M/s Radhakrishna Transport, Tadepallegudem V. The Commissioner of Income Tax, Rajahmundry

ITA 496/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6978 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-03-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 03-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Keywords: TDS; Set aside
• Section: 142(1); 40(a)(ia); 194C; 207; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.496/VIZAG/2009 ASSESSMENT YEAR : 2005-06 M/S. RADHAKRISHNA TRANSPORT, TADEPALLIGUDEM THE CIT, RAJAHMUNDRY (APPELLANT) VS. (RESPONDENT) PAN NO.AANFS 8700J APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI SUBRATA SARKAR, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT PASSED U/S 263 OF THE ACT SETTING ASIDE THE ORDER O F THE ASSESSING OFFICER WITH THE DIRECTION TO TAKE APPROPRIATE ACTION U/S 40(A)( IA) OF THE ACT IN RESPECT OF FREIGHT CHARGES PAYMENTS OF RS.4,45,75,260/- AND FI NANCIAL CHARGES PAYMENTS OF RS.4,11,088/-. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS PLACED ON RE CORD. THE FACTS RELATING TO THE IMPUGNED ISSUES BORNE OUT FROM THE RECORD AR E THAT ON SCRUTINY THE CIT NOTICED THAT THE CLAIM OF EXPENDITURE OF RS.4,4 5,75,260/- TOWARDS LORRY FREIGHT CHARGES OF RS.3,24,367/- TOWARDS INTEREST P AYMENTS AND OF RS.4,11,088/- TOWARDS FINANCIAL CHARGES WERE OMITTE D TO BE CONSIDERED FOR DISALLOWANCE U/S 40(A)(IA) OF THE ACT AND FOR FAILU RE ON THE PART OF THE ASSESSEE TO DEDUCT AT SOURCE U/S 194A AND 194C OF T HE ACT RESPECTIVELY THE CIT OBSERVED THAT THE ASSESSING OFFICERS ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CI T ACCORDINGLY ISSUED SHOW CAUSE NOTICE FOR INITIATING THE PROCEEDINGS U/S 263 OF THE ACT. IN RESPONSE THERETO, THE ASSESSEE FILED THIS WRITTEN SUBMISSION EXPLAINING THAT THE ASSESSEE HAS NOT PAID ANY FREIGHT CHARGES IN EXCESS OF THE AMOUNTS SPECIFIED IN SECTION 194C(3) OF THE INCOME TAX ACT TO ANY PAR TY PROVIDING LORRY AND AS 2 SUCH THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT S OURCE THERE OF U/S 194C OF THE ACT AND CONSEQUENTLY THERE IS NO SCOPE OF DISAL LOWANCE OF LORRY FREIGHT EXPENDITURE OF RS.4,45,75,260/- U/S 40(A)(IA) OF TH E ACT. WITH REGARD TO THE INTEREST PAYMENT IT WAS SUBMITTED THAT THERE WAS NO LIABILITY TO DEDUCT TAX IN RESPECT OF THE SAID INTEREST AS IT WAS PAID TO PART NERS AND OTHERS AND BANKS. IN RESPECT OF THE INTEREST PAID TO SMT. D. NAGARAJA LAKSHMI AND SMT. D. ANANTHA LAKSHMI, THE NECESSARY DECLARATION FORMS RE QUESTING FOR NON- DEDUCTION OF TAX AT SOURCE HAD BEEN SUBMITTED EARLI ER BEFORE THE ASSESSING OFFICER WITHIN THE SPECIFIED TIME. 3. SO FAR AS FINANCIAL CHARGES ARE CONCERNED, IT WA S CONTENDED THAT SUCH PAYMENTS MADE IN RESPECT OF LOANS TAKEN FROM BANKS/ COMPANIES FOR PURCHASE OF VEHICLES ARE NOT LIABLE FOR DEDUCTION OF TAX AS PER CBDT INSTRUCTIONS NO.1425 DT. 16.11.1981. IT WAS ALSO SUBMITTED THAT ASSESSING OFFICER HAS MADE A DETAILED EXAMINATION OF ALL THESE FACTS AS S UCH HIS ORDER CANNOT BE CALLED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF THE REVENUE. 4. THE CIT EXAMINED THE ORDER OF THE A.O. IN THE LI GHT OF ASSESSEES CONTENTIONS. BEING NOT CONVINCED WITH THE EXPLANAT ION OF THE ASSESSEE THE CIT SET ASIDE THE ASSESSMENT ORDER WITH THE DIRECTI ON TO THE A.O. TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE LAW AS PR OVIDED U/S 40(A)(IA) OF THE ACT. 5. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS EMPHATICALLY ARGUE D THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HA S APPLIED HIS MIND ON ALL THESE ISSUES AND IN SUPPORT OF HIS CONTENTIONS, HE HAS INVITED OUR ATTENTION TO THE COPY OF NOTICE ISSUED U/S 142(1) AND THE COPIES OF REPLY TO THE ABOVE NOTICE WHICH ARE PLACED AT PAGE 204 TO 207. THROUG H NOTICE U/S 142(1) THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FURNISH THE DETAILS OF BANK ACCOUNT, DETAILS OF FINANCIAL CHARGES PAID, NAMES AND ADDRESSES OF THE PERSONS TO WHOM LORRY FREIGHT WAS MADE, RE-CONCILIA TION OF LORRY FREIGHT RECEIVED WITH TDS CERTIFICATE ENCLOSED ALONG WITH T HE RETURN AND DETAIL OF UNSECURED LOANS ETC. THE NOTICE U/S 142(1) DATED 7 .3.2007 WAS DULY REPLIED 3 BY THE ASSESSEE VIDE ITS LETTER DATED 21.3.2007 ENC LOSING THE DETAILS OF THE PERSONS AND THE PAYMENTS OF FINANCIAL CHARGES, RE-C ONCILIATION STATEMENTS WITH REGARD TO THE LORRY FREIGHT RECEIVED AND TDS T HEREON, STATEMENT OF NAME AND PERSONS TO WHOM LORRY FREIGHTS WERE PAID, DETAI LS OF LORRIES OWNED BY THE ASSESSEE AND THE STATEMENT OF AFFAIRS OF THE PARTNE RS FOR THE YEAR. BESIDES BOOKS OF ACCOUNTS WERE ALSO PRODUCED BEFORE THE ASS ESSING OFFICER. 6. THE LD. COUNSEL FOR THE ASSESSEE FURTHER INVITED OUR ATTENTION TO THE SUMMARY OF LORRY FREIGHT PAYMENTS YEAR WISE, MONTH WISE, WEEK WISE WHICH IS AVAILABLE AT PAGE 1 TO 131 WITH THE SUBMISSIONS THAT ALL THESE DETAILS WERE PRODUCED BEFORE THE ASSESSING OFFICER DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. COPIES OF LEDGER EXTRACT IN RESPECT O F OTHER LORRIES WERE ALSO PLACED BEFORE THE A.O. WHICH IS AVAILABLE AT PAGE 1 30 TO 170 OF THE COMPILATION. THE LD. COUNSEL FOR THE ASSESSEE FURT HER CONTENDED THAT HE HAS PLACED ALL RELEVANT EVIDENCE BEFORE THE ASSESSING O FFICER FOR VERIFICATION OF THE PAYMENTS MADE TO VARIOUS LORRY OWNERS. IT WAS FURT HER CONTENDED THAT THE ASSESSEE HAS PLACED ALL RELEVANT EVIDENCE BEFORE TH E ASSESSING OFFICER WITH RESPECT TO THE QUERIES RAISED U/S 142(1) OF THE I.T . ACT AND BEING CONVINCED WITH THE EXPLANATIONS THE ASSESSING OFFICER HAS ACC EPTED THE CLAIM OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAS FUR THER CONTENDED THAT CIT HAS NOT GIVEN EVEN PROPER OPPORTUNITY OF BEING HEAR D TO THE ASSESSEES. HE HAS INVITED OUR ATTENTION TO THE ORDER OF THE CIT T HAT HE HAS FIXED THE HEARING ON 7.10.2009 AND THE ASSESSEE SUBMITTED THE REQUIRE D INFORMATION BEFORE HIM. WHEN HE WAS ASKED TO FILE THE PARTY WISE DETA ILS WITH COMPLETE POSTAL ADDRESSES, HE SOUGHT TIME AND THE HEARING WAS ADJOU RNED TO 8.10.2009. ON THE NEXT DATE OF HEARING THE ASSESSEE COULD NOT APP EAR AND IN HIS ABSENCE THE CIT HAS DECIDED THE MATTER. THE LD. COUNSEL FO R THE ASSESSEE FURTHER INVITED OUR ATTENTION TO PAGE 67 OF ITS COMPILATION AS A SAMPLE WITH RESPECT TO THE PAYMENT OF LORRY FREIGHTS WITH THE SUBMISSIONS THAT THE PAYMENTS WERE MADE TO A DIFFERENT LORRY OWNERS AND EACH PAYMENT I S LESS THAN THE PRESCRIBED LIMIT OF RS.20,000/-. THESE DETAILS ARE AVAILABLE AT PAGE NO.64 TO 278. HE HAS ALSO INVITED OUR ATTENTION TO THE LEDG ER ACCOUNT APPEARING AT PAGE 152 OF THE COMPILATION OF THE ASSESSEES. THE ASSESSEE HAS ALSO FILED THE DETAILS OF PROFITS AND EXPENDITURES OF ON OWNED LORRY AND HIRED LORRY 4 MONTH WISE WHICH IS AVAILABLE AT PAGE NO.20 TO 59 O F THE COMPILATION IN WHICH COMPLETE DETAILS OF THE LORRY USED BY THE ASSESSEES ARE AVAILABLE ALONG WITH THE EXPENDITURES OR THE PAYMENTS MADE TO THEM ON DI FFERENT DATES. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT PAY MENTS WERE MADE TO DIFFERENT LORRY OWNERS AND EACH PAYMENT ARE BELOW THE PRESCRIBED LIMIT AS SUCH THERE IS NO VIOLATION OF PROVISIONS OF SECTION 194C OF THE ACT. SIMILAR IS THE POSITION WITH REGARD TO THE INTEREST PAYMENT AN D THE FINANCIAL CHARGES FOR WHICH COMPLETE DETAILS WERE FILED BY THE ASSESSEE B EFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN RESP ONSE TO THE NOTICE ISSUED U/S 142(1) OF THE ACT. 7. THE LD. D.R. ON THE OTHER HAND HAS PLACED THE RE LIANCE UPON THE ORDER OF THE CIT(A). 8. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE ORDERS OF AUTHORITIES BELOW WE FIND THAT THE ASSESS ING OFFICER HAS RAISED THE QUERIES U/S 142(1) IN RESPECT OF DETAILS OF PERSONS TO WHOM PAYMENT OF LORRY FREIGHT WAS MADE AND ALSO THE RECONCILIATION OF LOR RY FREIGHT RECEIPT WITH TDS CERTIFICATE ENCLOSED ALONG WITH THE RETURN. THE A. O. HAS ALSO ASKED TO FURNISH THE DETAILS OF FINANCIAL CHARGES PAID AND ALSO THE NAME AND ADDRESS OF THE PERSONS AND AMOUNT PAID TO THEM. STATEMENT OF AFFA IRS OF THE PARTNERS WERE ALSO ASKED TO BE FILED. IN RESPONSE THERETO ASSESS EE HAS FILED ALL THE REQUISITE INFORMATION ALONG WITH THE DOCUMENTARY EVIDENCE THR OUGH ITS LETTER DATED 21.3.2007. THE NOTICE ISSUED U/S 142(1) AND THE RE PLY OF THE ASSESSEE IS AVAILABLE AT PAGE 204 TO 207 OF THE COMPILATION. W E HAVE ALSO BEEN CARRIED THROUGH THE SUMMARY OF LORRY FREIGHT PAYMENTS YEAR WISE, MONTH WISE AND WEEK WISE WHICH IS AVAILABLE AT PAGE 1 TO 131 OF TH E COMPILATIONS AND COPIES OF LEDGER EXTRACTS IN RESPECT OF THESE LORRIES WHIC H IS ALSO PLACED ON RECORD AT PAGE 132 TO 170 OF THE COMPILATION. THESE DETAILS AND THE EVIDENCES WERE FILED BEFORE THE ASSESSING OFFICER DURING THE COURS E OF ASSESSMENT PROCEEDINGS. FROM A CAREFUL PERUSAL OF THESE DETAI LS, WE FIND THAT THE PAYMENTS OF LORRY FREIGHT WERE MADE FOR DIFFERENT L ORRIES AND THE INDIVIDUAL PAYMENTS OF A PARTICULAR LORRY WAS LESS THAN THE PR ESCRIBED LIMIT. NOTHING HAS BEEN BROUGHT ON RECORD THAT THE PAYMENTS WERE MADE TO ONE CONTRACTOR OR A 5 SUB-CONTRACTOR WHO OWNS DIFFERENT LORRIES. THE PAY MENTS WERE MADE TO THE INDIVIDUAL LORRY OWNERS OR ITS DRIVERS ACCORDING TO THE ASSESSEES OF WHICH DETAILS ARE PLACED ON RECORD. IN THE LIGHT OF THES E FACTS WE ARE OF THE VIEW THAT ASSESSEE HAS PLACED ALL RELEVANT EVIDENCE BEFO RE THE ASSESSING OFFICERS AND THE SAME WAS DULY EXAMINED BY HIM BEFORE ACCEPT ING THE CLAIM OF THE ASSESSEES. 9. IT IS SETTLED POSITION OF LAW THAT ASSESSING OFF ICER IS NOT REQUIRED TO DISCUSS EACH AND EVERY ISSUE OR THE CLAIM OF THE AS SESSEES WHICH IS ACCEPTED BY HIM. IN THE INSTANT CASE, IT IS EVIDENT FROM TH E RECORD THAT LOT OF EVIDENCE WAS PLACED BEFORE HIM AND THE ASSESSING OFFICER HAS ACCEPTED IT AFTER MAKING A NECESSARY VERIFICATION. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT CIT IS NOT JUSTIFIED IN HOLDING OR CONCLUDING THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 10. SIMILAR IS THE POSITION WITH REGARD TO THIS FIN ANCIAL CHARGES AS WELL AS INTEREST PAYMENT. IN THIS REGARD, OUR ATTENTION WA S INVITED TO THE INSTRUCTION NO.1425 ISSUED BY THE CBDT THAT PROVISIONS OF SECTI ON 194A OF THE INCOME TAX ACT ARE NOT ATTRACTED WHERE THE VEHICLES ARE OW NED OR PURCHASED ON HIRE PURCHASE CONTRACT. THESE INSTRUCTIONS AND THE CLAR IFICATIONS OF THE LAW WERE ALSO FILED BEFORE THE ASSESSING OFFICER THAT PROVIS IONS OF SECTION 194A CANNOT BE ATTRACTED WITH RESPECT TO THE PAYMENTS OF INTERE ST MADE TO THE FINANCIERS. MEANING THEREBY, THE ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF THE ASSESSEES HAVING RELIED UPON THE INSTRUCTIONS AND T HE CLARIFICATIONS ISSUED BY THE MINISTRY OF LAW. IT IS ALSO SETTLED POSITION O F LAW THAT ONCE THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEW, THAT VI EW CANNOT BE REVISED U/S 263 BY SIMPLY HOLDING THAT ORDER OF THE ASSESSING O FFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. SIMILAR IS THE POSITION WITH REGARD TO THE PAYMENT TO THE PARTNERS WITH RESPECT TO WHICH A SSESSEE HAS FURNISHED THE PROPER EXPLANATIONS. IN THESE CIRCUMSTANCES, WE AR E OF THE CONSIDERED VIEW THAT CIT WAS NOT JUSTIFIED IN CONCLUDING THAT THE O RDER OF THE A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. WE THEREFORE SET ASIDE THE ORDER OF THE CIT PASSED U/S 263 OF THE AC T. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 6 PRONOUNCED IN THE OPEN COURT ON 25.3.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 25 TH MARCH, 2010 COPY TO 1 M/S. RADHAKRISHNA TRANSPORT, D.NO.9-8-7(1), SAVIT HRUPETA, CHENNAREDDY STREET, TADEPALLIGUDEM 2 THE CIT, RAJAHMUNDRY 3 THE CIT(A), RAJAHMUNDRY 4 THE DR, ITAT, VISAKHAPATNAM. 5 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM