M/s Rohini Traders, Tadepallegudem V. The ITO, Ward-1, Tadepallegudem

ITA 573/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6979 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 27 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: 29-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Keywords: TDS; Set aside
• Section: 142(1); 40(a)(ia); 194C; 201; 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.573/VIZAG/2009 ASSESSMENT YEAR : 2005-06 M/S. ROHINI OIL TRADERS TADEPALLIGUDEM ITO, WARD-1 TADEPALLIGUDEM (APPELLANT) VS. (RESPONDENT) GIR NO.R-350M 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 I.T. ACT SETTING ASIDE THE OR DER OF THE A.O. WITH THE DIRECTIONS TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE LAW AS PROVIDED U/S 40(A)(IA) OF THE ACT. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF AUTHORITIES BELOW AND DOCUMENTS PLACED ON RECORD . THE FACTS RELATING TO THE IMPUGNED ISSUE ARE THAT ON SCRUTINY THE CIT NOT ICED THAT THE CLAIM OF EXPENDITURE OF RS.8,15,090/- TOWARDS FREIGHT CHARGE S WAS OMITTED TO BE CONSIDERED FOR DISALLOWANCE U/S 40(A)(IA) OF THE AC T FOR FAILURE ON THE PART OF THE ASSESSEES TO DEDUCT TAX AT SOURCE U/S 194C OF T HE ACT. ACCORDINGLY, THE CIT HELD THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. CIT ACCORDINGLY ISSUE D A SHOW CAUSE NOTICE FOR INITIATING PROCEEDINGS U/S 263 OF THE ACT AND IN RE SPONSE THERETO, IT WAS EXPLAINED ON BEHALF OF THE ASSESSEE THAT THE ASSESS EE HAS NOT PAID ANY FREIGHT CHARGES IN EXCESS OF THE AMOUNTS SPECIFIED IN SECTION 194C(3) OF THE INCOME TAX ACT TO ANY PARTY PROVIDING LORRY, EXCEPT IN THE CASE OF K. SRINIVASA REDDY, PROPRIETOR, HEMANTH OIL STORES TO WHOM AN AMOUNT OF RS.5,44,800/- WAS PAID TOWARDS LORRY FREIGHT ON WHI CH TDS OF RS.11,467/- WAS DEDUCTED AND REMITTED THE SAME IN THE SBI ON 27 .5.2009 AND AS SUCH 2 THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE IN RESPECT OF BALANCE AMOUNT OF RS.2,69,290/- U/S 194C OF THE ACT. BECAU SE OF THE FACT THAT EACH PAYMENT OR AGGREGATE OF THE AMOUNT PAID TO THE BALA NCE LORRY OWNERS DOES NOT EXCEED THE AMOUNT SPECIFIED IN THE INCOME TAX A CT AND CONSEQUENTLY THERE IS NO SCOPE FOR ANY DISALLOWANCE OF THE LORRY FREIGHT EXPENDITURE OF RS.2,69,290/- U/S 40(A)(IA) OF THE ACT. CIT WAS NO T CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEES AND HE ACCORDINGLY HE LD THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. CONSEQUENTLY, HE SET ASIDE THE ASSESSMENT ORDER WITH THE DIRECTIO N TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE LAW AS PROVIDED U/S 4 0(A)(IA) OF THE ACT. 3. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR T HE ASSESSEE HAS INVITED OUR ATTENTION TO THE COPY OF NOTICE ISSUED U/S 142(1) A ND REPLY FILED IN RESPONSE THERETO. IN THIS NOTICE, ASSESSING OFFICER HAS ASK ED THE ASSESSEE TO PRODUCE THE DETAILS OF LORRY MAINTENANCE EXPENDITURES AND C AR RENTS PAID. THE BOOKS OF ACCOUNTS WERE ALSO PRODUCED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT SUMMARY OF FREIGHT PAYMENTS WAS FILE D BEFORE THE ASSESSING OFFICER ALONG WITH THE COPY OF VOUCHERS SUPPORTING THE FREIGHT PAYMENTS. THE SAME ARE AVAILABLE AT PAGE 1 TO 201 OF THE COMPILAT ION OF THE ASSESSEE. ON THESE DETAILS THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION WITH THE SUBMISSION THAT IF THE VOUCHERS AND THE DETAILS ARE TO BE EXAMINED ONE WOULD FIND THAT ONLY A SMALL PAYMENTS WERE MADE TO THE LORRY OWNERS AT DIFFERENT OCCASIONS AND NONE OF THE PAYMENT HAS EXC EEDED THE LIMIT SPECIFIED IN THE ACT FOR INVOKING THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT ON NON- DEDUCTION OF TDS. THE LD. DR ON THE OTHER HAND HAS PLACED THE RELIANCE UPON THE ORDER OF THE CIT. 4. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LOWE R AUTHORITIES AND MATERIAL PLACED BEFORE THE ASSESSING OFFICER AND WE FIND THAT ASSESSEE HAS FILED THE COMPLETE SUMMARY OF FREIGHT PAYMENTS ALON G WITH THE COPIES OF VOUCHERS SUPPORTING THE FREIGHT PAYMENTS. FROM A C AREFUL PERUSAL OF THESE DOCUMENTS IT IS ABUNDANTLY CLEAR THAT THE SMALL PAY MENTS WERE MADE BY THE 3 ASSESSEES ON ACCOUNT OF FREIGHT CHARGES TO DIFFEREN T LORRY OWNERS OR DRIVERS. SINCE THESE PAYMENTS HAVE NOT EXCEEDED THE LIMIT SP ECIFIED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT CANNOT BE INVOKED ON N ON-DEDUCTION OF TDS. IT IS A SETTLED POSITION OF LAW THAT ASSESSING OFFICER IS NOT REQUIRED TO DISCUSS ALL ISSUES IN DETAIL IN HIS ORDER ON WHICH HE IS CONVIN CED WITH THE EXPLANATIONS OF THE ASSESSEES. WHAT IS REQUIRED TO BE SEEN IN SUCH TYPE OF CASES ARE THAT WHETHER THE ASSESSEE HAS PLACED THE RELEVANT MATERI AL BEFORE THE A.O. AND THE ASSESSING OFFICER HAS APPLIED HIS MIND. IN THE INSTANT CASE, THE ASSESSEE HAS PLACED THE ENORMOUS EVIDENCE TO EXPLAIN THE VAR IOUS PAYMENTS OF THE FREIGHT CHARGES TO THE LORRY OWNERS OR DRIVERS AND THESE PAYMENTS ARE FOUND TO BE BELOW THE LIMIT SPECIFIED IN THE ACT. ASSESS EE HIMSELF HAS PLACED THE EVIDENCE WITH RESPECT TO THE PAYMENTS MADE TO K. SR INIVASA REDDY TO WHOM HE HAS PAID THE SUBSTANTIAL AMOUNT OF RS.5,45,800/- ON ACCOUNT OF LORRY FREIGHT CHARGES AND ON THESE PAYMENTS THE ASSESSEE HAS DEDUCTED THE TDS AT RS.11,407/- AND THE SAME WAS REMITTED TO THE SBI ON 27.5.2009. MEANING THEREBY, THE ISSUE HAS BEEN THOROUGHLY EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THOUGH HE HAS NOT DISCUSSED THIS ISSUE IN DETAIL IN THE ASSESSMENT ORDER BUT IT DOES NOT MEAN THAT FOR NON- DISCUSSION OF THE ISSUE IN THE ASSESSMENT ORDER, MA KES THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. WE THEREFORE OF THE VIEW THAT CIT IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. WE THEREFORE SET ASIDE HIS ORDER. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 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 4 COPY TO 1 M/S. ROHINI OIL TRADERS, K.N. ROAD, TADEPALLIGUDE M 2 ITO, WARD-1, TADEPALLIGUDEM 3 THE CIT, RAJAHMUNDRY 4 THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM