The ITO- 3(2), Bhopal V. Shri Dilip Bhai Patel, Bhopal

ITA 443/IND/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1506 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRIDULA BAJPAI
• Assessee Lawyers: H P VERMA; SAKSHI VERMA
• Keywords: Additional evidence; Assessment record; Reassessment proceedings
• Section: 194C; 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.443/IND/2012 A.Y. 2006-07 ITO-3(2), BHOPAL :: APPELLANT VS DILIP BHAI PATEL PROP. M/S.DILIP TRANSPORT CO., BHOPAL PAN AFWPP 7646 E :: RESPONDENT AND, CROSS-OBJECTION NO.94/IND/2012 (ARISING OUT OF ITA NO.443/IND/2012) A.Y. 2006-07 DILIP BHAI PATEL PROP. M/S.DILIP TRANSPORT CO., BHOPAL PAN AFWPP 7646 E :: OBJECTOR VS ITO-3(2), BHOPAL :: RESPONDENT 2 DEPARTMENT BY SMT. MRIDULA BAJPAI, CIT/DR ASSESSEE BY SHRI H.P. VERMA AND MISS SAKSHI VERMA DATE OF HEARING 16 .1.2013 DATE OF PRONOUNCEMENT 16 .1.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE AS WELL AS ASSESSEE ARE AGGRIEVED WITH THE ORDER DATED 10.5.2012 OF THE LEARNED CIT(A)-II, BHOPAL. THE REVENUE HAS RAISED THE GROUND THAT ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE, THE LEARNED FIRST APPELLATE AUTHORITY ERRED I N DELETING THE ADDITION OF RS.2,58,46,505/- MADE ON ACCOUNT OF DIS ALLOWANCES MADE U/S 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TDS, ON FREIGHT CHARGES PAID, BY ACCEPTING ADDITIONAL EVIDENCE REGA RDING EXPENDITURE ON TRUCKS OWNED BY THE ASSESSEE WHICH W ERE NOT REFLECTED IN THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SMT . MRIDULA BAJPAI, LD. CIT/DR AND AND SHRI H.P. VERMA ALONG WI TH MISS SAKSHI VERMA, LEARNED COUNSEL FOR THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS IDENTICAL TO THE GROUND RA ISED BY SUPPORTING THE ASSESSMENT ORDER. IT WAS ALSO PLEADE D THAT THE 3 ASSESSEE IS A TRANSPORTER ALSO HIRED TRUCKS AND NO TAX WAS DEDUCTED AT SOURCE BY HIM. PLEA WAS ALSO RAISED THAT THE ADD ITIONAL EVIDENCE WAS PRODUCED BEFORE THE LD. CIT(A) FOR WHICH NO OPP ORTUNITY WAS PROVIDED TO THE ASSESSING OFFICER. ON THE OTHER HAN D, SHRI H.P. VERMA AND MISS SAKSHI VERMA STRONGLY DEFENDED THE I MPUGNED ORDER BY ASSERTING THAT THE LD. CIT(A) HAS DULY EXA MINED THE CLAIM OF THE ASSESSEE AND HAS MET WITH THE OBJECTIONS RAI SED BY THE ASSESSING OFFICER. 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD.THE FACTS,IN BRIEF, AR E THAT THE ASSESSEE IS A TRANSPORTER HAVING OWN TRUCKS AND ALSO HI RED TRUCKS FOR TRANSPORTATION OF GOODS. THE ASSESSEE DECLARED NET PROFIT OF RS.16,15,077/- ON THE TOTAL RECEIPT OF RS.3,1 0,69,576/-. IT WAS OBSERVED BY THE AUDIT TEAM THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE ON THE FREIGHT PAID OF RS.2,60,76,076/-. AS PER THE REVENUE, THE ASSESSEE ONLY DEDUCTED TDS ON INTEREST PAID ON RS.18,99,907/-. NOTICE U/S 148 OF THE ACT AND THERE AFTER NOTICE U/S 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE. SUBSE QUENTLY, QUESTIONNAIRE WAS BISSUED AS THE CASE WAS TRANS FERRED TO ANOTHER 4 ASSESSING OFFICER. THE ASSESSEE ATTENDED THE PROCE EDINGS FROM TIME TO TIME AND FILED WRITTEN SUBMISSIONS ALONG WITH CO PIES OF ACCOUNTS, CONFIRMATIONS, COPIES OF DOCUMENTS AND OTHER DETAIL S AS DESIRED DURING THE HEARINGS AS IS EVIDENT FROM PAGE 2 OF TH E ASSESSMENT ORDER. THE ASSESSEE WAS ASKED TO JUSTIFY THE FREIGH T PAYMENT. IN RESPONSE, THE ASSESSEE DULY PRODUCED THE BOOKS OF A CCOUNTS CONSISTING OF CASH BOOK AND LEDGER AND THE SAME WER E EXAMINED WITH RESPECT TO BILLS AND VOUCHERS. ON VERIFICATION OF THE EXPENSES OF RS.2,60,76,076/-, IT WAS OPINED BY THE ASSESSING OF FICER THAT THE EXPENSES HAVE NOT BEEN BOOKED PROPERLY AND THERE IS A DEFAULT OF NON-DEDUCTION OF TDS ON THE AMOUNT PAID AS FREIGHT CHARGES, HIRED DURING THE COURSE OF THE BUSINESS, TO THE OTHER TRU CK OWNERS. THUS, THE AMOUNT OF RS.2,60,76,076/- WAS ADDED TO THE TOT AL INCOME OF THE ASSESSEE U/S 40(A)(IA) OF THE ACT. 2.2 ON APPEAL, THE LD. CIT(A) EXAMINED THE CLAIM OF THE ASSESSEE AND CONCLUDED AS UNDER: 3.3 IN ORDER TO EXAMINE THE VERACITY OF THE APPELL ANT CLAIM, THE BOOKS OF ACCOUNT AND ASSESSMENT RECORD WERE EXAMINED DURING THE APPELLATE PROCEEDINGS. IT IS FOUND THAT THE APPELLANT OWNS 31 TRUCKS THROUGH WHICH THE TRANSPORTATION OF FURNACE OIL AND BITUMEN COMPOUND IS DONE. THE APPELLANT IS MAINTAINING RECEIPT EXPENDITURE ACCOUNT IN RESPECT OF ALL OF TH E 31 5 TRUCKS. THE REGISTRATION NUMBERS OF THESE TANKERS A RE DESCRIBED IN P&L ACCOUNT AND BALANCE SHEET. THE EXPENSES INCURRED ON OPERATION OF THESE TANKERS ARE DULY RECORDED IN BOOKS OF ACCOUNTS. ON EXAMINATION OF ACCOUNTS IT IS ALSO FOUND THAT THE APPELLANT HAS HI RED OTHER TRANSPORTERS TANKERS ONLY FOR FEW TRIPS ON WH ICH TOTAL FREIGHT OF RS.4,28,846/- HAS BEEN PAID FOR HI RING 10 TANKERS AS DESCRIBED IN THE SCHEDULE GIVEN. IT I S CLEAR THAT THE APPELLANT HAD MADE FREIGHT PAYMENT O F ONLY RS.4,28,846/-. THE BALANCE AMOUNT OF EXPENDITURE IS INCURRED FOR OPERATION OF APPELLANT S OWN TANKERS. 3.4 THE APPELLANT HAD PAID TOTAL FREIGHT OF RS.4,28,846/- FOR TEN TANKERS HIRED. THE TDS HAD BE EN PROPERLY DEDUCTED IN CASE OF ONLY ONE TANKER NO. MP04F8346. IN RESPECT OF THIS TANKER TOTAL FREIGHT PAID IS RS.1,99,275/-. IN RESPECT OF 2 TANKERS TDS IS DEDUCTED SHORT OF THE PROVISION FOR DEDUCTION. IN RESPECT OF BALANCE 7 TANKERS NO TDS IS DEDUCTED. TH E APPELLANT HAS CLAIMED THAT NO TDS WAS DEDUCTIBLE SINCE THE PAYMENT IS BELOW RS.50,000/-. THIS CLAIM IS NOT PLAUSIBLE FOR THE REASON THAT IT IS NOT CLEAR W HETHER THE PAYMENT IS MADE TO 7 DIFFERENT OWNERS OR LESSER NUMBER OF THEM. THE APPELLANT HAS ALSO NOT SUBMITTE D ANY EVIDENCE IN SUPPORT OF CLAIM THAT THE TANKERS H IRED WERE OWNED BY SUB-CONTRACTORS OWNING NOT MORE THAN 2 GOODS CARRIAGE. IN VIEW OF THE ABOVE IT IS HELD T HAT THE FREIGHT PAYMENT DONE BY THE APPELLANT WAS SUBJE CT TO TDS U/S 194C. THE APPELLANT HAD DEDUCTED TDS IN ACCORDANCE WITH LAW ONLY IN RESPECT OF FREIGHT PAYM ENT OF RS.1,99,275/-. THE TDS WAS NOT DEDUCTED IN ACCORDANCE WITH SECTION 194C IN RESPECT OF FREIGHT PAYMENT OF RS.2,29,571/- HENCE THE SAME AMOUNT IS DISALLOWABLE U/S 40 A (IA). IN VIEW OF THE ABOVE TH E DISALLOWANCE U/S 40 A (IA) IS REDUCED FROM RS.2,60,76,076/- TO RS.2,29,571/-. 2.3 IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER , CONCLUSION DRAWN IN THE IMPUGNED ORDER AND THE ASSERTION MADE BY THE LD. RESPECTIVE COUNSEL ARE KEPT IN JUXTAPOSITION, IT IS OOZING OUT THAT THE 6 NECESSARY DETAILS WERE DULY FILED BY THE ASSESSEE A S HAS BEEN MENTIONED IN THE ASSESSMENT ORDER ITSELF. THE SUM O F RS.2,60,76,076/- WAS DISALLOWED BY THE ASSESSING OF FICER ON THE PRESUMPTION THAT IT IS FREIGHT PAYMENT TO OUTSIDE P ARTIES WHEREAS THE CLAIM OF THE ASSESSEE IS THAT ONLY A SUM OF RS. 4,28,846/- WAS PAID TOWARDS PAYMENT OF TRUCK FREIGHT TO OUTSIDE PA RTIES. THE DETAILS OF WHICH HAVE BEEN DULY CONSIDERED/REPRODUCED AT PA GES 2 & 3 OF THE IMPUGNED ORDER ALONG WITH TANKER NO., AMOUNT PA ID OR CREDITED, POSITION OF DEDUCTION OF TDS ALONG WITH REMARKS. WE FIND THAT TDS OF RS.2,679/- HAS BEEN DULY DEDUCTED ON THE PAYMENT OF RS.4,28,846/-, WHEREVER IT WAS REQUIRED TO BE DEDUC TED. THE LD. CIT(A) DULY EXAMINED THE LEDGER ACCOUNTS IN THE BOO KS OF THE ASSESSEE AND THERE IS UNCONTROVERTED FINDING THAT T HE ASSESSEE HAS DULY DEDUCTED TDS IN THE CASES WHERE SUCH LIABILITY AROSE. EVEN THERE IS OBSERVATION THAT THE FACTUM OF PAYMENT OF FREIGHT TO OUTSIDE PARTIES WAS DULY EXPLAINED AND BROUGHT TO THE NOTIC E OF THE ASSESSING OFFICER DURING REASSESSMENT PROCEEDINGS. THIS FACTUAL FINDING WAS NOT CONTROVERTED BY THE REVENUE. THE AS SESSEE ADOPTED COST/PROFIT ALLOCATION SYSTEM TO ASCERTAIN THE PR OFITABILITY OF THE INDIVIDUAL TRUCK/TANKER, AS PER WHICH, TOTAL FREIGH T RECEIPTS ARE 7 CREDITED TO THE ACCOUNT NAMES AS FREIGHT AND COMMI SSION. SUCH ACCOUNT WAS DULY FILED BY THE ASSESSEE BEFORE THE A UTHORITIES. IN THE IMPUGNED ORDER, SUCH RECEIPTS AND EXPENSES HAVE BEE N TABULATED AT PAGES 4 & 5. UNCONTROVERTEDLY, THE ASSESSEE MADE PA YMENT OF ONLY RS.4,28,846/- TO OUTSIDE PARTIES IN THE FORM OF FRE IGHT PAYMENT ON WHICH THE TAX HAS DULY BEEN DEDUCTED AT SOURCE. THE REFORE, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE UNCONTROVERT ED FINDING RECORDED IN THE IMPUGNED ORDER. IT IS UPHELD. THUS, APPEAL O F THE REVENUE IS HAVING NO MERIT, CONSEQUENTLY, DISMISSED. 3. THE ASSESSEE IN ITS CROSS-OBJECTION HAS CHALLENG ED UPHOLDING THE ACTION U/S 148 OF THE ACT ON THE PLEA THAT THE ASSESSING OFFICER REOPENED THE CASE ON THE BASIS OF DEPARTMENTAL AUDI T. CONSIDERING THE TOTALITY OF FACTS AVAILABLE ON RECORD, AFTER IN SERTION OF EXPLANATION 3 TO SEC. 147 OF THE ACT BY THE FINANCE (NO.2) ACT, 2009, W.E.F. 1.4.1989, THE ASSESSING OFFICER HAS WI DE POWERS AS THE PROCEEDINGS U/S 147 OF THE ACT ARE FOR THE BENEFIT OF THE REVENUE AND ARE AIMED AT PROTECTING THE ESCAPED INCOME. A DMITTEDLY, THE POWERS ARE NOT UNBRIDLED ALSO. THE FACTS CLEARLY SU GGEST THAT THE ASSESSING OFFICER WAS WITHIN HIS JURISDICTION TO TA KE RECOURSE U/S 8 147/148 OF THE ACT AND LD. CIT(A) WAS QUITE JUSTIFI ED TO UPHOLD THE SAME. THEREFORE, THE CROSS-OBJECTION OF THE ASSESSE E IS HAVING NO MERIT, CONSEQUENTLY, DISMISSED. FINALLY, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS- OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. RESPECTIVE COUNSEL FROM BOTH SIDES AT THE CO NCLUSION OF THE HEARING ON 16 TH JANUARY, 2013. SD/- SD/- (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH JANUARY, 2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE !VYS!