The ACIT, 4(1), Indore V. Shri Durgesh Shukla, Indore

ITA 488/IND/2010

• Counselvise Citation: 48822714 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H P VERMA; GIRISH AGARWAL S
• Assessee Lawyers: ARUN DEWAN
• Keywords: Question of law; Wrong claim
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M. PAN NO. : AUMPS6123J I.T.A.NO. 383 / IND /20 10 A.Y. : 2007 - 08 SHRI DURGESH SHUKLA, ACIT, S/O 94, BANGANGA MAIN ROAD, VS CIRCLE 4 (1), BANGANGA, INDORE. INDORE. APPELLANT RESPONDENT PAN NO. : AUMPS6123J I.T.A.NO. 488 / IND /20 10 A.Y. : 2007 - 08 ACIT, SHRI DURGESH SHUKLA, CIRCLE 4(1), VS S/O 94, BANGANGA MAIN ROAD, INDORE. BANGANGA, INDORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI H.P.VERMA AND SHRI GIRISH AGARWAL, ADVOCATES RESPONDENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 13.09.2011 DATE OF PRONOUNCEMENT : 10 .10.2011 - : 2 : - 2 O R D E R PER R. C. SHARMA, A.M. TH ESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) DATED 27.3.2010 FOR THE ASSESSMENT YEAR 2007 - 08 IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) DATED 30 TH DECEMBER, 2009. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE FAC TS, IN BRIEF, ARE THAT THE ASSESSEE IS A TRANSPORT ER AND LABOUR CONTRACTOR WORKING FOR CENTRAL WARE HOUSING CORPORATION, INDORE, AND MAKSHI AND ALSO NAFED. ASSESSEE HAS DEBITED RS.2,26,74,229/ - AS TRANSPORTATION CHARGES IN THE PROFIT AND LOSS ACCOUNT. TH E AO FOUND THAT THE ASSESSEE HAS MADE VARIOUS PAYMENTS TO TRANSPORTERS OUTSOURCED BY IT. HOWEVER, NO TDS WAS DEDUCTED ON SUCH PAYMENT. THE AO VERIFIED BOOKS OF ACCOUNT AND ALSO THE BALANCE SHEET AND AUDIT REPORT THEREON. IN POINT NO. 7 OF THE SCHEDULE 7 OF THE NOTES ON ACCOUNT , IT WAS QUALIFIED BY THE AUDITOR THAT - : 3 : - 3 IN RESPECT OF PAYMENT MADE TOWARDS TRANSPORTATION CHARGES, IT HAS BEEN INFORMED TO US THAT THE INDIVIDUAL TRUCK OWNER TO WHOM PAYMENTS HAVE BEEN MADE TOWARDS TRANSPORTATION CHARGES DOES NOT O WN MORE THAN TWO TRUCKS AND ASSESSEE HAS RECEIVED DECLARATION IN FORM 15 - I FROM THE TRUCK OWNER FOR THE ABOVE PURPOSE, SO, LIABILITY TO DEDUCT TAX DEDUCT AT SOURCE (TDS) ON TRANSPORTATION CHARGES DOES NOT ARISES. 3. HOWEVER, ON FURTHER INQUIRY, THE AO FOU ND THAT THE ASSESSEE HAS NOT GOT ANY DECLARATION IN FORM 15 - I FROM THE TRUCK OWNERS. THE AO ALSO FOUND THAT AS PER BOOKS OF ACCOUNT, THE PAYMENTS WERE SHOWN TO HAVE MADE TO THE TRUCK OWNERS, BUT ON INQUIRY, IT WAS FOUND THAT THE RESPECTIVE NUMBER OF THE TR UCKS AS GIVEN BY THE ASSESSEE IS NOT CORRECT, THESE NUMBERS WERE PERTAINING TO SCOOTER, MOTOR CYCLE, CAR, MOPED ETC. ACCORDINGLY, PAYMENT ENTERED IN THE BOOKS ON ACCOUNT O N TRANSPORTATION CHARGES WAS FOUND TO BE BOGUS . IN THE RESULT, THE AO DISALLOWED A S UM OF RS. 36,84,383/ - FOR NON DEDUCTION OF TAX ON ACCOUNT OF TRANSPORTATION CHARGES DEBITED IN BOOKS - : 4 : - 4 OF ACCOUNT AND FOR WHICH THE ASSESSEE HAS ALSO NOT OBTAINED ANY DECLARATION FORM 15 - I. SIMILARLY, FOR THE PAYMENTS WHICH WERE FOUND TO BE BOGUS, A DISALLO WANCE OF RS. 19,52,460/ - WAS MADE. IN APPEAL FILED BEFORE THE CIT(A), THE LD. CIT(A) DELETED THE DISALLOWANCE OF RS. 36,84,384/ - BY OBSERVING THAT THERE WAS NO WRITTEN OR ORAL CONTRACT BETWEEN THE ASSESSEE WITH ANY OF THE TRUCK DRIVERS/OPERATORS/OWNERS , T H EREFORE, THE ASSESSEE WAS NOT UNDER OBLIGATION TO DEDUCT TAX U/S 194C(2) WITH RESPECT TO PAYMENT MADE ON TRANSPORTATION CHARGES . T HE LD. CIT(A) CALLED FOR A REMAND REPORT, WHEREIN IT WAS FOUND THAT SOME OF THE VEHICLES, WHICH WERE FOUND BY THE AO AS SCOOT ER, CAR, MOPED ETC. WAS NOT CORRECT. ACCORDINGLY, THE LD. CIT(A) DELETED THE DISALLOWANCE ON ACCOUNT OF BOGUS FREIGHT PAYMENT AFTER RETAINING AN ADDITION OF RS. 5 LAKHS. BOTH THE ASSESSEE & REVENUE ARE IN APPEAL BEFORE US. 4. IT WAS ARGUED BY THE LD. AUTHORIZ ED REPRESENTATIVE THAT THERE WAS NO WRITTEN OR ORAL CONTRACT BY THE ASSESSEE WITH THE TRANSPORT OPERATOR, THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE ON ACCOUNT OF NON - DEDUCTION OF TDS. WITH RESPECT TO THE DISALLOWANCE MADE FO R BOGUS - : 5 : - 5 PAYMENT DEBITED IN PROFIT AND LOSS ACCOUNT , IT WAS CONTENDED THAT THE LD. CIT(A) HAS CALLED FOR A REMAND REPORT WHEREIN IT WAS FOUND THAT THE AO WAS NOT FULLY CORRECT, THEREFORE, THE LD. CIT(A) HAS CORRECTLY DELETED THE DISALLOWANCE. HE FURTHER ARG UED THAT EVEN THE DISALLOWANCE OF RS. 5 LAKHS AS SUSTAINED BY CIT(A) WAS NOT JUSTIFIED AS THE ENTIRE PAYMENT WAS MADE BY THE ASSESSEE TO THE TRUCK OWNERS/DRIVERS AND NOT FOR ANY MOTOR CAR, MOPED, SCOOTER ETC. 5. ON THE OTHER HAND, THE LD. SENIOR D.R. SUBMITT ED THAT U/S 194C, THE ASSESSEE WAS REQUIRED TO DEDUCT TDS ON THE PAYMENT OF TRANSPORTATION MADE TO THE SUB - CONTRACTOR, BEING TRUCK OWNERS, DRIVES ETC. SINCE THE ASSESSEE FAILED TO DEDUCT TAX THEREON, THE AO WAS JUSTIFIED IN DISALLOWING THE PAYMENT U/S 40A( IA) READ WITH SECTION 194C OF THE ACT. WITH REGARD TO DISALLOWANCE ON ACCOUNT OF BOGUS PAYMENT DEBITED IN PROFIT AND LOSS ACCOUNT , HE RELIED ON THE ORDER OF THE AO. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW AND FOUND FROM RECORD THAT THE ASSESSEE IS A TRANSPORT AND LABOUR CONTRACTOR WORKING FOR CENTRAL WAREHOUSING CORPORATION, - : 6 : - 6 INDORE, AND MAKSHI AND ALSO NAFED. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SHOWN TOTAL CONTRACT RECEIPT OF R S. 5,18,83,421/ - . OUT OF THIS CONTRACT RECEIPT, THE ASSESSEE HAS CLAIMED TRANSPORTATION CHARGES OF RS. 2,26,74,229/ - AND NET PROFIT OF RS. 33,07,114.50. DURING THE COURSE OF SCRUTINY ASSESSMENT, ON VERIFICATION OF BOOKS OF ACCOUNT, THE AO FOUND THAT THE A SSESSEE HAS NOT DEDUCTED TDS ON TRANSPORTATION CHARGES DEBITED IN PROFIT AND LOSS ACCOUNT . ON VERIFICATION OF BOOKS OF ACCOUNT AS WELL AS AUDIT REPORT, IT WAS FOUND THAT THE ASSESSEE HAS WRONGLY CLAIMED THAT IT HAS OBTAINED DECLARATION FORM 15 - I FROM THE T RUCK OWNERS, EVEN THE AUDITOR HAS GIVEN SPECIFIC NOTES ON ACCOUNT THAT THE ASSESSEE H AS OBTAINED DECLARATION FORM NO.15I FROM THE TRUCK OWNERS. THE AO ALSO FOUND THAT THE ASSESSEE HAS ENTERED BOGUS PAYMENT IN THE BOOKS OF ACCOUNT ON ACCOUNT OF TRANSPORTATI ON CHARGES, WHICH WAS SHOWN AS PAID TO THE TRUCK OWNERS, BUT AS PER THE VEHICLE NUMBER PROVIDED BY THE ASSESSEE, IT WAS FOUND THAT MOST OF THE NUMBERS BELONG TO MOPED, CAR, SCOOTER ETC. HOWEVER, THE LD. CIT(A) HAS DELETED THE DISALLOWANCE OF RS. 36,84,384/ - BY OBSERVING THAT THERE WAS NO WRITTEN OR ORAL CONTRACT BETWEEN - : 7 : - 7 THE ASSESSEE AND ANY OF THE TRUCK OWNERS IN RESPECT OF THE GOODS TRANSPORTED BY IT, ACCORDINGLY, THE AO WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 194C(2) OF THE INCOME - TAX ACT, 1961. WE DO NOT FIND ANY JUSTIFICATION IN THIS PART OF THE CIT(A) S ORDER, IN SO FAR AS THE GOODS TRANSPORTED BY THE TRANSPORTER AND PAYMENT MADE BY THE ASSESSEE FOR THE SAME ITSELF AMOUNTS TO A CONTRACT. IT IS NOT NECESSARY THAT SUCH CONTRACT SHOULD ALSO BE IN WRITING. THE WORK OF TRANSPORTER IN CARRYING THE GOODS AND ACT OF THE ASSESSEE IN MAKING PAYMENT FOR SUCH TRANSPORTATION OF GOODS ITSELF AMOUNTS TO A CONTRACT ON WHICH THE ASSESSEE WAS LIABLE TO DEDUCT TAX U/S 194C(2) WHENEVER THE PAYMENT EXCEEDS TH E LIMITS PRESCRIBED IN THE ACT . THE CASE LAWS RELIED ON BY THE LD. CIT(A) AND CITED BY THE LD. AUTHORIZED REPRESENTATIVE DURING THE COURSE OF HEARING BEFORE US, ARE MISCONCEIVED , IN SO FAR AS IN THE CASE OF UNITED RICE LAND LIMITED, 217 CTR 332, THE PUNJAB & HARYANA HIGH COURT HAVE MERELY AFFIRMED THE FINDING OF THE TRIBUNAL TO THE EFFECT THAT IN NO CASE SINGLE PAYMENT TO ONE TRUCK OWNER/OPERATOR WAS EXCEEDING RS. 20,000/ - . THE PROVISIONS OF SECTION 194C IS APPLICABLE ONLY WHERE PAYMENT TO ONE TRUCK - : 8 : - 8 OWNER/ OPERATOR EXCEEDS RS. 20,000/ - . ONCE IT IS FOUND BY TRIBUNAL THAT INDIVIDUAL PAYMENT WAS BELOW RS. 20,000/ - , THERE IS NO QUESTION OF APPLICA TION OF PROVISIONS OF SECTION 194C. HOWEVER, IN THE INSTANT CASE BEFORE US, IT WAS FOUND BY THE ASSESSING OFFICER THA T THE PAYMENT WAS MADE TO INDIVIDUAL TRANSPORTERS EXCEEDED THE PRESCRIBED LIMIT PREVAILING DURING THE YEAR UNDER CONSIDERATION, WHICH WAS RS. 50,000/ - AND IN RESPECT OF SUCH PAYMENT ONLY HE HAS INVOKED PROVISIONS OF SECTION 40A(IA) READ WITH SECTION 194 C (2 ) OF THE INCOME - TAX ACT, 1961. 7. SIMILARLY, HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BHAGWATI STEELS , 241 CTR 480, DISMISSED THE REVENUE S APPEAL ON THE PLEA THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL, WHEREIN IT WAS FOUND THAT NONE OF THE INDIVIDUAL PAYMENTS EXCEEDED RS. 20,000/ - AND THE PAYMENTS WERE MADE ON THE BASIS OF INDIVIDUAL GOODS RECEIPTS ISSUED BY THE TRUCK OWNERS FOR EACH TRIP SEPARATELY. 8. D ISALLOWANCE WAS ALSO MADE BY THE ASSESSING OFFI CER ON ACCOUNT OF BOG US PAYMENT DEBITED IN BOOKS OF ACCOUNT. IT IS VERY MUCH CLEAR FROM THE ORDER OF THE AO THAT VARIOUS DEFECTS - : 9 : - 9 WERE FOUND IN THE BOOKS OF ACCOUNT WITH REGARD TO THE PAYMENT ENTERED ON ACCOUNT OF TRANSPORT ATION CHARGES, WHICH WERE F OUND TO BE BOGU S. SIMILARLY, EVEN THE A UDITORS REPORT ON THE BOOKS OF ACCOUNT TO THE EFFECT THAT THE ASSESSEE HAS OBTAINED DECLARATION FORM 15 - I WAS ALSO FOUND TO BE WRONG. THUS, WE FOUND THAT IN TOTALITY THE BOOKS OF ACCOUNT VIS - - VIS AUDIT REPORT OF THE ASSESSEE WAS NOT CORRECT, T HEREFORE, BOOK RESULT SHOWN BY THE ASSESSEE DESERVES TO BE REJECTED. WE ARE , THEREFORE, INCLINE D TO SET ASIDE THE ORDERS OF BOTH THE LOWER AUTHORITIES AND DIRECT THE AO TO REJECT THE BOOKS OF ACCOUNT KEEPING IN VIEW THE BOGUS PAYMENT ENTERED BY IT IN THE B OOKS AND ALSO WRONG CERTIFICATION GIVEN BY THE AUDITORS IN RESPECT OF CORRECTNESS OF BOOKS OF ACCOUNT AND WRONG CLAIM OF TRANSPORTATION EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT. TO MEET THE END OF JUSTICE, T HE AO IS DIRECTED TO APPLY 8 % (EIGHT PERCENT ) NET PROFIT RATE WITH RESPECT TO THE TOTAL CONTRACT RECEIPT OF RS. 5,18,83,431/ - SHOWN BY THE ASSESSEE AND TO RE - WORK OUT THE TOTAL INCOME. WE DIRECT ACCORDINGLY. - : 10 : - 10 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED WHEREAS THE APPEAL OF THE REVENUE IS ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 10 TH OCTOBER, 2011. S D/ - S D/ - (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10 TH OCTOBER, 2011 . CPU* 7 . 10