VISHAL TEMPO CARRIERS, MUMBAI V. ITO WD 3(4), THANE

ITA 4724/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71999 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 30-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 16-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJUKTA CHOW DHURY; P K PARIDA
• Keywords: Search and seizure; Condonation of delay
• Section: 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI BEFORE SHRI I.P.BANSAL & SHRI D.KARUNAKARA RAO, AM ITA NO. 4724/ MUM/201 2 ( ASSESSMENT YEAR :200 8 - 200 9 ) M/S VISHAL TEMPO CARRIERS, MR. VIRENDRA CHOUDHARY, C/O BALBIRSHINGH CHOUDHARY, X - 7, LANE - 1, SECTOR - 9, CBD, BELAPUR - 400 614 VS. ITO, WARD 3(4), THANE PAN/GIR NO. : A A E FV 4033 C ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. P.K.PARIDA & SMT . SANJUKTA CHOWDHURY /REVENUE BY : MR . SANJEEV JAIN DATE OF HEARING : 30 TH DEC EMBER , 201 3 DATE OF PRONOUNCEMENT : 30 TH DECEMBER, 2013 O R D E R PER I.P.BANSAL ( J .M.) : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19 - 12 - 2011, PASSED BY THE LEARNED CIT(A) - I , THANE FOR THE ASSESSME NT YEAR 200 8 - 200 9 . 2 . THE ASSESSEE IN ITS APPEAL HAS RAISED THE FOLLOWING GROUNDS : - 1. DISALLOWANCE U/S. 40(A)(IA) R.W.S. 194C - RS. 1,32,07,225/ - A) THE ID. CIT(A) ERRED IN HOLDING THAT THE APPELLANT IS LIABLE TO DEDUCT TDS U/S.194C AND ON ITS FAILU RE, IT HAD FALLEN INTO THE MISCHIEF OF SEC. 40(A)(IA) FOR THE DISALLOWANCE OF ITS ALLEGED PAYMENTS TO LORRIWALAS WITHOUT APPRECIATING THAT THERE WAS NO CONTRACT BETWEEN THE APPELLANT AND THE TRUCK DRIVERS AND AS THE APPELLANT HAD EARNED ONLY COMMISSION AS AN INTERMEDIARY, THE DISALLOWANCE U/S. 40(A)(IA) R.W.S. 194C IS UNCALLED FOR AND THEREFORE, THE SAME MAY BE DELETED. ITA NO. 4724 /201 2 2 B) THE ID. CIT(A) FAILED TO APPRECIATE THAT IN THE EVENT THERE IS NOTHING REMAINING PAYABLE AT THE END OF THE YEAR, THE PROVISION OF SEC . 40(A)(IA) IS NOT ATTRACTED AND THE DISALLOWANCE U/S. 40(A)(IA) R.W.S. 194C IN UNCALLED FOR AND THE SAME MAY BE DELETED IN VIEW OF THE I TAT SPECIAL BENCH DECISION OF M/ S. MERILYN SHIPPING & TRANSPORTS. C) THE ID CIT (A) OUGHT TO HAVE APPRECIATED THAT T HE APPELLANT WAS NEITHER A SUB- CONTRACTOR NOR IT HAD MADE ANY PAYMENTS BY VIRTUE OF ANY CONTRACT TO ANY FIXED LORRY DRIVERS; HENCE THE PROVISION OF SEC. 194C IS CLEARLY NOT ATTRACTED TO IT. THE DISALLOWANCE MAY BE DELETED. D) WITHOUT PREJUDICE TO ABOVE , THE PROVISION OF CONTRACT OR SUB - CONTRACT STIPULATES THE PRESENCE OF OBLIGATION SUCH AS SAFE ARRIVAL OF GOODS IN ITS DESTINATION, INSURANCE, CLAIM OF DAMAGES DUE TO LOSS, THEFT OR FIRE, ETC; AND AS THE APPELLANT HAD NOT UNDERTAKEN ANY OBLIGATION I RESPON SIBILITY, THERE EXISTS NO CONTRACT WITHIN THE MEANING OF SEC.194C; THEREFORE, THE DISALLOWANCE OF CLAIM OF FREIGHT EXPENSES U/S. 40(A)(IA) MAY BE DELETED. 2. LEVY OF PENAL INTERESTS THE APPELLANT, ON MERITS, DENIES ITS LIABILITY TO PENAL INTEREST. 3 . BEFORE PROCEEDING TO DECIDE THE PRESENT APPEAL, IT MAY BE MENTIONED THAT THE APPEAL IS FILED BELATEDLY BY 105 DAYS. AN APPLICATION FOR CONDONATION OF DELAY HAS BEEN FILED, WHICH IS ALSO SUPPORTED BY AN AFFIDAVIT BY SH R I VIRENDRA KUMAR CHOUDHARY, WHO IS ONE OF THE PARTNER OF THE ASSESSEE FIRM. 4 . ON THE ISSUE OF CONDONATION OF DELAY, IT IS THE CASE OF THE ASSESSEE THAT BUSINESS OF PARTNERSHIP FIRM WAS CLOSED SINCE 9 TH APRIL, 2009. THE ASSESSEE FOR ITS TAXATION MATTERS WAS COMPLETELY RELYING UPON THE INCO ME TAX PRACTITIONER - CUM - CONSULTANT, SHRI D.T.UDESHI, WHO HAD COLLECTED THE IMPUGNED ORDER OF CIT(A) FROM HIS OFFICE. IT IS ALSO THE CASE OF THE ASSESSEE THAT THE ITP TO WHOM THIS TASK WAS ENTRUSTED WAS SUFFERING FROM INDIFFERENT HEALTH ON ACCOUNT OF CUTTIN G OF ITA NO. 4724 /201 2 3 FOOT FINGER AS HE WAS A CHRONIC DIABETIC. HE DID NOT INFORM THE ASSESSEE REGARDING COLLECTION OF THE ORDER FROM THE OFFICE OF THE CIT(A) AND WHEN THE PARTNER OF THE ASSESSEE FIRM MET HIM ON 4 TH JUNE, 2012, THE ORDER WAS HANDED OVER TO THE PARTNER AND AFTER RECEIPT OF THE SUCH ORDER, APPEAL WAS FILED BEFORE THE TRIBUNAL ON 16 TH JULY, 2012. 5. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND AFTER CONSIDERING THE CONTENTS OF THE APPLICATION FILED FOR CONDONATION OF DELAY, WHICH IS SUPPORTED BY AN AFFID AVIT, WE CONDONE THE DELAY AND PROCEED TO DECIDE THE PRESENT APPEAL . 6. ON THE APPEAL, AT THE OUTSET, IT WAS POINTED OUT BY THE LEARNED AR THAT THIS ISSUE WAS RAISED BY THE AO IN EARLIER YEAR ALSO I.E. FOR ASSESSMENT YEAR 2007 - 08. THE MATTER WENT BEFORE T HE TRIBUNAL AND THE TRIBUNAL HAS DECIDED THE SIMILAR ISSUE VIDE ITS ORDER DATED 27 - 6 - 2012 IN ITA NO.703/MUM/2012. COPY OF SUCH ORDER IS FILED AT PAGES 11 TO 16 OF THE PAPER BOOK. IT WAS POINTED OUT THAT THERE ARE VARIOUS ASPECTS TO BE EXAMINED BEFORE UPHOL DING OF THE DISALLOWANCE AND THE TRIBUNAL AFTER CONSIDERING VARIOUS SUBMISSIONS OF THE ASSESSEE VIDE PARA 7 OF THE AFOREMENTIONED ORDER, HAD REMITTED BACK THE MATTER TO THE FILE OF THE AO WITH THE FOLLOWING OBSERVATIONS : - 8. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE FACTS AS PLACED ON RECORD. ASSESSEE HAS FILED PROFIT & LOSS A/ C SHOWING LORRY FREIGHT RECEIPTS AT RS.79,71,542/ - AND LORRY CARTAGE PAID AT RS. 74,22,592/ - SHOWING NET REVENUE OF RS.5,48,950/ - . HOWEVER, IT CLAIMED TDS ON A LARGER AMOUNT AND TOTAL FREIGHTS AS PER THE REGISTER AGGREGATES TO RS.1,72,39,660/ - . THERE IS NO FINDING EITHER BY AO OR BY THE CIT (A) ABOUT THE EXACT NATURE OF ASSESSEE'S BUSINESS. AO CONSIDERED THE ENTIRE FREIGHT RECEIPTS AS THAT OF ASSESSEE'S AND REJECTED THE BOOKS OF ACCOUNT AND BROUGHT TO TAX ITA NO. 4724 /201 2 4 THE GROSS AMOUNT WITHOUT ALLOWING LORRY FREIGHT PAID. THE REASON FOR DISALLOWING THE FREIGHT PAYMENT WAS THAT ASSESSEE WAS NOT ABLE TO FURNISH THE DETAILS OF PAYMENTS. THE CIT (A) WHILE UPHOLDING THE RECEIPT WAS OF THE VIEW THAT ASSESSEE IS A CONTRACTOR AND SINCE HE HAS ENTERED INTO SUB CONTRACT BUSINESS WITH THE TRUCK OWNERS AND ALSO PAID AMOUNTS EXCEEDING RS.50,000/ - IN AN YEAR CONFIRMED THE AMOUNT TO THE TUNE OF RS.1,16,38,870/ - . WE ARE AFRAID WE CANNOT UPHOLD THE FINDINGS OF T HE CI T (A) FOR THE REASON THAT THERE IS NO EVIDENCE ON RECORD THAT ASSESSEE IS ENTERING INTO A CONTRACT WITH ANY TRUCK OWNER WHILE ARRANGING THE TRUCKS FOR TRANSPORTATION OF GOODS.THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. POOMPUHAR SHIPPING COR PORATION LTD. (2006) 282 ITR 3 (MAD) HAS HELD THAT MERE INTRODUCTION OF TRUCK DRIVERS TO TRANSPORTERS WOULD NOT AMOUNT TO A CONTRACT FOR CARRYING OUT ANY WORK OF TRANSPORTERS AS ADMISSIBLE IN SECTION 194C. HOWEVER, THESE PRINCIPLES CAN ONLY BE APPLIED, IF IT IS ESTABLISHED THAT ASSESSEE IS NOT IN THE BUSINESS OF TRANSPORTATION. THE DETAILS FILED IN THE FORM OF PAPER BOOK, PARTICULARLY THE RECEIPTS RECEIVED DURING THE YEAR AND THE AMOUNTS EXPENDED WHICH SHOWS THAT ASSESSEE HAS EARNED TOTAL FREIGHT OF RS.1,72 ,39,660/ - ON WHICH THERE IS NO DISPUTE. HOWEVER, IN THE WRITTEN SUBMISSIONS AS WELL AS IN THE BOOKS OF ACCOUNT, THE NET RECEIPTS AS COMMISSION WAS SHOWN AT RS. 5,48,950/ - WHEREAS IN THE STATEMENT FILED IN THE PAPER BOOK THE NET COMMISSION WAS SHOWN AT RS. 7 ,95,000/ - . THERE WAS CLAIM TOWARDS LORRY FREIGHT AT RS. 1,66,90,710/ - AFTER EXCLUDING HAMALI AND MUNSIAN (?) THE NET AMOUNT WAS SHOWN AT RS. 5,48,950 / - . HOWEVER, THERE IS NO RECONCILIATION WITH REFERENCE TO THE TOTAL RECEIPTS AS PER THE FREIGHT REGISTER AND WHAT WAS SHOWN IN THE PROFIT & LOSS A/C. SINCE AO DISALLOWED THE ENTIRE EXPENDITURE AND THE CIT(A) WITHOUT EXAMINING WHETHER PROVISIONS OF SECTION 194C ARE REALLY APPLICABLE TO ASSESSEE GAVE PARTIAL RELIEF HOLDING THAT THERE ARE PAYMENTS TO SOME TRUCK OWNE RS EXCEEDING RS. 50,000/ - . WE ARE UNABLE TO APPRECIATE EITHER OF THESE IN THE ABSENCE OF ANY EVIDENCE ABOUT THE THERE IS NO RECONCILIATION WITH REFERENCE TO THE TOTAL RECEIPTS AS PER EXACT NATURE OF ASSESSEE'S BUSINESS. THE CONTENTION THAT ASSESSEE IS NOT D OING ANY TRANSPORT BUSINESS IN ITS NAME HAS TO BE EXAMINED AS THERE IS DEDUCTION OF TAX: BY THE TRANSPORTERS. ASESSEE'S GROSS RECEIPTS ARE BASED ON BOTH TDS CERTIFICATES AS WELL AS FREIGHT REGISTER. THEREFORE, THE EXACT NATURE OF BUSINESS UNDERTAKEN BY AS SESSEE HAS TO BE VERIFIED. FU RTHER WHETHER MERE ARRANGEMENT OF TRUCKS RESULTED IN ANY CONTRACT IS TO BE EXAMINED AS AO HAS NOT INVOKED THE PROVISIONS OF SECTION 194C NOR DISA LLOWED AMOUNTS U/S. 40(A)(IA). ASSESSEE IS ALSO CONTENDING THAT THERE IS NO OUTSTAN DING AMOUNT PAYABLE AS ON 31/03/2007, SO THE SPECIAL BENCH DECISION IN THE CASE OF M/ S. MERILYN SHIPPING & TRANSPORTS VS. AC I T (SUPRA) WILL APPLY AS THERE ARE NO OUTSTANDING PAYMENT SO AS TO COME UNDER THE PROVISIONS OF SECTION 40(A)(IA). SINCE THESE ASPE CTS ARE NOT EXAMINED BY AO IN ITS CORRECT PERSPECTIVE, WE ARE OF THE OPINION THAT THE APPEAL CANNOT BE DECIDED ON LEGAL PRINCIPLES ALONE WITHOUT EXAMINING THE FACTS. FOR THIS PURPOSE, WE SET ASIDE THE ASSESSMENT TO THE FILE OF AO TO EXAMINE THE ABOVE ISSUE S AND COMPLETE THE ASSESSMENT ACCORDINGLY. AO IS FREE TO ENQUIRE ALL ASPECTS AND ASSESSEE IS DIRECTED TO FURNISH NECESSARY EVIDENCES IN ITA NO. 4724 /201 2 5 SUPPORT OF ITS CLAIM. THE APPEAL IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 7 . IT WAS SUBMI TTED BY THE LEARNED AR THAT THE APPEAL FILED BY THE ASSESSEE SHOULD BE REMITTED BACK TO THE FILE OF THE AO WITH SIMILAR DIRECTIONS. HE FURTHER REFERRED TO THE DECISION DATED 9 TH JU LY, 2013 , RENDERED BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT, MUZAFFARNAGAR VS. M/S VECTOR SHIPPING SERVICES (P) LIMITED, MUZAFFARNAGAR, IN WHICH HONBLE HIGH COURT HAS UPHELD THE VIEW POINT TAKEN BY THE SPECIAL BENCH DECISION IN THE CASE OF M/S MERILYN SHIPPING AND TRANSPORT LIMITED, 136 ITD 23 (SB) AND HAS HELD THAT FOR MAKING DISALLOWANCE ON ACCOUNT OF NON DEPOSIT OF TDS, THE AMOUNT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAID BY THE END OF THE YEAR. HE HAS SUBMITTED BEFORE US COPY OF THE SAID DECISION AND A COPY WAS ALSO GIVEN TO THE LEARNED DR. 8. PER CONTRA , IT WAS SUBMITTED BY THE LEARNED DR THAT IF THE MATTER IS BEING RESTORED BACK TO THE FILE OF THE AO, THE ISSUE SHOULD NOT BE LIMITED TO THE CONSIDERATION OF DECISION OF SPECIAL BEN CH BY THE AO BUT FOLLOWING DECISION IS ALSO REQUIRED TO BE TAKEN INTO CONSIDERATION BY THE AO : - I) (2012) 344 ITR 608 (KARNATAKA) SMT. J. RAMA VS. CIT II) (2013) 357 ITR 312 (GUJ) (CIT VS. SIKANDARKHAN N. TUNVAR & ORS. & III) (2013) 33 TAXMANN.COM 250(CAL) (CIT VS. CRESCENT EXPORT SYNDICATE). ITA NO. 4724 /201 2 6 9. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE. THE ISSUE RAISED BY THE ASSESSEE IN THE PRESENT CASE IS IDENTICAL TO THE ISSUE RAISED BY THE ASSESSEE BEFORE TRIBUNAL IN RESPECT OF ASSESSMENT YEAR 2007 - 08. THE CONCLUSIO N OF THE ITAT ON THE ISSUE HAS ALREADY BEEN REPRODUCED IN THE ABOVE PART OF THE ORDER. HENCE, RESPECTFULLY FOLLOWING THE AFOREMENTIONED ORDER, WE PASS SIMILAR ORDER WITH THE MODIFICATION THAT THE AO MAY ALSO TAKE INTO CONSIDERATION OTHER DECISIONS WHICH AR E AVAILABLE ON TH IS ISSUE. AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING, THE AO WILL READJUDICATE THE PRESENT ISSUE AS PER PROVISIONS OF LAW. WE DIRECT ACCORDINGLY . 10 . NO OTHER ISSUE WAS ARGUED BEFORE US, EXCEPT REGARDING DISALLOWANCE MA DE UNDER SECTION 40(A)(IA) READ WITH SECTION 194C . 11 . IN THE RESULT, FOR STATISTICAL PURPOSES, APPEAL FILED BY THE ASSESSEE IS CONSIDERED TO BE ALLOWED IN THE MANNER AS AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DEC . 201 3 . 30 TH DEC 201 3 SD/ - SD/ - ( ) ( D.KARUNAKARA RAO ) ( ) ( I.P.BANSAL ) / ACCOUNTANT MEMBER / JUDICIALMEMBER MUMBAI ; DATED 30/12/ 2013 /PKM , PS ITA NO. 4724 /201 2 7 COPY OF THE ORDE R FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//