The ACIT, Circle-1, JAMNAGAR V. M/s. Pasta Transport Co., JAMNAGAR

ITA 420/RJT/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9523 (ITAT-RAJKOT)
• Duration Of Justice: 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 02-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: P M MAHARSHI C A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBULAL, RAJKOT BENCH: RAJKOT .., ! ' #, $ % BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER &./ I.T.A. NO.420/RJT/2014 ( / ASSESSMENT YEAR : 2010-11) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1 JAMNAGAR / VS. M/S.PASTA TRANSPORT CO. NAVI NAGARI, OKHA PORT JAMNAGAR ( & ./ ) & ./ PAN/GIR NO. : AAKFP 0114 E ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY : SHRI AVINASH KUMAR, SR.DR +,(* . - / RESPONDENT BY : SHRI P.M. MAHARSHI, C.A. ! / 0 . # / DATE OF HEARING 17/02/2015 12 . # / DATE OF PRONOUNCEMENT 18/02/2015 3 / O R D E R PER BENCH : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-JAMNAGAR (CIT(A) IN SHORT) DATED 16/04/2014 PERTAINING TO ASSESSMENT YEAR (AY) 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE DISALLOWANCE MADE BY AO @ 5% OF GENERAL TRANSPORT WORK EXPENSES OF RS.12,69,093/- PAID IN CASH. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD.CIT(A) BE SET AS IDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO. 420/RJT/2014 ACIT-JAMNAGAR VS.M/S.PASTA TRANSPORT CO., JAMNAGAR ASST.YEAR - 2010-11 - 2 - 4. THAT THE REVENUE CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY GROUNDS OF APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 26/03/2013, THEREBY THE ASSESSING OFFICER (AO IN SHORT) DISALLOWANCE U/S.40A(3) AMOUNTING TO RS.3,48,012/- AND DISALLOWANCE OUT OF GENERAL TRANSPORT CASH EXPENSES @ 5% OF THE TOTAL EXPENSES OF RS.12,69,093/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS CO NFIRMED THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S.40A(3) OF THE A CT BY THE AO AND DELETED THE ADDITION MADE ON ACCOUNT OF DISALLOWANC E OUT OF GENERAL TRANSPORT CASH EXPENSES. 3. THE LD.SR.DR SUPPORTED THE ORDER OF THE AO AND S UBMITTED THAT THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E PAYMENTS HAVE BEEN MADE IN CASH. THE AO MADE ENQUIRY WITH REGARD TO THE GENUINENESS OF THE EXPENDITURE. THE AO NOTICED CERTAIN DISCREPANC IES IN THE DETAILS FURNISHED BY THE ASSESSEE. UNDER THESE FACTS, THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 3.1. ON THE CONTRARY, THE LD.COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ASSESSEE HAD FURNISHED ALL THE DETAILS WITH REGARD TO THE EXPENDITURE. HE SUBMITTED THAT MERELY BECAUSE OF THE EXPENSES HAVE BEEN MADE IN CASH CANNOT BE THE REASON FOR THE DISALLOWANCE OF THE EX PENDITURE. HE SUBMITTED THAT ALL EVIDENCES WERE FURNISHED IN SUPP ORT OF ITS CLAIM OF THE ITA NO. 420/RJT/2014 ACIT-JAMNAGAR VS.M/S.PASTA TRANSPORT CO., JAMNAGAR ASST.YEAR - 2010-11 - 3 - EXPENDITURE. HE SUBMITTED THAT EXPENSES HAVE BEEN INCURRED DURING THE COURSE OF BUSINESS AND THE ASSESSEE HAS DISCHARGED ITS ONUS BY PLACING ALL RELEVANT MATERIAL BEFORE THE AO. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE HAS GIVEN A FINDING ON FACT IN PARA-6.4.1 OF HIS ORDER WHICH IS REPRODUCED HEREUNDER:- 6.4.1. THE APPELLANT HAS INCURRED RS.4,22,40,357 /- AS GENERAL TRANSPORTATION WORK EXPENSES. OUT OF THIS, PAYMENT EQUAL TO RS.78,70,627/- HAD BEEN PAID BY CHEQUE AND THE BALA NCE AMOUNT OF RS.3,43,69,730/- HAD BEEN PAID IN CASH OUT OF WH ICH TAX HAS BEEN DEDUCTED AT SOURCE IN RESPECT OF RS.86,39,867/ -. OUT OF BALANCE CASH PAYMENT AMOUNT OF RS.2,53,81,851/-, 5% OF THE SAME ON AD HOC BASIS IS DISALLOWED BY AO. MAIN REASON F OR DISALLOWANCE BY AO IS THAT APPELLANT HAS NOT SUBMIT TED THE DETAILS CALLED FOR VIDE LETTER DATED 17/12/2012 AND BASED O N RTO INQUIRY AO HAS DOUBTED THE OWNERSHIP OF THE TRUCKS AND THER EFORE MAINLY ON THAT GROUND DISALLOWANCE HAS BEEN MADE. APPELLA NT HAS SUBMITTED THAT THAT IT HAS MAINTAINED FULL DETAILS OF EXPENDITURE INCURRED I.E. IN CASE OF ALL 1500 TRUCKS. APPELLAN T HAD FURNISHED THE DETAILS OF THE PERSON WHO HAVE COLLECTED THE FR EIGHT SHOWING THE NAMES AND SUBMITTED PAN OF THE PERSONS WHOM FRE IGHT IS PAID. IT HAS ALSO SUBMITTED LIST OF TRUCKS REGISTERED WIT H LOCAL ASSOCIATION AND URGED THAT OWNERSHIP OF THE TRUCKS IS NEVER IN DOUBT A AS PER THE LETTER OF RTO AND DETAILS SUBMITTED BY APPELLAN T DURING ASSESSMENT PROCEEDINGS. APPELLANT SUBMITTED THAT IT HAS SUBMITTED THE FULL DETAILS AS CALLED FOR LETTER DAT ED 17/12/2012 OF THE AO IN SUBMISSION DATED 2/1/2013, 15/1/2013, 5/3 /2013 AND 25/3/2013, WHICH ARE STATED IN STATEMENT OF FACTS. THEREFORE, THERE IS NO DETAILS, WHICH IS ASKED AND NOT SUBMITTED BY THE ASSESSEE TO AO. IT WAS ALSO SUBMITTED THAT AO HAS ASKED ADDRES S OF ITA NO. 420/RJT/2014 ACIT-JAMNAGAR VS.M/S.PASTA TRANSPORT CO., JAMNAGAR ASST.YEAR - 2010-11 - 4 - OUTSTANDING AMOUNT ONLY AND THE PAN AND RTO BOOKS O F THE PERSON/TRUCK FOR WHICH FREIGHT IS PAID SUPPORT FREI GHT PAID DURING THE YEAR. THEREFORE, THESE DETAILS ARE ALSO AVAILA BLE FOR OUTSTANDING FREIGHT PAYABLE ACCOUNT. THEREFORE, FO R EXAMINING THIS ISSUE THE FACTS ARE DISCUSSED AS FOLLOWS. APPELLAN T HIRES TRUCK REGISTERED WITH THE OKHA MANDAL TALUKA TRUCK TRANSP ORT ASSOCIATIONS, WHICH MOSTLY PLY IN THE REGION IN WHI CH THE ASSESSEE IS DOING THE BUSINESS. THE CERTIFIED LIST OF SUCH TRUCKS REGISTERED WITH THE ASSOCIATION WAS SUBMITTED AND PAYMENTS ARE MADE TO THEM. THAT ASSOCIATION MAINTAINS THE RTO BOOK OF T HE TRUCK, NAME OF THE OWNER AND PAN OF THE OWNER. AO HAS ALSO MAD E INQUIRY BY ISSUING LETTER U/S.133(6) TO THE RTO ABOUT 112 TRUC KS VIDE NOTICE DATED 12/3/2013. IN RESPONSE TO THAT RTO SUBMITTED THE DETAILS FO 112 TRUCKS IN WHICH ALL THE TRUCK NUMBER WERE FOUND CORRECT AND THEY WERE ALSO FOUND TO BE REGISTERED WITH THE RTO. RTO CERTIFIED IN THIS LIST THAT REGISTRATION NUMBER ARE GENUINE A ND ARE IN EXISTENCE AS THE GOODS TRANSPORT VEHICLE. FOR THE PAYMENT OF FREIGHT APPELLANT HAS LR AND BASED ON THAT LR THE R ECEIPT FOR THE PAYMENT OF FREIGHT IS MADE SHOWING THE NAME OF THE PERSON, DESTINATION AND ORIGINATION POINTS, TRUCK NUMBER, T HE WEIGHT, AND RATE OF FREIGHT. THE APPELLANT PREPARES THIS VOUCH ER AND ON THAT BASIS, THE RECEIPT IS OBTAINED TO WHOM FREIGHT IS P AID. AO HAS TREATED IT AS SELF-MADE VOUCHERS. IN FACT, IT IS R ECEIPT OF THE TRUCK FREIGHT PAYMENT, WHICH IS BACKED BY LR, AND THE PAY MENT OBTAINED BY THE APPELLANT FROM ITS PRINCIPAL AS AND WHEN THE GOODS REACHED THE DESTINATION POINT. AO IS DUTY BOUND TO EXAMINE WHETHER THE EXPENDITURE INCURRED IS FOR THE BUSINESS PURPOSES O F THE APPELLANT OR NOT AND IF THAT CONDITIONS ARE SATISFIED WHETHER THE PAYMENTS ARE MADE ON SELF-MADE VOUCHER OR NOT IS NOT RELEVANT. IN THIS CASE APPELLANT PREPARED ONLY LR BACKS THE RECEIPT AND IT FOR WHICH APPELLANT HAS OBTAINED THE PAYMENTS FROM ITS PRINCI PAL. IT IS NOT THE CASE OF AO THAT APPELLANT HAS BOOKED HIGHER FRE IGHT OR THE FREIGHT PAYMENT MADE BY AO AND DEBITED IN ITS BOOKS BUT WHICH IS NOT SHOWN IN THE FREIGHT RECEIPT OF THE APPELLANT. FURTHER THE QUESTIONNAIRE WHICH IS STATED BY AO THAT NO COMPLIE D BY THE APPELLANT IS PERUSED. THE QUESTIONNAIRE IS DATED 1 7/12/2012 WHICH IS GENERAL IN NATURE AND ASKED APPELLANT ABOUT A(3) PAYMENTS, OUTSTANDING FREIGHT PAYMENTS AND 40A(2)(B) PAYMENTS OF TRUCK ITA NO. 420/RJT/2014 ACIT-JAMNAGAR VS.M/S.PASTA TRANSPORT CO., JAMNAGAR ASST.YEAR - 2010-11 - 5 - FREIGHT ALONG WITH OTHER DETAILS. ALL THESE DETAIL S HAVE BEEN SUBMITTED BY THE APPELLANT VIDE VARIOUS SUBMISSION MADE. THE DETAILS OF TRUCK FREIGHT PAYMENTS ARE SUBMITTED DAY WISE, TRUCK NO WISE, AND FREIGHT INCOME WISE. THE TOTAL FREIGHT P AID IN QUANTITY WISE IS ALSO RECONCILED WITH FREIGHT INCOME QUANTIT Y WISE AND TRUCK NO WISE. THEREFORE, IT IS NOT CORRECT TO STATE THA T APPELLANT HAS NOT SUBMITTED THE DETAILS BUT IN FACT, IT HAS SUBMITTED EXHAUSTIVE DETAILS. BASED ON THESE DETAILS ONLY AO COULD FIND THE SAME DAY PAYMENT TO DIFFERENT PERSON FOR TRUCKS BUT WHICH AR E OWNED BY SAME OWNER AND DISALLOWANCE U/S.40A(3) IS MADE AND CONFIRMED BY ME VIDE GROUND NO.1 AND 2 OF THIS APPEAL. REGAR DING RESULT OF INQUIRY CARRIED ON WITH RTO, IT CERTIFIED THE NAME OF THE OWNER AS ON THE DATE OF THE LETTER I.E. 20/3/2013, HOWEVER, THE PAYMENTS RELATE TO THE PERIOD 31.3.2010 I.E. AFTER THREE YEA RS. IN THIS PERIOD, THERE MAY BE SOME CHANGES IN THE OWNERSHIP ALSO. A PPELLANT SUBMITTED THE DETAILS OF DISCREPANCY BETWEEN THE IN FORMATION RECEIVED FROM RTO OFFICE AS WELL AS SUBMITTED BY AS SESSEE GIVING REFERENCE TO THE CHANGE IN OWNERSHIP, DIFFERENCE IN NAME, TRUCKS REGISTERED IN THE NAME OF RELATIVES, APPELLANT ALSO SUPPORTED THAT BY THE PRODUCING THE COPY OF RTO BOOK OF TRUCKS AND PAN OF THE OWNERS. IN RTO INQUIRY ALL, THE TRUCKS WERE FOUND TO BE GENUINE TRANSPORT TRUCKS, NAME OF THE OWNERS AND NUMBER ARE ALSO FOUND TO BE CORRECT. FURTHER, THE GROSS PROFIT RATIO OF THE ASSESSEE HAS IMPROVED DURING THE YEAR AND SIMULTANEOUSLY THE PER CENTAGE OF EXPENDITURE HAS DECREASED COMPARED TO THE TOTAL EXP ENDITURE AND INCOME CANNOT BE DISREGARDED. FURTHER APPELLANT HA S ALSO SUBMITTED THE DETAILS OF PAN OF THE OWNERS OF THE T RUCKS AND WHICH ARE ON THE RECORDS OF THE INCOME TAX DEPARTMENT. T HE DETAILS SOUGHT BY THE AO VIDE LETTER DATED 17/12/2013 IS AL READY ON RECORD IN THE FORM OF REPLY SUBMITTED BY THE ASSESSEE ON V ARIOUS DATED INCLUDING REPLIES SUBMITTED ON 5/3/2013 AND 25/3/20 13. APPELLANT HAS SUBMITTED THE PAN OF THE OWNERS OF THE TRUCKS, WHICH PROVES THE IDENTITY OF THE TRUCK-OWNERS. FURTHER AO HAS N OT STATED THAT THE PAN SUBMITTED BY THE ASSESSEE ARE WRONG OR THER E IS MISMATCH BETWEEN THE NAME AND THE PAN OF THE PERSONS. GENER ALLY, WHEN THE PAN IS GIVEN DEPARTMENT ALWAYS HAVE ACCESS TO T HE FULL RECORDS OF SUCH PAN HOLDER INCLUDING THE AO AND HIS ASSESSMENT DETAILS. AO HAS STATED THAT AS THE ADDRESS WERE NO T FURNISHED B Y ITA NO. 420/RJT/2014 ACIT-JAMNAGAR VS.M/S.PASTA TRANSPORT CO., JAMNAGAR ASST.YEAR - 2010-11 - 6 - THE AO; HE IS TAKING AN ADVERSE VIEW. HOWEVER, LOO KING TO THE QUESTIONNAIRE IT WAS NEVER ASKED BY THE AO. IN SPI TE, APPELLANT HAS SUBMITTED PAN AND RTO BOOKS AS WELL AS CERTIFIE D LIST OF THE TRANSPORTERS REGISTERED WITH THE LOCAL ASSOCIATION AND OFFERED THAT THEY MAY BE EXAMINED. FURTHER, IN THIS TRANSACTION MOVEMENT OF GOODS, RATES, THE PERSON TO WHOM THE PAYMENT IS MAD E CANNOT BE DOUBTED AS AO HAS ALREADY TAXED THE RECEIPT OF THE FREIGHT FROM THIS TRANSACTION FOR THE WEIGHT, NUMBER OF TRUCK. IT IS NOT THE CASE OF AO THAT THERE IS MISMATCH BETWEEN THE NUMBERS OF TRUCKS FOR WHICH FREIGHT IS PAID AND NUMBER OF TRUCKS FOR WHIC H BILL RAISED ON PRINCIPAL. THEREFORE, THE MAIN REASON FOR DISALLOW ANCE BY THE AO THAT OWNERSHIP OF TRUCK-OWNERS IS DOUBTED IS NOT CO RRECT IN VIEW OF COMPLETE DETAILS SUBMITTED BY APPELLANT. DURING TH E COURSE OF ASSESSMENT, PROCEEDINGS BOOKS OF ACCOUNTS WERE PROD UCED BEFORE AO WITH VOUCHERS AND IT WERE VERIFIED BY AO. IN TH E BOOKS OF ACCOUNTS, AO DID NOT POINT OUT ANY DEFECT. THEREFO RE, THE WHOLE DISALLOWANCE MADE BY AO IS BASED ON GUESSWORK AND W ITHOUT ASSIGNING ANY REASON FOR THE SAME AND MERELY DOUBTI NG THE OWNERSHIP OF THE TRUCKS. THERE IS NO DISCREPANCY P OINTED OUT BY AO IN PAYMENTS MADE BY THE APPELLANT FOR GENERAL TR ANSPORTATION EXPENSES. THEREFORE, I DELETE THE ADHOC DISALLOWAN CE MADE @ 5% OF GENERAL TRANSPORT WORK EXPENSES OF RS.12,69,093/ -. THEREFORE, GROUND NO.3 & 4 OF THE APPEAL ARE ALLOWED. 4.1. THE ABOVE FINDING OF THE LD.CIT(A) IS NOT CONT ROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. WE FIND THAT THE LD.CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE DETAILS SOUGHT BY THE AO VIDE LETTER DATED 17/12/2013 IS ALREADY ON RECOR D IN THE FORM OF REPLY SUBMITTED BY THE ASSESSEE ON VARIOUS DATES INCLUDIN G REPLIES SUBMITTED ON 05/03/2013 AND 25/03/2013. THE APPELLANT HAS SUBMI TTED THE PAN OF THE OWNERS OF THE TRUCKS, WHICH PROVES THE IDENTITY OF THE TRUCK-OWNERS. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WI TH THE ORDER OF THE ITA NO. 420/RJT/2014 ACIT-JAMNAGAR VS.M/S.PASTA TRANSPORT CO., JAMNAGAR ASST.YEAR - 2010-11 - 7 - LD.CIT(A), SAME IS HEREBY UPHELD. THUS, GROUNDS RAISED IN THE REVENUES APPEAL ARE REJECTED. 5. IN THE RESULT, THE APPEAL OF THE APPEAL OF THE R EVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY THE 18 TH DAY OF FEBRUARY, 2015 AT RAJKOT. SD/- SD/- ( .. ) ( ! ' #) $ ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT; DATED 18/ 02 /2015 .. , /.$../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. &6& # ! 7# / CONCERNED CIT 4. ! 7# ( ) / THE CIT(A)-JAMNAGAR 5. 9/' : +$#$ , , /DR,ITAT, RAJKOT 6. : EF G 0 / GUARD FILE. / BY ORDER, , 9# +$# //TRUE COPY// !/ '# $% ( DY./ASSTT.REGISTRAR) # %&# ' , / ITAT, RAJKOT 1. DATE OF DICTATION .. 17.2.15 (DICTATION-PAD 5-PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17.2.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BAC K TO THE SR.P.S./P.S.18.2.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18.2.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK.. . 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER