ITO, JODHPUR V. M/s. Bharat Salt Company, JODHPUR

ITA 67/JODH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78280 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-07-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 05-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: U C JAIN
• Keywords: Additional evidence
• Section: 194C

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JODHPUR BENCH: J ODHPUR ( BEFORE SHRI H.M. MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ) I.T.A . NO. 67 /JODH/2014 ASS ESSMEN T YEAR - 2010 - 11 ITO, VS M/S. BHARAT SALT COMPANY, WARD - 2(1), STATI ON ROAD, JODHPUR. PHALODI, JODHPUR. PAN NO. AADFB0566B (APPELLANT) (RESPONDENT) ASSESSEE BY : - SHRI U.C. JAIN. DEPARTMENT BY : - SHRI O.P. MEENA , CIT - D.R. DATE OF HEARING : 17 /0 7 /201 4 DATE OF PRONOUNCEMENT : 28/ 0 7 / 2014 O R D E R P E R HARI OM MARATHA, J.M. . THIS APPEAL OF THE REVENUE, FOR A.Y. 2010 - 11, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), JODHPUR DATED 10.12.2013. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM WHICH CARRIED ON B USINESS OF PROCESSING AND TRADING OF INDUSTRIAL SALT IODIZED SALT, COMMON SALT INDUSTRIAL SALT ETC. FOR A.Y. 2010 - 11, IT FILED ITS 2 RETURN OF INCOME (ROI) ON 12.10.2011 DECLARING TOTAL INCOME OF RS. 13,40,840/ - . DURING THE YEAR IT HAS DISCLOSED TOTAL TURNOV ER OF RS. 10,04,94,813/ - AND GROSS PROFIT OF RS. 1,03,65,462/ - GIVING G.P. RATE OF 10.31% AS COMPARED TO G.P. RAT OF 10.25% DECLARED ON GROSS PROFIT OF RS. 1,14,81,507/ - AND TURNOVER OF 11,19,67,248/ - . THE A.O. HAS COMPLETE D ASSESSMENT AT TOTAL INCOME OF R S. 3,35,64,060/ - , VIDE ORDER DATED 25.03.2013 AS UNDER : - TOTAL INCOME AS PER RETURN RS. 13,40,840/ - ADDITION AS DISCUSSED IN PARA 3 RS. 44,472/ - ADDITION AS DISCUSSED IN PARA 3 RS.39,87,167/ - ADDITION AS DISCUSSED IN PARA 3 RS. 2,81,23,726/ - ADDITION AS DISCUSSED IN PARA 3 RS. 67,859/ - TOTAL INCOME RS.3,35,64,064/ - ROUNDED OFF RS. 3,35,64,060/ - 2.1 AGGRIEVED, THE ASSESSEE - FIRM PREFERRED FIRST APPEAL AND THE LD. CIT(A) HAS ALLOWED THE APPEAL. HOWEVER, THE REVENUE HAS FILED THIS APPEAL ONLY AGAINST THE DELETIONS OF MAJOR ADDITIONS OF RS. 39,87,167/ - ADDED ON ACCOUNT OF SALT QUALITY, QUANTITY AND RATE DIFFERENCE, AND DELETION OF ADDITION OF RS. 2,81,23,726/ - ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 3 2.2 WE HAVE HEARD BOTH THE SIDES ON THE GROUNDS RAISED BEFORE US. BOTH PARTIES HAVE REITERATED THEIR ARGUMENTS WHICH WERE TAKEN BEFORE THE CIT(A). THE LD. CIT(DR) SHRI O.P. MEENA, HAS ALSO SUBMITTED THAT DELETION OF RS. 39,87,167/ - IS BASED ON ADDITIONAL EVIDENCE PRODUCED BEFORE LD. CIT(A) WHICH WERE NEVER CONFRONTED TO THE A.O. 3. THE FACTS APROPOS GROUND NO. (1) AND (2) RAISING THE ISSUE OF ADDITION OF RS. 39,87,167/ - ARE THAT FROM THE PERUSAL OF THE TRADING AND PROFIT AND LOSS ACCOUNT IT WAS NOTICED THAT THE ASSESSEE - FIRM HAS REDUCED AN AMOU NT OF RS. 43,96,860/ - FROM SALES ON ACCOUNT OF SALT QUALITY, SALT QUANTITY AND RATE DIFFERENCE. IT WAS SUBMITTED BY THE ASSESSEE TO EXPLAIN THIS FACT THAT TO 34 CONCERNS, LISTED THEREIN, RATE DIFFERENCE HAS BEEN ALLOWED ON ACCOUNT OF QUALITY AND QUANTITY DISPUTED BY THEM. IN THIS SUBMISSION 31 DEBIT ENTRIES OF RS. 44,23,391/ - AND THREE CREDIT ENTRIES OF RS. 26,531/ - , WERE REPORTED TO THE A.O. ALONGWITH PROOF IN THE FORM OF COPIES, GIVING COMPLETE DETAILS. HOWEVER, THE A.O. BEING NOT FULLY SATISFIED, HAS, TO THE EXTENT OF RS. 4,07,693/ - ONLY WHICH A RE REFLECTED IN THE FEW VOUCHERS, FOUND EXPLAINED AND HAS ADDED THE REMAINING AMOUNT OF RS. 39,87,167/ - BY DISALLOWING THE SAME. 4 3.1 THE LD. CIT(A) HAS, ON THE BASIS OF EVIDENCE PRODUCED BEFORE A.O. AND AGAIN MADE AVAILABLE BEFORE HIM, HAS FOUND THAT THIS TOTAL AMOUNT OF INVOICE AND THE AMOUNTS RECEIVED AGAINST THE INVOICE RAISED ARE ONLY RECORDED IN THE ACCOUNTS AND THE ASSESSEE HAD PRODUCED THE COMPLETE LEDGER ACCOUNT OF ALL THE P A RTIES, HAS DELETED THE ADDIT ION OF RS. 39,87,167/ - . 3.2 THE LD. CIT(DR) HAS DISPUTED THIS DELETION MAINLY BY STATING THAT THE EVIDENCE EXHIBITING RECORDING OF THIS RATE DIFFERENCE WAS NOT AVAILABLE BEFORE THE A.O. BUT THIS ARGUMENT WAS NOT FOUND TO BE CORRECT. IN FACT, THE ASSESSEE HAD SUBMITTED COMPLETE SUCH VOUCHERS, AND THIS FACT IS NOTED BY THE A.O. IN HIS ORDER AT PAGE 2 AND PARA (4) EVERY CONSPICUOUSLY. SINCE, THIS RATE DIFFERENCE IS VERY OBVIOUS FROM THE RECORDS ITSELF, WE DONT FIND ANY FALLACY IN THIS FINDING GIVEN BY LD. C IT(A). NO NEW EVIDENCE WAS PRODUCED BEFORE HIM. ACCORDINGLY, WE CONFIRM THE DELETION OF RS. 39,87,167/ - AND DISMISS GROUND NO. 1 AND 2 OF REVENUES APPEAL. 4. THE FACTS APROPOS GROUND NO. 3 ARE THAT THE ASSESSEE HAS CLAIMED TRANSPORTATION CHAR GES OF RS. 5,75,29,641/ - AND HAS RECORDED 5 THE SAME IN THE P&L ACCOUNT. THE A.O. HAS INVOKED SECTION 40(A)(IA) AND HAS DISALLOWED TRANSPORTATION CHARGES OF RS. 2,81,23,726/ - . 4.1 AS AGAINST THE ABOVE, THE LD. CIT(A) HAS ALLOWED THIS CLAIM BY FOLLOWING THE TRIBUNAL ORDER DATED 27.06.2013 PASSED FOR A.Y. 2009 - 2010 RENDERED ON IDENTICAL FACTS OBTAINING IN THIS ASSESSEES CASE . WE HAVE FOUND THAT THE FACTS OBTAINING IN A.Y. 2009 - 10 WERE EXACTLY SAME AND SIMILAR AS THAT OF THE ASSESSMENT YEAR 2010 - 11, WHICH IS UNDER CONSIDERATION. BOTH THE PARTIES HAVE CONQUERED REGARDING THIS FACT. WE HAVE SEEN THE TRIBUNAL ORDER DATED 27.06.2013 PASSED IN THIS VERY ASSESSEES CASE, IN ITA NO. 115/JODH/2013. IN THIS ORDER THE RELEVANT FINDING READS AS UNDER : - AFTER COGITATIN G RIVAL SUBMISSIONS OUR CONSIDERED OPINION IS THAT AS PER THE RECORDS THE ASSESSEE HAS PAID TRANSPORTATION CHARGES ON BEHALF OF THE BUYERS AND THE BUYERS HAVE SIMPLY REIMBURSED THE SAME AND ON SUCH PAYMENTS NEITHER THE PROVISION OF SECTION 194C NOR THAT OF 40 A(IA) ARE ATTRACTED. THE AMOUNT OF TRANSPORTATION CHARGES IS SEPARATELY SHOWN IN THE BILLS. THE ASSESSEE HAS, ADMITTEDLY, NOT ENTERED INTO ANY CONTRACT WITH THE TRANSPORTERS. THESE PAYMENTS ARE ONLY REIMBURSEMENT SO THE QUESTION OF DIRECT OR INDIRECT C ONTRACT 6 DOES NOT ARISE. WE HAVE FOUND FROM THE RECORD THAT THE ASSESSEE ENGAGES TRUCKS FROM THE LOCAL TRUCK OWNERS AT THE INSTANCE OF THE PURCHASERS AND TRANSPORTS THE GOODS AT THE DESIRED DESTINATION AS DIRECTED BY THE BUYERS AND ON BEHALF OF THEM. WE AR E SATISFIED THAT THE FREIGHT IS PAID ON BEHALF OF THE BUYERS AND IS NOT AN EXPENDITURE INCURRED BY THE ASSESSEE FIRM. IT IS NOT A SOURCE OF INCOME OF THE ASSESSEE FIRM. IN THE SALES INVOICES, THE VALUE OF SALT AND FREIGHT PAYABLE ON TRANSPORTATION FOR TH E GOODS SOLD HAS BEEN SHOWN SEPARATELY. IN THE BOOKS OF ACCOUNT SALE ACCOUNT IS CREDITED BY THE GROSS AMOUNT OF INVOICE INCLUDING FREIGHT PAYABLE BY THE PURCHASERS. IN THE TRADING ACCOUNT FREIGHT PAID BY THE ASSESSEE IS REDUCED FROM THE GROSS SALES. DURING THE YEAR A SUM OF RS. 4,45,27,688/ - HAS BEEN PAID AS TRANSPORTATION CHARGES ON THE TRANSPORTATION OF GOODS SOLD ON BEHALF OF THE CUSTOMERS AND HAS BEEN REDUCED FROM THE GROSS SALES. REFER PAGE 50 OF APB. THUS WE HAVE FOUND IT FOR A FACT THAT THE PAYMENT O F FREIGHT WAS MADE BY THE ASSESSEE ON BEHALF OF THE BUYER OF THE SALT AND THEREFORE, THE ASSESSEE IS ONLY A CONDUIT BETWEEN THEM AND IS NOT LIABLE TO DEDUCT TDS U/S 194C OF THE ACT. THE FINDING OF THE LD. CIT(A) THAT THE ASSESSEE HAD MADE PAYMENT OF THE F REIGHT SO TDS MUST HAVE BEEN DEDUCTED BY IT EVEN IF IT WAS PAID ON BEHALF OF THE BUYERS IS NOT A CORRECT PROPOSITION OF LAW AND IS IN CONTRAVENTION OF THE PROVISIONS OF THE ACT. THE ASSESSEE IS A MANUFACTURE OF VARIOUS TYPES OF SALT AND THE GOODS ARE SOLD EITHER FROM ITS HEAD - OFFICE OR 7 FROM ITS BRANCH OFFICE(S). IN THE SALE INVOICES, VALUE OF SALT AND FREIGHT PAYABLE ON TRANSPORTATION FOR THE GOODS SOLD ARE SHOWN SEPARATELY. IN THE BOOKS SALE ACCOUNT IS CREDITED BY THE GROSS AMOUNT OF INVOICE INCLUDING FR EIGHT PAYABLE BY THE PURCHASERS. IN THE TRADING ACCOUNT FREIGHT PAID BY THE ASSESSEE IS REDUCED FROM THE GROSS SALES. DURING THE YEAR RS. 4,45,27,688/ - WERE PAID AS TRANSPORTATION CHARGES ON THE TRANSPORTATION OF GOODS SOLD ON BEHALF OF THE CUSTOMER AND WAS REDUCED FROM THE GROSS SALE. IN FACT, OUT OF TOTAL FREIGHT OF RS. 4,45,27,688/ - A SUM OF RS. 1,34,67,284/ - HAS BEEN PAID WHERE EACH PAYMENT IS LESS THAN RS. 20,000/ - AND TOTAL PAYMENT IN THE YEAR IS LESS THAN RS. 50,000/ - . THE A.O. IS REQUIRED TO ASC ERTAIN THE TRUE FACTS AND HAS TO TAX CORRECT TAXABLE INCOME. HE CANNOT DERIVE BENEFIT OUT OF MISTAKES OR IGNORANCE OF THE ASSESSEE. IN THIS REGARD WE MAY MENTION THAT THE PROVISION OF SECTION 40A(IA) APPLY ONLY WHEN THE AMOUNT PAID IS ACTUALLY PAYABLE AN D NOT OTHERWISE. AS A RESULT WE ORDER TO DELETE THE IMPUGNED ADDITION AND ALLOW GROUND NO. 4 IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE DONT FIND ANY INFIRMITY IN THE IMPUGNED FINDING AND THEREFORE, APPROVE THE SAME. THE GROUND NO. (3) OF REVENUES APP EAL. 8 5. GROUND NO. (4) IS REGARDING AUDITORS REPORT WHICH , IN EFFECT, DONT HAVE ANY B EARING ON THE IMPUGNED FINDING. 6. IN THE RESULT, WE DISMISS THE APPEAL OF THE REVENUE. (ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JULY, 2014.) SD/ - SD/ - (N.K. SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH JULY, 2014. VL/ - COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR SENIOR PERSONAL SECRETARY ITAT, JODHPUR