD 484 4,700 6.8.2007 JK BANK CD 484 JK BANK CD 484 9,000 5,500 9.9.2007 VEHICLE HIRING CHARGES 22,000 19.9.2007 VEHICLE HIRING CHARGES 18,500 5.10.2007 VEHICLE HIRING CHARGES 23,000 15.10.2007 VEHICLE HIRING CHARGES 29,000 12.1.2008 VEHICLE HIRING CHARGES 18,000 ITA NO.388(ASR)/2013 8 CLOSING BALANCE 1,10,500 TOTAL 2,26,300 2,26,300 MANZOOR AHMAD JKOIG-5569 DATE PARTICULAR VEHICLE NO. DEBIT CREDIT 3.4.2007 JK BANK CD 484 2840567 14,000 9.4.2007 VEHICLE HIRING CHARGES 14,600 10.4.2007 JK BANK CD 484 2840575 22,000 25.4.2007 VEHICLE HIRING CHARGES 12,000 5.5.2007 VEHICLE HIRING CHARGES 13,200 3.6.2007 VEHICLE HIRING CHARGES 12,000 4.6.2007 JK BANK CD 484 17782427 15,000 15.8.2007 VEHICLE HIRING CHARGES 2,300 24.10.2007 JK BANK CD 848 2,500 TOTAL 54,100 54,100 BOPINDER SINGH (JK02G-3657 DATE PARTICULAR VEHICLE NO. DEBIT CREDIT ITA NO.388(ASR)/2013 9 10.4.2007 VEHICLE HIRING CHARGES 9,580 14.4.2007 VEHICLE HIRING CHARGES 13,250 15.5.2007 VEHICLE HIRING CHARGES 6,500 25.5.2007 VEHICLE HIRING CHARGES 10,500 30.5.2007 VEHICLE HIRING CHARGES 14,700 4.6.2007 VEHICLE HIRING CHARGES 5,470 5.6.2007 JK BANK CD 484 17782430 60,000 TOTAL 60,000 60,000 BASHIR (JK03-7842) DATE PARTICULAR VEHICLE NO. DEBIT CREDIT 18.5.2007 VEHICLE HIRING CHARGES 4,895 28.5.2007 VEHICLE HIRING CHARGES 8,500 3.6.2007 VEHICLE HIRING CHARGES 7,580 8.6.2007 VEHICLE HIRING CHARGES 6,589 15.6.2007 VEHICLE HIRING CHARGES 5,897 25.6.2007 VEHICLE HIRING CHARGES 10,520 2.7.2007 VEHICLE HIRING CHARGES 12,540 27.7.2007 JK BANK CD 484 65,000 ITA NO.388(ASR)/2013 10 5.8.2007 JK BANK CD 484 4,700 6.8.2007 JK BANK CD 484 JK BANK CD 484 9,000 5,500 19.9.2007 VEHICLE HIRING CHARGES VEHICLE HIRING CHARGES 22,000 18,500 5.10.2007 VEHICLE HIRING CHARGES 23,000 15.10.2007 VEHICLE HIRING CHARGES 29,000 12.1.2008 VEHICLE HIRING CHARGES 18,000 TOTAL 2,26,300 2,26,300 MANZOOR AHMAD JK0IG-5569 DATE PARTICULAR VEHICLE NO. DEBIT CREDIT 3.4.2007 JK BANK CD 484 2840567 14,000 9.4.2007 VEHICLE HIRING CHARGES 14,600 10.4.2007 JK BANK CD 484 2840575 22,000 25.4.2007 VEHICLE HIRING CHARGES 12,000 5.5.2007 VEHICLE HIRING CHARGES 13,200 3.6.2007 VEHICLE HIRING CHARGES 12,000 4.6.2007 JK BANK CD 484 17782427 15,000 15.8.2007 VEHICLE HIRING CHARGES 2,300 24.10.2007 JK BANK CD 484 2,500 ITA NO.388(ASR)/2013 11 TOTAL 54,100 54,100 BOPINDER SINGH (JK02G-3657) 10.4.2007 VEHICLE HIRING CHARGES 9,580 14.4.2007 VEHICLE HIRING CHARGES 13,250 15.5.2007 VEHICLE HIRING CHARGES 6,500 25.5.2007 VEHICLE HIRING CHARGES 10,500 30.5.2007 VEHICLE HIRING CHARGES 14,700 4.6.2007 VEHICLE HIRING CHARGES 5,470 5.6.2007 JK BANK CD 484 17782430 60,000 TOTAL 60,000 60,000 BASHIR (JK03-7842) DATE PARTICULAR VEHICLE NO. DEBIT CREDIT 18.5.2007 VEHICLE HIRING CHARGES 4,895 28.5.2007 VEHICLE HIRING CHARGES 8,500 3.6.2007 VEHICLE HIRING CHARGES 7,580 8.6.2007 VEHICLE HIRING CHARGES 6,589 15.6.2007 VEHICLE HIRING CHARGES 5,897 ITA NO.388(ASR)/2013 12 25.6.2007 VEHICLE HIRING CHARGES 10,520 2.7.2007 VEHICLE HIRING CHARGES 12,540 8.7.2007 VEHICLE HIRING CHARGES 10,254 19.7.2007 VEHICLE HIRING CHARGES 15,780 28.7.2007 VEHICLE HIRING CHARGES 14,500 5.8.2007 VEHICLE HIRING CHARGES 17,500 15.8.2007 VEHICLE HIRING CHARGES 14,500 28.8.2007 VEHICLE HIRING CHARGES 11,400 5.9.2007 VEHICLE HIRING CHARGES 9,580 15.9.2007 VEHICLE HIRING CHARGES 12,450 25.9.2007 VEHICLE HIRING CHARGES 13,500 15.10.2007 VEHICLE HIRING CHARGES 8,700 25.10.2007 VEHICLE HIRING CHARGES 4,870 30.10.2007 VEHICLE HIRING CHARGES 10,445 2.11.2007 JK BANK CD 484 1,00,000 CLOSING BALANCE 1,00,000 TOTAL 2,00,000 2,00,000 ITA NO.388(ASR)/2013 13 GH.NABI JK0IE-7877 DATE PARTICULAR VEHICLE NO. DEBIT CREDIT 15.8.2007 VEHICLE HIRING CHARGES 25,600 28.8.2007 VEHICLE HIRING CHARGES 36,000 3.9.2007 VEHICLE HIRING CHARGES 28,400 9.9.2007 VEHICLE HIRING CHARGES 10,000 21.11.2007 JK BANK CD 484 1,00,000 TOTAL 1,00,000 1,00,000 GULAMA JK0IG-7787 21.5.2007 VEHICLE HIRING CHARGES 5,200 29.5.2007 VEHICLE HIRING CHARGES 11,200 4.6.2007 VEHICLE HIRING CHARGES 16,000 15.6.2007 VEHICLE HIRING CHARGES 32,000 29.6.2007 VEHICLE HIRING CHARGES 43,000 5.7.2007 VEHICLE HIRING CHARGES 25,600 15.7.2007 VEHICLE HIRING CHARGES 41,000 25.7.2007 VEHICLE HIRING CHARGES 7,700 8.11.2007 JK BANK CD 484 1,79,000 ITA NO.388(ASR)/2013 14 20.11.2007 JK BANK CD 484 10,000 25.11.2007 VEHICLE HIRING CHARGES 10,000 3.12.2007 JK BANK CD 484 2700 10.1.2008 VEHICLE HIRING CHARGES 24,500 15.1.2008 VEHICLE HIRING CHARGES 18,500 25.1.2008 VEHICLE HIRING CHARGES 16,200 2.2.2008 VEHICLE HIRING CHARGES 19,500 15.2.2008 VEHICLE HIRING CHARGES 26,500 CLOSING BALANCE 1,05,200 TOTAL 2,96,900 2,96,900 JABBAR JK1E-8785 14.5.2007 VEHICLE HIRING CHARGES 15,200 18.6.2007 VEHICLE HIRING CHARGES 15,200 15.7.2007 VEHICLE HIRING CHARGES 21,000 25.8.2007 VEHICLE HIRING CHARGES 10,000 12.11.2007 VEHICLE HIRING CHARGES 11,600 26.3.2008 JK BANK CD 484 73,000 TOTAL 73,000 73,000 ITA NO.388(ASR)/2013 15 JASWINDER JK0ID-4547 16.7.2007 VEHICLE HIRING CHARGES 15,200 25.7.2007 VEHICLE HIRING CHARGES 18,700 30.7.2007 VEHICLE HIRING CHARGES 16,200 15.8.2007 VEHICLE HIRING CHARGES 12,300 2.11.2007 JK BANK CD 484 50,000 25.2.2008 VEHICLE HIRING CHARGES 28,900 15.3.2008 VEHICLE HIRING CHARGES 31,200 CLOSING BALANCE 60,100 TOTAL 1,34,900 1,34,900 KAMJIT JK01G-6451 25.4.2007 VEHICLE HIRING CHARGES 44,500 30.4.2007 VEHICLE HIRING CHARGES 46,000 5.5.2007 VEHICLE HIRING CHARGES 35,600 10.5.2007 VEHICLE HIRING CHARGES 23,900 12.5.2007 JK BANK CD 484 2840574 1,50,000 25.09.2007 VEHICLE HIRING CHARGES 5,500 26.9.2007 JK BANK CD 484 5,500 ITA NO.388(ASR)/2013 16 14.10.2007 VEHICLE HIRING CHARGES 18,000 19.10.2007 VEHICLE HIRING CHARGES 24,500 29.10.2007 VEHICLE HIRING CHARGES 21,200 21.11.2007 VEHICLE HIRING CHARGES 2,60,400 CLOSING BALANCE 1,04,000 TOTAL 2,60,400 2,60,400 KARPAL SINGH JK01-4441 2.5.2007 VEHICLE HIRING CHARGES 5000 6.5.2007 VEHICLE HIRING CHARGES 5000 8.5.2007 JK BANK CD 484 17782418 10,000 7.7.2007 VEHICLE HIRING CHARGES 12,500 25.7.2007 VEHICLE HIRING CHARGES 13,200 15.8.2007 VEHICLE HIRING CHARGES 15,000 20.10.2007 VEHICLE HIRING CHARGES 11,300 2.11.2007 JK BANK CD 484 50,000 15.12.2007 JK BANK CD 484 2,000 25.1.2008 VEHICLE HIRING CHARGES 24,900 2.2.2008 VEHICLE HIRING CHARGES 20,000 ITA NO.388(ASR)/2013 17 2.3.2008 VEHICLE HIRING CHARGES 1,16,000 CLOSING BALANCE 54,900 TOTAL 1,16,900 1,16,900 M. ASHRAF JK01E-8984 15,6,2007 VEHICLE HIRING CHARGES VEHICLE HIRING CHARGES 16,000 8,700 28.6.2007 VEHICLE HIRING CHARGES 15,200 14.8.2007 VEHICLE HIRING CHARGES 10,100 23.8.2007 JK BANK CD 484 50,000 28.9.2007 VEHICLE HIRING CHARGES 25,600 29.10.2007 VEHICLE HIRING CHARGES 32,600 21.11.2007 VEHICLE HIRING CHARGES 18,000 21.11.2007 VEHICLE HIRING CHARGES 29,800 CLOSING BALANCE 1,06,000 TOTAL 1,56,000 1,56,000 M. SHABIR JK01-314 25.5.2007 VEHICLE HIRING CHARGES 15,200 5.6.2007 VEHICLE HIRING CHARGES 11,200 ITA NO.388(ASR)/2013 18 12.6.2007 JK BANK CD 484 17782434 30,000 15.6.2007 VEHICLE HIRING CHARGES 13,200 12.8.2007 VEHICLE HIRING CHARGES 12,300 20.9.2007 VEHICLE HIRING CHARGES 15,600 10.10.2007 VEHICLE HIRING CHARGES 12,500 20.11.2007 JK BANK CD 484 50,000 TOTAL 80,000 80,000 RASHID JK 01D-8545 17.5.2007 VEHICLE HIRING CHARGES 42,000 25.5.2007 VEHICLE HIRING CHARGES 31,200 5.6.2007 VEHICLE HIRING CHARGES 46,300 25.6.2007 VEHICLE HIRING CHARGES 36,000 29.6.2007 VEHICLE HIRING CHARGES 18,900 2.7.2007 VEHICLE HIRING CHARGES 15,000 3.7.2007 VEHICLE HIRING CHARGES 10,600 4.7.2007 JK BANK CD 484 2,00,000 8.8.2007 VEHICLE HIRING CHARGES 15,200 19.8.2007 VEHICLE HIRING CHARGES 25,600 ITA NO.388(ASR)/2013 19 29.8.2007 VEHICLE HIRING CHARGES 31,200 15.10.2007 VEHICLE HIRING CHARGES 21,000 18.12.2007 VEHICLE HIRING CHARGES 19,500 CLOSING BALANCE 1,12,500 TOTAL 3,12,000 3,12,000 RAVINDER JK01G-9987 20.8.2007 VEHICLE HIRING CHARGES 12,000 24.8.2007 JK BANK CD 484 12,000 25.8.2007 VEHICLE HIRING CHARGES 10,000 28.8.2007 JK BANK CD 484 10,000 2.9.2007 VEHICLE HIRING CHARGES 15,000 17.9.2007 JK BANK CD 484 15,000 15.10.2007 VEHICLE HIRING CHARGES 16,400 22.10.2007 JK BANK CD 484 1,400 3.12.2007 JK BANK CD 484 15,000 TOTAL 53,400 53,400 ITA NO.388(ASR)/2013 20 VIKRAMJIT JK01-2562 20.4.2007 VEHICLE HIRING CHARGES 32,700 23.4.2007 JK BANK CD 484 17782413 1,80,000 25.4.2007 VEHICLE HIRING CHARGES 41,000 30.5.2007 VEHICLE HIRING CHARGES 36,000 5.7.2007 VEHICLE HIRING CHARGES 24,500 15.7.2007 VEHICLE HIRING CHARGES 22,000 25.7.2007 VEHICLE HIRING CHARGES 21,800 25.8.2007 VEHICLE HIRING CHARGES 37,000 28.9.2007 JK BANK CD 484 35,000 25.10.2007 VEHICLE HIRING CHARGES 19,400 11.11.2007 VEHICLE HIRING CHARGES 24,800 29.11.2007 VEHICLE HIRING CHARGES 31,200 12.12.2007 VEHICLE HIRING CHARGES 42,100 18.12.2007 VEHICLE HIRING CHARGES 31,000 28.12.2007 VEHICLE HIRING CHARGES 26,300 12.1.2008 VEHICLE HIRING CHARGES 18,900 19.1.2008 VEHICLE HIRING CHARGES 19,200 29.1.2008 VEHICLE HIRING CHARGES 16,500 ITA NO.388(ASR)/2013 21 CLOSING BALANCE 2,29,400 TOTAL 4,44,400 4,44,000 SINCE NO EXPLANATION HAS BEEN FURNISHED BY THE ASSE SSEE AND ALSO ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNT AS WER E CALLED FOR FROM HIM BY THE UNDERSIGNED AS PER THE ORDER SHEET IN TH IS CASE, COULD NOT FURNISH A REASONABLE EXPLANATION, IT IS BEYOND ANY DOUBT EXPLAINED THAT THE PROVISIONS OF SUB SECTION (IA) OF SECTION 40 READ WITH CLAUSE (IV) OF EXPLANATION OF THE INCOME TAX ACT, 1961 ARE ATTRACTED AND INVOKED TO ASSESSEE TO TAX AN AMOUNT OF RS.26,39,30 0/- AS THE ASSESSEE HAS FAILED TO DEDUCT THE TAX AT SOURCE ON THESE PAY MENTS AND HAS FAILED TO DEPOSIT THE SAID TAX TO THE GOVERNMENT ACCOUNT. THUS, AN AMOUNT OF RS.26,39,300/- IS ASSESSED TO TAX ACCORDINGLY IN VIEW OF THE ABOVE STATE OF AFFAIRS OF THE ASSESSEE. 8. BEFORE THE LD. CIT(A), THE LD. COUNSEL FOR THE A SSESSEE HAS SUBMITTED WRITTEN SUBMISSION WHICH ARE REPRODUCED AS UNDER: 3B.4 THE LD. AO HAS MADE AN ADDITION OF RS.26,39,3 00/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ON F REIGHT EXPENSES PAID TO DRIVERS AND OWNERS OF THE TRUCK. IN THIS REGARD, IT IS TO SUBMIT THAT ALL THE TRUCK DRIVERS/OWNERS TO WHOM THESE PAYMENTS HAVE BEEN MADE DOES NOT OWN MORE TH AN ONE TRUCK. AS PER THE SECOND PROVISO TO EARLIER SECTION 194C(3 )(I), NO DEDUCTION SHALL BE MADE UNDER SUB SECTION (2) FROM THE AMOUNT OF THE SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID D URING THE PREVIOUS YEAR TO THE ACCOUNT OF SUB CONTRACTOR DURING THE CO URSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS, CARRIAGES, ON PROD UCTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDI TING SUCH SUM, IN THE PRESCRIBED FORM AND VERIFIED IN PRESCRIBED MA NNER AND WITHIN SUCH TIME AS MAY BE PRESCRIBED, IF SUCH SUB CONTRAC TOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TO GOODS CAR RIAGES AT ANY TIME DURING THE PREVIOUS YEAR. THE ASSESSEE HAS OBT AINED THE PRESCRIBED FORM NO.15-I FROM THE SAID OWNERS OF TRU CKS DURING THE ITA NO.388(ASR)/2013 22 PREVIOUS YEAR UNDER CONSIDERATION. COPIES OF DECLAR ATION FORM ARE ENCLOSED HEREWITH FOR YOUR KIND PERUSAL. RELIANCE IS PLACED ON THE JUDGMENT OF HONBLE HIGH COURT OF AHMEDABAD IN THE CASE OF CIT VS. VALIBHAI KHANBHAI MANKAD ITA 1182 OF 2011 IN WHICH IT WAS HELD THAT THE EXCLUSIO N PROVIDE IN SUB- SECTION (3) OF SECTION 194C FROM THE LIABILITY TO D EDUCT TAX AT SOURCE UNDER SUB-SECTION (2) WOULD THUS BE COMPLETED THE MOMENT THE REQUIREMENTS CONTAINED THEREIN ARE SATISFIED. SUCH REQUIREMENTS, PRINCIPALLY, ARE THAT THE SUBCONTRACTOR, RECIPIENT OF THE PAYMENT PRODUCES A NECESSARY DECLARATION IN THE PRESCRIBED FORMAT AND FURTHER THAT SUCH SUB CONTRACTOR DOES NOT OWN MORE THAN TWO GOODS CARRIAGE DURING THE ENTIRE PREVIOUS YEAR. THE MOMENT SUCH R EQUIREMENTS ARE FULFILLED, THE LIABILITY OF THE ASSESSEE TO DEDUCT TAX ON THE PAYMENTS MADE OR TO BE MADE TO SUCH SUB CONTRACTORS WOULD CE ASE. IN FACT, HE WOULD HAVE NO AUTHORITY TO MAKE ANY SUCH DEDUCTION. IT WAS FURTHER HELD THAT THE LATER PORTION OF SUB-S ECTION (3) WHICH FOLLOW THE FURTHER PROVISION IS A REQUIREMENT WHICH WOULD ARISE AT A MUCH LATER POINT OF TIME. SUCH REQUIREMENT IS THAT THE PERSON RESPONSIBLE FOR PAYING SUCH SUM TO THE SUB-CONTRACT OR HAS TO FURNISH SUCH PARTICULARS AS PRESCRIBED. WE MAY NOTICE THAT UNDER RULE 29D OF THE RULES, SUCH DECLARATION HAS TO BE MADE BY THE E ND OF JUNE OF THE NEXT ACCOUNTING YEAR IN QUESTION. IN OUR VIEW, THEREFORE, ONE THE CONDITIONS OF FURT HER PROVISION OF SECTION 194C(3) ARE SATISFIED, THE LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE WOULD CEASE. THE REQUIREMENT OF SUCH PAYEE T O FURNISH DETAILS TO THE INCOME TAX AUTHORITY IN THE PRESCRIBED FORM WITHIN PRESCRIBED TIME WOULD ARISE LATER AND ANY INFRACTION IN SUCH A REQUIREMENT WOULD NOT MAKE THE REQUIREMENT OF DEDUCTION AT SOURCE AP PLICABLE UNDER SUB-SECTION(2) OF SECTION 194C OF THE ACT. IN OUR V IEW THEREFORE, THE TRIBUNAL WAS PERFECTLY JUSTIFIED IN TAKING THE VIEW IN THE IMPUGNED JUDGMENT. IT MAY BE THAT FAILURE TO COMPLY SUCH REQ UIREMENT BY THE PAYEE MAY RESULT INTO SOME OTHER ADVERSE CONSEQUEN CES IF SO PROVIDED UNDER THE ACT. HOWEVER, FULFILLMENT OF SUC H REQUIREMENT CANNOT BE LINKED TO THE DEDUCTION OF TAX AT SOURCE. ANY SUCH FAILURE THEREFORE, CANNOT BE VISUALIZED BY ADVERSE CONSEQUE NCES PROVIDED U/S 40(A)(IA) OF THE ACT. COPY OF THE JUDGMENT IS ENCLO SED. ITA NO.388(ASR)/2013 23 WITHOUT PREJUDICE TO THE ABOVE, IT IS TO SUBMIT THA T IF THE INCOME ASSESSED BY THE AO IS CONSIDERED, THE NET PROFIT OF THE ASSESSEE COMES TO 68.80% WHICH IS UNREASONABLY HIGHER AS COMPARED TO THE NET MARGIN IN THE TRANSPORT INDUSTRY. IT IS PERTINENT T O MENTION HERE THAT THE HONBLE JURISDICTIONAL ITAT BENCH, AMRITSAR TH E JUDGMENT OF HONBLE ITAT, AMRITSAR BENCH IN THE CASE OF ASSOCIA TED CONTRACTORS VS. ITO (2010) 133 TTJ (ASR) (UO) 22 IN WHICH IT WA S CONCLUDED THAT ASSESSEE, A CARRIAGE CONTRACTOR, HAVING FAILED TO F URNISH THE REQUISITE INFORMATION AS CALLED FOR BY THE AO FROM TIME TO TI ME. IT WOULD BE FAIR AND REASONABLE ON THE FACTS OF THE CASE AND CONSIDE RING COMPARABLE CASES, TO ESTIMATE ASSESSEES INCOME BY APPLYING NE T PROFIT RATE OF 4 PER CENT TO THE GROSS RECEIPTS AS AGAINST 6 PER CEN T APPLIED BY THE CUT(A) AND 8 PERCENT APPLIED BY AO. IT IS ALSO IMP ORTANT TO MENTION THAT THE ASSESSEE IS ALSO OPERATING IN THE SRINAGAR AS IN THE CASE OF M/S. ASSOCIATED CONTRACTORS IN THE ABOVE REFERRED C ASE. IT IS FURTHER SUBMITTED AS UNDER: THE TURNOVER OF THE ASSESSEE RS.46,16,823/- I.E. RS.44,98,094/- DECLARED BY THE ASSESSEE AND RS .1,18,729/- INADVERTENTLY LEFT BY THE ASSESSEE AS DISCUSSED IN PARA 1 ABOVE. PROFIT DECLARED BY THE ASSESSEE RS.47,445/- RECEIPTS LESS SHOWN AS PER PARA 1 ABOVE RS.1,18,72 9/- ADDITION MADE BY THE AO AS PER PARA AI OF THE ASSESSMENT ORDER RS.1,94,284/- ADDITION MADE BY THE AO AS PER PARA A5 OF THE ASSESSMENT ORDER RS. 6,078/- TOTAL INCOME RS.3,56,536/-(I.E. 7.72%) THE INCOME AS CALCULATED ABOVE IS QUITE HIGHER THAN THE NET PROFIT RATE OF 4 APPLIED BY THE JURISDICTIONAL TRIBUNAL IN THE ABOVE REFERRED CASE IN TRANSPORT CONTRACTS. THEREFORE, IT IS REQUESTED TO YOUR GOODSELF TO KIN DLY DELETE THE ADDITION MADE BY THE AO BY INVOKING THE PROVISIONS OF 40(A)(IA) OF THE ACT. ITA NO.388(ASR)/2013 24 9. THE LD. CIT(A) DELETED THE ADDITION MADE BY THE A.O. AND THE RELEVANT PARA OF THE ORDER OF THE LD. CIT(A) IS REP RODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: THE ADDITION OF RS.26,39,300/- WAS MADE BY INVOKIN G THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ON FREIGHT EXPENSES PAID TO DRIVERS AND OWNERS OF THE TRUCK. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT WAS ASKED TO EXPLAIN AS TO WHY THE PROVIS IONS OF THE SECTION 40(A)(IA) IS NOT ATTRACTED IN HIS CASE. THE REPLY OF THE APPELLANT IS GIVEN IN PARA 3B.4 UNDER THE HEADING SUBMISSION DT. 14.3.2013. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT A ND GONE THROUGH THE JUDGMENT OF THE HONBLE HIGH COURT OF AHMEDABAD ON THE SID ISSUE AND FOUND THAT THE PLEA OF THE APPELLANT IS L OGICAL AND HAS FORCE. FURTHER, IT IS ALSO OBSERVED THAT HAVING REGARD TO THE INCOME DECLARED BY THE APPELLANT AND ADDITIONS UPHELD IN THE FOREGO ING PARAS, THE NET PROFIT OF THE APPELLANT COMES TO 8.44% WHICH IS QUI TE HIGHER THAN THE NET PROFIT OF 4% APPLIED IN THE CASE OF TRANSPORT C ONTRACTOR BY THE HONBLE JURISDICTIONAL ITAT, BENCH, AMRITSAR IN THE CASE OF ASSOCIATED CONTRACTORS VS. ITO (2010 133 TTJ (ASR)( UO) 22. IN THE ASSESSMENT ORDER PAGES 5 TO 10, THE DETAILS OF TRUC K OWNERS, ALONGWTIH TRUCK NO. IS MENTIONED TO WHOM PAYMENTS HAVE BEEN M ADE. FROM THAT DETAILS, IT IS FOUND FROM TRUCK NUMBER THAT NO TWO TRUCKS ARE OWNED BY AN INDIVIDUAL AND THERE ARE AS MANY 16 OWNERS TO WH OM PAYMENT WERE MADE. THUS, THE PROVISIONS OF SECTION 194C R.W .S. 40(A)(IA) IS NOT APPLICABLE. I AGREE WITH THE SUBMISSION AND ARGUMEN TS OF THE APPELLANT AND THIS GROUND OF APPEAL OF THE APPELLAN T IS ALLOWED. THE ADDITION OF RS.26,39,300/- IS DELETED. 10. THE LD. DR ARGUED THAT THE LD. CIT(A) HAS SIMPL Y ACCEPTED THE SUBMISSIONS OF THE ASSESSEE WHEREAS THE FACTS OF TH E CASE AS EVIDENT FROM THE FINDINGS OF THE AO AT PAGES 4 TO 11 THAT THE GOODS ARE TRANSPORTED CONTINUOUSLY IN PURSUANCE OF A CONTRACT FOR A SPECI FIC PERIOD AND THEREFORE, ITA NO.388(ASR)/2013 25 EACH GR CANNOT BE TREATED AS A SEPARATE CONTRACT A ND ACCORDINGLY ALL THE GRS RELATING TO THE YEAR UNDER DISPUTE WILL BE AGGR EGATED FOR THE PURPOSE OF TDS, AS PER CBDT CIRCULAR NO.715 DATED 08.08.1995. THE LD. CIT(A), THEREFORE, ALTOGETHER IGNORED THE SAID CIRCULAR AND THEREFORE, THE ORDER OF THE LD. CIT(A) IS BAD IN LAW AND NEEDS TO BE REVERSED. SECONDLY, THE LD. CIT(A) HAS NOT GIVEN ANY OPPORTUNITY TO THE AO AND NOTHING HAS BEEN CONFRONTED WITH REGARD TO THE SUBMISSION OF THE ASSESSEE BEFOR E HIM. 11. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERI AL AVAILABLE ON RECORD. WE ARE CONVINCED WITH THE ARGUMENTS OF THE LD. DR, MR. MAHAVIR SINGH THAT AS PER CBDT CIRCULAR NO.715 DATED 8.8.19 95 IF THE CONTRACT IS FOR A SPECIFIC PERIOD OR QUANTITY EACH GR WILL NOT BE A SEPARATE CONTRACT AND ALL GRS RELATING TO THAT PERIOD OR QUANTITY WILL BE AG GREGATED FOR THE PURPOSE OF TDS. FROM THE COPY OF ACCOUNT REPRODUCED BY THE AO AT PAGES 5 TO 10 WHICH ARE REPRODUCED HEREINABOVE, WHICH ARE WITH RE SPECT TO EACH TRUCK OWNED BY EACH PERSON AND CONTRACT IS FOR A SPECIFIC PERIOD AND IS A CONTINUING CONTRACT, IS EVIDENT FROM THE COPY OF AC COUNT OF EACH TRUCK WHERE THE PAYMENTS ARE BEING MADE IN PURSUANCE OF THE CON TINUING CONTRACT, WHICH IS EVIDENT FROM THE COPY OF ACCOUNT OF EACH TRUCK. THIS IS AS PER CIRCULAR NO.715 DATED 8.8.1995. THE SAME HAS BEEN IGNOR ED BY THE LD. CIT(A) WHO HAS SIMPLY ACCEPTED THE SUBMISSIONS OF T HE LD. COUNSEL FOR THE ITA NO.388(ASR)/2013 26 ASSESSEE AND THAT TOO WITHOUT CONFRONTING TO THE A. O. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. CIT (A) CANNOT BE ACCEPTED AND ACCORDINGLY, THE SAME IS DIRECTED TO BE REVERSE D AND THE ORDER OF THE A.O. IS RESTORED. THUS, GROUNDS NO. 2, 3 & 4 OF TH E REVENUE ARE ALLOWED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA NO.388(ASR)/2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH JANUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30TH JANUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. ZOGILLA ROADWAYS, SRINAGAR. 2. THE ITO WARD 3(3), SRINGAR 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR