DCIT, Bareilly v. Jitendra Singh Taneja, Bareilly

ITA 547/LKW/2010 | 2005-2006
Pronouncement Date: 06-07-2011 | Result: Allowed

Appeal Details

RSA Number 54723714 RSA 2010
Assessee PAN AAIPT0654K
Bench Lucknow
Appeal Number ITA 547/LKW/2010
Duration Of Justice 10 month(s) 17 day(s)
Appellant DCIT, Bareilly
Respondent Jitendra Singh Taneja, Bareilly
Appeal Type Income Tax Appeal
Pronouncement Date 06-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 06-07-2011
Date Of Final Hearing 04-05-2011
Next Hearing Date 04-05-2011
Assessment Year 2005-2006
Appeal Filed On 20-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A - BENCH LUCKNOW. BEFORE SHRI H.L.KARWA HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI ACCOUNTANT MEMBER I.T.A.NO.547(LKW.)/2010 A.Y. : 2005-06 THE DY.CIT CIR.-I VS. SHRI JITENDRA SINGH TANEJA BAREILLY. 25 RAM VATIKA BAREILLY. PAN AAIPT0654K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIVEK GUPTA SR.D.R. RESPONDENT BY : SHRI YOGESH AGRAWAL ADVOCATE O R D E R PER N.K.SAINI ACCOUNTANT MEMBER THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER OF THE CIT(A) BAREILLY DATED 15.4.2010 RELATING TO ASSESSMENT YEAR 2005-06 (WRONGLY MENTIONED AS 2007-08 WHICH WAS LATER ON RECTIFIED VIDE ORDER DATED 31.5.2011 UNDER SECTION 154 OF THE INCOME-TAX ACT 1961). 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL : 1. THAT THE COMMISSIONER OF INCOMETAX ( APPEALS) IS NOT JUSTIFIED IN ALLOWING RELIEF TO THE ASSESSEE AMOUNTING TO RS.7 06 506/- AS TRANSPORT CHARGES PAID TO THE TRUCK OPERATORS WITHOUT APPRECIATING THE EVIDENCES / MATERIAL FACTS RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 2. THAT THE LEARNED COMMISSIONER OF INCOMETAX ( APPEALS ) WAS NOT JUSTIFIED IN ACCEPTING FRESH EVIDENCES IN CONTRAVENTION OF RULE 46 A OF THE I.T.RULES 1962 WHEN NO SUCH 2 DETAILS/EVIDENCES WERE FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 3. THAT THE ORDER OF THE ORDER OF THE LD.COMMISSIONER OF INCOMETAX (APPEALS) MAYBE SET-ASIDE AND THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 3. THE ONLY GRIEVANCE OF THE DEPARTMENT IN THIS APPEAL RELATES TO THE DELETION OF ADDITION OF RS.7 06 506 BY ACCEPTING THE FRESH EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE INCOME-TAX RULES 1 962. 4. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX ACT 1961 ON 20.11.2007 AT AN INCOME OF RS.3 97 140. SUBSEQUENTLY ACTION UNDER SECTION 147 WAS TAKEN BY ISSUING THE NOTICE UNDER SECTION 148 ON 21.1.2009. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE DERIVED INCOME FROM TRANSPORT BUSINESS AND THAT THE GROSS RECEIPTS WERE AT RS.54 04 159 AND INTEREST INCOME OF RS.4 453. THE AO NOTICED THAT THE ASSESSEE HAD MADE PAYMENTS OF RS.7 06 506 AS TRANSPORT CHARGES TO TRUCK OPERATORS WHOSE TRUCKS WERE TAKEN ON HIRE BUT NO TDS WAS DEDUCTED ON THOSE PAYMENTS. THE AO HAD REASONS TO BELIEVE THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME-TAX ACT 1961 WERE ATTRACTED AND THE EXPENDITURE WAS NOT ALLOWABLE TO THE ASSESSEE. ACCORDINGLY ACTION UNDER SECTION 147 OF THE ACT WAS INITIATED. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE ENTIRE EXPENDITURE OF RS.7 06 506 SHOULD NOT BE DISALLOWED AND ADDED BACK TO THE INCOME. THE ASSESSEE SUBMITTED TO THE AO VIDE WRITTEN SUBMISSIONS DATED 15.7.2009 AS UNDER: 'ASSESSEE HAVE THE CONTRACTOR INCOME IN WHICH HE IS PROVIDING THE TRANSPORTATION AND LABOUR CONTRACT FOR THE SERVICES. IN THIS CONTINUATION HE 3 PROVIDES THE TRANSPORTATION OF THE GOODS TO 'UPFC BADAUN' IN THIS THE CONTRACT OF TRANSPORT WAS GIVEN FROM THE HEAD QUARTER OF THE UPFC BUDAUN TO ALL THE BLOCKS OF BUDAUN DISTRICT. IN THIS CONTRACT ONE TIME TRUCK RUNS FOR 20 KM TO 60 KM IN ONE TIME AND THE PAYMENT TO THE HIRED TRUCK ALSO COMES FROM RS.500/- TO 2000/-. IN THIS CONTRACT ASSESSEE PAID THE TRANSPORTATION CHARGES OF RS.760506/- FOR THE HIRED TRUCKS FROM THE MARKET. NO SINGLE PERSON WAS PAID RS.20 000/- AT ONE TIME AND RS.50 000/- IN A YEAR. HENCE PROVISION OF SECTION 194C NOT ATTACTED. WITH THE ABOVE FACTS WE WANT TO SAY THAT PAYMENT OF RS.760506/- DOES NOT FALL UNDER THE TDS PROVISIONS U/S 194 C OF THE INCOME TAX ACT 1961. A COPY OF THE CONTRACT WITH THE UPFC BUDAUN IS ENCLOSED HEREWITH AND THE COPY OF ACCOUNT OF TRANSPORTATION CHARGES PAID TO THE HIRED TRUCKS ARE ALSO ENCLOSED.' 4.1 IT WAS ALSO STATED THAT THERE WAS NO REQUIREMENT TO DEDUCT THE TDS ON THE TRANSPORTATION CHARGES PAID. THE AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE THOUGH SUBMITTED THAT NONE OF THE TRUCK-OWNERS WAS PAID FOR RS.20 000 BUT FAILED TO FURNISH DOCUMENTARY EVIDENCE AND ALSO THE NAMES AND ADDRESSES AND ASSESSMENT- STATUS OF THE PERSONS AS SUCH THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM. HE ACCORDINGLY DISALLOWED THE SUM OF RS.7 06 506 UNDER SECTION 40(A)(IA) OF THE INCOME-TAX ACT 1961 AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 5. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ISSUE RELATING TO THE PAYMENTS TO THE TRUCK OWNERS WAS ALREADY EXAMINED BY THE AO AT THE TIME OF MAKING ORIGINAL ASSESSMENT THEREFORE THE ACTION OF THE AO TO EXAMINE THE SAME ISSUE WITHOUT HAVING ANY NEW INFORMATION IN HIS POSSESSION WAS NOTHING BUT A MERE CHANGE OF OPINION WHICH COULD NOT BE JUSTIFIED IN THE EYES OF LAW. IT WAS FURTHER STATED THAT THE ASSESSEE FURNISHED COMPLETE LIST OF TRUCK NOS. WHICH WERE HIRED FROM THE MARKET AND THAT THE ASSESSEE WAS SUPPLYING THE TRUCKS ON CONTRACT BASIS TO THE COMPANIES AND FOR THAT PURPOSE HE WAS HIRING TRUCKS ON DAILY BASIS BY 4 MAKING THE PAYMENTS TO THE TRUCK DRIVERS AFTER THEIR TRIP WAS OVER. IT WAS CONTENDED THAT IN SUCH TYPE OF BUSINESS THE TRUCK OWNERS DID NOT OWN THEIR OWN FLEETS BUT GAVE THE TRUCKS ON DAILY BASIS FOR TRANSPORTING THE GOODS FROM ONE PLACE TO OTHER AND THEREFORE THERE WAS NO SCOPE OF MAKING PAYMENT TO THE TRUCK OWNERS WHICH COULD BE OF RS.20 000/- OR MORE IN A DAY OR RS.50 000 AGGREGATE IN A YEAR. IT WAS STATED THAT THE TRUCKS WERE HIRED ACCORDING TO THE NEED OF THE COMPANIES AND IN ORDER TO EXECUTE THE CONTRACT THE TRANSPORTERS MADE THE REQUIRED ARRANGEMENTS INSTANTLY. IT WAS ALSO STATED THAT THE STATUTORY AUDIT OF THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS CONDUCTED BY A CHARTERED ACCOUNTANT AND NO DISALLOWANCE WAS SUGGESTED IN THE AUDIT REPORT RELATING TO ANY DISALLOWANCE UNDER SECTION 40(1)(IA) OF THE I.T. ACT. IT WAS CONTENDED THAT THE OBSERVATIONS OF THE AO THAT THE ASSESSEE HAD NOT FURNISHED THE ASSESSMENT PARTICULARS OF THE TUCK-OWNERS OR DRIVERS DID NOT EMPOWER THE AO TO MAKE SUCH ADDITIONS AND THAT THE ASSESSEE COULD NOT BE EXPECTED TO MAINTAIN RECORDS OF THE ASSESSMENT PARTICULARS OF THE TRUCK DRIVERS OR THE OWNERS OF THE TRUCKS AND THERE WAS NO REQUIREMENT OF LAW TO MAINTAIN SUCH ASSESSMENT RECORDS OF THE CLIENTS WITH WHOM BUSINESS TRANSACTIONS WERE CARRIED OUT ON DAY TO DAY BASIS. THEREFORE THE ACTION OF THE AO WAS ILLEGAL AND CONTRARY TO THE FACTS OF THE CASE. 6. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE AO DID NOT CONDUCT ANY INVESTIGATION OF THE MATTER FOR COLLECTING ANY INFORMATION TO REBUT THE EXPLANATION FURNISHED BY THE ASSESSEE AND RATHER ASKED THE ASSESSEE TO FURNISH INFORMATION REGARDING THE ASSESSMENT STATUS OF THE TRUCK OWNERS WHOSE TRUCKS WERE HIRED BY THE ASSESSEE THROUGH THEIR DRIVERS ON DAY TO DAY BASIS AS SUCH THE AO DID NOT LOOK INTO THE GROUND REALITIES OF THE NATURE OF THE BUSINESS OF THE ASSESSEE. 5 THE LD.CIT(A) FURTHER OBSERVED THAT THE TRUCKS WERE HIRED FROM THE MARKET AS AND WHEN THE REQUIREMENT WAS RECEIVED FROM THE CONTRACTING PARTIES OF THE ASSESSEE. THEREFORE THERE WAS LEAST POSSIBILITY THAT THE SAME TRUCK OR CERTAIN TRUCKS WERE ALWAYS AVAILABLE IN THE MARKET FOR PROVIDING TRUCKS TO THE ASSESSEE AND THIS ASPECT WAS COMPLETELY IGNORED BY THE AO. HE FURTHER OBSERVED THAT THE ASSESSEE FURNISHED LIST OF TRUCKS TO THE AO ALONGWITH DATES PLACE FROM WHERE TRUCKS WERE HIRED TRUCK NUMBERS AMOUNT PAID AS FREIGHT ETC. WHICH SHOWS THAT NONE OF THOSE TRUCK DRIVERS WERE PAID RS.20 000 IN A DAY OR RS.50 000 IN AGGREGATE DURING THE YEAR. HE ACCORDINGLY DELETED THE ADDITION MADE BY THE AO. 7. NOW THE DEPARTMENT IS IN APPEAL. 8. THE LD.D.R. STRONGLY SUPPORTED THE ORDER OF THE AO AND FURTHER SUBMITTED THAT THE ONUS WAS ON THE ASSESSEE TO PROVE THAT NONE OF THE PAYMENT EXCEEDED RS.20 000 IN A SINGLE DAY OR RS.50 000 IN AGGREGATE DURING THE YEAR WHICH IS REQUIREMENT FOR THE NON-DEDUCTION OF TDS ON THE PAYMENTS AS PROVIDED IN SECTION 194C OF THE I.T.ACT. HE FURTHER SUBMITTED THAT SINCE PROPER DETAILS IN SUPPORT OF THE CLAIM WERE NOT FURNISHED BEFORE THE AO SO THERE WAS NO OPTION EXCEPT TO MAKE THE ADDITION. IT WAS CONTENDED THAT THE LD.CIT(A) WITHOUT CONSIDERING THE FINDINGS OF THE AO AND FACTS OF THE PRESENT CASE IN RIGHT PERSPECTIVE DELETED THE ADDITION. IT WAS PRAYED THAT THE ADDITION MADE BY THE AO MAY BE RESTORED. 9. IN HIS RIVAL SUBMISSIONS THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE DID NOT FURNISH ANY NEW EVIDENCE SO THERE WAS 6 NO VIOLATION OF RULE 46A OF THE I.T.RULES 1962. IT WAS FURTHER SUBMITTED THAT THE DETAILS CONTAINING THE PARTICULAR OF THE TRUCK NO. AMOUNT OF FREIGHT PAID AND THE MOVEMENT FROM ONE PLACE TO ANOTHER ALONGWITH THE DATES WERE FURNISHED TO THE AO AS WELL AS TO THE LD.CIT(A) WHICH CLEARLY SHOWS THAT THERE WAS NO VIOLATION OF THE PROVISIONS OF SECTION 194C OF THE I.T. ACT. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TOWARDS PAGES 8 TO 13 OF THE ASSESSEES COMPILATION. HE ACCORDINGLY SUBMITTED THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ARBITRARY ADDITION MADE BY THE AO. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE THE AO APPLIED THE PROVISIONS OF SECTION 194C OF THE I.T. ACT. SUB-SECTION (5) OF SECTION 194C OF THE I.T. ACT 1961 PROVIDES THAT NO DEDUCTION SHALL BE MADE FROM THE AMOUNT PAID OR ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF OR TO THE CONTRACTOR IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES AND FURTHER PROVIDES THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EXCEEDS FIFTY THOUSAND RUPEES THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRED TO IN SUB-SECTION (1) SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SECTION. IT IS THEREFORE CLEAR FROM THE PROVISIONS CONTAINED IN SECTION 194C(5) OF THE I.T.ACT 1961 THAT IT IS MANDATORY FOR A PERSON MAKING PAYMENTS TO THE CONTRACTORS TO DEDUCT TDS IF THE PAYMENT EXCEEDS RS.20 000 ON ONE DAY OR RS.50 000 IN AGGREGATE IN A YEAR. IN THE PRESENT CASE FROM THE DETAILS FURNISHED BY THE ASSESSEE TO THE AO AS WELL AS TO THE LD.CIT(A) COPIES OF WHICH ARE AVAILABLE AT PAGES 8 TO 13 OF THE ASSESSEES COMPILATION IT IS NOTICED THAT THE ASSESSEE NOWHERE MENTIONED THE NAME OF THE PERSON TO WHOM PAYMENT WAS MADE. SO IT IS VERY DIFFICULT TO 7 ASCERTAIN WHETHER THE PAYMENT TO A SINGLE PERSON EXCEEDED RS.20 000 ON A SINGLE DAY OR RS.50 000 IN AGGREGATE IN THE YEAR BECAUSE THE NAME OF THE PERSON HAS NOT BEEN MENTIONED ONLY TRUCK NUMBERS ARE GIVEN. FROM THESE TRUCK NUMBERS IT IS NOT CLEAR AS TO WHO IS THE OWNER OF THE TRUCK I.E. WHETHER A SINGLE PERSON IS THE OWNER OF ALL THE TRUCKS WHICH WERE HIRED BY THE ASSESSEE OR DIFFERENT PERSONS ARE OWNERS. FURTHERMORE IT IS ALSO NOT CLEAR AS TO WHETHER THERE WAS ANY CONTRACT BETWEEN THE ASSESSEE AND THE PERSONS FROM WHOM THE TRUCKS WERE HIRED THEREFORE THE FACTS OF THE PRESENT CASE ARE NOT CLEAR SO WE DEEM IT APPROPRIATE TO REMAND THIS ISSUE BACK TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. IN THE RESULT THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 6.7.2011. SD. SD. (H.L.KARWA) (N.K.SAINI) VICE PRESIDENT ACCOUNTANT MEMBER JULY 6TH 2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R. ITAT LUCKNOW. SRIVASTAVA.