Punjab Andhra Transport Corporation, Nizamabad, Nizamabad V. ITO, Ward-2, Nizamabad, Nizamabad

ITA 799/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2320 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K GOPALAKRISHNA
• Section: 194C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A SMC : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA.NO. 799/HYD/2016 ASSESSMENT YEAR 2010 - 2011 M/S. PUNJAB ANDHRA TRANSPORT CORPORATION, PLOT NO.4, LAXMI PRIYA NAGAR, NIZAMABAD. PAN: AADFP2152P VS. INCOME TAX OFFICER, WARD - 2, NIZAMABAD, TELANGANA. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI A. SRINIVAS FOR REVENUE : SHRI K. GOPALA KRISHNA, DR DATE OF HEARING : 26 .07 .2017 DATE OF PRONOUNCEMENT : 26 .07 .2017 ORDER PER D. MANMOHAN, VP. PENALTY OF RS. 1,00,000/ - LEVIED BY THE A.O. U/S 271B OF THE ACT HAVING BEEN CONFIRMED BY THE LD. CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL CONTENDING INTER ALIA THAT IT WAS UNDER BONAFIDE IMPRESSION THAT ONLY THE COMMISSION RECEIPTS HAVE TO BE TAKEN AS TURNOVER, IN WHICH EVENT, THERE WAS NO NEED FOR IT TO GET THE BOOKS AUDITED AND TO FILE THE AUDITED STATEMENT BEFORE FURNISHING OF THE RETURN. 2. BRIEF FACTS GIVIN G RAISE TO THE ISSUE ARE AS UNDER. THE ASSESSEE - FIRM IS ENGAGED IN THE BUSINESS OF SUPPLY OF LORRIES. THE FIRM OWNS ONE LORRY WHEREAS, OTHER LORRIES WERE ARRANGED TO THE PARTIES BY TAKING COMMISSION FROM THE LORRY OWNERS. THE COMMISSION SO EARNED WORKS OUT TO RS. 16,25,770/ - WHEREAS, THE INCOME FROM ONE LORRY IS RS. 1,50,000/ - . FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE ADMITTED TOTAL INCOME OF RS. 2,26,740/ - AND THE ASSESSMENT WAS PROCESSED ACCORDINGLY. THEREAFTER, THE A.O. REOPENED THE ASSESSMENT, BY ISSUING A NOTICE U/S 148 OF THE ACT AND CALLED FOR LIST OF SUNDRY CREDITORS AND SUNDRY DEBTORS, VEHICLES OWNED BY THE FIRM, NAME AND ADDRESS OF THE PARTIES, WHO HAVE BEEN DEDUCTED TDS, DETAILS OF COMMISSION ON TRANSPORTATION ETC. IN RESPONSE TO THE SA ME, ASSESSEE STATED THAT THEY HAVE ENGAGED 2 THE TRANSPORT VEHICLES ON BEHALF OF THE THIRD PARTY AND ON THESE TRANSACTIONS, THEY ONLY RECEIVED COMMIS SION, WHICH WAS ADMITTED AS THEIR INCOME. THE ASSESSEE OWNED ONLY ONE LORRY AND THE INCOME ASSESSED THEREFRO M WAS ALSO OFFERED TO TAX. WITH REGARD TO THE TAX DEDUCTED AT SOURCE, THOUGH IT WAS STATED THAT IT WAS REIMBURSED TO THE RESPECTIVE PARTIES, SUFFICIENT PROOF COULD NOT BE FURNISHED. UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER CONSIDERED THE TDS RECE IVABLE OF RS. 3,54,777/ - AS INC OME OF THE ASSESSEE ON THE TRANSACTIONS HELD WITH VARIOUS PARTIES. ACCORDINGLY, THE TOTAL INCOME WAS DETERMINED AT RS. 5,81,517/ - . IT DESERVES TO BE NOTICED THAT ONLY THE TDS AMOUNT WAS TAXED AS INCOME . B OOKS OF ACCOUNT ETC ., ARE NOT DISPUTED W ITH REGARD TO THE AMOUNT RECEIVABLE AS COMMISSION AND THE INCOME EARNED ON THE LORRY OWNED BY THE ASSESSEE. IT CANNOT BE DISPUTE D THAT IF THE ASSESSEE HAS ACTED FOR AND ON BEHALF OF THE LORRY OWNERS AND EARNED COMMISSION INCOME THEREON , IT CANNOT BE TAKEN AS TURNOVER OF THE ASSESSEE, IN WHICH EVENT, THE TURNOVER OF THE ASSESSEE CANNOT BE SAID TO HAVE EXCEEDED THE LIMITS PRESCRIBED FOR AUDIT U/S 44AB OF THE ACT. 3. HOWEVER, A.O. INITIATED THE PENALTY PROCEEDINGS U/S 271B OF THE ACT ON THE GROUND THAT THE TURNOVER DURING THE YEAR EXCEEDED THE LIMITS PRESCRIBED U/S 44AB OF THE AC T AND THE ASSESSEE HAVING NOT GO T THE BOOKS OF ACCOUNT AUDITED, IT IS A FIT CASE FOR LEVY OF PENA LTY. IN RESPONSE TO THE NOTICE THE ASSESSEE SUBMITTED THAT TH E GROSS RECEIPTS, WHICH ARE SHOWN IN THE TDS CERTIFICATES , ARE NOT GROSS RECEIPTS OF THE ASSESSEE - FIRM BUT THE GROSS RECEIPTS OF THE OTHER LORRY OWNERS AND THE ASSESSEE IS ONLY ENTITLED TO RECEIVE COMMISSION ON THE ARRANGEMENT MADE ON BEHALF OF THE LORRY O WNERS AND THEREFORE, ON THE TURNOVER OF THE ASSESSEE, THE PROVISIONS OF SECTION 44AB ARE NOT ATTRACTED. 4. A.O. REJECTED THE CONTENTION OF THE ASSESSEE. HE OBSERVED THAT WHATEVER IS THE NATURE OF BUSINESS, THE TRANSACTIONS SHOULD BE RECORDED / GONE THROUG H THE BOOKS OF ACCOUNTS AND THE SAME SHOULD BE REFLECTED IN THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT. HE ALSO NOTICED THAT THE TDS SO DEDUCTED SHOULD HAVE BEEN RETURNED TO THE LORRY OWNERS / DRIVERS AND THE LIABILITIES OF THE FIRM SHOULD HAVE BEEN REFL ECTED IN THE BALANCE SHEET. HE ALSO OBSERVED THAT THE ASSESSEE ENTERED INTO CONTRACT WITH THE RESPECTIVE PARTIES TO SUPPLY THE NEED S AND IN FACT, TDS WAS DEDUCTIBLE U/S 194C OF THE ACT. UNDER THESE CIRCUMSTANCES, AMOUNT RECEIVED BY THE ASSESSEE ON ALL THE 3 TRANSACTIONS SHOULD BE GONE THROUGH THE PROFIT & LOSS ACCOUNT ONLY, IN WHICH EVENT THE TURNOVER OF THE ASSESSEE EXCEEDS THE LIMITS PRESCRIBED U/S 44AB OF THE ACT I.E., RS. 40 LAKHS. HE ACCORDINGLY LEVIED A MAXIMUM PENALTY OF RS. 1 LAKH. LD. CIT(A) HAVIN G AFFIRMED THE ACTION OF THE REVENUE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS IN THIS LINE OF BUSINESS FOR PAST ABOUT SEVEN YEARS AND HAS BEEN ACCOUNTING FOR THE COMMISSION INCOME ONLY, W HICH WAS ASSESSED FROM TIME TO TIME. IN THE EARLIER YEAR S AS WELL AS FOR THE SUBSEQUENT PERIOD, THE ASSESSING OFFICER HAD THE BENEFIT OF EXAMINING THE MATTER IN THE SCRUTINY PROCEEDINGS BUT THE GROSS INCOME WAS NOT TAKEN INTO CONSIDERATION FOR THE PURPOSE OF APPLYING THE PROVISIONS OF SECTION 44AB OF THE ACT; IN FACT, COMMISSION INCOME WAS ONLY TAKEN INTO ACCOUNT AND THE ASSESSMENT S WERE COMPLETED ACCORDINGLY. THE LD COUNSEL FOR THE ASSESSEE THEREFORE SUBMITTED THAT THE COMMISSION EARNED , ON THE SUPPLY OF LORRIES OWNED BY OTHER S, CAN ALONE BE TAKEN AS TURNOVER OF THE ASSESSEE SINCE, THE ASSESSEE EARNED THAT INCOME FOR AND ON BEHALF OF THE LORRY OWNERS. IN THE ALTERNATIVE, IT WAS CONTENDED THAT THE ASSESSEE WAS UNDER THE BONAFIDE IMPRESSIO N THAT THE TURNOVER DID NOT EXCEED RS. 40 LAKHS, IF ONLY COMMISSION INCOME IS ONLY TAKEN INTO CONSIDERATION AND THUS, HE WAS OF THE OPINION THAT THERE WAS NO NEED TO OBTAIN THE AUDIT REPORT . E VEN AFTER THE SCRUTINY PROCEEDINGS FOR THE A.Y. 2011 - 12 , IN CAS E OF THE EARLIER AS WELL AS SUBSEQUENT YEARS, T HE BUSINESS DONE FOR AND ON BEHALF OF THE LORRY OWNERS WAS NOT TAKEN AS TURNOVER OF THE ASSESSEE, WHICH PROVES THAT THE FIRM IS MERELY THE COMMISSION AGENT. IT WAS THUS CONTENDED THAT THERE WAS A SUFFICIENT C AUSE FOR NOT OBTAINING THE AUDIT REPORT IN WHICH EVENT, PENALTY IS NOT LEVIABLE U/S 271B OF THE ACT. 6. ON THE OTHER HAND, LD DR SUBMITTED THAT THE ASSESSEE HAVING DEDUCTED TAX AT SOURCE , IT OUGHT TO HAVE MADE AN ENTRY IN THE BOOKS OF ACCOUNT OR PASSED IT ON TO THE LORRY OWNERS / DRIVERS, WHEREAS IN THE INSTANT CASE, THERE WAS NO PROOF WHICH INDICATE THAT THE GROSS RECEIPTS SHOWN IN THE TDS CERTIFICATES ARE THE GROSS RECEIPTS OF THE FIRM IN WHICH EVENT, THE PROVIS IONS OF SECTION 44AB OF THE ACT ARE ATTRACTE D AND CONSEQUENTLY, THE ASSESSING OFFICER WAS JUSTIFIED IN INITIATING THE PENALTY PROCEEDINGS U/S 271B OF THE ACT. 4 7. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE CASE OF THE ASSESSEE IS THAT BOTH IN THE EARLIER AS WELL AS IN THE SUBSEQUENT YEARS, THE ASSESSEE WAS TREATED AS COMMISSION AGENT EVEN IN THE SCRUTINY PROCEEDINGS AND THIS CLAIM WAS NOT DISPUTED BY THE LD DR. EVEN THE ASSESSMENT ORDER PASSED FOR THIS YEAR DOES NOT INDICATE THAT THE GROSS RECEIPTS ARE TAKEN INTO C ONSIDERATION FOR THE PURPOSE OF ESTIMATING THE INCOME; IN FACT, BOOKS OF ACCOUNT WERE NOT REJECTED AND NO OTHER ADDITION WAS MADE EXCEPT WITH REGARD TO THE TDS AMOUNT AND HENCE, NEITHER THE A.O. NOR THE LD. CIT(A) IS PERMITTED TO MAKE OUT A NEW CASE PARTIC ULARLY FOR THE PURPOSE OF LEVY OF PENALTY U/S 271B OF THE ACT. AT ANY RATE, THE EXPLANATION OF THE ASSESSEE THAT IT WAS UNDER BOANFIDE IMPRESSION IS SUPPORTED BY THE ASSESSMENT MADE BY THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES, I AM OF THE VIEW TH AT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. I THEREFORE, DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S 271B OF THE ACT. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE - FIRM IS ALLOWED. ORDER PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 26 T H OF JULY, 2017. S D / - (D. MANMOHAN) VICE PRESIDENT HYDERABAD, DATED: 26 TH JULY , 2017 OKK, SR.PS COPY TO 1. M/S. PUNJAB ANDHRA TRANSPORT CORPORATION, PLOT NO.4, LAXMI PRIYA NAGAR, NIZAMABAD. 2. INCOME TAX OFFICER,WARD - 2, NIZAMABAD, TELANGANA. 3. CIT(A) - 5 , HYDERABAD. 4. PR. CIT - 5 , HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE