ITO WD 20(1)(2), MUMBAI V. CHOUDHARY TRANSPORT, MUMBAI

ITA 8214/MUM/2010

• Counselvise Citation: 821419914 RSA 2010
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 26-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY MEHTA
• Assessee Lawyers: PARESH JOHRI
• Keywords: Principle of natural justice; Additional evidence; Non-deduction of tax; Corroborative evidences
• Section: 194C

Judgement Text

, LH LHLH LH INCOME TAX APPELLATE TRIBUNAL,MUMBAI - C BENCH. . . , ! ! ! ! , ' '' '# ## # BEFORE S/SH. H.L.KARWA, PRESIDENT & RAJENDRA, ACCOU NTANT MEMBER ./ ITA NO. 8214/MUM/2010, $ $ $ $ % % % % / ASSESSMENT YEAR-2006-07 ITO 20(1)(2) MUMBAI. VS. M/S CHOUDHARY TRANSPORT 312, RAMNATH AHIR CHAWL, S.V. ROAD, ANDHERI-(W), MUMBAI-400061 PAN: AACFC3129Q ( &' / APPELLANT) ( ()&' / RESPONDENT) $*+ $*+ $*+ $*+ , , , , / APPELLANT BY : SHRI PARESH JOHRI, DR # - , / REVENUE BY : SHRI VIJAY MEHTA $ $ $ $ - -- - +. +. +. +. / DATE OF HEARING : 08-08-2013 /0% - +. / DATE OF PRONOUNCEMENT : 21-08-2013 $ $ $ $ , 1961 - -- - 254(1) +1+ +1+ +1+ +1+ '2 '2 '2 '2 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM CHALLENGING THE ORDER DATED 27.09.2010 OF THE CIT(A )-31. MUMBAI, ASSESSING OFFICER (AO) HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AN D IN THE CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 1,61,48,238/- BEING PAYMENTS MADE TO VARIOUS TRUCK/TANKER OWNERS WHERE PROVISIONS OF SECTION 194 C(2) AND SECTION 40(A)(IA) ARE APPLICABLE. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN THE CIRC UMSTANCES OF THE CASE IN DELETING THE ADDITION EVEN AFTER THE AOS FINDING THAT THE ASSES SEE HAD FAILED TO SUBMIT THE FORM NO. 15-I RECEIVED FROM VARIOUS PARTIES BEFORE THE CONCE R4NED AUTHORITIES I.E. CIT(TDS), MUMBAI WITHIN THE STIPULATED TIME AS ENVISAGED VIDE 2 ND PROVISO TO SECTION 194(3) OF THE I.T. ACT, 1961 AND IN FACT WHEN THE ASSESSEE ITSELF ADMITTED THAT THERE WAS TECHNICAL ERROR ON THE PART OF THE ASSESSEE IN FULFILLING THE ABOVE CONDITION. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(APPEA LS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NECESSARY. AO HAS ALSO FILED FOLLOWING ADDITIONAL GROUNDS OF A PPEAL: GROUND NO.I 2 ITA NO.8214/MUM/2010 M/S CHOUDHARY TRANSPORT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ADMITTING ADDITIONAL EVIDENCE3 WHICH WERE NOT SUBMITTED BEFORE THE ASSESSING OFFICER WITHOUT ANY SUFFICIENT CAUSE IN VIOLATION OF PROVISIONS OF RULE 46A AND WITHOUT EXAMINING THE GE NUINELY OF THE ADDITIONAL EVIDENCES GROUND NO.II THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ADMITTING ADDITIONAL EVIDENCES WHEN THE ASSESSEE HAS NOT ESTABLISHED THAT IT HAD OBTAINED FORM 15-I BEFORE MAKING PAYMENTS TO SUB- CONTRACTORS AND NO SUBMISSION WAS MADE BEFORE THE A O. FURTHER THE ASSESSEE HAS NOT MADE SUCH SPECIFIC GROUND OF APPEAL BEFORE THE CIT(A) TH AT THE ASSESSEE WAS IN POSSESSION OF THE FORM 15-I AND THE FORMS COULD NOT BE SUBMITTED BEFO RE THE AO DUE TO SOME CAUSE. GROUND NO.III THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(APPE ALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. GROUND NO.IV THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY G ROUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE-FIRM,ENGAGED IN THE BUSINESS OF PUBLIC TRA NSPORTATION OF GOODS, FILED ITS RETURN OF INCOME ON 27.10.2006 DECLARING TOTAL INCOME AT RS. 6.16 LA CS. INITIALLY THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT.LATER ON THE CASE WAS SELECTED FOR SCRUT INY AND ASSESSMENT WAS FINALISED BY THE AO ON 22.12.2008 U/S.143(3) OF THE ACT DETERMINING THE TO TAL INCOME OF THE ASSESSEE AT RS. 2.30 CRORES. 2.1. DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THAT A SSESSEE HAD DEBITED FREIGHT PAID TO THE PROFIT & LOSS ACCOUNT,AMOUNTING TO RS. 2.24 CRORES. HE CALLED FOR THE DETAILS AND AFTER PERUSING THE SAME,HE FOUND THAT ASSESSEE HAD NOT PAID TDS IN THE GOVERNMENT ACCOUNTS ON THE FREIGHT PAID. HE FURTHER FOUND THAT IT HAD ALSO NOT GIVEN ANY DET AILS OF THE TDS PAID ON THE SAID PAYMENTS. HE ASKED THE ASSESSEE TO JUSTIFY AS TO WHY THE FREIGHT PAID SHOULD NOT BE ADDED TO ITS TOTAL INCOME AS PE R THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT.THE ASSESSEE DID NOT FILE ANY JUSTIFICATION FOR NON DEDUCTION OF TAX. REFERRING TO PROVISION OF SECTION 194C OF THE ACT R.W. SECTION 40(A)(IA) OF THE ACT, AO HELD THAT RS. 2.24 CRORES HAS TO BE ADDED TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF ITS FAILURE TO DEDUCT TAX AT SOURCE. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). DURING THE APPELLATE PROCEEDINGS, ASSESSEE FILED ADDITIONAL EVIDENCES. F AA REMANDED THE MATTER TO THE AO AND CALLED FOR REMAND REPORT AS REQUIRED UNDER RULE 46A OF THE I.T. RULES,1962 (RULES). HE ALSO FORWARDED THE LETTER OF THE ASSESSEE DATED 29.12.2009 ALONG WITH THE FORM NOS. 15-I, FILED BY THE ASSESSEE. AO DIRECTED THE ASSESSEE TO SUBMIT THE SUPPORTING DOCU MENTS OF THE VEHICLES TO VERIFY THE CLAIM MADE BY IT THAT THE OWNERS OF THE TRUCKS WERE COVERED BY THE PROVISIONS OF THE ACT AND THAT THEY HAD SUBMITTED FORM NO. 15-I OF THE ACT.HE RECORDED THE STATEMENTS OF SOME OF THE OWNERS OF THE TRUCK UNDER 131 OF THE ACT ON TEST CHECK BASIS.THE PARTIE S SUMMONED BY THE AO SUBMITTED SUPPORTING DOCUMENTS OF THE OWNERSHIP OF THE TRUCKS/TANKERS. H E MADE FURTHER QUERIES ABOUT SUBMISSION OF THE FORM NO. 15-I.ASSESSEE INFORMED HIM THAT THE FO RMS WERE SUBMITTED ON 26.11.2009 IN THE OFFICE OF THE CIT(TDS), MUMBAI.IN HIS REMAND REPORT AO SUBMITTED THAT FORM NO. 15-I WERE PRODUCED BEFORE THE FAA FOR THE FIRST TIME, THAT FO RM NO. 15-I WERE NOT SUBMITTED IN THE PRESCRIBED TIME LIMITS,THAT THE ASSESSEE HAD FAILED TO COMPLY WITH THE STATUTORY OBLIGATION PRESCRIBED IN THE ACT . 2.2.. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, ASSESSMENT ORDER AND THE REMAND REPORT OF THE AO,FAA HELD THAT APPELLANT FOR THE FIRST TIME I N APPEAL HAD CLAIMED THAT THE PAYMENT AMOUNT - ING TO RS. 1.61 CRORES WAS MADE,TO VARIOUS TRUCKS/T ANKERS OWNERS,WITHOUT DEDUCTING TDS, THAT SAID PAYMENT WAS COVERED BY THE EXCEPTIONAL CLAUSE OF SECTION 194C OF THE ACT, THAT ASSESSEE SUBMITTED THAT PARTIES-IN-QUESTION HAD FILED THEIR DECLARATION IN FORM NO. 15-I FOR NOT DEDUCTING TDS TOWARDS FREIGHT CHARGES PAYABLE TO THEM, THAT N O SUCH EXPLANATION OR EVIDENCE WERE FILED BEFORE THE AO, ADDITIONAL EVIDENCES WERE FILED BEFO RE HIM WERE FORWARDED TO THE AO IN VIEW OF THE 3 ITA NO.8214/MUM/2010 M/S CHOUDHARY TRANSPORT PROVISIONS OF RULE 46A OF THE RULES, THAT THE AO HA D NOT RAISED ANY OBJECTION FOR NOT FILING THE SAME BEFORE HIM, THAT THE AO HAD VERIFIED THE GENUI NENESS OF THE CLAIM OF THE ASSESSEE, THAT AO HAD EXAMINED CERTAIN PARTIES ON TEST CHECK BASIS BY RECORDING STATEMENTS U/S 131 OF THE ACT, THAT ON ACCOUNT OF THESE FACTS AND CIRCUMSTANCES ADDITIONAL EVIDENCES FILED BEFORE HIM HAD TO BE ADMITTED, THAT FRESH EVIDENCES PRODUCED BY THE ASSESSEE HAD D IRECT BEARING ON THE DISALLOWANCE MADE BY THE AO. HE FURTHER HELD THAT FORM NO. 15-I WERE NOT FIL ED BEFORE THE PRESCRIBED AUTHORITY ON DUE DATES, THAT THE ASSESSEES DEFAULT OF NOT SUBMITTING THE F ORMS ON TIME WOULD NOT MAKE ITS GENUINE CLAIM DISALLOWABLE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THAT THERE WAS NO SUCH PROVISION IN THE ACT TO HOLD THAT IF THE DECLARATIO N MADE WAS NOT FILED ON TIME BEFORE THE AO HOLDING JURISDICTIONAL OVER THE TDS PROVISIONS CLAI M MADE BY THE ASSESSEE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT HAD TO BE APPLIED.REFERRING TO THE PROVISIONS OF SECTION 194C(3) OF THE ACT HE HELD THAT THE ASSESSEE WAS JUSTIFIED IN NOT DEDUCTI NG THE TDS IN RESPECT TO THE PAYMENTS MADE TO THE TRUCK/TANKER OWNERS WHO HAD FILED THEIR RESPECTIVE DECLARATION IN FORM NO. 15-I ,THAT THE DEFAULT OF NOT FILING FORM NO. 15-I ON TIME MIGHT RESULT IN TO VARIOUS OTHER PENAL PROVISIONS PROVIDED IN CHAPTER XVII-B OF THE ACT.FINALLY, HE HELD THAT AO WAS NOT JUSTIFIED IN DISALLOWING THE SAME OF RS. 1.61 CRORES UNDER THE PROVISIONS OF SECTION 40(A)(I A) OF THE ACT. OUT OF TOTAL DISALLOWANCE OF RS. 2.24 CRORES,HE UPHELD THE ADDITION OF RS. 62,99,563 /- BECAUSE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 194C OF THE ACT-FORM NO.15-I WERE NOT FI LED NOR PROOF OF TDS PAYMENT WAS PRODUCED BY THE ASSESSEE-FIRM 2.3. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) SUBMITT ED THAT FAA HAD ADMITTED THE ADDITIONAL EVIDENCES IN VIOLATION OF RULE 46 OF THE RULES, THA T FORM NO. 15-I WERE NOT FILED ON DUE DATE, THAT RELYING UPON THE FRESH EVIDENCES HE DELETED THE ADD ITION MADE BY THE AO, EVEN THOUGH SAID FORMS WERE NOT SUBMITTED BEFORE HIM DURING THE ASSESSMENT PROCEEDINGS. AUTHORIZED REPRESENTATIVE (AR) SUBMITTED THAT PARTNERS OF THE ASSESSEE FIRM WERE N OT WELL-VERSED WITH THE PROVISIONS OF THE ACT, THAT THEY HAD MADE THE PAYMENT TO PERSONS WHO OWNED ONE/TWO TRUCKS/TRAILERS, THAT FORM NO. 15-I OBTAINED FROM THEM WERE SUBMITTED, THOUGH BELATEDLY , BEFORE THE AUTHORITY CONCERNED, THAT PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE NOT APPLICABLE IN THE CASE UNDER CONSIDERATION, THAT FAA HAD FOLLOWED THE PROCEDURE LAID DOWN BY RULE 46 A OF THE RULES, THAT DURING THE REMAND PROCEEDINGS AO HAD VERIFIED THE CLAIM MADE BY THE A SSESSEE, THAT FAA HAD UPHELD THE DISALLOWANCE OF RS. 62.24 LACS IN THE APPELLANT PRO CEEDINGS.HE RELIED UPON THE ORDERS OF ..DELIVERED BY THE BENCHES OF MUMBAI AN D AHMADABAD TRIBUNALS RESPECTIVELY, HE REFERRED PAGE NO. OF THE PAPER BOOK. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. FIRST WE WILL LIKE TO DEAL WITH THE ADDITIONAL GROUND RAISED BY THE AO.WE FIND THAT FAA HAD FORWARDED THE ADDITIONAL EVIDENCES, PRODUCED BEFORE HIM FOR THE FIRST TIM, T O THE AO. WE FIND THAT AO HAD SUMMONED THE TRUCK/TANKER OWNERS AND HAD RECORDED THEIR STATEMEN TS ON TEST CHECK BASIS. HE SENT A REPORT IN THIS REGARD TO THE FAA AFTER MAKING ENQUIRES.THUS DEPART MENT WAS NOT ADVERSELY AFFECTED BY ADMISSION OF FRESH EVIDENCES BY THE FAA.RULE 46A OF THE RULES REQUIRES THAT AO SHOULD BE GIVEN AN OPPORTUNITY BY THE FAA WHENEVER HE ADMITS FRESH ADD ITIONAL EVIDENCES. WE FIND THAT HE FOLLOWED THE PROVISIONS OF RULE 46A OF THE RULES IN SPIRIT A ND LAW.FIRST HE HAS MENTIONED THAT AS TO WHY HE WAS ADMITTING THE ADDITIONAL EVIDENCES AND LATER SA ME WER FORWARDED TO THE AO FOR FURTHER ENQUIRIES. IN SHORT HE HAD FOLLOWED THE PRINCIPLE O F NATURAL JUSTICE AND NO ADVERSE INFERENCE COULD BE DRAWN ABOUT HIS ACTION. SECTION 250 AS WELL AS R ULE 46A OF THE RULES ALLOWS THE FAA TO MAKE NECESSARY ENQUIRY AS HE THINKS FIT AND TO ADMIT ADD ITIONAL EVIDENCES OR TO REJECT THEM. DESCRETION HAS BEEN LEFT WITH THE FAA AS WHETHER TO ADMIT OR N OT TO ADMIT THE FRESH EVIDENCES. THE ONLY RESTRICTION IMPOSED IN THIS REGARD IS THAT HE SHOUL D NOT DECIDE THE ISSUE ON THE BASIS OF NEW EVIDENCES, WITHOUT HEARING THE AO. IN THE CASE UNDE R CONSIDERATION PROPER PROCEDURE HAS BEEN FOLLOWED BY HIM,SO WE DECIDE ADDITIONAL GROUNDS OF APPEAL FILED BY THE AO AGAINST HIM. 4 ITA NO.8214/MUM/2010 M/S CHOUDHARY TRANSPORT NOW WE WOULD LIKE TO DECIDE THE ISSUE ON MERITS.FAA HAS GIVEN A CATEGORICAL FINDING THAT ASSESSEE HAD MADE PAYMENTS OF RS. 1.61 CRORES TO SUCH TRUCK/ TANKER OWNERS WHO WERE COVERED BY THE PROVISIONS OF SECTION 194C OF THE ACT. HE HAD FORWA RDED THE FORM NO. 15-I, SUBMITTED BY THE ASSESSEE TO THE AO FOR VERIFICATION PURPOSES. WE FI ND THAT AO HAS NOT DOUBTED THE GENUINENESS OF THESE FORMS.THE OBJECTION OF THE AO WAS ABOUT NON-S UBMISSION OF THESE FORMS IN PRESCRIBED TIME LIMIT.WE AGREE WITH THE FAA THAT IN THE SAID DEFAUL T PROVISIONS OF SECTION 40(A)(IA) CANNOT BE INVOKED.SECTION 40(A)(IA) INTRODUCED WITH A DEFINIT E PURPOSE BY THE LEGISLATION.SIMILARLY PENAL PROVISIONS ARE INCORPORATED IN THE ACT TO PENALISE THE ASSESSEE WHO DO NOT FILE THE CERTIFICATE OF TDS IN TIME BEFORE THE PRESCRIBED AUTHORITIES.OFFICERS CONCERNED WERE FREE TO TAKE SUITABLE ACTION AGAINST THE ASSESSEE,BUT THE CLAIM MADE BY HIM CANNOT BE DI SALLOWED ONLY ON THE GROUND OF FORM NO. 15-I WERE NOT FURNISHED IN TIME.WE FURTHER FIND THAT FAA HAS SUSTAINED THE DISALLOWANCE AMOUNTING TO RS. 62.99 LACS BECAUSE THE ASSESSEE HAS NOT FILED A NY SUPPORTING EVIDENCE IN THIS REGARD. IN OUR OPINION, FAA HAS TAKEN A JUDICIOUS VIEW AFTER CONSI DERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE.HE ALLOWED RELIEF TO THE ASSESSEE WHERE EVIDEN CES WERE IN ITS FAVOUR,BUT CONFIRMED THE ADDITION MADE BY THE AO WHERE THE ASSESSEE COULD NO T PRODUCE ANY EVIDENCE. PROVISIONS OF SECTION 194C OF THE ACT STIPULATES THAT IN CERTAIN CASES TA X IS NOT REQUIRED TO BE DEDUCTED AT SOURCE. IF THE PAYMENT AMOUNTING TO RS. 1.61 CRORES WAS COVERED BY THAT SECTION THEN ASSESSEE WAS ENTITLED TO CLAIM THE SAME. CONSIDERING THE FACTS AND CIRCUMSTA NCES OF THE CASE UNDER CONSIDERATION, WE ARE OF THE OPINION THAT ORDER OF THE FAA DOES NOT NEED ANY INTERFERENCE FROM OUR SIDE. THEREFORE, UPHOLDING HIS ORDER WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. * +4 $*+ . 5 '6 - 1 * - + 78 9 ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST AUGUST,2013 . '2 - /0% : ;'$ 21 1#+ 0 - 1 9 SD/- SD/- ( . . /H.L.KARWA) ( ! ! ! ! / RAJENDRA) / PRESIDENT '# '# '# '# /ACCOUNTANT MEMBER / MUMBAI, ;'$ /DATE: 21 ST AUGUST,2013 SK '2 '2 '2 '2 - -- - (+< (+< (+< (+< =<%+ =<%+ =<%+ =<%+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT (A) / > ? , 4. THE CONCERNED CIT / > ? 5. DR C BENCH, ITAT, MUMBAI / <@1 (+$ , . . . 6. GUARD FILE/ 1 A 5 ITA NO.8214/MUM/2010 M/S CHOUDHARY TRANSPORT )<+ )<+ )<+ )<+ (+ (+(+ (+ //TRUE COPY// '2$ / BY ORDER, B / 7 DY./ASST. REGISTRAR , /ITAT, MUMBAI