ITO - 6(2)-2, MUMBAI V. M/s. DECCAN EXPRESS TRANSPORT P. LTD., MUMBAI

ITA 901/MUM/2007

• Counselvise Citation: 90119914 RSA 2007
• Duration Of Justice: 4 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 31-01-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUBAL SR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 901/MUM/2007 (A.Y. 2003-2004) ITA NO. 3881/MUM/2007 (A.Y. 2004-2005) INCOME TAX OFFICER, 6(2)-(2), R.NO.562, AYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. M/S DECCAN EXPRESS TRANSPORT PVT. LTD., 101, KTCH MEMON TRUST, BLDG.272, NARSHI NATHA STREET, MASJID, MUMBAI-400 009. PAN: AAACD 2959G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.R. KUBAL, SR.A.R., RESPONDENT BY : SHRI K.GOPAL /SHRI JITENDRA SINGH /SHRI SATENDRA PANDEY O R D E R PER PRAMOD KUMAR: THESE APPEALS WERE ORIGINALLY DISPOSED OF BY THIS T RIBUNAL, VIDE ORDER DATED 17 TH APRIL, 2009. ONE OF THE COMMON GROUNDS OF APPEAL OF THE ASSESSING OFFICER WAS AGAINST LD. CIT (A)S DIRECTI NG THE ASSESSING OFFICER TO ACCEPT THE PAYMENTS OF RS. 77,44,795/- (FOR A.Y. 2 003-2004) AND RS. 51,01,550/- (FOR A.Y. 2004-2005) AS GENUINE EVEN TH OUGH THE SAME WAS CLAIMED TO HAVE BEEN MADE TO TRANSPORT AGENTS WHO D ENIED HAVING RECEIVED THE SAME. WHILE DEALING WITH THIS GRIEVANCE, THE T RIBUNAL HELD AS FOLLOWS:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY AND HAVE PERUSED THE VARIOUS DETAILS OF FREIGHT PAID AS FILED BY THE ASSESSEE IN ITS COMPILATION BEFORE THE TRIBUNAL. W E FIND THAT THERE IS NO ABNORMALITY IN THE PRACTICE OF THE ASSE SSEE TO MAKE THE FREIGHT PAYMENT TO THE TRUCK WALLAS DIRECT LY AND NOT TO BROKER PARTIES. THE BROKER PARTIES RECEIVED THE IR BROKERAGE FROM THE TRUCK OWNERS ONLY. THE ASSESSEE HAS FILED COMPLETE ITA NO. 901/M/2007 (A.Y.2003-04 ITA NO. 3881/M/2007 (A.Y.2004-05 2 DETAILS OF THE FREIGHT PAID BY IT TO THE DIFFERENT TRUCK OWNERS FOR THE RELEVANT PERIODS SPECIFYING THE LOADING BRA NCH, LOAD DATED, REPORT (FC) NO., LORRY NO. AND THE AMOUNT OF FREIGHT PAID AT DESTINATION BY THE ASSESSEE. WE FIND THAT NOT A SINGLE ITEM OF PAYMENT TO DIFFERENT TRUCK OWNERS COULD BE PROVED AS BOGUS OR NON-GENUINE BY THE DEPARTMENT. THE APPROA CH OF THE ASSESSING OFFICER IN DISALLOWING THE ENTIRE FRE IGHT EXPENSES PAID IN CASH BY THE ASSESSEE, IS UNSUSTAIN ABLE IN LAW. THE ASSESSEE HAS SHOWN CORRESPONDING RECEIPTS OF FREIGHT CHARGES FROM ITS CLIENTS AND THE SAME HAS B EEN ACCEPTED BY THE DEPARTMENT. THE ASSESSING OFFICER HIMSELF HAS ALLOWED THE CHEQUE PAYMENTS MADE TO THE FOUR BR OKER PARTIES IN FULL. IN THESE FACTS OF THE CASE, WE AR E UNABLE TO SUSTAIN THE ACTION OF THE ASSESSING OFFICER IN DISA LLOWING ENTIRE FREIGHT CHARGES PAID IN CASH TO THE DIFFEREN T TRUCK OWNERS. HOWEVER, WE FIND THAT THE ASSESSEE HAS NOT PROCURED THE SIGNATURES OF THE TRUCK DRIVERS AT THE TIME OF MAKING PAYMENT OF FREIGHT IN CASH TO THEM. IN REPLY TO A SPECIFIC QUERY FROM THE BENCH, THE ASSESSEE COULD NOT SHOW A NY EVIDENCE OF THE PAYMENT OF FREIGHT CHARGES HAVING R ECEIVED BY THE TRUCK DRIVERS AT THE TIME OF UNLOADING OF GO ODS AT THE DESTINATION AND THEREFORE, THE PAYMENT OF FREIGHT I N CASH IS NOT WHOLLY VERIFIABLE. THE ONUS IS ON THE ASSESSEE TO PROVE WITH EVIDENCE THE GENUINENESS OF THE PAYMENT OF CAS H EXPENSES CLAIMED BY IT. IN THESE FACTS OF THE CASE , WE HOLD THAT THE ENDS OF JUSTICE SHALL BE MET, IF THE DISAL LOWANCE @ 10% OF THE TOTAL CASH PAYMENT OF FREIGHT CHARGES OF RS. 77.44 LAKHS AMOUNTING TO RS. 7.74 LAKHS IS SUSTAINED AND THE BALANCE ADDITION IS DELETED AND THE GROUND OF APPEA L NO.1 OF THE REVENUE IS PARTLY ALLOWED. 2. THE MATTER, HOWEVER, TRAVELLED FURTHER IN APPEAL AT THE INSTANCE OF THE ASSESSEE. HONBLE JURISDICTIONAL HIGH COURT, VIDE JUDGMENT DATED 5 TH FEBRUARY, 2010, VACATED THE ABOVE FINDINGS OF THE T RIBUNAL AND REMITTED THE MATTER BACK TO THE TRIBUNAL BY OBSERVING THE FOLLOW S:- THE APPEALS BY THE ASSESSEE AGAINST THE ORDER OF TH E INCOME TAX APPELLATE TRIBUNAL DATED 17 TH APRIL, 2009 PERTAIN TO ASSESSMENT YEAR 2003-04 AND 2004-05. BASICALLY, TWO ISSUES HAVE BEEN RAISED IN THE APPEALS AND THEY REL ATE TO : (I) THE DISALLOWANCE OF FREIGHT PAYMENT AMOUNTING TO RS . 7.74 LACS IN THE FIRST APPEAL AND RS. 5.10 LACS IN THE S ECOND OF THE TWO APPEALS; (II) THE DISALLOWANCE OF 50% OF THE FR EIGHT EXPENSES. ITA NO. 901/M/2007 (A.Y.2003-04 ITA NO. 3881/M/2007 (A.Y.2004-05 3 COUNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS DUR ING THE COURSE OF THE HEARING URGED SUBMISSIONS ONLY IN RESPECT OF THE FIRST OF THE TWO ISSUES. THE CIT (A) HAD ALLOWED THE ENTIRE PAYMENT OF FREIG HT CHARGES. IN APPEAL THE TRIBUNAL HAS EFFECTED A DIS ALLOWANCE AT 10% OF THE CASH PAYMENTS IN RESPECT OF FREIGHT CHAR GES. THE TRIBUNAL HAS NOTED THAT THE ASSESSEE HAD NOT PROCUR ED THE SIGNATURES OF THE TRUCK DRIVERS AT THE TIME OF MAKI NG PAYMENT OF FREIGHT IN CASH TO THEM AND IN RESPONSE TO A QUE RY FROM THE BENCH THE ASSESSEE COULD NOT SHOW ANY EVIDENCE OF T HE PAYMENT OF FREIGHT CHARGES HAVING BEEN RECEIVED BY THE TRUCK DRIVERS WEN THE GOODS WERE UNLOADED AT THE DESTINAT ION. HENCE, THE TRIBUNAL HELD THAT THE PAYMENT OF FREIGH T IN CASH IS NOT WHOLLY VERIFIABLE AND, THE ONUS BEING ON THE AS SESSEE, A DISALLOWANCE OF 10% HAS BEEN EFFECTED. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITT ED THAT BOTH BEFORE THE ASSESSING OFFICER AND BEFORE T HE CIT (A) THE ASSESSEE HAD PRODUCED THE RECORD RELATING TO TH E PAYMENT OF FREIGHT CHARGES IN ITS ENTIRETY INCLUDING THE RE CEIPTS OF THE TRUCK DRIVERS. HOWEVER, IT HAS BEEN STATED THAT ON THE DAY WHEN THE APPEALS WERE ARGUED BEFORE THE TRIBUNAL, C OUNSEL APPEARING ON BEHALF OF THE ASSESSEE WAS NOT IN POSS ESSION OF THE RECEIPTS. WE ARE OF THE VIEW THAT THE INTERESTS OF THE JUSTIC E WOULD REQUIRE THAT AN OPPORTUNITY SHOULD BE GRANTED TO TH E ASSESSEE TO MEET THE QUERY WHICH WAS RAISED BY THE TRIBUNAL ON THE QUESTION AS TO WHETHER RECEIPTS OF THE TRUCK DRIVER S IN RESPECT OF THE PAYMENT OF FREIGHT IN CASH ARE AVAILABLE FOR VERIFICATION. FOR THE PURPOSE AFORESAID, IT WOULD BE APPROPRIATE TO REMAND THE PROCEEDINGS ONLY ON THIS ASPECT TO THE TRIBUNAL . THE TRIBUNAL WOULD BE AT LIBERTY TO VERIFY WHETHER THE RECEIPTS ARE GENUINE AND WHETHER THEY WERE PRODUCED BY THE ASSES SEE DURING THE COURSE OF THE ASSESSM ENT PROCEEDINGS OR IN APPEAL BEFORE THE CIT (A). IN ORDER TO ENABLE A FRESH DET ERMINATION TO BE MADE ON THIS ASPECT, THE IMPUGNED ORDER OF THE T RIBUNAL IS SET ASIDE TO THE AFORESAID EXTENT AND THE PROCEEDIN GS ARE REMITTED BACK TO THE TRIBUNAL FOR A FRESH DECISION. THE APPEAL IS DISPOSED OF. IN THE CIRCUMSTANCES, THERE SHALL BE NO ORDER AS TO COSTS. 3. THAT IS HOW WE HAVE COME TO BE IN SEISIN OF THE MATTER ONCE AGAIN. ITA NO. 901/M/2007 (A.Y.2003-04 ITA NO. 3881/M/2007 (A.Y.2004-05 4 4. LEARNED COUNSEL FOR THE ASSESSEE HAS FILED VOLUM INOUS PAPER BOOKS CONTAINING RECEIPTS FOR FREIGHT CHARGES. HOWEVER, WHEN LEARNED COUNSELS ATTENTION WAS INVITED TO THE OBSERVATION MADE BY TH E ASSESSING OFFICER TO THE EFFECT THAT ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THEIR CLAIM THAT THE PAYMENT OF FREIGHT CHARGES ARE AID TO THE TRUCK OWNERS / TRUCK DRIVERS BOOKED THROUGH THE COMMISSION AGENT IT WAS SUBMITTED THAT THE ASSESSEE HAD PRODUCED AL L THE BOOKS OF ACCOUNTS AND VOUCHERS ETC., BEFORE THE ASSESSING OF FICER THOUGH THE ASSESSING OFFICER MAY NOT HAVE EXAMINED THE SAME. IT COULD ALSO NOT BE ESTABLISHED THAT THE LD. CIT (A) HAD THE BENEFIT OF EXAMINING ALL THESE DOCUMENTS EITHER. LEARNED COUNSEL, HOWEVER, SUBMIT S THAT HE HAS NO OBJECTION TO THE MATTER BEING REMITTED TO THE FILE OF THE ASSESSING OFFICER AS HE CAN EXAMINE THE EVIDENCES ON MERITS. LEARNED DE PARTMENTAL REPRESENTATIVE DOES NOT OBJECT TO THIS SUGGESTION A ND STATES THAT AS LONG AS THE ASSESSING OFFICER HAS AN OPPORTUNITY TO EXAMINE THIS MATERIAL, HE HAS NO OBJECTION TO THESE EVIDENCES BEING CONSIDERED. H E, HOWEVER, HASTENS TO ADD THAT THIS STAND SHOULD NOT BE CONSTRUED AS ADMI SSIBILITY OF EXPENDITURE ON MERITS. 5. HAVING REGARD TO THE ABOVE POSITION, AND IN DEFE RENCE TO HONBLE JURISDICTIONAL HIGH COURTS DIRECTIONS, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRE SH EXAMINATION ON MERITS. THE ENQUIRY MUST HOWEVER BE CONFINED TO BONAFIDES A ND GENUINENESS OF THE EVIDENCES, AND, UNLESS THESE ARE PROVED TO BE NOT G ENUINE OR INCOMPLETE, THE ASSESSING OFFICER SHALL DELETE THE ADHOC DISALLOWAN CE. WE DIRECT SO. ITA NO. 901/M/2007 (A.Y.2003-04 ITA NO. 3881/M/2007 (A.Y.2004-05 5 6. IN THE RESULT, AND IN MODIFICATION OF OUR ORDER DATED 17.04.2009, APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED ON THIS 30 TH DAY OF JUNE, 2011. SD/- SD/- V. DURGA RAO PRAMOD KUMAR JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 30 TH JUNE, 2011. OKK* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- VI, MUMBA I 4. COMMISSIONER OF INCOME TAX, CONCERNED 5. DEPARTMENTAL REPRESENTATIVE, BENCH D, MUMBAI TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI