ITO, Chandigarh v. Sh. Raman Sagar, Chandigarh

ITA 80/CHANDI/2011 | 2007-2008
Pronouncement Date: 17-11-2011 | Result: Dismissed

Appeal Details

RSA Number 8021514 RSA 2011
Bench Chandigarh
Appeal Number ITA 80/CHANDI/2011
Duration Of Justice 9 month(s) 27 day(s)
Appellant ITO, Chandigarh
Respondent Sh. Raman Sagar, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 17-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 17-11-2011
Date Of Final Hearing 20-10-2011
Next Hearing Date 20-10-2011
Assessment Year 2007-2008
Appeal Filed On 21-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NO. 80/CHD/2011 ASSESSMENT YEAR: 2007-08 ITO WARD 5(4) V SHRI RAMAN SAGAR CHANDIGARH. PROP. M/S AGGARWAL TRADERS # 66 RAILWAY ROAD VILLAGE DARUA CHANDIGARH. PAN: ABXPS-6706K (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI AKHILESH GUPTA ASSESSEE BY : S/SHRI RAVI SHANKAR & B .M.MONGA DATE OF HEARING : 20.10.2011 DATE OF PRONOUNCEMENT : 17 TH NOV. 2011 ORDER PER MEHAR SINGH AM THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER DATED 17.08.2010 PASSED BY THE LD. CIT(A) U/S 250 OF THE INCOME-TAX ACT 1961 (IN SHORT 'THE ACT'). 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2.5 LACS MADE BY THE AO ON 2 ACCOUNT OF INVESTMENT FROM UNEXPLAINED SOURCES IN THE FIRM M/S DASHMESH BRICKS TRADERS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AMOUNTING TO RS.6 56 612/- ON ACCOUNT OF FREIGHT PAID TO TRANSPORTERS FOR TRANSPORTING MATERIAL FROM COAL INDIA LTD. 4. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO MAY B RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OF. 3. GROUND NO. 1 4 & 5 RAISED BY THE REVENUE ARE G ENERAL IN NATURE AND NEED NO SEPARATE ADJUDICATION. 4. IN GROUND NO.2 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE FAIL ED TO GIVE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS FRE SH INVESTMENT OF RS.2.5 LACS IN THE FIRM M/S DASHMESH BRICKS TRADERS DESPITE BEING SPECIFICALLY ASKED AND AS SUC H ADDITION OF THIS AMOUNT WAS MADE AS UNEXPLAINED INVESTMENT. 5. DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT (A) THE LD. COUNSEL SUBMITTED AS UNDER: THE INVESTMENT IN M/S DASHMESH BRICKS TRADERS WAS MADE FROM STATE BANK OF BIKANER AND JAIPUR PANCHKULA BANK ACCOUNT NO. CC 0000061003934400 OF PROPRIETARY CONCERN OF THE APPELLANT M/S AGGARWAL TRADERS AND THIS CC ACCOUNT IS DULY 3 REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE A ND THE SOURCE IS FULLY EXPLAINED BEING CREDIT FROM THE BANK UNDER CASH CREDIT LIMIT PROVIDED BY THE SAID BANK. 6. THE CIT(A) FOUND THAT THE ADDITION OF RS.2 50 00 0/- WAS WRONGLY MADE AND ACCORDINGLY THE SAID ADDITION WAS DELETED. AGAINST SAID DELETION THE REVENUE IS IN AP PEAL BEFORE THIS TRIBUNAL. 7. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS LD. 'DR' PLACED RELIANCE ON THE ASSESSMENT ORDER PASSED BY T HE AO. IT WAS CONTENDED THAT THE ASSESSEE HAS FAILED TO FI LE EVIDENCE IN RESPECT OF ADDITION MADE OF RS.2 50 000/- AS UNE XPLAINED INVESTMENT IN THE FIRM M/S DASHMESH BRICKS TRADERS. IT WAS CONTENDED BY THE LD. 'AR' THAT THE NATURE AND S OURCE OF SUCH INVESTMENT HAS BEEN DULY EXPLAINED AS THE SAME HAS BEEN MADE FROM THE CASH CREDIT LIMIT. HE PLEADED T HAT THE GROUND OF APPEAL RAISED BY THE REVENUE IS NOT TENAB LE ON FACTS AND LAW. 8. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE AND THE RELEVANT RECORD AS MADE AVAILABLE. IN GROUND NO.2 IT WAS CONTENDED BY THE REVENUE THAT THE CIT(A) ERRED ON F ACTS AND LAW IN DELETING THE ADDITION OF RS.2.5 LACS MADE BY THE AO ON ACCOUNT OF INVESTMENT FROM UNEXPLAINED SOURCES. LD. 'AR' CONTENDED THAT THE INVESTMENT IN M/S DASHMESH BRICK S TRADERS WAS MADE FROM THE STATE BANK OF BIKANER & J AIPUR PANCHKULA BANK ACCOUNT NO. CC 0000061003934400 OF PROPRIETARY CONCERN OF THE APPELLANT. IT WAS FURTH ER MENTIONED THAT THIS CC ACCOUNT IS DULY REFLECTED IN THE 4 BOOKS OF ACCOUNT OF THE ASSESSEE. HENCE THE SOURC E HAS BEEN EXPLAINED. THE RELEVANT FINDINGS OF THE LD. C IT(A) AS CONTAINED IN PARAS 9 AND 10 ARE REPRODUCED AS UNDER : 9. AFTER TAKING INTO CONSIDERATION THE RIVAL SUBMISSIONS AND THE DOCUMENTS FILED BEFORE ME I FIND THAT THE INVESTMENT BY THE APPELLANT IN M/S DASHMESH BRICKS TRADERS WAS MADE FROM CC ACCOUNT NO. CC 0000061003934400 WITH THE STATE BANK OF BIKANER AND JAIPUR PANCHKULA. THE ENTRY IS DULY REFLECTED IN THE BANK STATEMENT WHICH IS ENCLOSED AS ANNEXURE A AND THE BOOKS OF ACCOUNT OF THE APPELLANT. 10. IN VIEW OF ABOVE I AM OF THE VIEW THAT THE ADDITION OF RS.2 50 000/- HAS WRONGLY BEEN MADE ON THIS ACCOUNT AND THE SAME IS HEREBY DELETED. 9. HAVING REGARD TO THE ABOVE POSITION WE DO NOT F IND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A) AND HEN CE THE SAME ARE UPHELD. THIS GROUND OF APPEAL OF THE REVE NUE IS DISMISSED. 10. IN GROUND NO.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD PAI D FREIGHT CHARGES TO THE TUNE OF RS.28 80 161/- TO M/ S CHINTTPURNI COAL CORPORATION FOR WHICH NO TDS WAS DEDUCTED AND PAID INTO GOVT. ACCOUNT WHICH IS AGAIN ST THE PROVISIONS OF SECTION 194C. IT WAS FURTHER OBSERVED THAT THE ABOVE PAYMENTS AMOUNTING TO RS.28 80 186/- FELL WIT HIN THE AMBIT OF SECTION 40A(IA) OF THE INCOME-TAX ACT AND THE PAYMENTS MADE ON ACCOUNT OF FREIGHT CHARGES TO M/S CHINTTPURNI COAL CORPORATION COULD NOT BE ALLOWED T O THE 5 ASSESSEE. AS PER THE AO SUCH WORK CONTRACT FOR CAR RIAGE OF GOODS IS ON PRINCIPAL TO PRINCIPAL BASIS AND ASSESS EE SHOULD HAVE DEDUCTED TAX AT SOURCE U/S 194C ON THE SAME. T HE LD. 'DR' FURTHER PLEADED THAT THE PROVISIONS OF SECTION 194C ARE APPLICABLE AND HENCE THE IMPUGNED ADDITION MADE BY THE AO BE UPHELD. LD. 'AR' ON THE OTHER HAND CONTENDED THAT THE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE TO TH E FACT SITUATION OF THE PRESENT CASE. 11. THE LD. CIT(A) DELETED THE ADDITION OF RS.28 80 186/-. THE RELEVANT FINDINGS OF THE CIT(A) ARE REPRODUCED AS UNDER : I HAVE CONSIDERED RIVAL CONTENTIONS AND MATERIAL O N RECORD. SECTION 40(A)(IA) OF THE INCOME-TAX ACT PRO VIDES THAT NO AMOUNT SHALL BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEADS PROFITS AND GAINS OF PROFESSION/BUSINESS IF TAX DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B ON SUCH AMOUNT HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION IT HAS NOT BEEN PAID AS PER THE STATUTORY PROVISIONS. THE AO HELD THAT THE APPELLANT WAS LIABLE TO DEDUCT U/S 194C ON THE ABOVE PAYMENT WHICH HE FAILED TO DEDUCT AND THUS DISALLOWED ALL THESE PAYMENTS AS PE R SECTION 40(A)(IA) OF THE INCOME-TAX ACT 1961. SIMILAR ISSUE HAS BEEN DECIDED BY THE HON'BLE ITAT CHANDIGARH BENCH IN ITA NO.63/CHD/2009 IN THE CASE OF BHAGWATI STEEL SALES V ADDL.CIT RANGE-I CHANDIGARH AFTER RELYING ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V UNIT ED RICE LAND LTD.(208) 217 CTR (P&H) 332 AND THE RELEVANT FINDINGS OF THE HON'BLE ITAT ON THE ABOVE ISSUE IS REPRODUCED AS UNDER : 9. AS PER THE PROVISIONS OF SECTION 194C OF THE ACT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDE NT FOR 6 CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT WI TH THE CONTRACTOR SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE DEDUCT THE TAX THEREON AT PRESCRIBED RATES. HOWEVER NO DEDUCTIO N OF TAX AT SOURCE IS REQUIRED TO BE MADE IF THE SUM PAI D OR CREDITED DOES NOT EXCEED RS.20 000/-. IN THE INSTA NT CASE THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS PAID FREIGHT CHARGES TO TWO TRUCK OWNERS DURING THE YEAR WHICH EXCEEDED RS.20 000/- IN AGGREGATE. THE TOTAL FREIGHT PAYMENT IS RS.1 72 723/- BUT IT IS NOT DIS PUTED THAT EACH INDIVIDUAL PAYMENT OF DOES NOT EXCEED RS.20 000/-. IT IS ALSO NOT IN DISPUTE THAT THE PA YMENTS ARE MADE ON THE BASIS OF INDIVIDUAL G.RS. ISSUED BY THE TRUCKER FOR EACH TRIP SEPARATELY. THE CLAIM OF THE ASSESSEE IS THAT THOUGH AGGREGATE OF THE PAYMENTS T O THE TWO TRUCK OWNERS DURING THE YEAR EXCEED RS.20 000/- YET IT WOULD NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194 C OF THE ACT BECAUSE THERE IS NO CONTRACT FOR A SPECIFIC PER IOD OR QUANTITY FOR CARRIAGE OF GOODS. ON THE BASIS OF AGGREGATION OF INDIVIDUAL PAYMENTS THE ASSESSING OFFICER HAS ONLY PRESUMED THEREAFTER THAT THERE IS A CONTRACT BETWEEN THE ASSESSEE AND THE IMPUGNED PART IES FOR THE CARRIAGE OF THE GOODS WHICH REQUIRES DEDUC TION OF TAX AS PER SECTION 194C OF THE ACT. WE HAVE CAREFU LLY CONSIDERED THE SAID PLEA ADVANCED BY THE ASSESSEE. FACTUALLY SPEAKING WE ARE IN AGREEMENT WITH THE ST AND OF THE ASSESSEE THAT THERE IS NO MATERIAL ON RECORD TO PROVE THAT THERE IS ANY WRITTEN OR ORAL AGREEMENT BETWEEN THE ASSESSEE AND THE RECIPIENTS IN QUESTION FOR TRANSPO RTATION OR CARRIAGE OF GOODS. THERE IS NO MATERIAL TO SHOW THAT THE PAYMENTS OF FREIGHT IN QUESTION HAVE BEEN MADE IN PURSUANCE OF A CONTRACT OF TRANSPORTATION OF GOODS FOR A SPECIFIC PERIOD QUANTITY OR PRICE. THIS IS AN ESSE NTIAL FEATURE TO TEST THE APPLICABILITY OF SECTION 194C O F THE ACT AND IN THIS CONTEXT THE FOLLOWING OBSERVATIONS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF UNITED RICE LAND LTD. (SUPRA) ARE RELEVANT :- 7 AS PER PROVISIONS OF S.194C OF THE IT ACT ANY PE RSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT SH ALL AT THE TIME OF CREDIT OF SUCH SUM OR AT THE TIME OF PA YMENT THEREOF IN CASH OR BY CHEQUE DEDUCT A TAX THEREON A T A PRESCRIBED RATE. HOWEVER NO SUCH DEDUCTION AT SOU RCE IS REQUIRED TO BE MADE IF THE SUM PAID OR CREDITED DO ES NOT EXCEED RS.20 000. IN THE PRESENT CASE THE ASSESSI NG OFFICER HAD HELD THE ASSESSEE LIABLE FOR DEDUCTION OF TAX ONLY ON THE ASSUMPTION THAT ASSESSEE WAS HAVING AGREEMENT WITH THE PARTIES THROUGH WHOM TRUCKS WERE ARRANGED FOR TRANSPORTATION OF GOODS. HOWEVER THE CIT(A) HAS RECORDED A FINDING OF FACT THAT THERE WA S NEITHER ANY ORAL OR WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND TRANSPORTERS FOR CARRIAGE OF GOODS NOR IT HAS BEEN PROVED THAT ANY SUM OF MONEY REGARDING FRE IGHT CHARGES WAS PAID TO THEM IN PURSUANCE OF A CONTRACT FOR SPECIFIC PERIOD QUANTITY OR PRICE. THIS FINDING O F FACT WAS RECORDED BY THE CIT(A) AFTER CONSIDERING THE CERTIFICATE FURNISHED BY THE TRANSPORTERS. THE TRI BUNAL HAS ALSO RECORDED A FINDING OF FACT THAT THE DEPART MENT HAS NOT CONTROVERTED THE SAID FINDING OF THE CIT(A) EVEN BEFORE THE TRIBUNAL. WHILE RECORDING THIS FINDING OF FACT TRI HAS CLEARLY STATED THAT NOTHING HAS BEEN BROUGH T ON RECORD BY THE ASSESSING OFFICER TO PROVE THAT THERE WAS NO (SIC) WRITTEN OR ORAL AGREEMENT BETWEEN THE ALLE GED PARTIES FOR CARRIAGE OF THE GOODS. 10. IN THE CASE BEFORE THE HON'BLE HIGH COURT THE ASSESSING OFFICER HAD HELD THE ASSESSEE LIABLE FOR DEDUCTION OF TAX AT SOURCE ON THE ASSUMPTION THAT T HE ASSESSEE WAS HAVING A CONTRACT WITH THE PARTIES THR OUGH WHOM THE TRUCKS WERE ARRANGED FOR TRANSPORTATION OR CARRIAGE OF GOODS. IN THE CASE BEFORE THE HON'BLE HIGH COURT ALSO THE PAYMENTS WERE MADE BY THE ASSESSEE AGAINST INDIVIDUAL G.RS. AND NO SINGLE PAYMENT EXCE EDED RS.20 000/-. THE ASSESSING OFFICER HAD SOUGHT TO AGGREGATE ALL THE PAYMENTS MADE DURING THE FINANCIA L 8 YEAR IN ORDER TO INVOKE THE PROVISIONS OF SECTION 1 94C OF THE ACT. THIS WAS SPECIFICALLY NEGATED BY THE HON 'BLE HIGH COURT ON THE PLEA THAT THERE WAS NO ORAL OR W RITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE TRANSPORTERS FOR CARRIAGE OF GOODS. ACCORDING TO THE HON'BLE HIGH C OURT UNDER SUCH CIRCUMSTANCES IN ORDER TO INVOKE SECTIO N 194C IT HAS TO BE PROVED THAT THE FREIGHT CHARGES W ERE PAID IN PURSUANCE TO A CONTRACT FOR SPECIFIC PERIOD QUANTITY OR PRICE. IN THE ABSENCE OF THE SAME SEC TION 194C WAS HELD TO BE INAPPLICABLE. IN THE INSTANT CASE ALSO THERE IS NEITHER ANY MATERIAL TO SUGGEST THAT THERE IS ANY WRITTEN OR OR AL AGREEMENT BETWEEN THE ASSESSEE AND THE IMPUGNED PARTIES FOR CARRIAGE OR TRANSPORTATION OF GOODS AND NOR IS IT PROVED THAT THE IMPUGNED SUM HAS BEEN PAID TO THE PARTIES IN PURSUANCE TO A CONTRACT FOR SPECIFIC PERIOD QUANTITY OR PRICE THEREFORE FOLLOWING THE PARITY OF REASONING LAID DOWN BY HON'BLE COURT IN THE CASE OF UNITED RICE LAND LTD. (SUPRA) AND THE HON'BLE ITAT IN THE CASE OF BHAGWATI STEEL SALES (SUPRA) IN THE INSTANT CASE T HE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/ S 194C OF THE ACT ON THE PAYMENT OF FREIGHT CHARGES O F RS.6 56 612/- AS DETAILED ABOVE. THOUGH THE ABOVE MENTIONED TRANSPORTERS HAVE TRANSPORTED THE GOODS FOR THE APPELLANT ON MORE THAN ONE OCCASION DURING THE FINANCIAL YEAR YET IT WAS BASED ON INDIVIDUAL GRS WHICH REPRESENT INDIVIDUAL AND SEPARATE CONTRACTS. THERE IS NO SINGLE CONTRACT FOR CARRIAGE OR TRANSPORTATION OF GOODS REFERRED TO BETWEEN THE APPELLANT AND THE TRANSPORTERS WHICH WOULD MAKE THE APPELLANT LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. FOLLOWING THE REASONING LAID DOWN BY THE HON'BLE HIGH COURT IN THE CASE OF UNITED RICE LAND LTD. (SUPRA) THE DISALLOWANCE OF RS.6 56 612/- INVOKING THE PROVISIONS OF SECTION 9 40(A)(IA) OF THE INCOME-TAX ACT 1961 DOES NOT SEEM JUSTIFIED. IN THE RESULT THE ADDITION OF RS.28 80 186 (RS.22 23 549+6 56 612) IS HEREBY DELETED. 12. HAVING REGARD TO THE ABOVE DETAILED LEGAL AND F ACTUAL DISCUSSION WE DO NOT FIND ANY INFIRMITY IN THE FIN DINGS OF THE LD. CIT(A) AND HENCE THE SAME ARE UPHELD. THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 13. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH NOV 2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 TH NOV. 2011. POONAM COPY TO: THE APPELLANT THE RESPONDENT THE CIT(A) THE CIT DR ASSISTANT REGISTRAR ITAT CHANDIGARH