Shew Kumar Bharatia, Raiganj V. J.C.I.T Rg - 3,Asansol, Asansol

ITA 998/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4262 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 03-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2013
• Court: TRIBUNAL
• Section: 194C; 154

Judgement Text

ITA NO. 998/KOL/13 SHEW KUMAR BHARTIA 1 IN THE INCOME TAX APPELLATE TRIBUNAL,B BENCH, KOLKATA BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 998/KOL/2013 A.Y: 2008-09 SHEW KUMAR BHARATIA VS. JOINT COMMISSIONER PAN: ADAPB4813D OF INCOME-TAX, RANGE-3 ASA NSOL (APPELLANT) (RESPONDENT) APPEARANCES BY: SHRI ARVIND AGARWAL, ADVOCATE, LD. AR FOR TH E ASSESSEE SHRI ABHIJIT DATTA, JCIT, LD.SR.DR DATE OF HEARING : 04-10-2016 DATE OF PRONOUNCEMENT : 04 -11-2016 O R D E R SHRI S.S. VISWANETHRA RAVI, JM :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26-09-2013 OF THE COMMISSIONER OF INCOME TAX, DURGAPUR PASSED U/SEC 154 OF THE ACT FOR THE ASSESS MENT YEAR 2008-09. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS:- I. FOR THAT, IN VIEW OF FACTS AND CIRCUMSTANCES OF THE EASE, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) GROSSLY ERRED O N FACTS AS WELL AS IN LAW IN UPHOLDING THE ADDITION OF RS. 4108894/- M ADE BY LD AO ON ACCOUNT OF TRUCK HIRE CHARGES UNDER THE PROVISIONS OF SEC 40(A)(IA) READ WITH SEC. 194C OF INCOME TAX ACT, 1961. ITA NO. 998/KOL/13 SHEW KUMAR BHARTIA 2 FOR THAT, WITHOUT PREJUDICE TO ABOVE, THE LD. COMMI SSIONER OF INCOME TAX (APPEAL) CONFIRMED THE ADDITION ON RS. 4108894/ - ON ALLEGED GROUND THAT CONTRACT EXISTED BETWEEN THE TRUCK OWNE RS AND APPELLANT IGNORING THE FACT THAT NO SUB-CONTRACTOR CAN BE APP OINTED BY THE APPELLANT AS PER TERMS OF CONTRACT LAID DOWN IN WOR K ORDER ISSUED BY THE CONTRACTEE E.G. EASTERN COALFIELD LTD. 3. FOR THAT, WITHOUT PREJUDICE TO ABOVE, THE LD. CI TCA) ERRED IN DRAWING ADVERSE VIEW REGARDING EXISTENCE OF CONTRAC T MERELY ON ALLEGED GROUND THAT TRANSPORTERS SUBMITTED FORM NO.151 TO T HE APPELLANT WITHOUT BRINGING ANY OTHER MATERIAL ON RECORD TO PR OVE THAT A CONTRACT EITHER ORAL OR WRITTEN EVER EXISTED FOR ANY FIXED Q UANTITY, RATE, DISTANCE AND PERIOD, BETWEEN VEHICLE OWNER AND APPELLANT. 4. FOR THAT, WITHOUT PREJUDICE TO ABOVE, THE LD. CI T (A) HAS GROSSLY ERRED AND WAS UNJUSTIFIED IN CONFIRMING DISALLOWANC E OF RS. 2071045/-, OUT OF RS. 4108894/- CONFIRMED BY HIM, BEING AMOUNT PAID TO VARIOUS PERSONS BELOW RS. 50000/- IN A YEAR WHO HAVE NOT SU BMITTED ANY FORM NO. 151 TO THE APPELLANT AND PROVISION OF SEC 40(A) (IA) CANNOT BE INVOKED TO SUCH PAYMENTS BELOW RS.50000/- IN A YEAR AND/OR BELOW RS. 20000/- IN SINGLE CONSIGNMENT. 5. FOR THAT, WITHOUT PREJUDICE TO ABOVE, THE LD. CI T CA) WAS WRONG AND UNJUSTIFIED IN CONFIRMING ADDITION OF RS. 2071045/- , BEING AMOUNT PAID TO PERSONS ABOVE RS. 50000/- IN A YEAR, OUT OF ADDI TION OF RS. 4108894 /- MADE BY LD. A.O. AND CONFIRMED BY HIM FOR ALLEGED V IOLATION OF SEC 40(A)(IA) OF INCOME TAX ACT, 1961 IGNORING THE FACT THAT THE SAID SECTION CANNOT BE INVOKED IN CASE OF PAYMENTS TO PE RSONS WHO FURNISHED FORM NO. 151 TO THE APPELLANT. 6. FOR THAT, WITHOUT PREJUDICE TO ABOVE, THE LD. CI T (A) WAS WRONG AND UNJUSTIFIED IN NOT APPRECIATING THE FACT THAT SEC 4 0(A) (IA) CANNOT BE INVOKED IF A PERSON IS NOT LIABLE TO DEDUCT TAX U/S 194(C) OF INCOME TAX ACT, 1961, ON ACCOUNT OF FACT THAT PAYEE HAS FU RNISHED FORM O. 151 TO THE PAYER OF TRANSPORT CHARGES. 7. FOR THAT, IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED ON FACTS AS WELL AS IN LAW IN CONFIRMI NG DISALLOWANCE OF RS. 4108894/- IGNORING THE FACT THAT WHOLE OF THE T RUCK HIRE CHARGES EXCEPT RS.138766/- HAVE BEEN DULY PAID DURING THE Y EAR UNDER APPEAL AND AS SUCH, HE OUGHT TO HAVE DELETED ADDITION OF R S. 3970128/- OUT OF TOTAL ADDITION OF RS. 4108829/- MADE BY LD. ASSESSI NG OFFICER. 8. FOR THAT, WITHOUT PREJUDICE TO ABOVE, LOWER AUTH ORITIES ERRED ON FACTS AS WELL AS IN LAW IN NOT APPRECIATING THE FAC T THAT ALL THE PERSONS, TO WHOM PAYMENT ABOVE RS. 50000/- HAVE BEEN MADE, A RE ASSESSED TO INCOME TAX AND PAYMENTS MADE TO THEM HAVE ALREADY B EEN TAXED IN THEIR HANDS, AND AS SUCH. THE LD. CIT(A) OUGHT TO H AVE DELETED THE ADDITION MADE BY LD. ASSESSING OFFICER. 9. FOR THAT, ORDER OF THE LD. A.O., IS OTHERWISE BA D ON FACTS AS WELL AS IN LAW. 10. FOR THAT, THE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONAL GROUNDS AND FOR CHANGE OR WITHDRAW ANY OF THE GROUNDS OR TH E WHOLE OF THE APPEAL AT THE TIME OF HEARING. ITA NO. 998/KOL/13 SHEW KUMAR BHARTIA 3 3. ALL THE GROUNDS ABOVE ARE RELATING TO THE ADDITI ON OF RS.22,20,830/-, THEREFORE, HEARD TOGETHER, WITH THE CONSENT OF THE PARTIES, APPEAL IS DISPOSED OFF TREATING ALL TH E GROUNDS AS ONE ISSUE. 4. THE ASSESSEE IS AN INDIVIDUAL AND IS A TRANSPORT CONTRACTOR CONDUCTING HIS BUSINESS IN THE NAME AND STYLE AS M/ S. ASOKA ROAD TRANSPORT AS A PROPRIETOR AND FILED HIS RETURN OF INCOME DISCLOSING AN INCOME OF RS.6,82,966/- ON 24-09-08. BESIDES TRANSPORT BUSINESS, ACCORDING TO AO HE HAS SUBSTANT IAL INTEREST IN DIGVIJAY DEALCOMM (P) LLD AND SHREE VORDHAN META LIKS PVT LTD AND IS REGISTERED WITH M/S EASTERN COALFIELD LT D FOR TRANSPORT WORKS OF COAL AND SAND. DURING THE YEAR U NDER CONSIDERATION, THE ASSESSEE WAS ENGAGED IN BUSINESS OF TRANSPORTING OF COAL AND SAND. IN RESPONSE TO THE STATUTORY NOTICES, THE ASSESSE THROUGH HIS AUTHORIZED REPRESE NTATIVE FILED THE REQUISITE DOCUMENTS. THE AO FOUND THE ASSESSEE DEBITED RS.41,08,894/- TOWARDS HIRE CHARGES TO HIS PROFIT A ND LOSS ACCOUNT. ON EXAMINATION BY THE LIST OF HIRED TRUCKS AS PROVIDED BY THE ASSESSEE, THE AO CONCLUDED THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE ON PAYMENTS MADE TOWARDS TRUCK HIRING CHARGES AND FOR NON FILING OF FORM NO:15J, THE ENTI RE TRANSPORTATION HIRE CHARGES OF RS.41,08,894/- FOR V IOLATION OF SEC. 194C OF THE ACT AND ADDED THE INCOME OF THE AS SESSEE BY INVOKING SEC40(A)(IA) OF THE ACT. 5. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT-A. THE CIT-A CAME TO A CONCLUSION TH ERE WAS CONTRACT BETWEEN ASSESSEE AND TRUCK OWNERS AND PAID TRUCK HIRING CHARGES IN ACCORDANCE WITH THE SAME AND CONF IRMED THE ADDITION MADE BY THE AO. ITA NO. 998/KOL/13 SHEW KUMAR BHARTIA 4 6. AS MATTER STOOD THUS, THE ASSESSEE FILED A PETIT ION U/S. 154 OF THE ACT, POINTING OUT MISTAKE IN CONFIRMATION OF ADDITION OF RS. 41,08,894/- BY THE CIT-A, FOR NON CONSIDERATION OF HIS SUBMISSION IN PARA 2.3, SPECIFICALLY, THE FULL AMOU NT OF RS. 41,08,894/- DEBITED AS TRUCK HIRE CHARGES CANNOT BE DISALLOWED, ONLY THOSE PAYMENTS EXCEEDING RS. 50,000/- MADE TO A PERSON TO THE EXTENT OF RS.20,37,849/- CAN BE DISALLOWED AND PLEADED ALLOWANCE FOR REMAINING AMOUNT OF RS.20,71,045/-. T HE CIT-A CONSIDERING THE ABOVE SUBMISSIONS, DIRECTED THE AO TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF RS.22,20,830/- AN D RENDERED RELIEF TO THE EXTENT OF RS.18,88,064/- AND THE RELE VANT PORTION OF WHICH IS REPRODUCED AS UNDER: THE APPELLANT HAS ALSO SUBMITTED ANOTHER LIST OF PA YMENTS BELOW RS. 50,000/- DURING THE YEAR VIDE PAGE 58 TO 60 OF PAPER BOOK ,ON WHICH THE APPELLANT CLAIMED RELIEF AS NO TDS IS EXIGIBLE ON THE SAME U/S 194C OF THE ACT, AN D ACCORDINGLY CONTESTED THAT THE SAME CANNOT BE DISAL LOWED U/S 40(A)(IA) OF THE ACT. HOWEVER, PERUSAL OF THE L IST OF PERSONS, AS APPEARING AT PAGE NO-58 TO 60 OF THE PA PER BOOK FILED ON DT.06.02.2013, TO WHOM PAYMENT BELOW RS. 50,000/- HAVE BEEN CLAIMED TO HAVE BEEN MADE IN E W HOLE YEAR, REVEALS THAT THERE ARE THREE PERSONS NAMELY I ) ANUTAM R. CHOUDURY (RS.30968+RS.23959) II) ASTICK MONDAL (RS.30245+RS.43900) AND III) PRADIP MONDAL (RS.13241+RS.12906+RS.27762), WHO HAVE BEEN PAID MO RE THAN RS. 50,000/- IN AGGREGATE IN THE WHOLE YEAR, A LTHOUGH AGAINST DIFFERENT VEHICLES. THEREFORE, THE TOTAL PA YMENT OF RS. 1,82,981/-, MADE TO THESE THREE PERSONS DOES NO T QUALIFY FOR RECTIFICATION AND BALANCE OF RS. 18,88, 064/- (RS.2071045-RS182981) IS REQUIRED TO BE DELETED OUT OF THE ADDITION OF RS. 41,08,894/- MADE BY THE ASSESSING O FFICER AND ERRONEOUSLY CONFIRMED BY THE LEARNED CIT(A), IN THE APPEAL ORDER DATED 18.02.2013. THEREFORE, I DIRECT THAT ADDITION OF RS. 18,88,064/- SHOULD BE DELETED AND B ALANCE AMOUNT OF RS.22,20,830/- ONLY STAND CONFIRMED OUT O F RS.41,08,S94/- WRONGLY CONFIRMED IN PARA 5 WHILE ADJUDICATING GROUND NO 3 IN THE APPELLATE ORDER DAT ED L8.02.2013. 5. IN THE RESULT, THE RECTIFICATION PETITION IS ALL OWED IN PART AND THE ASSESSING OFFICER IS DIRECTED TO GIVE EFFEC T TO THIS ORDER BY RESTRICTING THE DISALLOWANCE TO RS. 22,20, 830/- (RS.41,08,894/- LESS 18,88,064/-) OUT OF RS. 41,O5, 594/- ITA NO. 998/KOL/13 SHEW KUMAR BHARTIA 5 INADVERTENTLY CONFIRMED IN PARA 5, WHILE DECIDING G ROUND NO.3 IN THE APPELLATE ORDER DATED 18-02-2013. 7. THE ASSESSEE BEFORE US CHALLENGED THE ADDITION O F RS.22,20,830/- PASSED BY THE CIT-A U/SEC 154 OF THE ACT. THE LD. AR SUBMITTED THAT THERE IS NO CONTRACT BETWEEN THE ASSESSEE AND OWNERS OF HIRE TRUCKS AND THE APPLICATION OF SECTIO N 194C OF THE ACT DOES NOT ARISE AT ALL. THE LD.AR SUBMITS THAT T HE APPEAL IS COVERED BY THE ORDER DT: 20-07-2016 OF THIS TRIBUNA L IN THE CASE OF RAJA TRANSPORT IN ITA 29/KOL/2012 FOR A.Y 2008-0 9. ON THE CONTRARY, THE LD. DR RELIED ON THE ORDER OF AO. 8. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L ON RECORD. WE FIND THAT THE TRIBUNAL IN THE CASE OF RA JA TRANSPORT SUPRA HELD THAT FOR VIOLATION OF SECTION 194C AND ADDIT ION BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT IS NOT MAINTAINABLE IN THE ABSENCE OF EITHER VERBAL OR WRI TTEN CONTRACT. WE ALSO FIND THAT THE TRIBUNAL IN THE CASE OF SUPRA DERIVED SUPPORT FROM THE DECISION OF THE HONBLE JURISDICTI ONAL HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. STUMN INDI A IN ARRIVING SUCH CONCLUSION AS DISCUSSED ABOVE. THE RELEVANT DI SCUSSION AND FINDING OF THE TRIBUNAL IN THE CASE OF SUPRA AT PARA NO. 2.4 AND 2.5 ARE REPRODUCED HEREIN BELOW:- 2.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. THE FACTS STATED HER EINABOVE UNDISPUTED AND HENCE, THE SAME ARE NOT REITERATED F OR THE SAKE OF BREVITY; WE FIND FROM THE FACTS AND CIRCUMSTANCE OF THE CASE THAT THE PROVISION OF SECTION 194C(2) COULD NOT BE MADE APPLICABLE AS THERE WAS NO CONTRACT BETWEEN THE ASS ESSEE AND INDIVIDUAL DUMPER OWNERS AND HENCE, THE INVOCATION OF PROVISION OF SECTION 40(A)(IA) CANNOT BE MADE APPLICABLE. WE FIND THAT THE INVOCATION OF PROVISIONS OF SECTION 40(A)(IA) IS TO BE DECIDED ON THE SCOPE AND AMBIT OF SUCH ENACTMENT. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD INDEED DEDUCTED TAX AT SOURCE WHER EVER IT HAD DULY ENTERED INTO CONTRACTS FOR TRANSPORTATION OF G OODS TO THE TUNE OF RS.11,18,33,299/- OF THE TOTAL HIRE CHARGES ITA NO. 998/KOL/13 SHEW KUMAR BHARTIA 6 RS.16,17,19,641/-. IN RESPECT OF REMAINING HIRE CHA RGES OF RS.4,98,86,342/-,DEPENDING ON THE EXIGENCIES OF CIR CUMSTANCES, THE ASSESSEE HAD MADE PAYMENTS TOWARDS HIRE CHARGES ON TEMPORARY BASIS ON VARIOUS OCCASIONS WHICH WAS DONE FROM THE MARKET MOSTLY THROUGH BROKERS. WE FIND THAT THERE W AS NO MATERIAL TO SUGGEST THE DUMPER OWNERS/DRIVERS WHO A RE ARRANGED THROUGH BROKERS BY THE ASSESSEE WERE INVOL VED IN CARRYING OUT ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE BY SPENDING THEIR TIME, ENERGY AND BY TAKING THE RI SK ASSOCIATED WITH THE MAIN CONTRACT WORK. NO CONTRACT, EITHER VE RBAL OR WRITTEN, IS ENTERED INTO WITH THE OWNERS/DRIVERS IN THESE CASES OF PURELY TEMPORARY TRANSPORTING ARRANGEMENTS. 2.5 WE FIND THAT THE ISSUE BEFORE US IS COVERED B Y THE DIRECT DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. STUMN INDIA SUPRA, WHEREIN IT WAS HELD THAT : IT IS URGED BEFORE US THAT THE LEARNED TRIBUNAL OU GHT NOT TO HAVE ACCEPTED THE JUDGMENT AND ORDER OF THE CIT(APPEAL) WHO HAS QUASHED THE DISALLOWANCE OF DEDUCTION OF RS.41,33,710/- AND ON ACCOUNT OF TAX DEDUCTION AT SOURCE. THE LEARNED TRIBUNAL HAS RECOR DED THE FACT THAT THE DEPARTMENT HAS NOT BEEN ABLE TO B RING ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HA S MADE THE PAYMENT TO THE TRANSPORTERS IN PURSUANCE O F CONTRACT FOR CARRIAGE OF GOODS OF THE ASSESSEE AND THE QUESTION OF DEDUCTION AT SOURCE UNDER SECTION 194C DOES NOT AND CANNOT ARISE. IN THE ABSENCE OF EVIDENCE OF PAYMENT MADE BY THE ASSESSEE TO THE TRANSPORTERS, T HE ASSESSEE CANNOT BE SADDLED WITH THE LIABILITY OF DE DUCTING TAX AT SOURCE. BEFORE US NO OTHER POINT AS BEING UR GED NOT IT IS SAID THAT THE AFORESAID FACT FINDING IS TRUTH FUL WITHOUT ANY BASIS WHATSOEVER. 9. IN THE PRESENT CASE THE CONTENTION OF THE ASSES SEE AS NOTICED FROM THE ORDERS OF THE AUTHORITIES BELOW THAT THERE WAS NO CONTRACT IN EXISTENCE BETWEEN THE ASSESSEE AND THE OWNERS OF HIRED TRUCKS . IN SUCH CIRCUMSTANCES AS RIGHTLY POINTED OUT BY THE LD. AR THAT THE FACTS IN THE AFOREMENTIONED CASE AS DECIDED BY THE KOLKATA TRIBU NAL IN THE CASE OF SUPRA ARE CLEARLY APPLICABLE TO THE PRESENT FACTS OF THE CASE TO THE EXTENT THAT THE REVENUE COULD NOT PRODUCE ANYTHING ON RECO RD TO SHOW THE EXISTENCE OF ANY CONTRACT. WE ALSO FIND THAT THE T RIBUNAL SUPRA WHILE CONSIDERING THE CASE ON HAND DERIVED SUPPORT FROM T HE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF CALCUTTA IN THE CASE O F SUPRA. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE ORDER OF THE C IT-A IS UNJUSTIFIED AND ITA NO. 998/KOL/13 SHEW KUMAR BHARTIA 7 ACCORDINGLY, WE DELETE THE IMPUGNED ADDITION AS MA DE BY THE CIT-A BY HIS ORDER DT. 26.9.2013 UNDER SECTION 154 PROCEEDINGS O F THE ACT. THUS, THE GROUNDS RAISED ARE ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH NOVEMBER,2016. SD/- SD/- M.BALAGANESH S.S.VIS WANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 04/ 11/2016 1. THE APPELLANT/ ASSESSEE : SHEW KUMAR BHARTIA PROP : ASHOKA ROAD TRANSPORT, TARBANGLA, N.S.B TOAD, P.O RANIGANJ 71333 47. 2 . THE RESPONDENT/ DEPARTMENT : THE JOINT COMMISSIONER OF INCOME TAX, INCOME TAX DEPARTMENT, RANGE-3, ASANSOL, 54 G. T ROAD, APCAR GARDEN (WES), P.O ASANSOL 713304. 3. CIT 4. CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR ** PRADIP SPS INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA COPY OF THE ORDER FORWARDED TO : -