2015 (9) TMI 1225 - AT - Income Tax

TDS u/s 194C on Freight - Assessee is booking only net profit out of the transaction - Since the assessee have got no own trucks, it was seen that freight has been received and credited to the Profit & Loss Account and at the same time, trucks are hired from open market and freight is being paid by the assessee at lesser rate, thereafter, showing the profits. - Addition on account of violation of Section 40(a)(ia) and not admitting the additional evidence. - the auditor has remarked, It is not possible for us to verify whether payment has been made exceeding ₹ 20,000/- otherwise than by crossed check or DD . Held that - The issue of paid and payable, as considered under section 40(a)(ia) of the Act have been finally decided by Hon ble Punjab & Haryana High Court in the group cases of PMS Diesels v. CIT 2015 (5) TMI 617 - PUNJAB & HARYANA HIGH COURT in which it was held that, The requirement to deduct tax at source is mandatory and that the provision of Section 40(a)(ia) apply to the assessees who follow the cash system as well as assessees who follow mercantile systems . The question was decided in favour of the revenue and against assessee

Summary

Issues:
Challenge to order confirming addition under Section 40(a)(ia) of the Income Tax Act and rejection of additional evidence.

Analysis:
1. The appeal was against the order confirming the addition of Rs. 70,09,804 on account of violation of Section 40(a)(ia) of the Income Tax Act and not admitting additional evidence for assessment year 2006-07.
2. Initially, the appeal was dismissed in default, but later restored for hearing on merits based on a Miscellaneous Application by the assessee.
3. The assessee contested the order confirming the addition and not admitting additional evidence, claiming to act as a commission agent only.
4. The Assessing Officer found discrepancies in the TDS certificates regarding payments received by the assessee for transportation services, leading to the disallowance under Section 40(a)(ia) and 40A(3) of the Act.
5. The assessee explained its business as a transport commission agent, receiving only commission income, and filed replies citing relevant decisions to support its position.
6. The Assessing Officer noted that the assessee accounted for freight received and paid in its books, disallowing the claim of acting solely as a commission agent and insisting on TDS compliance under Section 194C.
7. The ld. CIT(Appeals) upheld the addition, rejecting the request for additional evidence admission, as the assessee's own records contradicted the claim of being a commission agent only.
8. The Tribunal considered the submissions, emphasizing the entries in the books of account showing freight transactions, and upheld the authorities' decisions based on the facts and evidence presented.
9. The refusal to admit additional evidence was justified as the assessee failed to establish a case for admission under Rule 46A, and the claim of acting solely as a commission agent was contradicted by the records.
10. The Tribunal referenced relevant case laws to distinguish the present case from those relied upon by the assessee, emphasizing the mandatory nature of TDS provisions under Section 40(a)(ia).
11. Considering the facts and findings of the lower authorities, the Tribunal dismissed the appeal, finding no grounds to interfere with the decisions made.

This detailed analysis covers the issues raised in the judgment, highlighting the arguments presented, authorities' findings, and the Tribunal's decision based on the facts and legal provisions involved.