The Hindustan Corporation (Hyd) Pvt.Ltd., Hyd, Hyderabad V. ITO, Ward-2(2), Hyd., Hyderabad

ITA 819/HYD/2015

• Counselvise Citation: 81922514 RSA 2015
• Duration Of Justice: 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 17-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: A V RAGHURAM
• Section: 40A(3); 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.819/HYD/2015 ASSESSMENT YEAR 2008-2009 THE HINDUSTAN CORPORATION (HYD.) P. LTD., HYDERABAD. PAN A AACT7967Q VS. THE INCOME TAX OFFICER, WARD-2(2), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. A .V. RAGHURAM FOR REVENUE : MR. B. KURMI NAIDU DATE OF HEARING : 22 .03.2016 DATE OF PRONOUNCEMENT : 13 .0 5 .2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2008-09. THE ONLY GROUND IN THIS APPEAL IS THAT THE LD. CIT( A) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.27,43,561 MA DE UNDER SECTION 40A(3) OF THE I.T. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE, THAT THE ASSESSEE COMPANY, A TRANSPORT CONTRACTOR, FILED ITS RETURN O F INCOME FOR THE A.Y. 2008-09 ON 29.09.2008, DECLARING LOSS OF RS.2,05,493 FROM BUSINESS AND INCOME FROM HOUSE PROPERTY OF RS.2,43,511. AFTER SETTING OFF THE BUSI NESS LOSS FROM INCOME FROM HOUSE PROPERTY ASSESSEE ADMITTED N ET TAXABLE INCOME OF RS.38,018. DURING THE ASSESSMENT 2 ITA.NO.819/HYD/2015 THE HINDUSTAN CORPORATION (HYD) P. LTD., HYDERABAD. PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, THE A. O. CALLED FOR VARIOUS DETAILS AND THE ASSESSEE FURNISH ED THE SAME. THE A.O. FOUND THAT THE ASSESSEE HAD INCURRED CASH PAYMENTS EXCEEDING RS.20,000 AND THESE PAYMENTS WER E MADE TO VARIOUS INDIVIDUALS TO THE TUNE OF RS.27,43 ,561. HE ALSO FOUND THAT THE ASSESSEE PAID A SUM OF RS.1,16,000 TO M/S. SRIDEVI TYRE RETREAD P. LTD., F OR RETREADING OF TYRES WITHOUT DEDUCTING TAX. THE ASSE SSEE WAS ASKED TO EXPLAIN THE SAME. ASSESSEE SUBMITTED T HAT THE PROVISIONS OF SECTION 40A(3) ARE NOT APPLICABLE TO THESE PAYMENTS SINCE THEY FALL UNDER EXCEPTION PROVIDED I N CLAUSE (K) OF RULE 6DD OF I.T. RULES. IT WAS FURTH ER SUBMITTED THAT THE ASSESSEE HAS PRODUCED THE GOODS DELIVERY MEMO WHICH CONTAIN DETAILS OF ALL THE OWNE RS OF THE TRUCKS, DRIVERS OF THE TRUCKS ETC., AND THE TRU CK AFTER GETTING ENGAGED BY THE ASSESSEE GOES TO THE CUSTOME R FROM WHOM THE GOODS ARE TO BE TRANSPORTED AND FROM THERE THEY GO TO THE PLACE WHERE GOODS ARE TO BE DELIVERED AND HENCE THEY DO NOT COME BACK TO THE ASSESSEE AND THEREFORE , THE ASSESSEE HAS ADOPTED A SYSTEM UNDER WHICH THE PAYME NT IS MADE THROUGH AN AGENT AFTER ASCERTAINING THAT TH E TRUCK CARRIED THE GOODS. IT WAS THUS SUBMITTED THAT ALL THE PAYMENTS ARE THROUGH AGENTS AND THAT AT NO POINT OF TIME, THE PAYMENT IS MADE DIRECTLY TO THE DRIVER OR OWNER AND THEREFORE, THE PROVISIONS OF SECTION 40A(3) ARE NOT ATTRACTED. FURTHER, WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS, IT WAS ALSO SUBMITTED THAT THE ASSESSE E HAS DEDUCTED TAX ON EACH OF THE PAYMENTS AND THEREBY, 3 ITA.NO.819/HYD/2015 THE HINDUSTAN CORPORATION (HYD) P. LTD., HYDERABAD. COMPLYING WITH THE PROVISIONS OF SECTION 40(A)(IA) AND THEREFORE, THE PROVISIONS OF SECTION 40A(3) CANNOT BE INVOKED. 2.1. TO VERIFY THE CONTENTIONS OF THE ASSESSEE, A. O. CALLED FOR FURTHER DETAILS. ASSESSEE FURNISHED ITS SUBMISSIONS AND AFTER CONSIDERING THE SAME, THE A.O . HELD THAT THERE IS NO PROOF THAT THE ASSESSEE GOT T HE SERVICES OF THE TRUCK OWNERS THROUGH BROKERS. FURTH ER HE HELD THAT BY DEDUCTING TDS, THE ASSESSEE CANNOT CLA IM IT AS PROOF OF GENUINE PAYMENT/TRANSACTION. HE, THEREF ORE, BROUGHT THE ENTIRE SUM OF RS.27,43,561 AND ALSO RS.1,16,000 TO TAX UNDER SECTION 40A(3) AND 40(A)(I A) OF THE I.T. ACT, RESPECTIVELY. AGGRIEVED, ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE A.O. AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US . 3. THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORI TIES BELOW, SUBMITTED THAT BOTH THE A.O. AS WELL AS THE CIT(A) HAVE CONFIRMED THE ADDITIONS WITHOUT CONSIDER THE F ACT THAT THE ASSESSEE HAS TO DO BUSINESS THROUGH A BROK ER WHO IS IN THE NATURE OF AN AGENT AND THEREFORE, IT IS COVERED BY THE PROVISIONS OF CLAUSE (K) OF RULE 6DD OF THE I.T. RULES. 4. THE LD. D.R. ON THE OTHER HAND, HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 4 ITA.NO.819/HYD/2015 THE HINDUSTAN CORPORATION (HYD) P. LTD., HYDERABAD. 5. WE FIND THAT THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEAL AND HAS MADE ELABORATE STATEMENT OF FACTS BEFORE THE CIT(A), THE CIT(A) HA S NOT CONSIDERED THE SAME AND HAS DISMISSED THE ASSESSEE S APPEAL WITHOUT GIVING ANY FINDING ON ANY OF THE CONTENTIONS OF THE ASSESSEE EXCEPT REPRODUCING THE EXTRACTS OF SOME DECISIONS ON THE INTERPRETATION OF TAXING STATUTES. THE LD. COUNSEL FOR THE ASSESSEE HAS PLAC ED RELIANCE UPON THE DECISION OF COORDINATE BENCH OF T HIS TRIBUNAL AT PUNE IN THE CASE OF M/S. RAJENDRA CARGO MOVERS P. LTD., PUNE VS. ITO, WARD-10(1), PUNE IN ITA.NO.145/PN/2013 DATED 30.12.2014 WHEREIN IN SIMI LAR CIRCUMSTANCES, THE TRIBUNAL AT PARA-18 HAS HELD AS UNDER: 18. THE ASSESSEE HAD FURNISHED THE AUDITED ACCOUN TS FOR THE YEAR UNDER CONSIDERATION ALONG WITH THE AUD IT REPORT OF THE AUDITOR WHICH IS PLACED AT PAGES 1 TO 68 OF THE PAPER BOOK. THE AUDITOR IN THE AUDIT REPORT IN FORM NO.3CD HAD DECLARED THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE TO BE THE GOODS TRANSPORT CONTRACTOR A ND COMMISSION AGENT. IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE AUDITOR HAD ALSO GIVEN A CERTIFICATE THAT NO AM OUNT WAS INADMISSIBLE UNDER SECTION 40A(3) OF THE ACT RE AD WITH RULE 6DD OF THE INCOME TAX RULES. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT THE PAYMENTS TO THE SAI D PERSONS WERE MADE ON ACCOUNT OF COMMISSION FOR BOOK ING THE TRUCKS. FURTHER, THE SAID PERSONS DO NOT OWN TH E TRUCKS BUT WERE THE COMMISSION AGENTS, WHO IN TURN BOOKED THE TRUCKS/ CARRIERS FOR CARRIAGE OF GOODS. OUR ATTENTION WAS DRAWN TO THE VARIOUS DOCUMENTS ISSUED BY THE SAID PARTIES PLACED AT PAGES 232 AND 283 OF THE PAPER BOOK. THE PERUSAL OF THE COLLECTION MEMO DATED 16.03.2009 PLACED AT PAGE 232 OF THE PAPER BOOK REF LECTS M/S. SARVODYA ROAD LINES TO BE THE TRUCK SUPPLIER. ANOTHER SUCH COMMUNICATION IS PLACED AT PAGE 248 OF THE 5 ITA.NO.819/HYD/2015 THE HINDUSTAN CORPORATION (HYD) P. LTD., HYDERABAD. PAPER BOOK. ADMITTEDLY, THE ASSESSEE HAS MADE CASH PAYMENTS TO THE SAID PERSONS EXCEEDING RS.20,000/- IN A DAY BY DIFFERENT ENTRIES. HOWEVER, UNDER THE PROVIS IONS OF CLAUSE (K) TO RULE 6DD OF THE RULES, SUCH PAYMENTS MADE BY THE ASSESSEE DO NOT VIOLATE THE PROVISIONS OF SE CTION 40A(3) OF THE ACT. MERELY BECAUSE WHILE DEDUCTING T HE TAX AT SOURCE, THE ASSESSEE HAD DEDUCTED THE TAX UNDER SECTION 194C OF THE ACT, DOES NOT ESTABLISH THE CAS E OF THE REVENUE, ESPECIALLY, IN THE CIRCUMSTANCES WHERE THE ASSESSEE HAD CLAIMED THAT THE DEDUCTION OF TAX WAS MADE UNDER A WRONG SECTION. THE PAYMENT MADE FOR HIRED VEHICLES THROUGH COMMISSION AGENTS WAS THOUGH PAID IN CASH EXCEEDING RS.20,000/- FALLS WITHIN THE EXCEPTI ON PROVIDED IN CLAUSE (K) TO THE RULE 6DD OF THE RULES AND WE FIND NO MERIT IN THE ORDERS OF AUTHORITIES BELOW IN DISALLOWING THE SAID PAYMENT AS NOT ALLOWABLE UNDER SECTION 40A(3) OF THE ACT. FURTHER IN THE STATEMENT RECORDED, THE DIRECTOR OF ASSESSEE COMPANY HAD STAT ED THAT ADVANCE LORRY CHARGES WERE PAID IN CASH TO PAR TIES. NO QUERY WAS RAISED AS TO THE PERSONS TO WHOM PAYME NTS ARE BEING MADE. IN THE SAID CIRCUMSTANCES, WE FIND NO MERIT IN ORDERS OF AUTHORITIES BELOW. REVERSING THE ORDER OF CIT(A), WE DIRECT THE ASSESSING OFFICER TO DELETE T HE DISALLOWANCE MADE UNDER SECTION 40A(3) OF THE ACT A T RS.64,60,549/-. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 5.1. WE FIND THAT THE FACTS AND CIRCUMSTANCES BEFORE US ARE ALSO SIMILAR. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO ALLOW THE ASSESSEES APPEAL ON SI MILAR LINES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 13.05.2016. SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 13 TH MAY, 2016 VBP/- 6 ITA.NO.819/HYD/2015 THE HINDUSTAN CORPORATION (HYD) P. LTD., HYDERABAD. COPY TO : 1. THE HINDUSTAN CORPORATION (HYD) P. LTD., HYDERABAD. C/O. MR. K. VASANTKUMAR & MR. A.V. RAGHURAM, * MR. P. VINOD, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500 001. 2. THE INCOME TAX OFFICER, WARD - 2(2), HYDERABAD. 3. CIT(A) - II, HYDERABAD. 4. PR. CIT - II, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE