VISHAL TEMPO CARRIERS, V. ITO WD 3(4), THANE

ITA 703/MUM/2011

• Counselvise Citation: 70319914 RSA 2011
• Duration Of Justice: 42 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2012
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Assessee Lawyers: P K PARIDA; SANJUKTA CHOWDHARY
• Keywords: Search and seizure
• Section: 194C

Judgement Text

ITA NO.703 OF 2011 VISHAL TEMPO CARRIERS MUMBAI F B ENCH PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO.703/MUM/2011 (ASSESSMENT YEAR: 2007-08) M/S VISHAL TEMPO CARRIERS MR.VIRENDER CHOUDHARY C/O BALBIRSINGH CHOUDHARY X-7 LANE-1 SECTOR 9 CBD VS INCOME TAX OFFICER WARD-3(4) THANE BELAPUR-400 614 PAN AAEFV 4033 C (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P.K. PARIDA AND SMT. SANJUKTA CHOWDHARY DEPARTMENT BY: SHRI A.K. MODI DATE OF HEARING: 18/06/2012 DATE OF PRONOUNCEMENT: 27/06/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS AN ASSESSEES APPEAL AGAIST THE ORDER OF T HE CIT (A)-1 THANE DATED 15.10.2010. THE ISSUE INVOLVED IN THIS APPEAL IS WITH REFERENCE TO THE DISALLOWANCE UNDER SECTION 40(A)(I A) ON THE REASON THAT ASSESSEE HAS NOT DEDUCTED THE TAX ON THE TRUCK S PROVIDED BY IT THEREBY VIOLATING THE PROVISIONS OF SECTION 194C(1) . 2. BRIEFLY STATED, ASSESSEE IS IN THE BUSINESS OF TRAN SPORT ARRANGING VEHICLES FOR TRANSPORTATION OF GOODS AND EARNING COMMISSION THEREOF. ASSESSEE HAS SHOWN LORRY FREIGH T RECEIVED AT ` 79,71,542/- AND CLAIMED LORRY CARTAGE PAID AT ` 74,22,592/- SHOWING NET REVENUE OF ` 5,48,950/-. IT RETURNED A NET PROFIT OF ` 5,686/- FROM THE BUSINESS. ASSESSEE CLAIMED REFUND OF THE TDS ON THE BASIS OF CERTIFICATES. AO WHILE ASSESSING GROSS RECEIPTS AT ` 1,72,39,660/- ON THE BASIS OF CERTIFICATES AND STAT EMENTS DID NOT ITA NO.703 OF 2011 VISHAL TEMPO CARRIERS MUMBAI F B ENCH PAGE 2 OF 6 ALLOW ANY PAYMENT ON THE REASON THAT ASSESSEE HAS N OT GIVEN ANY EVIDENCE TO PROVE THE GENUINENESS OF THE AMOUNT CRE DITED AND DEBITED IN THE PROFIT & LOSS A/C. HE WAS OF THE VIE W THAT AS THE SAID CERTIFICATES ARE IN THE NAMES OF ASSESSEE, IT WAS A SSESSEE WHO EARNED THE CONTRACT RECEIPTS AS PER THE CERTIFICATE S ISSUED BY THE PARTIES CONCERNED AND ASSESSEE HAVE NO EVIDENCE THA T IT EARNED COMMISSION. SINCE THE BOOKS OF ACCOUNT WERE NOT PRO DUCED FOR VERIFICATION, AO TOOK THE GROSS RECEIPTS ON THE BAS IS OF THE TDS CERTIFICATES AND ALLOWED ONLY ADMINISTRATIVE EXPEND ITURE CLAIMED BY ASSESSEE THEREBY BRINGING TO TAX AN AMOUNT OF ` 1,66,96,400/-. 3. BEFORE THE CIT (A) IT WAS CONTENDED THAT ASSESSEE W AS ONLY IN THE BUSINESS OF ARRANGING THE TRUCKS WHICH COMES FR OM NORTH INDIA TO OFFLOAD GOODS IN AND AROUND MUMBAI AND ASSESSEE DIRECTS THE SAID LORRY DRIVERS TO PARTIES WHOSE GOODS ARE TO BE TRANSPORTED OUT OF MUMBAI. IT WAS FURTHER EXPLAINED THAT ASSESSEE IS O NLY A CONDUIT AND HE GETS COMMISSION ONLY IN THE PROCESS. IT WAS FURTHER CONTENDED THAT ASSESSEE IS NOT A CONTRACTOR AND HE HAS NO CONTROL OVER THE TRUCK OWNERS. HENCE THERE IS NO OBLIGATION TO SHOW THE ENTIRE RECEIPTS IN THE BOOKS. IT WAS FURTHER SUBMI TTED THAT ASSESSEE IS NOT LIABLE TO DEDUCT TAX UNDER SECTION 194C SINC E THEY ARE ONLY TRUCK DRIVERS AND NOT SUB CONTRACTORS. SINCE NUMBER OF TRUCK OWNERS/DRIVERS INVOLVED, HE COULD NOT PROVIDE PAN, ADDRESS AND OTHER DETAILS AND THEREFORE, TAXING ENTIRE GROSS AM OUNT IS NOT CORRECT. ASSESSEE ALSO RELIED ON THE VARIOUS CASE L AWS BEFORE THE CIT (A). 4. THE CIT (A) NOTICED THAT OUT OF THE DETAILS FURNISH ED BY ASSESSEE, THERE WAS A SUM OF ` .1,16,38,870/- MADE TO VARIOUS TRUCK OWNERS WHICH EXCEEDS ` .50,000/- AND THE CIT (A) HOLDS THAT ASSESSEE BEING A SUB CONTRACTOR SUPPOSED TO DEDUCT THE TAX ON PAYMENT TO TRUCK DRIVERS. THEREFORE, HE UPHELD THE DISALLOWANCE TO THE EXTENT OF ` .1,16,38,870/- AND GRANTED A RELIEF OF ` .56,00,790/-. ITA NO.703 OF 2011 VISHAL TEMPO CARRIERS MUMBAI F B ENCH PAGE 3 OF 6 5. WE WERE NOT INFORMED WHETHER ANY CROSS APPEAL IS PE NDING ON THIS ISSUE. THEREFORE, WE HAVE PROCEEDED TO DISPOSE OF ASSESSEES APPEAL ON MERITS. 6. IT WAS THE LEARNED COUNSELS SUBMISSION THAT AO REJ ECTED THE BOOKS OF ACCOUNT AND BROUGHT TOTAL RECEIPTS OF INCO ME OUT OF STATEMENTS FURNISHED AND WHEN THE BOOKS OF ACCOUNT WERE REJECTED, OTHER PROVISIONS OF THE ACT PARTICULARLY WITH REFER ENCE TO THE DISALLOWANCE UNDER SECTION 40(A)(IA) DOES NOT ARISE . HE RELIED ON THE PROPOSITION LAID DOWN IN THE CASE OF INDWELL CONSTR UCTIONS V. CIT (1998) 232 ITR 776 (AP) AND ITO VS. KENARAM SHAH AN D SUBASH SHAH 301 ITR 171 (KOL.). IT WAS FURTHER CONTENDED T HAT ASSESSEE IS ONLY IN THE BUSINESS OF ARRANGING OR INTRODUCING LO RRYWALAS TO THE TRANSPORTERS AND IT EARNS ITS COMMISSION AT ` 500/-PER TRUCK. THE LEARNED COUNSEL EXPLAINED MODALITIES OF ASSESSEES BUSINESS AND SUBMITTED THAT ASSESSEE DOES NOT TAKE ANY RESPONSIB ILITY OR OBLIGATION EITHER FOR REACHING THE GOODS SAFELY TO ITS DESTINATION NOR THERE IS ANY AGREEMENT EITHER ORAL OR WRITTEN UNDER TAKING FROM TRANSPORTERS ON BEHALF OF THE CLIENTS. HOWEVER, FOR RECORD PURPOSE, TRANSPORTERS GAVE COMMISSION TO ASSESSEE AFTER DEDU CTING THE TDS AND AFTER CLEARING THE NECESSARY PAYMENTS TO THE TR UCK DRIVERS IN CASH AND SHOWED COMMISSION INCOME IN THE PROFIT & L OSS A/C. IT WAS FURTHER SUBMITTED THAT IT IS VERY DIFFICULT TO KEEP TRACK OF TRUCK DRIVERS AND THEREFORE, DIFFICULTY IN PRODUCING THEM BEFORE AO. IT IS FURTHER SUBMITTED THAT ASSESSEE IS NOT REQUIRED TO MAKE ANY TDS IN THE PAYMENTS MADE TOWARDS DIESEL EXPENSES, FOOD EXP ENSES OF THE DRIVERS, REPAIR EXPENSES ETC, AND AS THERE IS NOTHI NG TO SHOW MORE THAN ONE TRIP BY THE SAME TRUCK OWNER, TDS PROVISIO NS ARE NOT APPLICABLE. IT WAS FURTHER SUBMITTED THAT THERE IS NOTHING PAYABLE AT THE END OF THE FINANCIAL YEAR AS THERE WAS NO OUTST ANDING AMOUNT SHOWN IN THE BALANCE SHEET AND SINCE ALL THE CHARGE S ARE PAID TO VARIOUS TRUCK DRIVERS, PROVISIONS OF SECTION 40(A)( IA) ARE NOT APPLICABLE ON THE BASIS OF THE SPECIAL BENCH DECISI ON IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT IN ITA NO.477/VIZ/08 ITA NO.703 OF 2011 VISHAL TEMPO CARRIERS MUMBAI F B ENCH PAGE 4 OF 6 DATED 29.3.2012. IT WAS FURTHER SUBMITTED THAT MERE INTRODUCTION OF TRUCK DRIVERS TO TRANSPORTERS DID NOT AMOUNT TO CON TRACT FOR CARRYING OUT OF ANY WORK OF TRANSPORTERS AS PER SECTION 194C . THE LEARNED COUNSEL RELIED ON THE DECISION OF THE HON'BLE MADRA S HIGH COURT IN THE CASE OF CIT VS. POOMPUHAR SHIPPING CORPORATION LTD. (2006) 282 ITR 3 (MAD). 7. THE LEARNED DR WHILE ADMITTING THAT AO BROUGHT GROS S RECEIPTS TO TAX WITHOUT ALLOWING THE EXPENDITURE AN D HAS NOT SPECIFICALLY INVOKED THE PROVISIONS OF SECTION 40(A )(IA) AND REFERRED TO THE CIT (A)S ORDER TO SUBMIT THAT THERE WAS A F INDING THAT ASSESSEE PAID MORE THAN ` 50,000/- TO A TRUCK OWNER IN A YEAR AND ACCORDINGLY ASSESSEE IS LIABLE TO DEDUCT TAX AND FO R NON DEDUCTING THE TAX, PROVISIONS OF SECTION 40(A)(IA) ARE APPLIC ABLE. 8. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE FACTS AS PLACED ON RECORD. ASSESSEE HAS FILED PROFIT & LOSS A/C SHOWING LORRY FREIGHT RECEIPTS AT ` 79,71,542/- AND LORRY CARTAGE PAID AT ` 74,22,592/- SHOWING NET REVENUE OF ` 5,48,950/-. HOWEVER, IT CLAIMED TDS ON A LARGER AMOUNT AND TOTAL FREIGHTS A S PER THE REGISTER AGGREGATES TO ` 1,72,39,660/-. THERE IS NO FINDING EITHER BY AO OR BY THE CIT (A) ABOUT THE EXACT NATURE OF ASSE SSEES BUSINESS. AO CONSIDERED THE ENTIRE FREIGHT RECEIPTS AS THAT O F ASSESSEES AND REJECTED THE BOOKS OF ACCOUNT AND BROUGHT TO TAX TH E GROSS AMOUNT WITHOUT ALLOWING LORRY FREIGHT PAID. THE REASON FOR DISALLOWING THE FREIGHT PAYMENT WAS THAT ASSESSEE WAS NOT ABLE TO F URNISH THE DETAILS OF PAYMENTS. THE CIT (A) WHILE UPHOLDING TH E RECEIPT WAS OF THE VIEW THAT ASSESSEE IS A CONTRACTOR AND SINCE HE HAS ENTERED INTO SUB CONTRACT BUSINESS WITH THE TRUCK OWNERS AND ALS O PAID AMOUNTS EXCEEDING ` .50,000/- IN AN YEAR CONFIRMED THE AMOUNT TO THE T UNE OF ` .1,16,38,870/-. WE ARE AFRAID WE CANNOT UPHOLD THE FINDINGS OF THE CIT (A) FOR THE REASON THAT THERE IS NO EVIDENC E ON RECORD THAT ASSESSEE IS ENTERING INTO A CONTRACT WITH ANY TRUCK OWNER WHILE ARRANGING THE TRUCKS FOR TRANSPORTATION OF GOODS. T HE HON'BLE ITA NO.703 OF 2011 VISHAL TEMPO CARRIERS MUMBAI F B ENCH PAGE 5 OF 6 MADRAS HIGH COURT IN THE CASE OF CIT VS. POOMPUHAR SHIPPING CORPORATION LTD. (2006) 282 ITR 3 (MAD) HAS HELD TH AT MERE INTRODUCTION OF TRUCK DRIVERS TO TRANSPORTERS WOULD NOT AMOUNT TO A CONTRACT FOR CARRYING OUT ANY WORK OF TRANSPORTERS AS ADMISSIBLE IN SECTION 194C. HOWEVER, THESE PRINCIPLES CAN ONLY BE APPLIED, IF IT IS ESTABLISHED THAT ASSESSEE IS NOT IN THE BUSINESS OF TRANSPORTATION. THE DETAILS FILED IN THE FORM OF PAPER BOOK, PARTIC ULARLY THE RECEIPTS RECEIVED DURING THE YEAR AND THE AMOUNTS EXPENDED W HICH SHOWS THAT ASSESSEE HAS EARNED TOTAL FREIGHT OF ` 1,72,39,660/- ON WHICH THERE IS NO DISPUTE. HOWEVER, IN THE WRITTEN SUBMIS SIONS AS WELL AS IN THE BOOKS OF ACCOUNT, THE NET RECEIPTS AS COMMIS SION WAS SHOWN AT ` 5,48,950/- WHEREAS IN THE STATEMENT FILED IN THE PA PER BOOK THE NET COMMISSION WAS SHOWN AT ` 7,95,000/-. THERE WAS CLAIM TOWARDS LORRY FREIGHT AT ` 1,66,90,710/- AFTER EXCLUDING HAMALI AND MUNSIAN (?) THE NET AMOUNT WAS SHOWN AT ` 5,48,950/-. HOWEVER, THERE IS NO RECONCILIATION WITH REFERENCE TO THE TO TAL RECEIPTS AS PER THE FREIGHT REGISTER AND WHAT WAS SHOWN IN THE PROF IT & LOSS A/C. SINCE AO DISALLOWED THE ENTIRE EXPENDITURE AND THE CIT (A) WITHOUT EXAMINING WHETHER PROVISIONS OF SECTION 194C ARE RE ALLY APPLICABLE TO ASSESSEE GAVE PARTIAL RELIEF HOLDING THAT THERE ARE PAYMENTS TO SOME TRUCK OWNERS EXCEEDING ` .50,000/-. WE ARE UNABLE TO APPRECIATE EITHER OF THESE IN THE ABSENCE OF ANY EV IDENCE ABOUT THE EXACT NATURE OF ASSESSEES BUSINESS. THE CONTENTION THAT ASSESSEE IS NOT DOING ANY TRANSPORT BUSINESS IN ITS NAME HAS TO BE EXAMINED AS THERE IS DEDUCTION OF TAX BY THE TRANSPORTERS. ASES SEES GROSS RECEIPTS ARE BASED ON BOTH TDS CERTIFICATES AS WELL AS FREIGHT REGISTER. THEREFORE, THE EXACT NATURE OF BUSINESS U NDERTAKEN BY ASSESSEE HAS TO BE VERIFIED. FURTHER WHETHER MERE A RRANGEMENT OF TRUCKS RESULTED IN ANY CONTRACT IS TO BE EXAMINED A S AO HAS NOT INVOKED THE PROVISIONS OF SECTION 194C NOR DISALLOW ED AMOUNTS U/S 40(A)(IA). ASSESSEE IS ALSO CONTENDING THAT THERE I S NO OUTSTANDING AMOUNT PAYABLE AS ON 31/03/2007, SO THE SPECIAL BEN CH DECISION IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS V S. ACIT (SUPRA) ITA NO.703 OF 2011 VISHAL TEMPO CARRIERS MUMBAI F B ENCH PAGE 6 OF 6 WILL APPLY AS THERE ARE NO OUTSTANDING PAYMENT SO A S TO COME UNDER THE PROVISIONS OF SECTION 40(A)(IA). SINCE THESE AS PECTS ARE NOT EXAMINED BY AO IN ITS CORRECT PERSPECTIVE, WE ARE O F THE OPINION THAT THE APPEAL CANNOT BE DECIDED ON LEGAL PRINCIPLES AL ONE WITHOUT EXAMINING THE FACTS. FOR THIS PURPOSE, WE SET ASIDE THE ASSESSMENT TO THE FILE OF AO TO EXAMINE THE ABOVE ISSUES AND C OMPLETE THE ASSESSMENT ACCORDINGLY. AO IS FREE TO ENQUIRE ALL A SPECTS AND ASSESSEE IS DIRECTED TO FURNISH NECESSARY EVIDENCES IN SUPPORT OF ITS CLAIM. THE APPEAL IS CONSIDERED ALLOWED FOR STATIST ICAL PURPOSES. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS CONS IDERED ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JUNE, 2012. SD/- SD/- (VIVEK VARMA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 27 TH JUNE, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI