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TMI Blog2015 (10) TMI 1757X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts already paid during the year ?. 2. The appellant craves leave to add, amend or alter any of the above grounds of appeal. 4. The assessee in CO No.58/PN/2013 has raised the following grounds of objections:- a) Without considering the fact that in a number of cases payments made to the transport subcontractors do not exceed Rs. 20,000 at one time or Rs. 50,000 in aggregate in the financial year 2008-09 being relevant to the A.Y. 2009-10 and therefore TDS is not required under section 194 C of the Income tax Act, 1961 (the Act), the Assessing Officer has erred in disallowing payments made to transport contractors under provisions of section 40(a)(ia) of the Act. b) Without considering the fact that on furnishing of Permanent Account Number by the Contractor during the course of business of plying, hiring or leasing goods carriages and therefore TDS is not attracted under subsection (6) Of section 194 C of the Act, the Assessing Officer has erred in disallowing payments made to transport contractors under provisions of section 40(a)(ia) of the Act. c) Without considering the facts of the case, business of the assessee and nature of transportation expenses incurred and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s viz. (1) M/s. Deejay Enterprises, which is engaged in the business of processing and supply of silica and sand, (2) M/s. Deesha Cargo Movers and (3) M/s. Shivam Transport Co., carrying on the business as Transport Contractor. The Assessing Officer noted that the assessee had debited sum of Rs. 17,51,627/-under the head 'Other /Miscellaneous expenses' which include transport charges of Rs. 15,60,000/- in respect of M/s. Deejay Enterprises. As regards the other firms i.e. M/s. Deesha Cargo Movers and M/s. Shivam Transport Co. are concerned, an amount of Rs. 1,50,77,123/- and Rs. 2,61,887/- respectively have been debited to the respective P & L account under the head "Transport Charges". The assessee was confronted with the applicability of provisions of section 194C of the Act in respect of transport charges claimed. The assessee in reply, submitted the details including list of more than 1200 truck drivers to whom the transport charges had been paid by the assessee. The Assessing Officer notes that though the assessee had given the details of truck drivers, but had failed to furnish any explanation regarding applicability of TDS provisions. Further, the list furnished by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r para 10 at page 4 of the assessment order. In reply, the assessee furnished submissions which are reproduced under para 11, pages 5 to 9 of the assessment order. 9. The first objection raised by the assessee was that the provisions of section 40(a)(ia) of the Act were applicable to the amount payable and not paid. This argument of the assessee was rejected by the Assessing Officer in view of the various decisions. In respect of objections of the assessee to various defects pointed out in the show cause notice, the Assessing Officer considered the arguments of the assessee and deliberated upon the issue. The plea of the assessee that it had not made payments exceeding Rs. 20,000/- on any single day and the amount involved in aggregate did not exceed Rs. 50,000/-, was rejected by the Assessing Officer since the assessee had failed to maintain party-wise / individual-wise ledger accounts of the transport charges. Hence, this claim of the assessee was rejected by the Assessing Officer. In respect of the list of truck numbers given by the assessee, the Assessing Officer noted that mostly the said trucks were of States outside Maharashtra and only with the single name and truck number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Utpadak and Prakriya Sangh Maryadit Vs. TRO (supra), wherein, vide para 10 and 11, the issue was decided against the assessee. 13. Following the same parity of reasoning, we reverse the order of CIT(A) in this regard and allow the grounds of appeal raised by the Revenue. 14. Now, coming to the alternate plea raised by the learned Authorized Representative for the assessee vide its grounds of objections. The first objection raised by the assessee was that in number of cases, the payment made to the transport sub-contractors did not exceed Rs. 20,000/- at one time or Rs. 50,000/- in aggregate in the financial year and hence, TDS was not required to be deducted under section 194C of the Act. The second objection raised by the assessee is that where the PAN number of contractors have been furnished, TDS was not attracted under sub-section (6) of section 194C of the Act and the Assessing Officer had erred in disallowing the said payments under the provisions of section 40(a)(ia) of the Act. The next objection raised by the assessee vide its cross objections was that the business of assessee and the nature of transportation expenses incurred and in view of the provisions of section 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble at the close of year. 17. Now, coming to the plea raised by the assessee that it had made individual payments to the truck owners, which were less than Rs. 20,000/-, even in some cases, whether the payments were more than one, the aggregate of payments during the year did not exceed Rs. 50,000/-. 18. Under the provisions of section 194C of the Act, it is provided that where a person is responsible for paying any sum to any resident for carrying out any work including supply of labour for carrying out any work, in pursuance of contract between the contractor and the specified person, then, such person at the time of credit of such amount, to the account of contractor or at the time of payment whichever is earlier, deduct an amount equal to 1% in the case of advertising and in any case 2% of such sum as income tax on income comprised therein. Admittedly, in the case of assessee before us, the provisions of section 194C of the Act were attracted in respect of transport charges paid by the assessee to different entities. The assessee in its Paper Book has attached the list of persons to whom it has paid the transport charges for hiring the trucks, in the course of carrying on its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es pointed out by the Assessing Officer that the PAN numbers did not match, the assessee stated that it had complied with the said information at the request of the Assessing Officer and there might be some typographical errors, spelling mistakes or errors in inputs. However, "just because some information do not match with the data available with you on computer system, we are of the opinion that it will be incorrect to term that the entire information given was wrong", such was the plea raised by the assessee before the Assessing Officer. The assessee alleged that in case specific cases were pointed out, he would check the records and rectify wherever necessary. In respect of allegation of the Assessing Officer that the aggregate amount of transportation charges exceed Rs. 50,000/- or not though different PAN numbers were given by the assessee, it was explained that in view of the voluminous nature of the business it may be possible that some lorries / trucks had been allotted more than one trip. However, considering the voluminous nature of the business, it was practically impossible to keep a track of each and every truck to determine whether they had been allotted trips by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PAN pertains to as per system 1 S Raju BIBPP7864F Sreedevi Podili 2 S Raju AMFPT9962R Shrinu Tirumani 3 S Raju AGPPV3671 Venu Gopal Reddy Vemireddy 4 Bazee AHSPM4570E Kailash Meghwanshi 5 Bazee AISPT2997D Vinod Maniklal Tiwari 6 Bazee AJJPP4039Q Ghansham H Tiwari 7 Bazee AFGPB9058N Hari Krishna Bolineni 22. The Assessing Officer further noted that some of the names appeared repeatedly in the list i.e. name of S. Raju appeared 50 times, name of Bazee appeared 38 times, name of Shreenu appeared 83 times and so on. Further, the truck numbers also repeated against various names and in view thereof, the Assessing Officer was of the view that the list given by the assessee cannot be relied upon. In the absence of complete details, the Assessing Officer was of the view that the list given by the assessee could not be taken as sacroscent. Further, the Assessing Officer made local enquiries by deputing the Inspector and observed as under:- "8. From the above, it is clear that the details given by the assessee in the list cannot be accepted in toto as the details given were not correct in respect of some of the cases as narrated above. The details given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruck owner was a separate job for the same person at different rates and terms and hence different job will not turn into single contract. In this context, it is pertinent to note here that the decision of ITAT Jodhpur Bench in the case of Shree Choudhary Transport Co. Vs ITO referred to in para 19 above, has taken a contrary view and as held in the said decision and also in view of CBDT circular No. 715 dated 8.8.1995 goods carried under separate receipt/bill would constitute a separate contract and assignment of such 'contract by assessee to truck owner/operators has to be considered as sub contract and 'section 194C was applicable. The argument of the assessee in para 1.b is more or less similar to the arguments in para 1.a and in view of the reasoning given above, i.e. in view of the decisions in the case of Shree Choudhary Transport CO. and in view of CBOT circulars 715 dated 8.8.1995, this plea of the assessee is also rejected. The arguments in para 1.c are concerned, it is pertinent to note here that the assessee was asked to give full details of all expenses claimed, details of TDS and relevant supporting documents etc. vide questionnaire issued alongwith notice u/s. 142( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has failed to establish the correctness and genuineness of the claim and hence these arguments can also be not accepted. 22. Further vide questionnaire dated 16.8.2011 the assessee was asked to produce books of accounts and other documents in support of various expenses / claim made. However, the assessee attended on 26.12.2011 and stated that books of accounts are available in his laptop on tally package. He has also given a hard copy of ledger account of "Transport charges'. However, the said ledger account is a single ledger for all the transport charges. As noted in the order sheet entry dated 26.12.2011, the AR stated that no individual / partywise ledger account has been maintained in respect of Transport Charges claimed. In the absence of Partywise ledger account, in respect of transport charges paid the claim of the assessee that the transport charges paid to any individual truck owner did not exceed Rs. 20000/-on any single day cannot be verified. The consolidated so called ledger account submitted by the AR do not reflect any name of the party and it only reflects datewise payments made in cash. In any case, the list given by the assessee is incomplete and on going thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances, where the Assessing Officer had collated information and carried out the verification exercise, which was against the assessee, the same should have been confronted to the assessee before taking any adverse view against the assessee. Following the principles of natural justice, we are of the considered opinion that the Assessing Officer before using any information against the assessee, should have confronted the assessee with the complete information in order to enable him to meet / correct defects in the verification exercise carried on. Though the proposition offered by the assessee that in case the individual payments are less than Rs. 20,000/- and aggregate payments are less than Rs. 50,000/-, no tax is to be taxed at source, is acceptable, but entire onus is upon the assessee to establish its case and especially in view of the verification exercise and the order of Assessing Officer, where it has been pointed out that in some cases, the truck owners owned more than 4 trucks and the total payment to the said persons were far in excess of Rs. 50,000/-, during the year. We find no merit in the plea of the assessee that no disallowance can be made under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made under section 40(a)(ia) of the Act, in view of the ratio laid down by the Hon'ble High Court of Gujarat in CIT Vs. Valibhai Khanbhai Mankad (2013) 92 DTR (Guj) 267. The assessee claims that it had furnished the said Form No.15I with the Assessing Officer and he has failed to consider the same. We direct the Assessing Officer to verify the assessment records and allow the claim in line with the directions of Hon'ble High Court of Gujarat. The cross objection Nos.(a) and (b) raised by the assessee are thus, allowed for statistical purposes and (c) and (d) are dismissed. 26. The issue in cross objection Nos.(e) and (f) raised by the assessee is against the addition made by the Assessing Officer of Rs. 5,00,000/- under section 68 of the Act. 27. Briefly, in the facts of the issue, the Assessing Officer noted that the assessee had shown liability of Rs. 5,00,000/- in its accounts. When the assessee was asked to give explanation, the assessee submitted that it had received gift of Rs. 5,00,000/- from his wife on various dates. The Assessing Officer did not accept the contention of the assessee since the assessee himself had recognized the liability of Rs. 5,00,000/-. In case the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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