M/s Pai Transport Company., Belgaum V. Income Tax Officer Ward-2 (2), Belgaum

ITA 46/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93462 (ITAT-PANAJI)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 27-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEHBOOB ALI KHAN LD
• Assessee Lawyers: V K GURUNATHAN
• Keywords: Reasonable cause; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, HON'BLE ACCOUNTANT MEMBER ITA NOS. 46 & 248/PNJ/2014 : (A.YS 2007 - 08 & 2008 - 09) M/S. PAI TRANSPORT COMPANY P.B. ROAD, BELGAUM PAN : AAAFP9609G ( APPELLANT) VS. ITO, WARD - 2(2), BELGAUM (RESPONDENT) ASSESSEE BY : V.K. GURUNATHAN, ADV. REVENUE BY : MEHBOOB ALI KHAN, LD. DR DATE OF HEARING : 18/06/2015 DATE OF PRONOUNCEMENT : 18/06/2015 O R D E R PER GEORGE MATHAN : 1. ITA NO. 46/PNJ/2014 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), BELGAUM IN ITA NO. 489/BGM/2009 - 10 DT. 18.11.2013 FOR THE A.Y 2007 - 08 AND ITA NO. 248/PNJ/2014 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), BELGAUM IN ITA NO. 490/BGM/2009 - 10 DT. 22.5.2014 FOR THE A.Y 2008 - 09. SHRI V.K. GURUNATHAN, ADV. REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI MEHBOOB ALI KHAN, LD. DR REPRESENTED ON BEHALF OF THE REVENUE. 2. BOTH THE APPEALS ARE AGAINST THE CONFIRMATION OF LEVY OF PENALTY U/S 271B. AS BOTH THE APPEALS RELATE TO THE SAME ASSESSEE AND ARE ON IDENTICAL ISSUES, BOTH THE APPEALS ARE DISPOSED OFF BY THIS COMMON ORDER. 2 ITA NOS. 46 & 248/PNJ/2014 (A.YS 2007 - 08 & 2008 - 09) 3 . IT WAS SUBMITTED BY THE LD. AR THAT THE A SSESSEE IS A BOOKING AGENT FOR TRANSPORTATION OF GOODS. IT WAS THE SUBMISSION THAT THE ASSESSEE DOES NOT HAVE ANY LORRIES. IT WAS THE SUBMISSION THAT THE ASSESSEES GROSS RECEIPTS FOR THE YEAR 2007 - 08 WAS RS. 93,27,575/ - AND THE COMMISSION INCOME OF THE ASSESSEE WAS ONLY RS. 7,30,465/ - . FOR THE A.Y 2008 - 09, THE ASSESSEES GROSS RECEIPTS WAS RS.84,04,206/ - AND THE COMMISSION INCOME WAS RS. 7,76,283/ - . IT WAS THE SUBMISSION THAT THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT HAD ACCOUNTED ONLY THE COMMISSION. IT WAS THE SUBMISSION THAT THE TOTAL FREIGHT RECEIVED BY THE ASSESSEE WAS NEVER ACCOUNTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE BUT WAS MAINTAINED IN A SEPARATE ACCOUNT CALLED FREIGHT PAYABLE ACCOUNT SEPARATELY AND THE SAME WAS DIRECTLY PAID TO THE V ARIOUS TRUCK OPERATORS. IT WAS THE SUBMISSION THAT THE ASSESSEE WAS OF THE BONA FIDE BELIEF THAT AS THE ASSESSEES TURNOVER REPRESENTED ONLY THE COMMISSION AND THE SAME WAS BELOW THE PRESCRIBED LIMIT OF RS. 40 LACS, THE ASSESSEE HAD NOT GOT ITS BOOKS OF A CCOUNTS AUDITED. IT WAS THE SUBMISSION THAT THE AO HAD CONSIDERED THE FREIGHT PAYABLE ACCOUNT ALSO AND HAD TREATED THE ASSESSEE AS HAVING VIOLATED THE PROVISIONS OF SEC. 44AB AS THE TOTAL TURNOVER EXCEEDED RS. 40 LACS. IT WAS THE SUBMISSION THAT THAT T HE FREIGHT PAYABLE ACCOUNT DID NOT BELONG TO THE ASSESSEE INSOFAR AS THE ASSESSEE WAS EXCLUSIVELY A COMMISSION AGENT FOR TRANSPORTATION OF GOODS. IT WAS THE SUBMISSION THAT AS THE ASSESSEES TURNOVER DID NOT EXCEED RS. 40 LACS, PENALTY LEVIED U/S 271B, AND AS CONFIRMED BY THE LD. CIT(A), WAS LIABLE TO BE DELETED. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD CONSIDERED THE DECISION IN THE CASE OF MUKESH CHOKSI REPORTED IN 2011 - TIOL 234, ITAT MUMBAI, WHO WAS AN ACCOMMODATION ENTRY PROVIDER TO HOLD THAT T HE LEVY OF PENALTY ON THE ASSESSEE WAS CORRECT. IT WAS THE SUBMISSION THAT THE ASSESSEE IS NOT AN ACCOMMODATION ENTRY PROVIDER AND THE BUSINESS OF THE ASSESSEE WAS NOT IN ANY WAY CONNECTED 3 ITA NOS. 46 & 248/PNJ/2014 (A.YS 2007 - 08 & 2008 - 09) WITH ACCOMMODATION ENTRY PROVIDING. IT WAS THE FURTHER SUBMISSION THAT THE RELIANCE MADE BY THE LD. CIT(A) WAS ERRONEOUS. 4. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD. CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET, IT IS NOTICED THAT THE INCOME OF THE ASSESSEE IS BASICALLY FROM COMMISSION ON TRANSPORTATION. THE PENALTY LEVIED U/S 271B IS NOT A BLANKET PENALTY BUT IS SUBJECT TO THE CONTROL OF SEC. 273B. THUS, THE ASSESSEE DOES HAVE THE GROUND TO RAISE THE ISSUE OF REASONABLE CAUSE. THE ASSESSEE HAS EXPLAINED AND SHOWN WITH EVIDENCE THAT THE ASSESSEE IS ACCOUNTING ONLY THE COMMISSION AS ITS INCOME /TURNOVER IN ITS PROFIT & LOSS ACCOUNT. ADMITTEDLY, NO DEFECT IN ITS BOOKS OF ACCOUNTS HAVE BEEN FOUND TO SHOW THAT THE ASSESSEE HAS DONE ANY FRAUDULENT ACTIVITY EITHER. IT IS ALSO AN ACCEPTED FACT THAT THE FREIGHT PAYABLE ACCOUNT IS SEPARATELY MAINTAINED WHICH CONTAINS THE DETAILS OF THE FREIGHT PAYABLE WHICH IS RECEIVED BY THE ASSESSEE AND WHICH IS DISBURSED BY THE ASSESSEE. THIS BEING SO, THE CLAIM OF THE ASSESSEE THAT HE WAS UNDER REASONABLE AND BONA FIDE BELIEF THAT HIS TURNOVER DID NOT EXCEED RS. 40 LACS IS CLEARLY A BONA FIDE CLAIM ON WHICH NO PENALTY IS LEVIABLE U/S 271B. 6. COMING TO THE FINDING OF THE LD. CIT(A) THAT THE ASSESSEES CASE IS SIMILAR TO THE DECISION IN THE CASE OF MUKESH CHOKSI REFERRED TO SUPRA, WE FIND THAT, THAT WAS A CASE WHERE ACCOMMODATION ENTRIES WERE BEING PROVIDED. THE BUSINESS OF ACCOMMODATION ENTRY ITSELF REQUIRES FUNDS TO BE BROUGHT IN AND PLOUGHED OUT. CLEARLY, THAT WAS A CASE OF ABSOLUTE FRAUD ON THE REVENUE, WHICH UNDER THOSE CIRCUMSTANCES HAD BEEN HELD AGAINST THE ASSESSEE. IN THE PRESENT CASE, SUCH IS 4 ITA NOS. 46 & 248/PNJ/2014 (A.YS 2007 - 08 & 2008 - 09) NOT THE STATE - OF - THE - AFFAIRS. IN THE CIRCUMSTANCES, THE PENALTY LEVIED U/S 271B BY THE AO, AND AS CONFIRMED BY THE LD. CIT( A) STANDS DELETED. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/06/2015. S D / - (N.K. BILLAIYA) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 1 8 /06/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 5 ITA NOS. 46 & 248/PNJ/2014 (A.YS 2007 - 08 & 2008 - 09) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 18/06/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 1 9 /06/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 9 /06/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 1 9 /06/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 9 /06/2015 SR.PS 6. DATE OF PRONOUNCEMENT 18/06/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 1 9 /06/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER