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TMI Blog2009 (12) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... equence upon any written or oral agreement - when hiring of trucks and payment thereof was not in consequence upon any written or oral agreement, the natural outcome is that the provisions of section 194C, not applicable - assessee’s case was not hit by the provisions of section 40(a)(ia ) of the Act – in favor of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... 9D-3935 5. A.K. Patnaik 2,89,754 OR-09D 5940, OR-09D-5988, OR-09D-6561, OR-09D-7380 6. A.K. Shaw 1,53,644 OR-09D-5461 7. A.K. Sinddhu 1,52,328 OR-04D-8249 8. Alam Ansari 2,55,307 OR-09D-1649, OR09E-0294 9. Amit Kumar 59,274 OR-09A-2240 10. Anand Singh 1,26,369 OR-09E-5351 11. A. Parida (Arati Parida) 70,159 OR-09D-5280 12. Arati Parida 82,611 --do-- 13. Arbin Kumar Gupta 4,08,684 OR-09B-4706, OR-09D-5746 14. Arjun Palit 56,569 OR-14J-2851 15. Ashok Sahou (A.K. Shaw) 1,35,254 OR-09D-5461 16. Babulal Mohanta 2,61,391 OR-09B-9330, OR-09B-9331, OR-09B-9332, OR-09B-9335 OR 09B-9701, OR-09C-1697 17. Baldev Singh 18,41,823 JH-05D-8735, OR-14J-5421, OR-14J-5422, OR-14J-5601, OR-14J-6461, OR 14J-6460, OR-09C-7322 18. Bashudev Behera 73,323 OR-09D-5310 19. B. Behera (Basudev Behera) 1,20,899 do 20. Beddev Singh (Baldev Singh) 51,449 JH-05D-8735, OR-14J-5421, OR-14J-5422, OR-14J-5601, OR-14J-6461, OR-14J-6460, OR-09C-7322 21. Bharat Chandra Mahanta 61,434 OR-09D-5249 22. Bholanath Rajbhar 55,138 OR-09D-6031 23. Bijaya Jaiswal 55,318 JH-06A-7517 24. Bikash Nayak 4,52,630 OR-09D-4294 25. Biranchi Mahanta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -09D-3662, OR-04B 8502 73. Parth Samanth Ray 2,47,521 OR 09D-3182 74. Pawan Sahoo 69,572 OR-09C-9187 75. P.C. Das 5 1,254 OR-09D-6504, OR-09E-2391 76. P.O. Giri 94,874 OR-09D-8502, OR 09D-5637 77. P. Lama 1,69,897 OR-09D-8337 78. P.L. Sahani 1,36,122 OR-09D-5788 79. P. Mahanta 1,48,195 OR-09C-9570 80. Pratap Sahoo (Father- Kashinath Sahoo) 1,60,201 OR-09D-5795 81. P. Samantray (Parth Samanth Ray) 58,867 OR-09D-3182 82. Rabi Charan 1,17,410 OR-09E-3038 83. Rabindara Panda 84,408 OR-09D-5427 84. Rajesh Kumar Agarwal 69,017 OR-09D-7775 85. Rajesh Prasad Shaw 58,987 OR-09D-6302, OR-09D-6320 86. Rajeshwar Sharama 3.54,476 OR 09D-2360, OR 090-9260 87. Raj Kumar 58,055 OR 09D-9209, OR-05R-2395 88. R. Khatoon 2,31,787 JH-06A-5624 89. R.K. Siddhu 2,27,843 OR-09C-8819, OR-09D-6529 90. Sahoo Trading Agencies 56,466 OR-04D-2503 91. Sartkar Pradhan 1,74,496 OR-09D-4459, OR-04B-6837 92. Santosh 66,885 OR-09C-8951 93. S.C. Kar 54,631 OR-09C-5988 94. S.C. Mahanta 89,552 OR-09C-0703, OR-09C-0942 95. Sidnarih Dash 75,494 OR-OSE-6097 96. Sikandar Khan 96,444 OR-09D-5300 97. S. Jena 2,51,630 OR-09D-4716 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of submission are enclosed herewith. The above being the fact, the learned Assessing Officer did not allow further time for submitting the same and hurriedly passed the order on 30th Nov., 2007 when the said assessment was to be barred by limitation on 31st Dec., 2007. The learned Assessing Officer did not allow opportunity to the assessee despite having adequate time in completing the assessment." 4.3 The aforesaid reply of the assessee was forwarded by the CIT(A) to the Assessing Officer for the purpose of submission of Assessing Officer's comments on the assessee's reply. The Assessing Officer submitted his reply as per his letter dated 22-4-2009 which has been recorded by the CIT(A) in para 2 of the appellate order itself, which reads as under : "4.1 As per rule 20D (sic) of Income-tax Rules, 1962, Form No. 15-1 received from sub-contractors along with Form No. 153 (sic) shall be furnished to the CIT so designated by the Chief CIT within which area of jurisdiction of the office of the contractor is situated on or before the 30th June, following the financial year. Whereas in the instant case the assessee claimed that Form Nos. 15-I and 153 (sic) were filed before the ITO, K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport has only stressed on procedural lapses without making any enquiry. Therefore, the assessee furnished another reply dated 28-8-2009 which has been reproduced by the CIT(A) in para 2.2 of his order, which reads as under : "2.2 It was contended that the appellant is a transport contractor and has engaged other truck owners to execute the transportation work on as and when basis without any contract being signed. The appellant did assign any particular portion of work. No sub-contract agreement either written or oral exists between the appellant and the outside truck owners. There being no tendering process, there is no offer and acceptance which are main ingredients for a valid contract. Therefore, the appellant was not liable to deduct tax under section 194C of the Income-tax Act 1961 from payments made to the truck owners/drivers. In this regard, the appellant relied upon the decision of Cuttack Bench of Tribunal in ITA No. 179/Ctk/2009, dated 23rd July, 2009 in the case of R.R. Caryying Corpn. v. Asstt. CIT, Circle-1(1), Sambalpur [Reported at [2009] 126 TTJ (Ctk.) 240/[2009] 30 DTR (Ctk.)(Trib.) 569--Ed.]. The following extract of the above decision is quoted as under : 'T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court, transporters were working as the middlemen arranging trucks for the assessee and payments for transportation were being made to the truck owners. 4.8 The CIT(A) further came to the conclusion that the assessee's dealing with 106 parties who according to him were transporters, was as a result of oral contract. The relevant part of his order as contained in paras 3, 3.1, 3.2 and 3.3, is reproduced as under : "3. I have given careful consideration to the matter. The additional ground of appeal which resulted in a remand report from the Assessing Officer reflecting the claim of the appellant regarding filing of Form Nos. 15-I and 15J is not being pressed. Therefore, it is not necessary to adjudicate the same. 3.1 The appellant has now taken a stand that it did not have any written or oral contract with the truck owners so as to attract the provisions of section 194C. Section 194C in sub-section (1) refers to payment of any sum for carrying out any work in pursuance of a contract between the contractor and other listed entities. The appellant has relied upon the decision of Cuttack Bench of Tribunal in the case of R.R. Carrying Corpn. case (supra). In this case as well as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are made to the transporters for transportation of goods. They are listed in pp. 2, 3 and 4 of the assessment order. There is no finding in the assessment order that these transporters were only arranging trucks for a payment of small fee and payments have been made to the truck owners and not to the transporters. The appellant has also not filed any evidence to the contrary. Therefore, any payment to them in the nature of transportation charges will invite the provisions of section 194C as the definition of work in Explanation (iii) below section 194C(2) includes 'carriage of goods and passengers by any mode of transport other than railways'. 3.3 There is no legal controversy that oral contracts are also recognized under The Indian Contract Act, 1872. CBDT Circular No. 93 dated 26th Sept., 1972 has clarified that the provisions of section 194C 'are wide enough to cover not only written contact but also oral contracts.' Since the contention of the appellant in this case is that there was no written contract with the concerned parties, it is to be ascertained whether the transactions were governed by any oral agreement/contract. The moot question is what could be the evidence of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these truck owners falls within the ambit of definition of "sub contractor" because as held by the Hon'ble Himachal Pradesh High Court in the case of ITO v. Rama Nand & Co. [1987] 163 ITR 702 it would mean any person who entered into a contract with the contractor for carrying out the whole or part of work undertaken by the contractor and since in the present case the assessee had not assigned any part or whole of the work undertaken by the assessee in the capacity of contractor for transporting of goods of four parties. 5.2 The learned Authorised Representative of the assessee further submitted that liability to deduct tax under section 194C of the Act can be fastened on the transporter only if it is found, as a matter of fact, that freight charges were paid by the contractor in pursuance to a contract for a specified period, quantity or price for a specified work either as a result of written or oral contract between the parties for carrying of goods. Referring to the present case, the learned Authorised Representative of the assessee submitted that there is no written or oral agreement of the assessee with any one of 106 truck owners and revenue has also not brought any evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Insurance Co. Ltd. v. Smt. Nirmala Devi [1979] 118 ITR 507. Further reliance was placed on the decision of Mahaveer Prasad Jain v. CIT [1988] 172 ITR 331 (MP) for the proposition that the appellant cannot be penalized for the failure of the advocate. 5.6 The learned Authorised Representative of the assessee further submitted that since the decisions of Co-ordinate Bench i.e., Tribunal, Cuttack Bench in all the four cases already referred hereinabove are on similar facts with that of the assessee, the Bench should follow the same and should not deviate from findings therein. Reliance was placed on the decision of Hon'ble Supreme Court in the case of Union of India v. Raghubir Singh [1989] 178 ITR 548, Reliance was further placed on the decision in the case of Society of Presentation Sisters v. ITO [2009] 125 TTJ (Coch.)(TM) 9092 and in the case of CIT v. Ram Narain Goel [1997] 224 ITR 180 (Punj. & Har.) for the proposition that suspicion, howsoever strong could not take the place of evidence or proof. This was in the context of Authorised Representative of the assessee's submission that revenue authorities have proceeded on the basis of suspicion that the 106 parties were transpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of some parties, is unable to transport the goods in his own vehicle either because he has no sufficient number of vehicles or his vehicles are not available, he has to hire vehicles/trucks either through some other transporter or from truck owners directly, as the case may be. But in this case, the hiring is not a result of written or oral contract. The payments made in consequence of such hiring to the transporter or to the truck owners directly are also not a result of any written or oral contract and it is so because the liability fastened on the transporter (contractor) having entered into contract with the parties for transporting their goods is never fastened either on to the transporter or the truck owners from whom the trucks are hired. This view is fully supported by the decision of Hon'ble Punjab and Haryana High Court in the case of United Rice Land Ltd. (supra), which has been relied upon by the assessee, wherein the Hon'ble High Court has held as under : "Headnote : TDS--Under section 194C--Payment to transporters for arranging trucks--CIT(A) has recorded a finding of fact that there was neither any oral or written agreement between the assessee and the transporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to these parties as a result of oral contract) and the assessee's clarification that 106 parties were truck owners having not been refuted by the learned Departmental Representative at the time of hearing, we have no hesitation to accept the stand of the assessee that 106 parties were the truck owners and not transporters. Consequently hiring of their trucks as well as the payments made to them by the assessee, were not in consequence of any written or oral contract. 7.3 Without prejudice to the above, even if we consider the 106 parties as transporters, then also the revenue having not brought any material on record to establish that the hiring of vehicles from them and the payments thereof were in consequence of any written or oral agreement the observation of the CIT(A) that oral agreement can be ascertained, from the accounts and conduct of the parties is not sustainable on the facts and circumstances of the case, because no such accounts and conducts of the assessee, which could suggest that there was oral contract, have been brought on record by the revenue. The theoretical observation of the CIT(A) is of no use. 8. In view of the above and on the totality of the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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