DCIT, Circle - 8, Kolkata, Kolkata V. M/s. Premier Road Carriers Ltd., Kolkata

ITA 961/KOL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5080 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 30-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAY KUMAR SARDAR
• Section: 40A(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA (BEFORE SHRI P. M. JAGTAP, A.M. & SHRI S.S.VISWANET HRA RAVI, J.M.) ITA NO. 961/KOL/2011 : AS STT. YEAR : 2006-2007 DCIT, CIRCLE-8 KOLKATA VS M/S. PREMIER ROAD CARRIERS LTD. (PAN: AACCP 8468Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI UDAY KUMAR SARDAR, ADDL.CIT , SR.DR RESPONDENT BY : SHRI SUBASH AG ARWAL, ADVOCATE DATE OF HEARING : 18.01.2016 DATE OF PRONOUNCEMENT : 15-04-2016 ORDER PER SHRI S.S.VISWANETHRA RAVI, J.M . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 22.03.2011 PASSED BY THE CIT(APPEALS)-VIII, KOLKATA FOR THE ASSESSMENT YEAR 2006-07 FRAMED UNDER SECTION 144/14 3(3) OF THE I.T.ACT. 2. THE REVENUE BEING APPELLANT RAISED FOLLOWING GRO UNDS IN SUPPORT OF THEIR APPEAL:- (1) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE DISALL OWANCE U/S 40A(3) TO RS.14,04,748/-, INSTEAD OF RS.3,14,36,086 /-, WITHOUT AFFORDING PROPER OPPORTUNITY TO THE ASSESSI NG OFFICER TO CONDUCT A DETAILED INQUIRY IN TERMS OF PROVISION S OF SECTION 250(4) OF THE INCOME- TAX ACT, 1961 READ WI TH RULE 46A OF THE INCOME-TAX RULE, 1962. (2) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWA NCE OF RS.24,63,583/- ON ACCOUNT OF HAMALI CHARGES AND ADMINISTRATIVE EXPENSES, WITHOUT AFFORDING PROPER OPPORTUNITY TO THE ASSESSING OFFICER TO CONDUCT A D ETAILED INQUIRY IN TERMS OF PROVISIONS OF SECTION 250(4) OF THE 2 ITA NO.961/KOL/2011 M/ S. PREMIER ROAD CARRIERS LTD. ASSESSMENT YEAR: 2006-07 INCOME-TAX ACT, 1961 READ WITH RULE 46A OF THE INCO ME-TAX RULE, 1962. (3) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWA NCE OF RS.9,62,722/- ON ACCOUNT OF UNEXPLAINED LIABILITIES , WITHOUT AFFORDING PROPER OPPORTUNITY TO THE ASSESSING OFFIC ER TO CONDUCT A DETAILED INQUIRY IN TERMS OF PROVISIONS O F SECTION 250(4) OF THE INCOME- TAX ACT, 1961 READ WITH RULE 46A OF THE INCOME-TAX RULE, 1962. (4) THAT THE APPELLANT CRAVES LEAVE TO ADD, MODIFY, ALTER AND/ OR RESCIND ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING OF THE CASE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY CARRYING ON THE BUSINESS OF TRANSPORTATION AND FILED ITS RETURN DECLARING A TOTAL INCOME OF RS.39,37,067/-. THE ASS ESSEE HAS ITS CORPORATE OFFICE AT MUMBAI AND REGISTERED OFFICE AT KOLKATA. 4. GROUND NO.1 RELATES TO RESTRICTING THE DISALLOWA NCE UNDER SECTION 40A(3) TO RS.14,04,748/- AGAINST RS.3,14,36,086/-. DURING COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE CLAIMED EXPENDI TURE OF RS.39,29,51,199/- ON LORRY HIRE CHARGES. FOR NON-PR ODUCTION OF BREAK-UP OF SUCH EXPENDITURE, THE AO ASSUMED THAT LORRY HIRE CHARGES ARE PAID IN CASH IN EXCESS OF RS.20,000/- AND TAKEN 40% OF RS.3 9,29,51,199/- CHARGES AS VIOLATION OF SECTION 40A(3) OF THE ACT. THE AO ADDED 20% OF SUCH VIOLATION OF RS.3,14,36,086/- [ 40% OF RS.3 9,29,51,199/-] TO THE INCOME OF THE ASSESSEE. 5. THE LD. CIT(A) IN FIRST APPEAL, SOUGHT REMAND RE PORT AND DURING SUCH PROCEEDINGS THE AO FOUND RS.14,04,748/- WAS MA DE IN CASH IN EXCESS OF RS.20,000/-. THEREFORE, THE CIT(A) RESTRI CTED THE DISALLOWANCE UPTO RS.14,04,748/-. 3 ITA NO.961/KOL/2011 M/ S. PREMIER ROAD CARRIERS LTD. ASSESSMENT YEAR: 2006-07 6. BEFORE US, THE LD. DR CONTENDED THAT THE ASSESSE E FILED THE CONCERNED LEDGER COPIES BEFORE CIT(A), BUT WITHOUT ANY OPPORTUNITY BEING HEARD TO THE AO RESTRICTED THE DISALLOWANCE T O RS.14,04,748/- AGAINST RS.3,14,36,086/- AND RELIED ON THE ORDER OF THE AO. THE LD. AR SUBMITTED THAT THE AO DID NOT GIVE THE ASSESSEE PRO PER OPPORTUNITY FOR SUBMISSION OF DETAILS OF EXPENDITURE WHICH WERE MAI NTAINED BY THE CORPORATE OFFICE IN MUMBAI AND THERE WAS DELAY OF G ETTING THE DETAILS FROM THE CORPORATE OFFICE IN SPITE OF THEIR EFFORTS , WHICH RESULTED INTO ASSESSMENT EX PARTE UNDER SECTION 144 OF THE ACT. F URTHER SUBMITTED THAT IN FIRST APPEAL, THE LD. CIT(A) RESTRICTED THE DISA LLOWANCE BASING ON REMAND REPORT SUBMITTED BY THE AO. 7. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL S AVAILABLE ON RECORD. THE MAIN CONTENTION OF THE REVENUE IS THAT THE CIT(A) DID NOT OFFER AN OPPORTUNITY TO THE AO, WHEREAS IN HIS ORDE R, IT IS OBSERVED THAT AN OPPORTUNITY WAS OFFERED TO AO AND ON HIS REMAND REPORT THE DISALLOWANCE WAS RESTRICTED TO RS.14,04,748/- THE R ELEVANT PORTION OF WHICH IS EXTRACTED BELOW: GROUND NO.4 IN THIS GROUND, THE APPELLANT HAS OBJECTED TO THE A CTION OF THE ASSESSING OFFICER IN DISALLOWING RS.3,14,36,086/- O N ESTIMATE BASIS ON ACCOUNT OF LORRY HIRE CHARGES U/S .40A(3) OF THE INCOME TAX ACT, 1961. IN THE REMAND REPORT OF THE ASSESSING OFFICER HE ST ATED THAT AFTER GOING THROUGH THE LEDGER COPIES IN RESPECT OF THE IMPUGNED EXPENDITURE, PRODUCED DURING THE APPELLATE PROCEEDINGS AND WHICH WERE SENT TO HIM FOR REMAND, THE CASH PAYMENT IN EXCESS OF RS. 20,000/- WERE FOUND TO THE TUNE RS.14,04,748/- ONLY, DETAILS OF WHICH ARE GIVEN IN ANNEXURE A OF THE REMAND REPORT. HENCE, THIS AMOUNT IS DISALLO WABLE U/S. 40A(3) OF THE INCOME TAX ACT, 1961. IN VIEW OF THE ABOVE FINDING GIVEN BY THE A.O. IN THE REMAND REPORT, AFT ER PERUSAL AND EXAMINATION OF THE DETAILS AND DOCUMENTS FURNIS HED BY THE ASSESSEE, THE DISALLOWANCE ON ACCOUNT OF LORRY HIRE 4 ITA NO.961/KOL/2011 M/ S. PREMIER ROAD CARRIERS LTD. ASSESSMENT YEAR: 2006-07 CHARGES IS RESTRICTED TO RS. 14,04,748/-. THE APPEL LANT GETS RELIEF OF RS.3,00,31,338/-. GROUND NO. 4 IS, THUS, PARTLY ALLOWED. 7.1 WE FIND THAT THE PROPER OPPORTUNITY WAS ACCORDE D TO THE AO FOR HIS COMMENTS AND IN TURN, THE AO EXAMINED THE DETAI LS AND BREAK-UP OF LORRY HIRE CHARGES AND FOUND THAT THE ASSESSEE HAS PAID RS.14,04,748/- IN EXCESS OF RS.20,000/-. ON SUCH REMAND REPORT THE CIT(A) RESTRICTED THE DISALLOWANCE TO RS.14,04,748/- AND THEREFORE, W E DO NOT FIND ANY MERIT IN THE GROUND RAISED BY THE REVENUE FOR VIOLA TION OF RULE 46A OF THE RULES. THE ASSESSEE DID NOT OFFER ANY EXPLANATI ON TO THE DISALLOWANCE OF RS.14,04,748/- AND THUS, WE CONFIRM AND JUSTIFY THE ORDER OF CIT(A) ON GROUND NO.1. ACCORDINGLY, THE GR OUND NO.1 FAILS AND IT IS DISMISSED. 8. GROUND NOS.2 AND 3 RAISED BY THE REVENUE RELATIN G TO DELETION OF DISALLOWANCE OF RS.24,63,583/- ON ACCOUNT OF HAMALI CHARGES AND ADMINISTRATIVE EXPENSES AND DELETION OF DISALLOWANC E OF RS.9,62,722/- ON ACCOUNT OF UNEXPLAINED LIABILITIES WITHOUT AFFOR DING PROPER OPPORTUNITY TO THE AO. THE REASONS RECORDED BY THE AO THAT THE EXPENSES OF HAMALI CHARGES AND ADMINISTRATIVE EXPEN SES REMAINED UNVERIFIED. THEREBY THE AO ADDED RS.24,63,583/- BEI NG 10% OF RS.2,46,35,827/-. ON ACCOUNT OF LIABILITY SHOWN BY THE ASSESSEE AND FOR NON-PRODUCTION OF DETAILS, THE AO ESTIMATED THE LIA BILITY AT 10% OF TOTAL LIABILITY OF RS.96,27,221/- AND ADDED RS.9,62,722/- TO THE TOTAL INCOME OF THE ASSESSEE. THE CIT(A) BASING ON REMAND REPORT DELETED BOTH THE IMPUGNED ADDITIONS. 9. THE LD. DR RELIED ON THE ORDER OF THE AO AND LD. AR RELIED ON THE ORDER OF CIT(A). 5 ITA NO.961/KOL/2011 M/ S. PREMIER ROAD CARRIERS LTD. ASSESSMENT YEAR: 2006-07 10. HEARD RIVAL SUBMISSIONS AND PERUSED THE RELEVAN T MATERIALS AVAILABLE ON RECORD. AS RIGHTLY POINTED OUT BY THE LD. AR THAT THE CIT(A) HAS GIVEN AN OPPORTUNITY TO AO FOR EXAMINATI ON OF DETAILS OF HAMALI CHARGES, ADMINISTRATIVE EXPENSES AND LIABILI TIES. WE FIND THAT THE AO SUBMITTED REMAND REPORT AND OFFERED NO ADVER SE REMARKS AGAINST THE ASSESSEE, THE RELEVANT PORTION OF WHICH IS REPR ODUCED HEREIN BELOW: GROUND NO. 5, 6 & 7 IN THESE GROUNDS, THE APPELLANT HAS OBJECTED TO THE ACTION OF THE ASSESSING OFFICER IN (I) DISALLOWING A SUM OF RS.24,63,583/- ON A COUNT OF HAMALI CHARGES AND ADMINISTRATIVE EXPENSES ON ESTIMATE BASIS, (II) DIS ALLOWING OF A SUM OF RS.9,62,722/- ON ACCOUNT OF LIABILITIES ON ESTIMATE BASIS AND (III) DISALLOWING A SUM OF RS.50 ,00,000/- ON ACCOUNT OF LORRY HIRE CHARGES ON ESTIMATE BASIS U/S. 40(A)(IA) OF THE INCOME TAX ACT, 1961. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT A ND PERUSED THE REMAND REPORT OF THE ASSESSING OFFICER ON THE DISALLOWANCES AS PER ABOVE GROUNDS. AS PER THE REMAND REPORT, AFTER GOING THROUGH THE E VIDENCES AND LEDGER ACCOUNTS PRODUCED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS, ALL THE DETAILS IN RESPECT O F THESE EXPENSES HAS BEEN VERIFIED BY THE A.O. AND NO ADVER SE INFERENCE WAS DRAWN BY HIM. IN LIGHT OF THE ABOVE R EMAND REPORT OF THE A.O., THE DISALLOWANCE CONTESTED BY T HE ASSESSEE IN GROUNDS NO. 5, 6 AND 7 ARE DELETED AND THESE GROUNDS ARE ALLOWED. THE APPELLANT GETS RELIEF OF R S. 84,26,305/-(I.E. RS.24,63,583/- ON ACCOUNT OF HAMAL I CHARGES AND ADMINISTRATIVE EXPENSES, RS. 9,62,122/- ON ACCOUNT OF LIABILITIES AND RS. 50,00,000/- ON ACCOU NT OF LORRY HIRE CHARGES U/S, 40(A)(IA) OF THE INCOME TAX ACT, 1961). 11. WE FIND THAT THE PROPER OPPORTUNITY WAS ACCO RDED TO THE AO FOR HIS COMMENTS AND IN TURN, THE AO EXAMINED THE DETAI LS AND ALL THE DETAILS IN RESPECT OF HAMALI CHARGES AND ADMINISTRA TIVE EXPENSES AND 6 ITA NO.961/KOL/2011 M/ S. PREMIER ROAD CARRIERS LTD. ASSESSMENT YEAR: 2006-07 THESE EXPENSES HAS BEEN VERIFIED BY THE A.O. AND TH E AO ALSO EXAMINED LIABILITIES AND NO ADVERSE INFERENCE WAS DRAWN BY H IM ON ALL THESE GROUNDS OF APPEAL. ON SUCH REMAND REPORT THE CIT(A) DELETED THE DISALLOWANCES ON HAMALI CHARGES AND ADMINISTRATIVE EXPENSES AND UNEXPLAINED LIABILITIES AND THEREFORE, WE DO NOT FI ND ANY MERIT IN THE GROUNDS 2 AND 3 RAISED BY THE REVENUE FOR VIOLATION OF RULE 46A OF THE RULES. THUS, WE CONFIRM THE ORDER OF CIT(A) ON GROU ND NOS.2 AND 3. ACCORDINGLY, THE GROUND NOS. 2 AND 3 FAILS AND THE Y ARE DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH APRIL, 2016. SD/- SD/- ( P.M.JAGTAP) (S.S.VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15/04/2016 TALUKDAR/SR.PS COPY OF ORDER FORWARDED TO: 1 M/S. PREMIER ROAD CARRIERS LTD., 32, J.L. NEHRU ROA D, KOLKATA 700 071 2 DCIT, CIRCLE-8, KOLKATA 3 THE CIT(A), 4 5 CIT, 5. D.R. TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA