Shri Sunil Kumar, Delhi V. ITO, New Delhi

ITA 956/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5245 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 25-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 40(a)(ia); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO-956/DEL/2016 (ASSESSMENT YEAR: 2010-11) SUNIL KUMAR PROP. M/S. BHAWAT GOLDEN CARRIER, 1953, OUTRAM LINE, KINGSWAY CAMP, NEW DELHI AGVPK9489Q VS ITO WARD-20(4) NEW DELHI REVENUE BY SH. K. SAMPATH ADV, & SH. V. RAJA KUMAR, ADV ASSESSEE BY SH. ABHISHEK KUMAR, SR. DR ORDER PER K. NARSIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 21/12/2015 IN APPEAL N O. 108/13-14 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-12, NEW DELHI (LD. CIT(A)), ASSESSEE PREFERRED THIS APPEA L CHALLENGING THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER IN INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE DATE OF HEARING 16.05.2019 DATE OF PRONOUNCEMENT 17.05.2019 ITA NO. 956/DEL/2016 2 INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AND MAKI NG DISALLOWANCE OF RS.42,60,708/-ON ESTIMATE BASIS. 2. BRIEFLY STATED FACTS, ACCORDING TO THE LEARNED A SSESSING OFFICER, ASSESSEE IS CARRYING ON THE BUSINESS OF TRANSPORTAT ION UNDER THE NAME AND STYLE OF M/S BHARAT GOLDEN CARRIER. FOR THE ASSESSM ENT YEAR 2010-11 ASSESSEE FILED HIS RETURN OF INCOME ON 29/9/2010 DE CLARING A TOTAL INCOME OF RS. 1,50,734/-AFTER ADJUSTING THE BROUGHT FORWAR D LOSSES FOR THE FINANCIAL YEAR 2008-09 RELEVANT TO ASSESSMENT YEAR 2009-10 OF RS.64,686/-. DURING SCRUTINY PROCEEDINGS, LEARNED A SSESSING OFFICER FOUND THAT THE ASSESSEE DEBITED TO ITS PROFIT AND L OSS A SUM OF RS. 2,13,03,542/-TOWARDS AMOUNTFREIGHT PAID. THE AUDITO RS REPORT WAS TO THE EFFECT THAT THE TDS HAS NOT BEEN DIRECTED FROM THE FREIGHT PAID NEITHER ANY DECLARATION FOR HAVING ONE OR TWOTRUCKS AND AGG REGATE OF THE AMOUNT OF SUCH SUMS CREDITED OR PAID DURING THE FINANCIAL YEAR DOES NOT EXCEED RS. 50,000/- NOR THE PAN NUMBERS OF TRUCK OWNERS WE RE OBTAINED. WHEN CALLED UPON TO EXPLAIN, ASSESSEE SUBMITTED THAT IND IVIDUAL TRUCK WAS SETTLED FROM MARKET ACCORDING TO THE AVAILABILITY O F TRUCKS AND REQUIREMENT OF THE COMPANY AT A SETTLED FREIGHT AN D AFTER SETTLEMENT FREIGHT AT A TIME NOT MORE THAN RS. 20,000 WAS PAI D. HE FURTHER STATED THAT TRUCKS ARE NOT ORGANISED SECTOR, INDIVIDUAL TR UCK IS ARRANGED AND PAYMENT OF FREIGHT IS MADE TO HIM AND HENCE NO TDS HAS BEEN DEDUCTED. 3. LEARNED ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAD NOT FILED ANY COPY OF LEDGER ACCOUNT OF THE FREIGHT CHARGES PAID NOR THE PARTY WISE PAYMENT DETAILS, IN SPITE OF BEING ASKED AND, THEREFORE, IN THE ABSENCE OF ANY SPECIFIC DETAILS 1/5 OF THE TOTAL CL AIM UNDER THIS HEAD WAS ESTIMATED TO BE COVERED, WHERE LIABLE TO DEDUCTED T HE TAX WAS THERE BUT ITA NO. 956/DEL/2016 3 THE SAME WAS NOT DEDUCTED. LEARNED ASSESSING OFFICE R,, THEREFORE, , DISALLOWED A SUM OF RS. 42,60,708/-UNDER SECTION 40 (A)(IA) OF THE ACT. 4. DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE IMPUGNED ORDER SPEAKS THAT THE ASSESSEE PRODUCED TH E PARTY WISE DETAILS OF THE FREIGHT AND AFTER OBTAINING THE REMAND REPOR T FROM THE LEARNED ASSESSING OFFICER, LD. CIT(A) ACCEPTED THE ADDITION AL EVIDENCE. HOWEVER, LD. CIT(A) HELD THAT THE TRUCK OWNERS WERE USED FOR ACTUAL TRANSPORTATION OF WORK AND, THEREFORE, THE CONTRAC T IS FOR TRANSPORTATION OF GOODS AND NOT AN ARRANGEMENT FOR HIRING OF VEHIC LES. HE, THEREFORE, DISMISSED THE APPEAL OF THE ASSESSEE HOLDING THAT T HE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE ATTRACTED TO THE C ASE OF THE ASSESSEE AS NO TDS WAS DEDUCTED ON THE AMOUNT OF RS. 2.13 CRORES U NDER SECTION 194C OF THE ACT. 5. ASSESSEE, THEREFORE, FILED THIS APPEAL. IT IS T HE ARGUMENT OF LD. AR THAT IN THIS CASE THE ASSESSEE IS A FACILITATOR AND PROVIDER OF TRANSPORT AND A DOES NOT OWN EVEN A SINGLE VEHICLE FOR TRANSPORT. ASSESSEE ONLY ARRANGES THE VEHICLES FOR THE PEOPLE WHO TRANSPORT THE GOODS AND THIS FACT IS EVIDENT FROM THE FINDINGS OF THE LD. CIT(A) TO T HE EFFECT THAT THE ASSESSEE HAD INCURRED ONLY OFFICE EXPENDITURE AND N O EXPENDITURE RELATING TO TRANSPORTATION OF GOODS SUCH AS LOADING , UNLOADING CHARGES ETC HAVE BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. LD. AR SUBMITS THAT IT IS NOT A CASE WHERE THE ASSESSEE RE NDERS ANY SERVICES TO THE TRANSPORTERS NOR ENGAGES ANY TRANSPORTER FOR TR ANSPORT OF HIS GOODS AND IT IS ONLY ON EARNING HIS MARGINS HE ENGAGES TH E TRANSPORTERS FOR THE TRANSPORT OF GOODS OF HIS CLIENTS. ITA NO. 956/DEL/2016 4 6. THE SECOND LIMB OF ARGUMENT OF LD. AR IS THAT TH E AUTHORITIES BELOW DID NOT FIND ANY SINGLE PAYMENT OF MORE THAN RS. 20,000/- FURTHER, ACCORDING TO THE ASSESSEE THE AUTHORITIES ARE NOT JUSTIFIED IN MAKING AND SUSTAINING ANY AD HOC ADDITION, WHICH IS IMPERMISSIBLE UNDER SECTION 194C OF THE ACT. 7. PER CONTRA, IT IS THE ARGUMENT OF THE LD. DR THA T FOR ATTRACTING THE PROVISIONS UNDER SECTION 194C OF THE ACT, IS NOT NE CESSARY THAT THERE THE ASSESSEE MUST OWN ANY VEHICLE, AND AS COULD BE SEEN FROM CLAUSE (IV) TO EXPLANATION TO SECTION 194C, IT IS CLEAR THAT WORK INCLUDES CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS. HE, THEREFORE, SUBMITTED THAT THE ASSESSEE CANNOT C ONTEND THAT HE IS NOT THE PERSON RESPONSIBLE TO DEDUCT THE TAX INASMUCH A S HE DOESNT OWN ANY VEHICLE. ACCORDING TO THE LD. DR THE ASSESSEE ENGAG ES THE TRANSPORTERS OR VEHICLE OWNERS AS SUB-CONTRACTORS FOR TRANSPORTA TION OF GOODS IN RESPECT OF WHICH HE ENTERS INTO A CONTRACT WITH THE CLIENTS. ON THIS GROUND HE JUSTIFIED THE IMPUGNED ORDERS. 8. AS COULD BE SEEN FROM THE IMPUGNED ORDER, IT IS CLEAR THAT ITS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE OWNS ANYV EHICLE. FURTHER DURING THE YEAR UNDER CONSIDERATION, HE RECEIVED FREIGHT R ECEIPTS TO THE TUNE OF RS. 2,25,63,625/-AND A PAID FREIGHT CHARGES OF RS.2 ,13,03,542/- MAKING AND EARNING OF RS. 2,60,083/- WHICH ROUGHLY CONSTIT UTES 1.15%. ASSESSEE FURNISHED THE DETAILS OF FREIGHT RECEIVED AND FREIG HT PAID. DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A) ASSESSE E ALSO PRODUCED THE PARTY WISE DETAILS OF FREIGHT ALONG WITH THE PAN NU MBERS. ITA NO. 956/DEL/2016 5 9. ALL THROUGH THE PROCEEDINGS IT IS THE CASE OF TH E ASSESSEE IS THAT THERE IS NO CONTRACT BETWEEN HIMSELF AND THE VEHICL E OWNERS FOR TRANSPORTATION OF GOODS BUT WHEN HE SECURES AN ORDE R FOR TRANSPORT OF GOODS, HE WAS SEARCHING FOR THE INDIVIDUAL TRUCK IN THE MARKET AND DEPENDING UPON THE AVAILABILITY OF THE TRUCK AND TH E REQUIREMENT OF THE CLIENT, AT A SETTLED FREIGHT, THE FREIGHT WAS PAID NOT MORE THAN RS. 20,000/- AT A TIME. ASSESSEES FURTHER CONTENTION IS THAT TH ERE HAS NEVER BEEN ANY CONTRACT BETWEEN THE ASSESSEE AND THE VEHICLE OWNER AND THE VEHICLE OWNERS ARE ENGAGED IN ON INDIVIDUAL BASIS AND PAID ON THE BASIS OF GOODS RECEIPTS ISSUED FOR EACH TRIP SEPARATELY. 10. LD. AR SUBMITS THAT THE OBSERVATIONS OF THE LD. CIT(A) THAT THE TRUCK OWNERS/OPERATORS ARE TRANSPORTING THE GOODS O N BEHALF OF THE ASSESSEE IS A FACTUAL ERROR AND HAS NO BASIS AT ALL . HE FURTHER SUBMITTED THAT THE LD. CIT(A) COMMITTED AN ERROR IN HIS OBSER VATION THAT IS NOT THE CASE OF THE ASSESSEE THAT HE IS A COMMISSION AGENT OR LORRY BOOKING AGENT MERELY ARRANGING TRANSPORTATION FOR VARIOUS PARTIES ; WHEREAS, AS A MATTER OF FACT, THE CONTENTION OF THE ASSESSEE HAS ALL THR OUGH BEEN IS THAT HE IS A COMMISSION AGENT OR LORRY BOOKING AGENT MERELY ARRA NGING TRANSPORTATION FOR VARIOUS PARTIES AND THIS FACT IS EVIDENT FROM THE OBSERVATIONS OF THE LD. CIT(A) HIMSELF THAT THE ASS ESSEE HAD INCURRED ONLY OFFICE EXPENDITURE AND NO EXPENDITURE RELATING TO TRANSPORTATION OF GOODS SUCH AS LOADING, UNLOADING CHARGE ETC HAS BEE N DEBITED. 11. ASSESSEE PLACED RELIANCE ON THE DECISIONS OF TH E HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. CA RGO LINKERS (2009) 179 TAXMAN 151 (DEL) AND CIT VS. HARDARSHAN SINGH ( 2013) 30 TAXMANN.COM 245 (DELHI) FOR THE PRINCIPLE THAT IN A CASE WHERE THE ITA NO. 956/DEL/2016 6 ASSESSEE WAS NOTHING BUT AN INTERMEDIARY BETWEEN TH E CLIENTS AND THE TRANSPORTERS AND MAINLY FACILITATES THE CONTRACT FO R CARRYING GOODS, HE CANNOT BE HELD AS THE PERSON RESPONSIBLE FOR DEDU CTION OF TAX AT SOURCE UNDER SECTION 194C . IN THIS MATTER THE MATCHING OF THE FREIGHT RECEIVED AND FREIGHT PAID BUT FOR THE DIFFERENCE OF 1.15% WH ICH ACCOUNTS FOR THE COMMISSION OF THE ASSESSEE, INDICATES THAT THE ASSE SSEE IS NOTHING BUT AN INTERMEDIARY BETWEEN THE CLIENTS AND THE VEHICLE OW NERS/OPERATORS AND MAINLY FACILITATES THE CONTRACT FOR CARRYING GOODS. 12. HAVING REGARD TO THE VOLUMES OF THE FREIGHT REC EIVED AND PAID IN CONTRAST TO THE EARNINGS OF THE ASSESSEE, ANALYZED IN THE BACKGROUND OF THE OBSERVATIONS OF LD. CIT(A) THAT THE ASSESSEE HA D INCURRED ONLY OFFICE EXPENDITURE AND NO EXPENDITURE RELATING TO TRANSPOR TATION OF GOODS SUCH AS LOADING, UNLOADING CHARGE ETC HAS BEEN DEBITED, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE ACTUALLY ENGAG EDHIMSELF NOT IN THE TRANSPORTATION BUSINESS,BUT ONLY FACILITATING OR AR RANGING TRANSPORTATION FOR VARIOUS PARTIES AND HE IS A MERE LORRY BOOKING AGENT.WE, THEREFORE, ARE OF THE OPINION THAT THE ASSESSEE CANNOT BE HELD AS THE PERSON RESPONSIBLE FOR DEDUCTION OF TAX AT SOURCE AND TO THE FACTS OF THE CASE THE PROVISIONS UNDER SECTION 194C OF THE ACT HAVE NO AP PLICATION. 13. NO COMING TO THE CONTENTION OF THE ASSESSEE THA T THE AD HOC ADDITION ON ESTIMATE BASIS IS NON-SUSTAINABLE, INSO FAR AS THE PROVISIONS UNDER CHAPTER XVII-B IN GENERAL AND TO SECTION 194C IN PARTICULAR, DISALLOWANCE ON ESTIMATE BASIS CANNOT BE SUSTAINED. VIEWING FROM ANY ANGLE, WE FIND IT DIFFICULT TO SUSTAIN THE DISALLOW ANCE MADE BY THE LEARNED ASSESSING OFFICER AND, THEREFORE, DIRECT THE SAME TO BE DELETED. ITA NO. 956/DEL/2016 7 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17.05.2019 SD/- SD/- (N. K. BILLAIYA) (K. NARSIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17.05.2019 R.N COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 15.05 .201 9 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER