9911796707
TMI Blog2011 (9) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... ,46,758/- invoking the provision of section 40(a)(ia) of the Income-tax Act, 1961 made by the Ld. Income Tax Officer, Ward 2(1), Asansol on account of alleged infringement of the provision of section 194C of the Income-tax Act, 1961 as none of the conditions precedent for such alleged action existed and/or has been complied with and/or fulfilled in the instant case and his alleged action on that behalf is ab initio void, ultra vires and null in law. II. FOR THAT the Ld. Commissioner of Income Tax (appeals) Asansol manifestly erred in upholding the impugned addition of ₹ 61,65,119/- invoking the provision of s. 40(a)(ia) of the income Tax Act, 1961 made by the Ld. Income Tax Officer, Ward 2(1), Asansol on account of alleged infringement of the provision of section 194C of the Income-tax Act, 1961 without establishing on record the applicability of such provision in the facts and circumstances of the instant case and the purported action on that behalf are absolutely arbitrary, unreasonable, infirm and perverse. III. FOR THAT the Ld. Commissioner of Income Tax (Appeals) Asansol acted unlawfully in upholding the alleged disallowance of ₹ 37,81,639/- made by the Ld. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61,65,119/- on account of vehicle hire charges paid to several vehicle owners and running cost of such vehicles of ₹ 37,81,639/-, totalling to ₹ 99,46,758/- under the nomenclature 'transportation charges' in its P/L Account. During the course of assessment proceedings, the A.O. issued several notices requiring the assessee to furnish documents as mentioned in those notices and the assessee also replied those notices explaining its case and furnishing documents, the copies of which are filed in the paper book at pages 27 to 55. The A.O., however, observed that the assessee although filed copies of bank account, agreement with the contractee, Sri Harjit Singh Talwar, but could not file cash book, complete details of bills/vouchers in support of expenses of ₹ 37,81,939/- debited to P/L Account. He further alleged that the assessee furnished incomplete list consisting of names of truck owners and some truck numbers. However, the assessee in its written submissions filed before the A.O. on several occasions has stated that it has, inter alia, already produced/filed books of account, cash book, ledger bills, bills/vouchers etc. However, in the assessment order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the truck owners and numbers of the trucks engaged in its transportation business. The A.O. was not satisfied with the explanation of the assessee and found lack of evidence being filed/produced in support of the claim of the assessee. He, therefore, observed that it is clear that the assessee has paid the amount of ₹ 37,81,639/- on behalf of the truck owners and had the above expenses has been incurred by the truck owners individually, the assessee had not to pay the identical amount on account of transport charges in addition to ₹ 61,65,119/-. He, therefore, held that the actual transport hire charges paid by the assessee was for ₹ 99,46,758/- [₹ 61,65,119 + ₹ 37,81,639] which was in contravention of provisions of sec. 194C of the Act and on such premise, the A.O. made an addition of ₹ 99,46,758/- by way of disallowance u/s. 40(a)(ia) of the Act. 3. On appeal, the assessee furnished before the ld. C.I.T.(A) detail list of truck owners comprising of names of the owners, their addresses, truck Nos. and gross amount paid to each of them aggregating to ₹ 61,65,119/-, a copy of which has also been filed in the paper book at pages 21 to 26. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal liability to deduct tax at source u/s. 194C of the Act and as such the alleged invocation of sec. 40(a)(ia) of the Act in the instant case is ultra vires the scope and ambit of such enactment. In support of the submissions, the assessee relied on the decisions in the cases of (i) CIT v. Maharajadhiraja Kameswar Singh of Darbhanga [1933] 1 I.T.R.94 (PC); (ii) Dakeshwari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC); (iii) ITO v. Rama Nand Co. [1987] [163 ITR 702 (HP)] and (iv) City Transport Corpn. v. ITO [2007] 13 SOT 479 (Mum). 3.1. After considering the submissions of the assessee, the ld. C.I.T.(A) at the outset opined that the assessee has not produced the books of accounts, bills/vouchers, complete postal addresses of the truckers etc. before the A.O. and the assessee did not enable the A.O. to verify the correctness and completeness of books of account as well as the submissions made by the assessee. He further rejected the submission and/or explanation of the assessee about non-application of provisions of sec. 40(a)(ia) r.w.s. 194C of the Act on the facts of the assessee's case. He pointed out that before the A.O. the assessee has furnished list of 54 truc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sub-contractor of Sri Harjit Singh Talwar and according to the work order, the assessee only transported coal from one designated place to another. The loading unloading of the goods transported were done by the principal himself. To get this work order done, the assessee hired out empty trucks/dumpers on payment of hire charges of ₹ 61,65,119/- and all running expenses on such hired out vehicles were incurred by the assessee on its own which amounted to ₹ 37,81,639/-. These expenses were combinedly debited in the P/L Account as transport charges. The payments received by the assessee in execution of work order issued by Sri Harjit Singh Talwar were subject to TDS, as would be evident from page-70 of the paper book. He further submitted that detailed list of truck owners from whom the assessee hired out vehicles and other documents in regard to running expenses on such vehicles were produced/furnished before the A.O. as well as before the ld. C.I.T.(A). Referring to replies in response to notices issued by the A.O., placed in the paper book, the ld. counsel submitted that books of account, cash book, bills/vouchers etc. were produced/filed before the A.O. Without ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situated at Asansol, which was far away from the assessee's place of operation and as a matter of convention followed, the assessee used to request the persons including its drivers etc. to encash the bearer cheques from the bank and to deliver the cash on their return at the assessee's place. Without linking such withdrawal with any expenditure in cash exceeding ₹ 20,000/-, the ld. C.I.T.(A) has wrongly assumed power u/s. 251(1)(a) and thus arbitrarily invoked provisions of sec. 40A(3) of the Act. He, therefore, submitted that the disallowance made on that account by enhancing the income of ₹ 13,82,541/- should be quashed. 5. On the other hand, the ld. Departmental Representative relied on the order of ld. C.I.T.(A). He has further submitted that the ld. C.I.T.(A) has elaborately dealt with the issues involved in this appeal in great detail and justifiably upheld the action of the A.O. in making addition of ₹ 99,46,758/- by invoking provisions of sec. 40(a)(ia) of the Act. He has further submitted that the A.O. although discussed in his assessment order about violation of provisions of sec. 40A(3) of the Act by the assessee, but he omitted to ultimatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of the orders of the authorities below and documents filed by the assessee before them as well as before us in the paper book, we observe that there is allegation and counter allegation about submission of various details in respect of incurring of truck hire expenses and running expenses, the details of which have already been given above. We further observe that the A.O. did not enquire from any of the truck owners about the actual nature of transaction entered into with them by the assessee. The complete list of 132 truck owners/drivers with addresses etc. was filed before the ld. C.I.T.(A), which has been made annexure to his impugned appellate order. On the given facts and circumstances of the case and evidence on record, it is required to be first ascertained whether the assessee carried on the transportation work as specified in the work order on its own by engaging vehicles and incurring expenses, as claimed by the assessee, or merely sub-contracted the work to the vehicle owners so as to attract the mischief of provisions of sec. 40(a)(ia) r.w.s. 194C of the Act, because the authorities below have mainly relied on the hypothesis that there was a contractual relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sum of ₹ 99,46,758/- u/s 40(a)(ia) of the Act. In this view of the matter, the A.O. is also directed to re-examine the details already on record and further evidence that may be furnished by the assessee during remand proceeding. Needless to mention, the A.O. shall provide adequate opportunity of being heard to the assessee. 6.2. The assessee has also objected the enhancement of income by the ld. C.I.T.(A) by invoking provisions of sec. 251(1)(a) of the Act to the extent of ₹ 13,82,541/-, being 20% of the cash payments of ₹ 69,12,706/- u/s. 40A(3) of the Act. We observe that although the A.O. has discussed this issue in his assessment order, but ultimately did not separately add the said amount to the total income of the assessee. However, the ld. C.I.T.(A) has stated that there were payments by bearer cheques to 35 persons, as detailed on page-3 of the assessment order in contravention of provisions of sec.40A(3) of the Act and thus he directed the A.O. to add back the sum of ₹ 13,82,541/- to the assessee's total income. We observe that the ld. C.I.T.(A) himself has upheld the disallowance of ₹ 99,46,758/- u/s. 40(a)(ia) of the Act on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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