ACIT, Alwar V. M/S THE TRUCK OPERATOR UNION, Alwar

ITA 844/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62018 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHRI
• Keywords: Opportunity of being heard
• Section: 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : A JAIPUR. BEFORE SHRI R.K. GUPTA AND SHRI SANJAY ARORA ITA NO. 844/JP/2011 ASSTT. YEAR : 2007-08 PAN :AAAAT 7537 Q THE ACIT VS. M/S. THE TRUCK OPERATOR UNION CIRCLE- 2 N.H. 8, NEAR CHORAHA ALWAR BEHROR, DISTT. ALWAR (APPELLANT) (RESPONDENT) C.O. NO.83/JP/2011 (ARISING OUT OF ITA NO. 844/JP/2011 ) ASSTT. YEAR : 2007-08 PAN :AAAAT 7537 Q M/S. THE TRUCK OPERATOR UNION VS. THE ACIT N.H. 8, NEAR CHORAHA CENTRAL CIRCLE- 2 BEHROR, DISTT. ALWAR ALWAR (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHRI RESPONDENT BY SHRI P.C. PARWAL DATE OF HEARING : 09.05.2012 DATE OF PRONOUNCEMENT : 16-05-2012 ORDER DATE OF ORDER : 16/05/2012. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDE R OF THE LD. CIT(A) RELATING TO ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS FILED THE CROSS OBJECTION. 2.1 IN THE GROUND OF APPEAL, THE DEPARTMENT IS AGAI NST RESTRICTING THE ADDITION OF RS. 45,22,457/- TO RS. 17,31,362/- BY APPLYING THE NET PROFIT RATE OF 3% INSTEAD OF 8% AS 2 APPLIED BY THE AO BY INVOKING THE PROVISION OF SECT ION 145(3) OF THE INCOME TAX ACT, 1961. 2.2 THE ASSESSEE IS OBJECTING THE REMAINING ADDITIO N SUSTAINED BY THE LD. CIT(A) OF RS. 17,31,362/- VIDE GROUND NO. 1 OF ITS C.O. 2.3 SINCE BOTH THE GROUNDS ARE INTERLINKED, THEREFO RE, THEY ARE BEING DISPOSED OF TOGETHER. 2.4 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A TRANSPORT UNION OF ITS MEMBERS. FOR BECOMING THE MEMBERS OF THE UNION, THE INDIVIDUAL MEMBER IS REQUIRED TO PAY MEMBERSHIP FEES. THE AIMS & OBJECTS OF ASSESSEE AS PER ITS CONSTITUTION IS AS UNDER:- - TO ENCOURAGE CO-OPERATION AMONG THE TRUCK OWNERS OF BEHROR - TO REPRESENT BEFORE THE ADMINISTRATION THE PROBLEM OF THE TRUCK OWNERS IN RESPECT OF OCTROI, SALES TAX ETC. - TO PROTECT INTEREST OF ALL THE TRUCK OWNERS BY REDU CING COMPETITION & BRINGING PARITY IN TRUCK FARES - TO SOLVE THE PROBLEMS OF THE TRUCK OWNERS TO REPRES ENT BEFORE THE GOVERNMENT WITH UNITY & CO-OPERATION THE UNION DOES NOT HAVE ANY TRUCKS OF ITS OWN. IT B OOKS THE TRUCK OF THE TRUCK OWNERS FOR WHICH IT CHARGES RS. 20/- PER BILTY. SAMPLE COPY OF BILTIES IS AT PAGES 21-26 OF THE PAPER BOOK . THE BILTY CHARGES ARE ACCOUNTED IN P&L A/C AT PAGE 12 OF THE PAPER BOOK. WHEN THE JOB IS PERFORMED BY THE TRUCK OWNER, THE HIRER OF THE TRUCK EITHER ISSUES THE CHEQUE OF FREIGHT DIRECTLY IN FAVOUR OF THE TRUCK OWNER (WITH OUT DEDUCTION OF TAX AT SOURCE) OR IN FAVOUR OF ASSESSEE UNION (AFTER DEDUCTION OF TAX AT SOURCE U/S 194C). THE AMOUNT SO RECEIVED BY THE UNION IN ITS BANK ACCOUNT IS WITHDR AWN IN CASH & DISBURSED TO THE CONCERNED TRUCK OWNER. THE AO MADE THE FOLLOWING O BSERVATIONS:- 3 (I) ASSESSEE FAILED TO PRODUCE VOUCHERS/EVIDENCES OF FR EIGHT PAYMENT OF RS. 5,77,12,083/- MADE IN CASH TO THE TRUCK OWNERS (II) IN THE RETURN OF INCOME, ASSESSEE HAS CLAIMED REFUND OF RS. 14,31,680/- AFTER TAKING CREDIT OF TAX DEDUCTED AT SOURCE OF RS. 14,6 0,603/- BY COMPANIES. HOWEVER, TOTAL RECEIPTS OF RS. 5,77,12,083/- AGAINS T THE SAME HAS NOT BEEN DECLARED IN P&L A/C. (III) HONBLE ITAT IN A.Y. 03-04 IN ASSESSEES OWN CASE I N ITA NO. 49/JP/2009 DT. 31.07.2009 RESTRICTED THE ADDITION MADE ON ACCO UNT OF SIMILAR FACTS TO RS. 3 LACS BUT THIS ORDER IS CHALLENGED BY THE DEPARTMENT BEFORE HONBLE HIGH COURT & ALSO THE FACTS STATED SUPRA IN POINT NO. (II) WER E NOT BROUGHT TO THE NOTICE OF THE HONBLE BENCH WHILE DECIDING THE APPEAL. (IV) IN A.Y. 06-07, N.P. RATE OF 10% WAS APPLIED ON ESTI MATED RECEIPTS OF RS. 2.5 CRORES ACCORDINGLY, IT APPLIED THE N.P. RATE OF 8% ON GROS S RECEIPTS OF RS. 5,77,12,083/-, THEREBY MAKING ADDITION OF RS. 46,16,967/-. 2.5 THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.16, 36,852/- BY APPLYING N.P. RATE OF 3% ON TOTAL RECEIPTS OF RS. 5,77,12,083/-. IN DOING SO, HE GAVE THE FOLLOWING FINDINGS:- ..IT IS ALSO SEEN THAT THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNT AND IN SUCH CIRCUMSTANCES AND FACT S OF THE CASE, THE ASSESSING OFFICER HAS TO PROCEED IN MAKING THE ASSESSMENT TAK ING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH THE ASSESSING OFFICER HAS GATHERED A FTER GIVING THE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE THEREFORE THE PAYMENTS AND EXPENSES SO INCURRED THOUGH ARE NOT VERIFIABLE. THEREFORE UNDER SUCH CIR CUMSTANCES AND FACTS OF THE CASE AND MATERIAL ON RECORD WHETHER INCOME ASSESSED BY THE ASSESSING OFFICER IS CORRECT OR NOT HAS TO BE SEEN IN THIS BACKGROUND. T HE LEARNED COUNSEL HAS NOT SUBSTANTIATED HIS CLAIM OF INCOME AS RETURNED IN TH E RETURN OF INCOME WITH ANY DOCUMENTARY EVIDENCE. THEREFORE, IN THE CIRCUMSTANC ES AND FACTS OF THE CASE, IN THE ABSENCE OF THE BOOKS OF ACCOUNT OR ANY DETAILS, THERE IS EVERY POSSIBILITY OF LEAKAGE OF REVENUE. DURING THE COURSE OF APPELLATE PROCEEDING, THE LEARNED COUNSEL HAS RELIED UPON THE DECISION OF AMRITSAR BE NCH OF INCOME TAX APPELLATE TRIBUNAL, IN CASE OF BHATINDA TRUCK OPERATORS UNION VS. ITO, WARD-1(3), AS REPORTED IN 158 TAXMAN 148, WHEREIN UNDER SUCH CIRC UMSTANCES A NET PROFIT RATE OF 3% OF TOTAL RECEIPT IS APPLIED WITHOUT GIVING AN Y DEDUCTION ON ACCOUNT OF ANY EXPENSES AS THE INCOME WAS DIRECTED TO COMPUTED BY APPLYING NET PROFIT RATE OF 3%. IN A.Y. 2003-04 THE HONBLE ITAT, JAIPUR IN CAS E OF THE ASSESSEE HAS RESTRICTED THIS ADDITION AT RS. 3 LACS ON 77,70,000 /- INCOME ESTIMATED BY THE AO. IN A.Y. 2006-07, MY PREDECESSOR HAS APPLIED 3% NET PROFIT RATE ON TOTAL RECEIPT IN APPEAL NO. 322/08-09. THEREFORE, BY FOLLOWING THE S AID ORDER, IT IS DIRECTED TO APPLY A NET PROFIT RATE OF 3% ON TOTAL RECEIPTS OF RS. 5,77,12,083/-. THUS, THE NET 4 ADDITION ON THIS ACCOUNT WILL BE WORKED OUT TO RS. 16,36,852/- (RS.17,31,362 RS.94,510) AND THE REMAINING ADDITION OF RS. 28,85, 605/- IS HEREBY DELETED. THUS, THE APPELLANT WILL GET A RELIEF OF RS. 28,85,605/-. 2.6 NOW BOTH THE PARTIES ARE IN APPEAL HERE BEFORE THE TRIBUNAL. 2.7 THE LD. DR PLACED RELIANCE ON THE ORDER OF THE AO. 2.8 ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASS ESSEE FILED THE WRITTEN SUBMISSION. IT WAS FURTHER SUBMITTED THAT IN EARLIER YEAR THOUGH T HE TRIBUNAL HAS CONFIRMED THE NET PROFIT RATE OF 3% YET THE FACTS IS THAT THE ASSESSEE IS NO T TRANSPORTING ANY GOODS ITSELF BUT ONLY CHARGING RS. 20/- PER BILTY FROM THE TRUCK OWNERS / DRIVERS WHO IN FACT TRANSPORT THE MATERIAL ON BEHALF OF OTHERS. IT WAS FURTHER EXPLAI NED THAT THE TRIBUNAL IN EARLIER YEAR HAS OBSERVED THAT THERE IS NO EVIDENCE ON RECORD TO ASC ERTAIN THAT TDS AMOUNT HAS BEEN REFUNDED TO THE RESPECTIVE TRUCK OWNERS/ DRIVERS. I T WAS SUBMITTED THAT IN EARLIER YEAR THE ASSESSEE COULD NOT PRODUCE VARIOUS DETAILS BUT IN T HE YEAR UNDER CONSIDERATION, ALL THE DETAILS ARE KEPT. THE WHOLE OF AMOUNT HAS BEEN PAID TO THE TRUCK OWNERS/ DRIVERS WHO IN FACT TRANSPORTED THE GOODS. THE TDS WAS RETAINED BY THE ASSESSEE AS THE SAME HAS TO BE CLAIMED AS REFUND. WHENEVER, IT WAS SAID AFTER ASCE RTAINING THAT THE GOODS HAS BEEN DELIVERED TO THE DESTINATIONS THEN THE TDS AMOUNT I S ALSO PAID TO THE RESPECTIVE TRUCK OWNER/ DRIVER. IN SUPPORT OF THIS CONTENTION, THE L D. AR OF THE ASSESSEE PRODUCED THE REGISTER SHOWING THE PAYMENT OF TDS AFTER OBTAINING THE SIGNATURE OF THE RESPECTIVE PARTY. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CAS E, IT WAS REQUESTED THAT A REASONABLE VIEW BE TAKEN INSTEAD OF FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE EARLIER YEAR. 2.9 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AFTER CONSIDERING THE WRITTEN SUBMISSION OF THE ASSESSEE INCLUDING THE ORDER OF THE TRIBUNAL FOR THE IMMEDIATELY PRECEDING YEAR, WE FIND THAT THERE IS NO SUBSTANCE IN THE APPEAL OF THE DEPARTMENT AND THE ASSESSEE DESERVES TO SUCCEED IN ITS GROUND IN PART. UNDISPUTEDLY, THE 5 ASSESSEE IS A TRANSPORT UNION CONSTITUTED BY ITS ME MBERS. A MEMBERSHIP FEE IS PAID TO THE UNION. THE ASSESSEE IS CHARGING RS. 20/- PER BI LTY FROM THE TRUCK OWNERS WHO IN FACT TRANSPORTED THE MATERIALS. THE SAMPLE COPIES OF TH E BILTIES ARE PLACED AT PAGES 21 TO 26 OF THE PAPER BOOK. THE BILTY CHARGES ARE ACCOUNTED FOR IN THE PROFIT AND LOSS ACCOUNT. WHEN THE JOB IS PERFORMED BY THE TRUCK OWNERS, THE HIRER OF THE TRUCK EITHER ISSUES THE CHEQUE OF FREIGHT DIRECTLY IN FAVOUR OF THE TRUCK OWNER WITHO UT DEDUCTING THE TAX AT SOURCE OR IN FAVOUR OF THE ASSESSEE UNION AFTER DEDUCTING THE TA X AT SOURCE U/S 194C OF THE ACT. THE AMOUNT SO RECEIVED BY THE UNION IS KEPT IN ITS BANK ACCOUNT AND AFTER WITHDRAWING FROM THE BANK, THE SAME IS DISBURSED TO THE CONCERNED TR UCK OWNER. THE SIMILAR ISSUE CAME UP BEFORE THE TRIBUNAL IN EARLIER YEAR. THE TRIBUNAL A FTER CONSIDERING THE DETAILED SUBMISSIONS SUSTAINED THE ADDITION OF RS. 3.00 LACS . WHILE HOLDING SO, THE TRIBUNAL OBSERVED THAT THE ASSESSEE COULD NOT LEAD ANY EVIDE NCE IN RESPECT OF THE CLAIM THAT TDS AMOUNT WHICH WAS DEDUCTED BY THE HIRER HAS BEEN REF UNDED TO THE TRUCK OWNER AND THEREFORE, THE TRIBUNAL SUSTAINED THE ADDITION OF R S. 3.00 LACS. HOWEVER, IN THE YEAR UNDER CONSIDERATION , THE LD. AR OF THE ASSESSEE HAS PROD UCED THE REGISTER SHOWING THAT THE TDS AMOUNT HAS BEEN REFUNDED TO THE RESPECTIVE TRUCK OW NER. WE FURTHER NOTED THAT FOR THE ASSESSMENT YEAR 2003-04 ALSO, THE TRIBUNAL HAS SUST AINED THE ADDITION OF RS. 3.00 LACS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE A ND ALSO THE PAST HISTORY OF THE CASE, WE ARE OF THE VIEW THAT SINCE THE FACTS ARE SIMILAR, T HEREFORE, WE DIRECT THE AO TO RESTRICT THE ADDITION TO RS. 3.00 LACS AGAINST THE NET PROFIT RA TE OF 3% DIRECTED TO BE APPLIED BY THE LD. CIT(A) ON THIS ISSUE. IN THIS WAY, THE GROUND OF TH E DEPARTMENT FAILS AND THE GROUND OF THE C.O. OF THE ASSESSEE IS ALLOWED IN PART. 6 3.1 THE NEXT GROUND OF THE ASSESSEE IN ITS C.O. IS REGARDING ASSESSING THE MEMBERSHIP FEE OF RS. 1,05,600/- IN INCOME IGNORING THAT THE S AME IS NOT TAXABLE ON THE PRINCIPLE OF MUTUALITY. 3.2 DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS GROUND WAS NOT TAKEN UP BEFORE THE AO OR BEFORE THE LD. CIT(A). HOWEVER, IN VIEW OF THE DECISION OF HON'BLE APEX COURT IN THE CASE OF NTPC LTD. VS. CIT, 229 ITR 383, THE GROUND IS ADMISSIBLE SINCE IT IS A LEGAL GROUND. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE RECEIVED THE MEMBER SHIP FOREIGN EXCHANGE FROM ITS MEMBERS AND THE FEE IS UTILIZED FOR THE PURPOSE OF FACILITATION WORK TO THE MEMBERS ONL Y. THEREFORE, MUTUALITY CONCEPT HAS TO BE SEEN ON THE FACT OF THE PRESENT CASE. RELIANCE H AVE BEEN PLACED IN THE CASE OF CHELMSFORD CLUB VS. CIT, 243 ITR 89 (SC) AND IN THE CASE OF SIND CO-OPERATIVE HOUSING SOCIETY VS. ITO , 26 DTR 149 (BOM.). 3.3 ON THE OTHER HAND, THE LD. DR OBJECTED IN ADMI TTING THE ADDITIONAL GROUND AS THE SAME WAS NEITHER TAKEN UP BEFORE THE AO NOR BEFORE THE LD. CIT(A). 3.4 AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THIS IS A LEGAL G ROUND AND CAN BE TAKEN UP AT ANY STAGE EITHER BEFORE THE AO OR BEFORE THE LD. CIT(A) OR B EFORE THE TRIBUNAL. THE HON'BLE APEX COURT IN THE CASE OF NTPC LTD. VS. CIT (SUPRA) HAS HELD THAT IF THE FACTS ARE NOT DISPUTED THEN THE LEGAL GROUND URGED SHOULD BE ACCEPTED. SIN CE THERE IS NO DISPUTE THAT THE ASSESSEE RECEIVED MEMBERSHIP FEE FROM ITS MEMBERS AND THE AS SESSEE WANTED TO CONSIDER THESE RECEIPTS ON ACCOUNT OF MUTUALITY, THEREFORE, THE G ROUND SO TAKEN UP IS ADMITTED. HOWEVER, SINCE IT WAS NOT URGED EITHER BEFORE THE AO OR BEFO RE THE LD. CIT(A), THEREFORE, IN THE INTEREST OF JUSTICE, THE MATTER IS REMANDED BACK TO THE FILE OF THE LD. CIT(A) TO DISPOSE OFF 7 THE SAME ON MERIT AFTER AFFORDING REASONABLE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. WE ORDER ACCORDINGLY. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D AND THE C.O. OF THE ASSESSEE IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL P URPOSES . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16-0 5-2012. SD/- SD/- ( SANJAY ARORA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, *MISHRA COPY FORWARDED TO :- THE ACIT, CIRCLE- 2, / THE ACIT , CENTRAL CIRCLE- 2 , ALWAR M/S. THE TRUCK OPERATOR UNION, ALWAR THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 844/JP/2011) BY ORDER, AR ITAT JAIPUR.