Kalinga Achyut Travels, Jagatsinghpur V. ITO, Paradeep

ITA 498/CTK/2012

• Counselvise Citation: 49822114 RSA 2012
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 11-10-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: SUNIL MISHRA
• Keywords: Income from undisclosed sources; Reasonable cause
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 498/CTK/2012 / ASSESSMENT YEAR 2008 - 09 KALING ACHYUT TRAVELS, BADAPADIA, PARADEEP, JAGATSINGHPUR PAN: AAHFK 7087 N. - - - VERSUS - INCOME - TAX OFFICER, WARD 1, PARAD EEP. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI SUNIL MISHRA, AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DR / DATE OF HEARING: 27.11.2012 / DA TE OF PRONOUNCEMENT: 14.12.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.1.8.2012 F OR THE ASSESSMENT YEAR 2008 - 09 IN THE CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN ITS GROUNDS OF APPEAL. 1) FOR THAT, THE LEARNED FORUMS BELOW WERE ERRED IN ADDING RS.1,70,4431 - ON THE GROUND OF EXCESS CREDIT BALANCE IN THE BANK A CCOUNT WITHOUT DUE VERIFICATION OF THE BANK RECONCILIATION STATEMENT, WHICH SUBSTANTIATE THE FACT THAT THE APPELLANT DISCLOSURE OF CLOSING BALANCE AS ON 31.03.2008 AT RS.27,796/ - WAS THE NET CASH BALANCE AFTER GIVING DUE ACCOUNTING EFFECT TO THE CHEQUES IS SUED TO THE CREDITORS. 2) FOR THAT THE ADDITION OF RS.5,83,473 ON THE GROUND OF VIOLATION OF PROVISIONS OF SEC.1 94C READ WITH PROVISION OF SEC.40(A)(IA) BY THE FORUM BELOW IS ILLEGAL, UNJUSTIFIED AND NON - APPLICATION OF MIND AS THE LEARNED AO HAS FAILED TO CO NSIDER THE REASONABLE CAUSE OF NON DEDUCTION OF TAX THAT THE TRAVEL AGENT IS NOT A PERSON RESPONSIBLE FOR MAKING PAYMENT IN TERMS OF SEC.194C OF THE ACT BEING AN INTERMEDIARY, WHEN THE AGREEMENT IS BETWEEN THE VEHICLE OWNER AND THE HIRER AND NOT BETWEEN THE APPELLANT AND THE VEHICLE OWNER. I.T.A.NO. 498/CTK/2012 2 3) FOR THAT, THE ORDER OF THE LEARNED CIT (APPEAL) IS BAD IN LAW, SINCE THE CIT(APPEAL) PASSED THE ORDER BY MIS - INTERPRETING THE JUDGMENT CITED BY THE APPELLANT IN CASE OF CIT V CARGO LINKERS (2008) 218 CTR (DELHI) 695 AN D DISMISSED THE APPEAL BY CITING THE JUDGMENT IN THE CASE OF SMT. J. RAMA VRS. CIT (2012) 344 ITR 608 BUT THE SAID JUDGMENT IS NOT RELEVANT TO THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, THE ORDER IS LIABLE TO BE QUASHED IN ITS ENTIRETY. 4) FOR THAT, TH E LEARNED CIT(APPEAL) PASSED THE ORDER CONTRADICTING HIS OWN FINDING IN ALLOWING SIMILAR ADDITIONS/DISALLOWANCES, AS SUCH THE ORDER IS INCOHERENT ONE BASED ON HIS OWN FINDING, THEREBY, LIABLE TO BE QUASHED. 3. BOTH THE PARTIES WERE HEARD REGARDING THE IS SUE RAISED BY THE ASSESSEE AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL IN THE LIGHT OF THE RIVAL SUBMISSIONS , THE UNDISPU TED FACTS RELATING TO THE ISSUES ARE THAT THE RETURN FILED BY THE ASSESSEE WAS TAKEN UP FOR SCRUTINY CONSIDERATION BY THE ASSESSING OFFICER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD CREDIT BALANCE AT RS.1,98,239 AS ON 31.3.2008 AS PER THE BANK STATEMENT WHEREAS IT H AD SHOWN BALANCE OF RS.27,796 IN THE BALANCE SHEET AS ON31.3.2008. HENCE,THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.1,70,043, ( I.E., THE DIFFERENCE BETWEEN RS.1,98,239 RS.27,796) AS INCOME FROM UNDISCLOSED SOURCES AS THE ASSESSEE IS NOT ABLE TO C LARIFY THE ABOVE DIFFERENCE TO THE ASSESSING OFFICER. THERE AFTERWARDS THE AO HAS FOUND ON EXAMINATION OF THE DETAILS FURNISHED BY THE ASSESSEE THAT OUT OF TOTAL PAYMENTS OF RS.16,90,752 TO THE VEHICLE OWNERS, RS.5,83,473 HAS BEEN PAID IN VIOLATION OF PROV ISIONS OF SECTION 194C R.W.S. 40(A)(IA). ACCORDINGLY, HE DISALLOWED THE SAID AMOUNT OF RS.5,83,473 U/S.40(A)(IA) SINCE THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON IT. I.T.A.NO. 498/CTK/2012 3 5. AGGRIEVED BY THIS ASSESSMENT ORDER, THE ASSESSMENT IN APPEAL BEFORE THE CIT(A). THE LEARNED CIT(A) AFTER HEARING THE ASSESSEE AND CONSIDERING THE JUDGMENT RELIED UPON BY THE ASSESSEE BEFORE HIM RENDERED IN THE CASE OF CIT V. CARGO LINKERS (2008) 218 CTR (DEL) 695 UPHELD THE ADDITION OF RS.1,70,443 MADE BY THE ASSESSING OFFICER BEING THE DIFFERENCE BETWEEN THE AMOUNT SHOWN IN THE BANK STATEMENT AND THAT SHOWN IN THE BALANCE SHEET AS ON 31.3.2008.CONSIDERINGTHEOTHER ISSUE OF APPLICATION OF SECTIN194C, RELYING O N THE DECISION OF HON BLE KARNATAKA HIGH COURT IN THE CASE OF SMT. J.RAMA V. CIT (2012) 344 ITR 608 AND THE DECISION RENDERED IN THE CASE OF OBEROI V. CBDT (135 ITR 257), WHICH WAS EXTRACTED BY THE LEARNED CIT(A) IN PARAGRAPH 6.2 OF HIS ORDER, WHEREIN IT WAS NOTED THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM HIRING OF VEHICL ES UNDER A WRITTEN AGREEMENT AND THE ASSESSEE IS PROVIDING VEHICLES TO ONE OF ITS CUSTOMERS M/S.MAHINDRA TRANSPORT SOLUTIONS GROUP. CLAUSE 5 OF THE AGREEMENT STIPULATES THAT THE PROVISION OF SERVICE WOULD INVOLVED PROVIDING VEHICLES OWNED BY THE ASSESSEE O R ASSOCIATES OF THE ASSESSEE OR AGENTS, FOR TRANSPORTATION OF THE EMPLOYEES OF THOMSON CORPORATION (INTERNATIONAL) PVT. LTD. THE MATERIAL ON RECORD DISCLOSES THAT THE ASSESSEE IS OWNING A FLEET OF VEHICLES. THAT IS NOT SUFFICIENT TO MEET THEIR OBLIGATIONS . THERE IS NO WRITTEN AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND SUCH INDIVIDUAL OWNERS. IT IS THOSE VEHICLES HIRED IN THE AFORESAID MANNER WHICH ARE UTILIZED FOR PERFORMING THE CONTRACT ENTERED INTO BETWEEN THE ASSESSEE AND ITS CUSTOMERS. IN THE ABS ENCE OF ANY MATERIAL PLACED BY THE ASSESSEE, THE ONLY INFERENCE THAT CAN BE DRAWN FROM THE FACTS OF THE CASE IS THAT THE ASSESSEE HAS UTILIZED THE VEHICLES TAKEN ON LEASE TO PERFORM THE WRITTEN CONTRACT ENTERED INTO BETWEEN THE ASSESSEE AND VARIOUS CUSTOME RS . . . THESE FACTS ARE ENTIRELY DIFFERENT FROM THOSE IN THE PRESENT CASE ON HAND BUT THE LEARNED I.T.A.NO. 498/CTK/2012 4 CIT(A) FOLLOWING THAT DECISION AND APPLYING THE RATIO THEREOF HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE U/S.40(A)( IA) OF RS.5,83,473. ON COMPARISON OF THE FACTS IN BOTH THE CASES, IT IS CLEAR THAT THEY ARE NOT AKIN AND HENCE, THE RATIO LAID DOWN BY THE KARNATAKA HIGH COURT IN THE CASE OF SMT.J.RAMA V.CIT (SUPRA) IS NOT ALL APPLICATION TO THE FACTS OF THE ASSESSEES CA SE AS THEY ARE ENTIRELY DIFFERENT. HENCE, THIS IS NOTHING BUT A MISAPPLICATION OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT BY THE LEARNED CIT(A). THE MAIN DIFFERENCE OF FACTS BETWEEN THESE TWO JUDGMENTS IS THAT THE ASSESSEE IS USING HIS OWN VEHICLES FO R CARRYING OUT CARGO FROM THE CUSTOMERS UP TO THE AIRPORT FOR LOADING PURPOSE. BUT N THE CASE OF J.RAMA V. CIT (SUPRA) THE ASSESSEE IS TO HIRE THE VEHICLES FROM OUTSIDERS AND USE THE SAME IN ITS BUSINESS OF TRANSPORT. THEREFORE, WE ARE OF THE CONSIDERED VI EW THAT THE RELIANCE PLACED BY THE LEARNED CIT(A) IS NOTHING BUT MISPLACED. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE CONFIRMATION OF THE DISALLOWANCE MADE BY THE AO ON THIS COUNT IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. WE SET ASIDE THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND DIRECT DELETION OF RS.5,83,473 MADE BY THE ASSESSING OFFICER U/S.40(A)(IA) AND CONFIRMED BY THE LEARNED CIT(A) . 6. NOW COMING TO THE OTHER ISSUE OF ADDITION OF RS.1,70,443, WE FIND THAT THIS IS THE DIFFERENCE BETWEEN THE AMOUNT S SHOWN IN THE BANK STATEMENT AND THE BALANCE SHEET AS ON 31.3.2008 . ON THE OBSERVATION THAT THE ASSESSEE IS NOT ABLE TO RECONCILE THESE FIGURES , THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION AND THE LEARNED CIT(A) HAS CONFIRMED THE SAME. 6.1. HAVIN G HEARD BOTH PARTIES AND O N CAREFUL CONSIDERATION OF THE ORDERS PASSED BY THE AUTHORITIES BELOW, WE FIND THAT THE AUTHORITIES BELOW ARE NOT ABLE TO SHOW UNDER WHICH PROVISION OF THE I.T.ACT SUCH AMOUNT IS TO BE ADDED TO THE INCOME OF THE ASSESSEE. THE BANK BALANCE REQUIRES I.T.A.NO. 498/CTK/2012 5 RECONCILIATION WHEN CHEQUES ARE ISSUED NOT ENCASHED BY THE PAYEES WILL SHOW LESS AMOUNT IN THE BALANCE SHEET, BUT OBVIOUSLY THE BANK WILL SHOW MORE BALANCE WHICH CANNOT BE TAXED IN THE IMPUGNED YEAR AS INCOME. THE AUTHORITIES BELOW THEREF ORE, ARE NOT JUSTIFIED IN TAXING THE SAME UNILATERALLY ON MISINTERPRETATION OF FACTS. IN SUCH VIEW OF THE MATTER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS COUNT AND DIRECT DELETION OF THE ADDITION OF RS.1,70,443. 7. IN THE RESULT, THE APPEA L OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DATE: 14.12.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : KALING ACHYUT TRAVELS, BADAPADIA, PARADEEP, JAGATSINGHPUR 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 1, PARADEEP. 3 . / TH E CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPEN DIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 07.12.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DIC TATING MEMBER 10.12.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DA TE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 14.12.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSIS TANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.