2004 (8) TMI 312 - AT - Income Tax

Levy of penalty u/s 271B - business of transporting goods - Defaulter for non-compliance of opportunity given A.O. - HELD THAT - I am inclined to agree with the submission of the learned counsel for the assessee that so far as receipts attributable to trucks owned by others were concerned, though the same were routed through the assessee (assessees being the transporters responsible for carrying on the goods of the parties the same cannot be considered as assessees' turnover), it is common and admissible way of business of transporters that if they do not have their own trucks at the relevant time, they hire the truck owned by other parties and take responsibility for paying the transport charges to such truck owners. But at the same time it is the responsibility of the customers for transporting their goods and charge the transportation charges meaning thereby that the transporters save only a petty amount which is normally called as commission, out of transportation charges received from the parties because transportation charges has to be paid to the trucks owners. Thus, I am of the opinion that so far as present cases are concerned, the total receipts computed on the basis of the TDS certificates could not be considered as assessee's own receipts for the purpose of s. 44AB of the Act. Consequently I am of the opinion that so far as present cases are concerned, there was no contravention of provisions of s. 44AB of the Act. The penalty imposed u/s 271B in both the cases is, therefore, cancelled. In the result, appeals of both the assessees are allowed.

Summary

Issues involved: Appeal against penalty u/s 271B of the IT Act confirmed by CIT(A).

Summary:
The appeals were filed by different assessees against the CIT(A)'s orders confirming the penalty u/s 271B of the IT Act. Both assessees were involved in the business of transporting goods, using their own trucks and trucks belonging to outsiders. The AO found that their receipts exceeded Rs. 40 lakhs, making them defaulters for non-compliance with s. 44AB of the Act. The assessees failed to comply during penalty proceedings, leading to the imposition of penalties. The assessees appealed to the CIT(A) but were unsuccessful, resulting in their appeal to the ITAT.

The counsel for the assessees argued that as they used their own trucks, they were not obligated to maintain books of accounts u/s 44AE of the Act. They contended that receipts from their own trucks should not be considered as turnover for s. 44AB purposes. Additionally, they argued that receipts from trucks owned by others, even if routed through them, should not be considered as their turnover, as they only received a commission. The Departmental Representative supported the CIT(A)'s orders.

After considering the submissions and relevant provisions, the ITAT held that the receipts included amounts from both the assessees' own trucks and trucks owned by others. The ITAT agreed that the assessees were not required to maintain accounts u/s 44AE and that the receipts did not contravene s. 44AB. It was noted that the assessees only received a commission from transactions involving trucks owned by others. Therefore, the ITAT concluded that the penalties imposed u/s 271B were unwarranted and canceled them.

In conclusion, the ITAT allowed the appeals of both assessees, ruling in their favor and canceling the penalties imposed.