VIKAS ROAD CARRIERS LTD, MUMBAI v. ITO WD 8(3)(4), MUMBAI

ITA 6470/MUM/2009 | 2005-2006
Pronouncement Date: 16-07-2010 | Result: Allowed

Appeal Details

RSA Number 647019914 RSA 2009
Assessee PAN AAACV4685M
Bench Mumbai
Appeal Number ITA 6470/MUM/2009
Duration Of Justice 6 month(s) 30 day(s)
Appellant VIKAS ROAD CARRIERS LTD, MUMBAI
Respondent ITO WD 8(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 16-07-2010
Assessment Year 2005-2006
Appeal Filed On 17-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH MUMBAI BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 6470/MUM/2009 (ASSESSMENT YEAR: 2005-06) M/S. VIKAS ROAD CARRIERS LTD. INCOME TAX OFFICER - 8(3)(4) C/O. BHANSALI GAGGAR & MEHTA MUMBAI C-10 SHASTRI NAGAR JODHPUR (RAJ) VS. PAN - AAACV 4685 M APPELLANT RESPONDENT APPELLANT BY: SHRI T.P. GAGGAR RESPONDENT BY: SHRI SANJAY GUPTA O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)- XVIII MUMBAI DATED 22.10.2009. 2. THE ISSUE RAISED BY THE ASSESSEE IS WITH REFERENCE TO ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.92 17 263/- UNDER SECTION 40(A)(IA) BY THE A.O. IN RESPECT OF FREIGHT PAYMENT MADE TO T RANSPORTERS STATING THAT THEY ARE COVERED BY THE PROVISIONS OF SECTION 194C. 3. ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORTATI ON HAVING BRANCHES AT JODHPUR PALI DELHI AND JAIPUR. IT HAS REGISTERED OFFICE AT MUMBAI EARLIER WHICH NOW STANDS SHIFTED TO JODHPUR. ASSESSEE FILED RETURN OF INCOME IN MUMBAI. IN THE COURSE OF ASSESSMENT TH E A.O. NOTICED THAT THE ASSESSEE HAD PAID AN AMOUNT OF RS.99 82 074/- IN TH E NATURE OF FREIGHT AND ASKED THE ASSESSEE THE DETAILS OF THE SAME. THE ASS ESSEE SUBMITTED THAT THE ABOVE AMOUNT INCLUDED FREIGHT PAID TO RAILWAYS RS.1 72 742/- AND LABOUR CHARGES OF RS.5 71 709/-. THE A.O. ASKED FOR EXPLAN ATION WHY TDS HAS NOT BEEN DEDUCTED ON THE ABOVE AMOUNTS AS PER PROVISION S OF SECTION 40(A)(IA). IT WAS ASSESSEES SUBMISSION THAT THE ASSESSEE HAS PAI D SMALL AMOUNTS TO LORRY DRIVERS WHICH IS NOT COVERED UNDER THE PROVIS IONS OF SECTION 194C AND ACCORDINGLY DISALLOWANCE UNDER SECTION 40(A)(IA) DO ES NOT ARISE. THE ITA NO. 6470/MUM/2009 M/S. VIKAS ROAD CARRIERS LTD. 2 ASSESSEE VIDE LETTER DATED 27.12.2007 SUBMITTED T HAT ONLY THREE AMOUNTS PAID IN THE CASE OF FARUKH RAMJAN AND MOHD ASLAM A MOUNTING TO RS.85 850/- WERE TO BE COVERED BY SECTION 194C AS T HE AMOUNT IN EXCESS OF RS.20 000/- WHEREAS THE BALANCE OF THE AMOUNTS WERE PAID IN SMALL AMOUNTS TO VARIOUS DRIVERS FOR TRANSPORTATION OF GO ODS FROM ONE PLACE TO ANOTHER EXPLAINED THE MODUS OPERANDI AND ALSO FURN ISHED TRANSPORT VOUCHERS TO SUBMIT THAT THE PAYMENTS ARE NOT COVERE D BY SECTION 194C. CONSEQUENTLY PROVISIONS OF SECTION 40(A)(IA) ARE NO T APPLICABLE. IT WAS SUBMITTED THAT EXCEPT THE THREE PAYMENTS STATED ABO VE THE FREIGHT FOR EACH TRANSACTION WAS LESS THAN RS.20 000/- AND EVEN IF P ARTY-WISE IS CONSIDERED THE AMOUNTS ARE LESS THAN RS.50 000/- PER YEAR. ACC ORDINGLY PROVISIONS OF SECTION 40(A)(IA) R.W.S. 194C ARE NOT APPLICABLE. T HE A.O. ON GOING THROUGH THE DETAILS FILED NOTICED THAT ONLY NAME OF THE DR IVER IS MENTIONED IN PLACE OF PARTY AND TRUCK NUMBERS HAVE BEEN MENTIONED AND ON GOING THROUGH THE LEDGERS ONLY VEHICLE NUMBERS HAVE BEEN MENTIONED N O NAME OF THE DRIVERS HAVE BEEN MENTIONED AND NO SEPARATE REGISTERS IN RE SPECT OF PARTIES TO WHOM FREIGHT HAVE BEEN PAID HAVE BEEN MAINTAINED BY THE ASSESSEE. IT IS ALSO NOTICED THAT DOCUMENTS FILED IN SUPPORT OF THE CONT ENTIONS IN RESPECT OF DELIVERY OF GOODS TO THE PARTIES DOES NOT HAVE ANY RECEIPT AGAINST HANDING OVER NOR THERE IS ANYTHING TO VERIFY IDENTIFICATION OF THE TRANSPORTERS TO WHOM FREIGHT WAS ACTUALLY BEEN PAID. THUS HE INVOKED PRO VISIONS OF SECTION 40(A)(IA) INTRODUCED FROM 01.04.2005 AND PROVISIONS OF SECTION 194C TO CAME TO THE CONCLUSION THAT THE ASSESSEE SHOULD HAVE MAI NTAINED ITS ACCOUNTS IN SUCH A WAY SO AS TO CLEARLY IDENTIFY THE PARTIES TO WHOM THE FREIGHT HAS BEEN PAID. ACCORDINGLY HE WAS OF THE OPINION THAT PROVIS IONS OF SECTION 40(A)(IA) R.W.S. 194C IS APPLICABLE AND AN AMOUNT OF RS.92 17 623/- WAS DISALLOWED. BEFORE THE CIT(A) THE ASSESSEE REITERATED THE SUBMI SSIONS WHICH WERE NOT FOUND FAVOUR WITH THE CIT(A). ACCORDINGLY THE CIT(A ) CONFIRMED THE DISALLOWANCE. 4. THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE IS A SMALL TIME OPERATOR WHOSE MAIN ACTIVITIES ARE IN AN AROUND JOD HPUR AND IN CASE THE ASSESSEE HAS MORE THAN TRUCK OF LOAD OF GOODS FOR T RANSPORTATION USUALLY USE ITS OWN VEHICLE OTHERWISE FOR TRANSPORTATION OF GOO DS IT ENGAGED LOCAL LORRIES ITA NO. 6470/MUM/2009 M/S. VIKAS ROAD CARRIERS LTD. 3 WHICH ARE GOING IN A PARTICULAR DIRECTION AND ACCOR DINGLY FREIGHT WAS PAID TO THE LORRY DRIVERS. ASSESSEE ISSUES STATEMENTS CALLE D BILTIES STATED TO BE A SORT OF WAY BILLS ALONG WITH THE GOODS AND 50% OF T HE FREIGHT WAS PAID AT THE TIME OF LOADING OF GOODS AND BALANCE 50% OF THE FRE IGHT WAS COLLECTED BY THE DRIVERS AFTER DELIVERY OF GOODS IN THEIR BRANCH OFF ICES AT VARIOUS PLACES. SINCE THERE IS NO CONTRACT FOR TRANSPORTATION OF GOODS AN D SMALL AMOUNTS HAVE BEEN PAID (EXCEPT THOSE 3 ITEMS WHICH THE ASSESSEE AGREES THAT TDS SHOULD HAVE BEEN MADE) THERE IS NO NECESSITY FOR DEDUCTION OF TAX ON THE FREIGHT PAYMENTS. SINCE THERE IS NO REGULAR CONTRACT INVOLV ED IN THESE EITHER WITH THE TRUCK OWNERS OR WITH ANY AGENT PROVISIONS OF S ECTION 194C ARE NOT APPLICABLE AND ACCORDINGLY DISALLOWANCE UNDER SECTI ON 40(A)(IA) DOES NOT ARISE. THEN HE REFERRED TO THE STATEMENT FILED BEFO RE THE A.O. IN SUPPORT OF THE CONTENTIONS PLACED BEFORE THE LOWER AUTHORITIES . HOWEVER THE COUNSEL WHO APPEARED FROM JODHPUR EXPRESSED HIS INABILITY TO SUBMIT THE BILTIES I.E. WAY BILLS OR LORRY WISE PAYMENTS TO EXAMINE TH E PROCEDURE FOLLOWED BY THE ASSESSEE IN TRANSPORTING GOODS BY ENGAGING LOCA L LORRIES. 5. THE LEARNED D.R. HOWEVER RELIED ON THE ORDERS OF THE A.O. AND CIT(A) TO SUBMIT THAT THE DRIVERS NAMES WERE USED ONLY FO R THE PURPOSE OF AVOIDING TDS AND THE CIT(A) HAS GIVEN A FINDING THAT THE ASS ESSEE IS CAMOUFLAGING ITS PAYMENTS SO AS TO AVOID VERIFICATION OF DEDUCTION O F TAX. HE SUPPORTED THE ORDER OF THE A.O. 6. THE LEARNED COUNSEL IN REPLY SUBMITTED THAT THE FIN DINGS OF THE CIT(A) ARE WITHOUT ANY BASIS AND THE A.O. IN SUBSEQUENT YE ARS HAVE ACCEPTED ASSESSEES PAYMENT OF FREIGHT CHARGES WITHOUT INVOK ING THE PROVISIONS OF SECTION 40(A)(IA) AND FURNISHED THE ORDERS FOR ASSE SSMENT YEARS 2007-08 AND 2008-09 PASSED BY THE A.O. JODHPUR. THESE ORDERS AR E PLACED ON RECORD. 7. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE FACT S OF THE CASE THE A.O. HAS NOT MADE OUT ANY CASE WHETHER THE PAYMENT MADE TO LORRY DRIVERS IS COVERED BY THE PROVISIONS OF SECTION 194C. FIRST OF ALL THERE IS NO AGREEMENT OR CONTRACT BETWEEN THE ASSESSEE AND THE INDIVIDUAL LORRY TRANSPORTERS TO WHOM IT CLAIMED THE AMOUNTS WERE PA ID ON A DAY-TO-DAY BASIS AND TRIP-WISE BASIS WITHOUT HAVING ANY FORMAL CONTRACT AND THE ITA NO. 6470/MUM/2009 M/S. VIKAS ROAD CARRIERS LTD. 4 PAYMENTS ARE LESS THAN RS.20 000/-. THE ASSESSEE HA S FILED ALL THE DETAILS SORTED DRIVER-WISE FOR THE WHOLE OF THE YEAR WHICH THE A.O. DID NOT PUT TO ANY VERIFICATION EXCEPT STATING THAT ADDRESS OF THE DR IVERS ARE NOT COMPLETE. THE ASSESSEE HAS GIVEN LORRY NUMBERS ALONGWITH DRIVERS NAMES BY WHICH IT TRANSPORTED GOODS. AS SEEN FROM THE DETAILS IT DOE S NOT INDICATE THAT THE ASSESSEE HAS ENGAGED THE SAME DRIVER REPEATEDLY AND OR CHANGED THE NAME OF THE DRIVER AS WAS ALLEGED BY THE CIT(A). THERE I S NO INDICATION THAT THE ASSESSEE HAS ENGAGED A PARTICULAR PARTY REPEATEDLY OR ENGAGED ANY OF ITS OWN LORRIES ON REGULAR BASIS SO AS TO COME UNDER TH E PROVISIONS OF SECTION 194C. THE A.O. ALSO GIVES A FINDING THAT THERE IS N O CONTRACT OR AGREEMENT IN THE TRANSPORTATION. THE CIT(A)S FINDINGS ARE PUREL Y ON SURMISES WHICH CAN NOT BE TAKEN INTO CONSIDERATION. AS SEEN FROM THE D ETAILS FURNISHED BEFORE THE AUTHORITIES THE ASSESSEE DID ENGAGE VARIOUS LO RRIES FOR TRANSPORTATION OF GOODS AND ITS SUBMISSION THAT NO AMOUNT ABOVE RS.20 000/- WAS PAID EXCEPT THREE CASES AS MENTIONED ABOVE. THE A.O. HAS NOT ENQUIRED AT ALL WHETHER ANY PARTY WAS ENGAGED ON ROUTINE BASIS. HE COULD HAVE VERIFIED BY CONSOLIDATING THE LORRY NUMBERS AS THE ASSESSEE HAS GIVEN NAMES OF THE DRIVERS AND LORRY NUMBERS. THIS EXERCISE COULD HAVE BEEN DONE BY THE A.O. ON A CURSORY IT IS NOTICED THAT THERE IS NO REPETIT ION OF ANY LORRY AND THE ASSESSEES CONTENTION THAT IT HAS ENGAGED VARIOUS L ORRIES AVAILABLE IN THE MARKET FOR TRANSPORTATION OF GOODS ON A DAILY BASIS CANNOT BE BRUSHED ASIDE. IN VIEW OF THIS WE ARE OF THE OPINION THAT EXCEPT THE AMOUNT OF RS.85 850/- IN THE CASE OF THREE PAYMENTS WHICH THE ASSESSEE A GREES FOR DISALLOWANCE UNDER SECTION 40(A)(IA) NO OTHER AMOUNT IS COVERED BY THE PROVISIONS OF SECTION 194C. ON THE FACTS OF THE CASE SINCE THE P AYMENT ARE LESS THAN RS.20 000/- EACH AND SINCE NO PAYMENT IS MADE IN EX CESS OF RS.50 000/- IN A YEAR TO ANY PARTICULAR PARTY PROVISIONS OF SECTIO N 194C ARE NOT APPLICABLE SO THE DISALLOWANCE UNDER SECTION 40(A)(IA) IS NOT WARRANTED. 8. HOWEVER THE LEARNED COUNSEL EXPRESSED HIS INABILIT Y TO FURNISH LORRY WISE DETAILS OF PAYMENTS WHETHER ANY PARTICULAR LOR RY WAS ENGAGED SO AS TO BE COVERED BY THE PROVISIONS OF SECTION 194C. SINCE THE DETAILS ARE AVAILABLE IN JODHPUR HE HAS NO OBJECTION TO RESTORE THE MATT ER TO THE A.O. TO EXAMINE THIS ASPECT. THE ABOVE OBSERVATIONS MADE IN EARLIER PARA ARE ON PRELIMINARY ITA NO. 6470/MUM/2009 M/S. VIKAS ROAD CARRIERS LTD. 5 EXAMINATION OF DETAILS ON RECORD BUT AN ASPECT WHIC H REQUIRES EXAMINATION IS WHETHER THE ASSESSEE HAS ENGAGED ANY PARTICULAR LORRY/PARTY THROUGHOUT THE YEAR IN WHICH PAYMENT OF RS.50 000/- OR ABOVE H AVE BEEN MADE IN THE YEAR. ACCORDINGLY FOR THE LIMITED PURPOSE THE MATT ER IS RESTORED TO THE FILE OF THE A.O. TO EXAMINE WHETHER THE ASSESSEE HAS PAID A NY AMOUNT IN EXCESS OF RS.50 000/- AS FREIGHT CHARGES TO A PARTICULAR LORR Y/PARTY AND IF SO PROVISIONS OF SECTION 194C ARE APPLICABLE OR NOT. A CCORDINGLY THE MATTER IS RESTORED TO THE FILE OF THE A.O. FOR THE LIMITED VE RIFICATION AND TAKING NECESSARY ACTION IN THIS REGARD. ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY. GROUND IS PARTLY ALLOWED. 9. IN THE RESULT APPEAL ALLOWED FOR STATISTICAL PURPO SES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY 2010. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 16 TH JULY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XVIII MUMBAI 4. THE CIT VIII MUMBAI CITY 5. THE DR F BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.