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TMI Blog2012 (12) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... s are duly recorded and routed through the books of accounts of the appellant. The appellant has nowhere been able to demonstrate that the goods sold to outside parties were in fact belonged to or owned by the principals or farmers. Rather, the appellant has sold the goods to outside parties after purchasing them on his own account from the kachha arahtia and the domain over the goods sold was that of appellant. Thus once the status of appellant is established to be so, the entire receipts including commission are to be considered for the purpose of applicability of section 44AB. Admittedly, the receipts of the appellant far exceed the limits prescribed u/s 44AB and the appellant was liable to get his books of accounts audited u/s 44AB. The turnover of Rs.1,46,27,433/- as shown in the sales tax return has to be considered as turnover of the appellant and not the commission of Rs.1,33,270/- only - against assessee. Invoking the provisions of section 194H making him liable for TDS from commission payments and invoking the provisions of section 40 (a)(ia) - Held that:- As concluded by the Hon’ble High Court, there is no res judicata, as regards assessment orders, and assessments f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total income of the appellant-assessee in the present case u/s. 40 (a) (ia) of the Income Tax Act, 1961. v That in the preceding financial year 2005-06 to the present period the monetary limit as prescribed under clause (a) or (b) of section 44AB of the Income Tax Act, 1961 was not exceeded, as such, the appellant assessee was not required to deduct TDS under section 194H of the Income Tax Act, 1961 in the present period i.e. AY - 2007-08 (FY - 2006-07). vi. That the appellant craves leave to add, amend, revise, modify, substitute or delete any or all grounds of appeal or/and prayer made. vii. In view of the above, it is, therefore, prayed that the impugned assessment order being illegal, arbitrary, beyond jurisdiction and in utter disregards of the true facts and in the circumstances of the case may kindly be quashed In the interest of justice and fair play. 2. At the outset, the ld. AR on behalf of the assessee while inviting our attention to an application for condonation of delay in filing the appeal submitted that the impugned order was received by the assessee on 16.03.2011 and thus, appeal was required to be filed on or before 15th May, 2011. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 979] 49 Comp Cas 463, Mata Din v. A. Narayanan, AIR 1970 SC 1953, and held that expression "each day's delay must be explained", does not mean that a pedantic approach should be made and it must be applied in a rational commonsense pragmatic manner. In view of the foregoing and especially in the light of observations of the Hon ble Apex Court in O.P. Kathpalia v. Lakhmir Singh reported in AIR 1984 SC 1744, that if the refusal to condone the delay results in grave miscarriage of justice, it would be a ground to condone the delay, we are of the opinion that the reasons given by the assessee for the delay in filing the appeal, reflect sufficient cause and, accordingly, the delay is condoned. 4. Adverting now to ground nos. I to v in the appeal, facts, in brief, as per relevant orders are that return declaring income of Rs.1,58,360/- filed on 19th December, 2007 by the assessee, carrying on the business of trading and commission agent of food grains, was selected for scrutiny with the service of a notice u/s 143(2) of the Income-tax Act, 1961 (hereinafter referred to as the Act ), issued on 10th September, 2008. During the course of assessment proceedings, the Assessing Officer (A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 44AB are not applicable. However, the AO did not accept this reply concluded that the assessee was licensed as a pakka arahtia and his turn over exceeded the limits prescribed u/s 44AB of the Act due to the following reasons given in para 3.6 of the assessment order :- i) In the coloum of name of purchaser, name of the assessee was written in all of the purchase bills issued on form (I). It is nowhere mentioned that any third party is involved or name of purchaser is any third party and not the assessee. ii) These form (I) which is prescribed form for kacha arahtia at the time of sale of goods to the principal are issued by the kacha arhatia only and not by pakka arahtia. It has been specifically written on the form itself that this is a bill of kacha aratia. iii) Kacha arahiti charges commission @ 2.5% apart from purchaser of goods but do not pay commission to the farmers at the time of purchase of goods. Whereas assessee is paying commission being a pakka arahtia at the time of purchase of goods from kacha arahtia 2.5% and charges commission @ 1 % at the time of sale of goods to the purchaser/principal. iv) Assessee is entitled to subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man Traders, Alawalpur Road, Palwal. Pakka Arhati. Rs. 3,57,522/- 4.1 Accordingly, the AO concluded that assessee was doing the business of commission agent as pakka arahtia and keeping in view of his commission sale/turnover, he was required to get his accounts audited in terms of provisions of section 44AB of the Act as clarified vide circular no.452 date 17.03.1986. 4.2 Since the assessee did not deduct tax at source on the amount of commission paid to the parties at the time of purchase of the goods, the AO also showcaused the assessee as to why the amount of commission paid be not disallowed in terms of section 40(a)(ia) of the Act. In reply, the assessee submitted that he was doing business of a proprietary concern and was not required to get his account audited u/s 44AB of the Act. However, the AO did not accept the submissions of the assessee and concluded that the assessee being a pakka arahtia and his turn over having exceeded the limits prescribed u/s 44AB of the Act, he was required to get his account audited and deduct tax at source on commission in terms of provisions of section 194H of the Act. The assessee having failed to do so, the AO disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of various Court pronouncements, following principals of distinction can be laid down between a kachha arahtia and a pacca arahtia: (1) A kachha arahtia acts only as an agent of his constituent and never acts as a principal. A pacca arahtia, on the other hand, is entitled to substitute his own goods towards the contract made for the constituent and buy the constituent's goods on his personal account and thus he acts as regards his constituent. (2) A kachha arahtia brings a privity contract between his constituent and the third party so that each becomes liable to the other. The pacca arahtia, on the other hand, makes himself liable upon the contract not only to the third party but also to his constituent. (3) Though the kachha arahtia does not communicate the name of his constituent to the third party, he does communicate the name of the third party to the constituent. In other words, he is an agent for an unnamed principal. The pacca arahtia, on the other hand, does not inform his constituent as to the third party with whom he has entered into a contract on his behalf. (4) The remuneration of a kachha arahtia consists solely of commission and he is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the constituents after purchasing them from kachha arahtias after paying commission of 2.5%. Also the appellant has made payments to the kachha arahtias on his own account and received payment from the buyers on his own account. The transactions of purchases and sales as well as payments are duly recorded and routed through the books of accounts of the appellant. The appellant has nowhere been able to demonstrate that the goods sold to outside parties were in fact belonged to or owned by the principals or farmers. Rather, the appellant has sold the goods to outside parties after purchasing them on his own account from the kachha arahtia and the domain over the goods sold was that of appellant. The appellant relied upon the additional evidences filed at page 19 to 25A of the paper book which were objected to by the AO on the ground that such agreements, all dated 01.10.2006, with the outside parties were only an afterthought as nothing prevented the assessee to file such evidences during the assessment proceedings had these been available with the assessee. Although these additional evidences have been admitted by my learned predecessor but the admitted fact remains that the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between an agreement of sale and an agreement of agency is that, in the former case, the property is sold by the seller as his own property and, in the later case, the property is sold by the agent not as his own property but as the property of his principal and on his behalf. Since, it has been already held that the appellant has sold the goods to outside parties on his own account; the above decision does not help the case of appellant. The rationale laid down in the other decisions relied upon by the appellant has already been considered by the CBDT while issuing Circular No.452 as discussed above. The decision of Hon'ble Gujarat High Court in the case of ITO vs. Sachinam Trust (230 ITR 445) relied upon by the appellant is on the issue of reasonable cause in the context of section 273A of the Act and not applicable to the facts of case. Keeping in view the above factual and legal position, the ground No. (i) of the appeal is dismissed. 6.1 In the ground No (ii) to (iv) of the appeal, the appellant has challenged the action of the AO in invoking the provisions of section 194H making him liable for deduction of tax at source from commission payments; and invoking the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntext of provisions of sec. 43B of the Act. Referring to page 19 to 25A of the paper book, the ld. AR argued that the assessee did not have dominion over the goods purchased on behalf of others, the sale consideration of these goods could not form part of turnover of the assessee. While inviting our attention to page 40 and 41 of the paper book, the ld. AR contended that since the assessee dealt with the outside parties on principal to principal basis, he was not required to deduct tax at source. Inter alia, the ld. AR relied upon decisions in V.K. M. Abdulsalam Rowther Vs. State of Kerala (1961) 12 STC 98 (Kerala); Atul Glass Industries, Faridabad Vs. State of Haryana others (1971) 28 STC 148 (P H); CIT Vs. Sir Kikabhai Premchand (1953) 24 ITR 506 (SC); Arun Electrics, Bombay Vs. CST, Maharashtra State (1966) 17 STC 576 (SC) and CIT Vs.Jai Drinks Pvt. Ltd.. 7. On the other hand, ld. DR supported the findings of the ld. CIT(A) and submitted that on the basis of order of the sales tax authorities, turnover being Rs.1.46 crore, the assessee was required to have his accounts audited in terms of provisions of sec. 44AB of the Act. While referring to page 43-44 of the paper book, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count and received payment from the buyers on his own account as evident from the transactions of purchases and sales as well as payments recorded in the books of accounts of the assessee. Neither before the lower authorities nor even before us, any material has been placed, evidencing that the goods sold to outside parties, in fact, belonged to or owned by the principals or farmers. Rather, the assessee sold the goods to outside parties after purchasing them on his own account from the kachha arahtia and the dominion over the goods sold was that of the assessee alone, as found by the ld. CIT(A). The ld. CIT(A) while referring to additional evidence concluded that admittedly the assessee substituted his own purchased goods towards such contracts made with the outside parties, the assessee having charged as many as under eight heads like bonus etc. including VAT, cess and commission, which were enough to compensate for his desired profit while being registered as a pacca arahtia he made himself responsible and liable for receipt of payments from outside parties as also the payments towards suppliers. In the light of aforesaid circular issued by the CBDT and admittedly, the receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year. 19. On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter-and if there was not change it was in support of the assesses-we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-Tax in the earlier proceedings, a different and contradictory stand should have been taken. This Court notices that there cannot be a wide application of the rule of consistency. In Radhasaomi itself, the Supreme Court acknowledged that there is no res judicata, as regards assessment orders, and assessments for one year may not bind the officer for the next year. This is consistent with the view of the Supreme Court that "there is no such thing as res judicata in income-tax matters" (Visheshwara Singh v. Commissioner of Income Tax AIR 1961 SC 1062). Similarly, erroneous or mistaken views cannot fetter the authorities into repeating them, by application of a rule such as estoppel, for the reason that being an equitable principle, it has to yield to the mandate of law. A deeper reflection would show that blind adherence to the rule of consistency would lead t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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