Agrawal Roadlines Pvt.Ltd., Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 668/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9005 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 11-09-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 02-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Keywords: Principle of natural justice
• Section: 234B; 133(6); 37(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI H. L. KARWA, JM AND N. S. SAINI, AM) ITA NO.668/AHD/2009 A. Y.: 2005-06 AGRAWAL ROADLINES PVT. LTD., FLAT NO.A-1004, ROSEWOOD ESTATE, OPP. PRERNA TIRTH BUNGALOWS-2, SATELLITE, AHMEDABAD PA NO. AABCA 6667 M VS THE D. C. I. T., CIRCLE-1, AAYAKAR BHAVAN, AHMEDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI TUSHAR HEMANI, AR DEPARTMENT BY SHRI M. C. PANDIT, DR O R D E R PER H. L. KARWA: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, AHMEDABAD DATED 03-12-2008 RELATING TO ASSESSMENT YEAR 2005-06. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS: 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND IN FAC TS IN CONFIRMING THE ACTION OF LD. AO IN DISALLOWANCE EXPENDITURE OF RS.17,88,062/- BEING OVERLOAD CHARGES INCURRED IN T HE NORMAL COURSE OF BUSINESS OF THE ASSESSEE BY TREATING THE SAME AS PENALTY WITHOUT APPRECIATING THE TRUE AND CORRECT N ATURE OF SUCH EXPENDITURE. 2. THE LEARNED CIT (A) HAS ERRED IN LAW AND IN FACT S IN NOT FOLLOWING THE ORDER OF HIS PREDECESSOR FOR A. Y. 20 04-05 WHEREIN UNDER IDENTICAL CIRCUMSTANCES, SUCH EXPENDI TURE HAS BEEN DELETED BY LD. CIT(A). ITA NO.668/AHD/2009 AGRAWAL ROADLINES PVT. LTD. 2 3. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN NOT PROPERLY APPRECIATING AND CONSIDERING VARIOUS SUBMISSIONS, EVIDENCES AND SUPPORTING PLACED ION RE CORD DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND NOT PROPERLY APPRECIATING VARIOUS FACTS AND LAW IN ITS PROPER PERSPECTIVE AND FURTHER ERRED IN PASSING ORDERS IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 4. LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING THE LE VY OF INTEREST U/S 234A/B/C OF THE ACT. 5. LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF THE AO IN INITIATING PENALTY UNDER SECTIO N 271(1) (C ) OF THE ACT WITHOUT RECORDING MANDATORY SATISFACTION AS CONTEMPLATED UNDER THE ACT. 3. AS REGARDS GROUNDS NOS. 1 TO 3 OF THE APPEAL BRI EF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRANSPORT CONTRACTOR & FLEET OWNERS. TH E AO OBSERVED THAT ON VERIFICATION OF AUDIT REPORT IN FORM NO.3CD, IT WAS FOUND THAT IN COLUMN NO. 17E, THE AUDITOR HAD PUT A REMARK AS UND ER: PENALTY IS THERE EXCEPT OVERLOAD PENALTY WHICH IS IN NORMAL COURSE OF BUSINESS AND HENCE NOT REPORTED. THE AO VIDE HIS LETTER DATED 14-2-2007 ASKED THE AS SESSEE TO FURNISH DETAILS OF SUCH PENALTY. IN RESPONSE TO THIS QUERY, THE ASSESSEE VIDE ITS LETTER DATED 11-5-2007 SUBMITTED AS UNDER: AS PER PARA (A) YOUR LETTER DTD. 14/02/20007, YOUR GOODSELVES HAVE STATED THAT THE AUDITORS HAVE MENTI ONED A NOTE IN TAX AUDIT REPORT THAT PENALTY ON ACCOUNT OF OVER LO ADING IS NOT REPORTED BY THEM. YOUR GOODSELVES HAS ASKED US TO F URNISH COMPLETE DETAILS OF SUCH PENALTY. IN THIS REGARD IT IS TO SUBMIT THAT THE PENALTY IS NOT THERE IN EACH AND EVERY CASE. WE ARE ENGAGED IN TRANSPORTATI ON OF LIQUID CARGO HENCE THE CHANCES OF OVERLOAD ARE LESS HOWEVE R IF ANY PENALTY FOR OVERLOAD IS THERE THAT IS NORMAL BUSINESS EXPEN DITURE BECAUSE CORRESPONDING INCOME FOR THE SAME IS ALSO BILLED TO THE PARTY WHICH IS BILLED PER MT OF THE CARGO. FURTHER IT IS TO SUB MIT THAT GUJARAT ITA NO.668/AHD/2009 AGRAWAL ROADLINES PVT. LTD. 3 GOVERNMENT HAD COME OUT WITH A SCHEME OF GOLD CARD WHICH ENTITLED EVERY TRANSPORTER TO HAVE OVERLOADED VEHIC LE FOR THAT PARTICULAR MONTH ON PAYMENT OF THE ADDITIONAL FEES FIXED FOR THAT GOLD CARD AS SUCH THE SAME IS A NORMAL BUSINESS EXP ENDITURE ONLY WHICH WAS ALLOWED BY THE GOVERNMENT ALSO AFTER PAYM ENT OF REQUISITE FEES. FURTHER THE COMPOSITION FEE IS PAID TO VARIOUS RTO AUTHORITIES WHICH ENTITLES A VEHICLE TO CARRY THE O VERLOAD AFTER PAYMENT OF THE COMPOSITION FEES. IF THIS WOULD HAVE BEEN A PENALTY, THE RTO AUTHORITIES WOULD HAVE FORCED THE VEHICLE T O PAY THE PENALTY AND UNLOAD THE EXCESS LOAD, WHICH IS NOT THE CASE I N ANY OF THE AMOUNTS PAID AS COMPOSITION FEES. THE VEHICLE IS PE RMITTED TO CARRY THE EXCESS LOAD WHICH THEY HAVE CARRIED TILL THE DE STINATION. HENCE, THE SAME SHOULD NOT BE TERMED AS PENALTY O THERWISE THE RTO AUTHORITIES WOULD HAVE FORCED TO UNLOAD THE EXCESS WEIGHT CARRIED BY THE VEHICLE AFTER THE PENALTY. THIS IS O NLY A PAYMENT TO GOVERNMENT OF TAXED WHICH OTHERWISE THE VEHICLE HAD PAID LESS FOR PASSED LOAN ONLY. IN CASE THE LOAD IS IN BASIS OF T OTAL QUANTITY INCLUDING THE EXCESS LOAD QUANTITY. HENCE THE SAME SHOULD NOT BE EQUATED WITH THE PENALTY FOR INFRINGEMENT OF LAW OR OTHERWISE, AS PER THE PROVISIONS OF INCOME TAX ACT. WITHOUT PREJUDICE TO THE ABOVE, IT IS TO SUBMIT THAT WE HAVE WORKED OUT THE FIGURES OF TH E ACTUAL AMOUNT PAID FOR THE SAME AND DETAILS OF THE SAME ARE SUBMI TTED HEREWITH. 4. KEEPING IN VIEW THE ABOVE REPLY OF THE ASSESSEE, THE AO ISSUED A SHOW CAUSE NOTICE ON 24-5-2007 REQUIRING THE ASSESS EE TO SUBMIT THE EXPLANATION AS TO WHY THE PENALTY CHARGES OF RS.17, 88,062/- SHOULD NOT BE DISALLOWED AS THE SAME IS PENALTY IN NATURE AND HENCE NOT ALLOWABLE EXPENDITURE. THEREAFTER, ANOTHER SHOW CAUSE NOTICE WAS ISSUED ON 11-12- 2007 FOR GIVING OPPORTUNITY TO SUBMIT THE DETAILED EXPLANATION. IN RESPONSE TO ABOVE SHOW CAUSE NOTICE, THE ASSESSEE S TATED THAT THE LETTER FURNISHED ON 11-5-2007 MAY BE CONSIDERED AS REPLY T O ABOVE QUERY. THE AO DID NOT ACCEPT THE REPLY OF THE ASSESSEE. THE AO REJECTED THIS CONTENTION OF THE ASSESSEE THAT IT WAS NORMAL BUSIN ESS EXPENDITURE AS CORRESPONDING INCOME FOR THE SAME WAS BILLED TO THE PARTIES AND THAT GUJARAT GOVERNMENT HAS COME OUT WITH A SCHEME OF GO LD CARD WHICH ENTITLES EVERY TRANSPORTERS TO HAVE OVERLOADED VEHI CLE FOR THAT PARTICULAR MONTH ON PAYMENT OF ADDITIONAL FEES FIXED FOR THAT GOLD CARD. THE AO ITA NO.668/AHD/2009 AGRAWAL ROADLINES PVT. LTD. 4 ALSO REJECTED THIS CONTENTION OF THE ASSESSEE THAT THE OVERLOADING PENALTY CANNOT BE EQUATED WITH THE PENALTY FOR INFRINGEMENT OF LAW OR OTHERWISE, AS PER THE PROVISIONS OF INCOME TAX ACT. THE AO TOO K THE VIEW THAT IT CANNOT BE HELD THAT GOLD CARD HOLDER CAN VIOLATE TH E LAW AND CLAIM THE EXPENDITURE THEREOF. THE AO REFERRED TO THE DECISIO N OF THE HONBLE SUPREME COURT DATED 9-11-2005 PASSED IN THE CASE OF TRANSPORTERS I.E. PARAMJIT BHASIN & OTHERS VS UNION OF INDIA AIR (200 6) SC 440, WHEREIN THE HONBLE SUPREME COURT HAS HELD AS UNDER: SECTION 200 DOES NOT IN ANY WAY AUTHORIZE THE STAT E GOVERNMENT TO PERMIT THE EXCESS WEIGHT TO BE CARRIE D WHEN ON VARIOUS INSPECTION/DETECTION IT IS NOTICED THAT THE RE IS CARRIAGE LOAD BEYOND THE PERMISSIBLE LIMIT. IT ONLY GIVES AN OPPO RTUNITY OF COMPOUNDING SO THAT INSTEAD OF THE AMOUNTS FIXED, L ESSER AMOUNTS CAN BE ACCEPTED BY THE AUTHORIZED OFFICER. THE INTE NTION OF UPLOADING IN THE EXCESS WEIGHT IS APPARENT FROM BARE READING OF THE SECTION 194(1). THE LIABILITY TO PAY CHARGE FOR UPLOADING O F THE EXCESS LOAD IS FIXED ON ONE WHO DRIVES A VEHICLE OR CAUSES A MOTOR VEHICLE TO BE DRIVEN IN CONTRAVENTION OF THE PROVISION OF SECTION 113, 114 AND 115. COMPOUNDING IS DONE EITHER BEFORE OR AFTER THE INSTITUTION OF THE PROSECUTION IN RESPECT OF THE ENUMERATED OFFENSES . NOTIFICATION ISSUED BY STATE GOVERNMENT PERMITTING CARRIAGE OF E XCESS WEIGHT AFTER COMPOUNDING RUNS COUNTER TO THE CLEAR IMPORT OF S. 194 AND HAS NO VALIDITY. AFTER COMPOUNDING THE EXCESS LOAD, SAME CANNOT BE PERMITTED TO BE CARRIED IN THE CONCERNED VEHICLE. SUCH CARRIAGE WOULD AMOUNT TO INFRACTION OF S 113 O F THE ACT. MOREOVER, OVER LOADING CAUSES SIGNIFICANT DAMA GE TO THE ROAD SURFACE AND ALSO CAUSES POLLUTION THROUGH AUTO EMISSIONS. EVEN OVER LOADED VEHICLES ARE SAFETY HAZARDS NOT ON LY FOR THEMSELVES, BUT ALSO FOR OTHER ROAD USERS. IT I S INDISPUTABLE THAT THE POWER OF COMPOUNDING VESTS WITH THE STATE GOVER NMENT BUT THE NOTIFICATION ISSUED BY VARIOUS STATE GOVERNMENTS IN THAT REGARD CANNOT AUTHORIZE CONTINUATION OF THE OFFENCE WHICH IS PERMITTED TO BE COMPOUNDED BY PAYMENTS OF THE AMOUNTS FIXED. IF PERMITTED TO BE CONTINUED, IT WOULD AMOUNT TO FRESH COMMISSIO N OF OFFENCE FOR WHICH THE COMPOUNDING WAS DONE. THE STA TE GOVERNMENTS WHICH HAVE NOT YET WITHDRAWN THE NOTIFI CATIONS DIRECTED TO DO IT FORTHWITH. 5. THE AO ALSO MENTIONED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR AY 2004-05, THE THEN AO ON THE SIMI LAR ISSUE IN OTHER ITA NO.668/AHD/2009 AGRAWAL ROADLINES PVT. LTD. 5 CASE FALLING IN HIS JURISDICTION HAD CALLED FOR INF ORMATION U/S 133(6) OF THE INCOME TAX ACT FROM THE RTO OFFICE TO ASCERTAIN CORRECT NATURE OF PENAL ACTION. THE RTO, VIDE HIS LETTER DATED 8-9-20 06 CONFIRMED THAT THE PAYMENT TO RTO IS PENAL IN NATURE AS PER THE MOTOR VEHICLES ACT. THE AO FURTHER STATED THAT THE RTO HAS SUBMITTED RELEVANT TEXT OF SECTION 194 OF MOTOR VEHICLES ACT, 1968. ACCORDING TO THE SAID SEC TION, THE INCUMBENT WOULD BE PUNISHABLE FOR VIOLATING THE PROVISIONS OF SECTION 113, 114 AND 115 BY WAY OF FINE. THE AO FURTHER RELYING UPON CER TAIN DECISIONS OF THE COURTS HELD THAT IN THE PRESENT CASE OF THE ASSESSE E, THE NATURE OF PENALTY IS NOT COMPENSATORY BUT IS FOR THE VIOLATIO N OF RUDIMENTARY LAW. ACCORDING TO THE AO, THIS FEATURE AND TENDENCY OF C ARRYING OVERLOADED GOODS BY THE ASSESSEE IS RAMPANT, CONSCIOUS AND DEL IBERATE PHENOMENA OVER THE YEARS. THE AO CONCLUDED THAT THIS BEING A COGNIZABLE OFFENCE AND INFRINGEMENT OF LAW AND PAYMENT BEING PENAL IN NATURE AND NOT INCIDENTAL TO THE ASSESSEES REGULAR BUSINESS, THE SAME IS NOT ALLOWABLE AS AN ALLOWABLE EXPENDITURE UNDER THE PROVISIONS OF SECTION 37(1) OF THE ACT. HE, THEREFORE, DISALLOWED THE AMOUNT OF RS.17, 88,062/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 6. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 7. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE MADE BY THE AO IS NEITHER SUSTAINABLE IN LAW NOR IN FACT. THE ASSESSEE ALSO SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE CIT(A)-IV, AHMEDABAD RELATING TO AY 20 04-05 WHEREIN UNDER IDENTICAL CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE WAS ALLOWED. THE ASSESSEE FURTHER SUBMITTED BEFORE THE CIT(A) THAT T HE AOS RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF PARAMJIT BHASIN & OTHERS VS UNION OF INDIA AIT (2006) SC 440 AS WEL L AS ON LANGUAGE OF SECTION 194 OF MOTOR VEHICLE ACT 1968 ARE COMPLETEL Y MISPLACED AND MIS- ITA NO.668/AHD/2009 AGRAWAL ROADLINES PVT. LTD. 6 CONCEIVED. IT WAS ALSO SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE HONBLE SUPREME COURT WAS CONCERNED WITH THE SCHEME S OF THE STATE GOVERNMENT IN SO FAR AS OVERLOADING WAS CONCERNED. IT NOWHERE DECIDED THAT THE AMOUNT PAID BY THE ASSESSEE TOWARDS SUCH S CHEME (GOLD CARD IN THE PRESENT CASE) IS FOR ILLEGAL PURPOSES. SECON DLY, AS OBSERVED BY THE CIT(A) FOR AY 2004-05, THE SAID DECISION WAS APPLIC ABLE FROM 09-11-2005 I.E. FROM AY 2006-07. THEREFORE, UNDER BOTH THE COU NTS, THE CASE OF THE AO IS NOT SUSTAINABLE. IT WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE THE CIT(A) THAT THE AO WITHOUT APPRECIATING THE NATURE OF PAYMENT MADE BY THE ASSESSEE BY WAY OF ADDITIONAL FEES UNDER GOLD C ARD SCHEME FLOATED BY THE GUJARAT GOVERNMENT WHICH IS VERY MUCH COMPEN SATORY IN NATURE AS RTO AUTHORITIES HAVING NOT CONFISCATED THE VEHIC LES OR DIRECTING TO UNLOAD THE EXCESS LOAD HAS TREATED THE SAME AS PEN AL IN NATURE AND MADE APPLICABLE THE PROVISIONS OF EXPLANATION OF SE CTION 37(1) OF THE ACT. THE ASSESSEE HAS ALSO SUBMITTED BEFORE THE CIT(A) T HAT THE FOLLOWING FACTS WOULD ESTABLISH THAT THE SAID EXPENDITURE WAS COMPE NSATORY IN NATURE AND NOT PENAL: (I) OVERLOADING CHARGES ARE COLLECTED IN ADVANCE. NO PE NALTY CAN BE COLLECTED IN ADVANCE. (II) IT HAS GOT DIRECT RELATION WITH THE QUANTUM OF OVER LOAD. PENALTY USUALLY IS FLAT AND ONCE INFRACTION OF LAW TAKES PLACE, THE SAME IS LEVIED INDISCRIMINATELY. (III) VEHICLES ARE NOT DETAINED OR CONFISCATED EVEN WHEN OVERLOADING IS DONE ON REGULAR BASIS. 8. ACCORDINGLY, IT WAS SUBMITTED BY THE ASSESSEE BE FORE THE CIT(A) THAT THE AMOUNT IN QUESTION IS COMPENSATORY IN NATU RE AND NOT PENAL AS ALLEGED BY THE AO. THE ASSESSEE ALSO CITED THE FOLL OWING DECISIONS BEFORE THE CIT(A): 1) PRAKASH COTTON MILLS PVT. LTD. VS CIT (1993) 201 IT R 684 ITA NO.668/AHD/2009 AGRAWAL ROADLINES PVT. LTD. 7 2) LACHMANDAS MATHURDAS VS CIT (2002) 254 ITR 799 (SC) 9. THE CIT(A) DID NOT ACCEPT THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE HIM AND CONFIRMED THE ADDITION OBSERVING AS UNDER: KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMSTA NCES, IT IS CRYSTAL CLEAR THAT THE EXPENDITURE WHICH CAN BE DEDUCTED IS ONLY IN RESPECT OF BUSINESS CARRIED ON BY THE AP PELLANT. THE PENALTY PAID FOR VIOLATION OF LAW IN THE COURSE OF CONDUCT OF BUSINESS CANNOT BE REGARDED AS DEDUCTIBLE EXPENDITU RE AS THE ASSESSEE IS EXPECTED TO CARRY ON THE BUSINESS IN AC CORDANCE WITH THE LAW. PENALTY OR INTEREST OR FINE UNDER DIR ECT TAXES IS NOT DEDUCTIBLE, FOR EXAMPLE, INTEREST LEVIED ON THE ASSESSEE FOR DELAY IN FILING RETURN WILL NOT BE ALLOWABLE AS A B USINESS EXPENDITURE AS HELD IN THE CASE OF BHARAT COMMERCE AND INDUSTRIES LTD. VS CIT(1998) (230 ITR 733/98 TAXMAN 151 (SC). KEEPING IN VIEW THE AFORESAID FACTS, CIRCUMSTANCES AND VARIOUS JUDICIAL PRONOUNCEMENTS, IT IS ABUNDANTLY C LEAR THAT THE AFORESAID IS COGNIZABLE OFFENCE: THE INFRINGEME NT OF LAW, THEREBY, THE PAYMENT IN QUESTION IS PENAL IN NATURE AND NOT AT ALL RELATE TO APPELLANTS REGULAR BUSINESS. WITH THE RESULT, THE SAME CANNOT BE ALLOWED AS AN ALLOWABLE EXPENDIT URE UNDER THE PROVISIONS OF SECTION 37(1) OF THE INCOME -TAX ACT, 1961. IN THE GIVEN FACTS AND CIRCUMSTANCE, THE ASSE SSING OFFICER HAS RIGHTLY DISALLOWED THE AMOUNT OF RS.17, 88,062/- AND ADDED BACK TO THE TOTAL INCOME OF THE APPELLANT . HENCE, THE ACTION OF THE ASSESSING OFFICER IS CONFIRMED ON THIS GROUND (I.E. GROUNDS NO.1,2,3 AND 4). 10. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AT LENGTH AND HAVE ALSO PERUSED THE MATERIALS AVAILABL E ON RECORD. IT IS RELEVANT TO STATE THAT SHRI TUSHAR HEMANI, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE FURTHER SUBMITTED THAT IN ASSESSEES OWN CASE WH EREIN UNDER IDENTICAL CIRCUMSTANCES, THE CIT(A)-IV, AHMEDABAD VIDE HIS OR DER DATED 25-10- 2007 HAS ALLOWED THE APPEAL OF THE ASSESSEE FOR AY 2004-05. HE FURTHER SUBMITTED THAT THE ORDER OF THE CIT(A) FOR AY 2004- 05 HAS BECOME FINAL AND, THEREFORE, THE CIT(A) SHOULD HAVE FOLLOWED THE ORDER OF HIS PREDECESSOR WHILE DECIDING THE ISSUE. ON THE OTHER HAND, SHRI M. C. ITA NO.668/AHD/2009 AGRAWAL ROADLINES PVT. LTD. 8 PANDIT, LEARNED DR SUBMITTED THAT THE FACTS OF THE PRESENT YEAR ARE ENTIRELY DIFFERENT AND, THEREFORE, THE CIT(A) WAS J USTIFIED IN NOT FOLLOWING THE ORDER OF HIS PREDECESSOR PASSED IN THE ASSESSEE S CASE FOR AY 2004- 05. WE HAVE PERUSED THE REPLY OF THE ASSESSEE DATED 11-5-2007 SUBMITTED BEFORE THE AO. THE CONTENTION OF THE ASSE SSEE THAT PENALTY IS NOT LEVIED IN EACH AND EVERY CASE, MOREOVER THE ASS ESSEE BEING ENGAGED IN THE BUSINESS OF TRANSPORTATION OF LIQUID CARGO C HANCES OF OVERLOADING WAS NOT FREQUENT. FURTHER, THE ASSESSEE ALSO SUBMIT TED THAT THIS EXPENDITURE IS INCURRED IN THE NORMAL COURSE OF BUS INESS AND CORRESPONDING INCOME OUT OF CARRYING OF OVERLOAD WA S SUBJECTED TO TAX AS THE PARTY WAS BILLED AS PER TONNAGE CARRIED. THERE IS NO DISPUTE THAT THE GOVERNMENT OF GUJARAT HAD INTRODUCED A SCHEME OF G OLD CARD TO CARRY OVERLOAD ON PAYMENT OF ADDITIONAL FEES FIXED FOR TH AT GOLD CARD. WE FIND THAT SUCH COMPENSATORY FEES WERE BEING PAID TO VARI OUS RTO AUTHORITIES THAT ENTITLED THE TRANSPORTERS TO CARRY OVERLOAD ON PAYMENT OF SUCH COMPENSATION FEES TO THE FINAL DESTINATION WITHOUT STOPPING THEM TO UNLOAD THE EXCESS WEIGHTAGE. IN OUR VIEW, IF THESE FEES WERE PENAL IN NATURE THEN RTO AUTHORITIES WOULD HAVE RECOVERED TH E AMOUNT FROM THE TRANSPORTERS AND UNLOADED THE EXCESS LOAD. IN OUR C ONSIDERED VIEW, THE AUTHORITIES BELOW HAVE NOT CORRECTLY APPRECIATED TH E FACTS OF THE PRESENT CASE. IN FACT, THEY HAVE GRIEVOUSLY ERRED IN OBSER VING THAT SCHEME OF GOLD CARD INTRODUCED BY THE GOVERNMENT OF GUJARAT E NTITLED THE TRANSPORT CARRIERS TO CARRY OVERLOAD BY PAYMENT OF ADDITIONAL FEES WAS STRANGE IN A WAY THERE IS NO GOVERNMENT MACHINERY W OULD ENCOURAGE VIOLATION OF INFRINGEMENT OF LEGAL PROVISIONS. BOTH THE AUTHORITIES BELOW HAVE NOT APPRECIATED THE APPELLATE ORDER FOR AY 200 4-05 WHEREIN THE CIT(A) HAS DISCUSSED THE JUDGMENT OF THE HONBLE SU PREME COURT IN THE CASE OF PARAMJIT BHASIN & OTHERS VS UNION OF INDIA (SUPRA) AS WELL AS THE PROVISIONS OF SECTION 194 OF THE MOTOR VEHICLES ACT , 1968. IN OUR CONSIDERED VIEW, THE JUDGMENT OF THE HONBLE SUPREM E COURT IN THE CASE OF TRANSPORTERS DATED 9-11-2005 IS OPERATIVE FROM T HE DATE OF THE ITA NO.668/AHD/2009 AGRAWAL ROADLINES PVT. LTD. 9 JUDGMENT. HERE, WE ARE CONCERNED WITH THE ASSESSMEN T YEAR 2005-06 AND THE RETURN OF INCOME WAS FILED ON 30-10-2005 I. E. MUCH BEFORE THE DATE OF THE JUDGMENT PASSED IN THE CASE OF PARAMJIT BHASIN AND OTHERS (SUPRA). IN FACT, THE DECISION OF THE HONBLE SUPRE ME COURT (SUPRA) WAS APPLICABLE FROM 9-11-2005 I.E. FROM THE AY 2006-07 AND HENCE NOT APPLICABLE TO THE FACTS OF THE PRESENT YEAR. THE HO NBLE SUPREME COURT HELD THAT NOTIFICATIONS ISSUED BY THE STATE GOVERNM ENTS PERMITTING TO CARRY EXCESS WEIGHT AFTER GIVING EFFECT TO SECTION 194 OF THE MOTOR VEHICLES ACT HAS NO VALIDITY. IN THIS JUDGMENT, THE HONBLE SUPREME COURT DIRECTED THE STATE GOVERNMENTS TO WITHDRAW THE NOTI FICATION FORTHWITH. AS WE HAVE ALREADY STATED HEREINABOVE THAT THE STATE G OVERNMENT OF GUJARAT HAD INTRODUCED A SCHEME OF GOLD CARD WHICH ENTITLED THE HOLDER OF THE CARD TO CARRY OVERLOAD ON PAYMENT OF ADDITIONAL FEE S FIXED FOR THAT GOLD CARD. SUCH COMPENSATORY FEES WERE BEING PAID TO VAR IOUS RTO AUTHORITIES THAT PERMITTED THE TRANSPORTERS TO CARR Y OVERLOAD ON PAYMENT OF SUCH COMPENSATION FEES TO FINAL DESTINATION WITH OUT STOPPING THEM TO UNLOAD THE EXCESS WEIGHT. IN OUR CONSIDERED VIEW, P AYMENT OF FINE TOWARDS CARRYING EXCESS LOAD CANNOT FALL INTO THE C ATEGORY EITHER OF AN OFFENCE OR INFRINGEMENT OF LAW. IT IS EVIDENT FROM THE RECORD THAT ON PAYMENT OF ADDITIONAL AMOUNT ALREADY FIXED BY RTOS, THEY HAVE ALLOWED VEHICLES TO MOVE FURTHER WHICH ITSELF SHOWS THAT AM OUNT COLLECTED BY THE RTOS WAS NOT PAYMENT TOWARDS INFRINGEMENT OF LAW BU T IN THE NATURE OF COMPENSATION. IT IS PERTINENT TO STATE HERE THAT GO VERNMENT OF GUJARAT HAS ALLOWED TO CARRY SUCH EXCESS LOAD AND COLLECTED ONLY COMPENSATORY AMOUNT FROM THE ASSESSEE WHICH CANNOT BE TERMED AS PAYMENT TOWARDS INFRINGEMENT OF LAW. IT IS ALSO RELEVANT TO STATE T HAT LAWS OF STATE GOVERNMENT ALLOWED THE TRANSPORTERS TO CARRY EXCESS LOAD IN VEHICLES IN RELEVANT YEARS AND HENCE SUCH PAYMENT IS NOT IN VIO LATION OF ANY LAW. THUS, CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE, WE ARE OF THE CONSIDERED VIEW THAT PAYMENT OF PENAL TY FOR EXCESS LOAD ITA NO.668/AHD/2009 AGRAWAL ROADLINES PVT. LTD. 10 CARRIED WAS NOT FOR INFRINGEMENT OF LAW BUT IN THE NATURE OF COMPENSATION IN THE BUSINESS ACTIVITIES OF TRANSPORTATION OF GOO DS. 11. IN VIEW OF THE ABOVE DISCUSSIONS WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS NOT SUSTAINABLE AND ACCORDINGLY, WE DELETE THE ADDITION OF RS.17,88 ,262/- . ACCORDINGLY, WE DISMISS THE GROUND NOS. 1 TO 3 OF THE APPEAL. 12. GROUND NO.4 OF THE APPEAL RELATES TO CHARGING O F INTEREST U/S 234A, 234B AND 234C OF THE ACT. AT THE TIME OF HEARING OF THE APPEAL THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THI S GROUND OF APPEAL IS CONSEQUENTIAL IN NATURE AND WE HOLD ACCORDINGLY. 13. NOW, WE WILL DECIDE GROUND NO.5 OF THE APPEAL. IN THE IMPUGNED ORDER THE CIT(A) HAS OBSERVED AS UNDER: REGARDING PENALTY PROCEEDINGS U/S. 271(1) ( C ) O F THE INCOME TAX ACT, 1961, IT IS DECIDED THAT AS IS ABUNDANTLY CLEAR FROM THE AFORESAID FACTS AND CIRCUMSTANCES; THE APPELLAN T HAS REALLY CONCEALED/FURNISHED INACCURATE PARTICULARS O F ITS INCOME. WITH THE RESULT, THE ACTION OF THE ASSESSIN G OFFICER ON THIS GROUND IS CONFIRMED. HENCE, THE APPEAL IS DISM ISSED ON THIS GROUND. 14. AFTER HEARING THE PARTIES, WE FIND THAT THE ABO VE OBSERVATIONS OF THE CIT(A) ARE UNWARRANTED, UNJUSTIFIED, AND HENCE NOT SUSTAINABLE IN LAW. IN THE INSTANT CASE, CIT(A) WAS NOT REQUIRED TO MAKE S UCH COMMENTS BECAUSE HE WAS DECIDING THE QUANTUM APPEAL AND NOT THE PENALTY APPEAL. IN OUR VIEW, THE CIT(A) HAS EXCEEDED HIS JU RISDICTION WHILE MAKING SUCH OBSERVATIONS. IN FACT, THE CIT(A) SHOUL D HAVE OBSERVED THAT THIS GROUND OF APPEAL IS PREMATURE AND HENCE I REJE CT THE SAME. ACCORDINGLY, WE QUASH THE ABOVE OBSERVATIONS OF THE CIT(A) ON THE GROUND THAT THE SAME ARE WITHOUT JURISDICTION AND U NCALLED FOR. THIS GROUND OF APPEAL IS ALLOWED. ITA NO.668/AHD/2009 AGRAWAL ROADLINES PVT. LTD. 11 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18-09 -2009 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (H. L. KARWA) JUDICIAL MEMBER DATE : 18-09-2009 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD