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TMI Blog2022 (10) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... s not raised any objection in this regard. We, therefore, condone the said delay and proceed to dispose of the appeal of the assessee on merit. 3. The assessee, in the present case, is an individual who is engaged in transportation business. The return of income for the year under consideration was filed by him on 30.09.2009 declaring a total income of Rs.4,54,720/-. The case of the assessee was selected for scrutiny and a notice under Section 143(2) of the Income-tax Act, 1961 ("the Act" in short) was issued by the Assessing Officer to the assessee on 25.08.2010. Thereafter, the assessment under Section 143(3) of the Act was completed by the Assessing Officer vide an order dated 05.12.2011 determining the total income of the assessee at Rs.3,49,14,986/- after making, inter alia, the following additions/disallowances:- i) Disallowance of freight charges under - Rs.2,81,54,400.00 Section 40(a)(ia) of the Act for the alleged failure of the assessee to deduct tax at source ii) Unexplained cash deposits found to be made - Rs. 55,33,807.00 in the bank accounts of the assessee iii) Unexplained unsecured loans - Rs. 8,55,310.00 iv) Unexplained investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freight payments in question. Both the lower authorities invoke Section 194C of the Act in treating the said payments to be contractual in nature whose non deduction of TDS invites Section 40(a)(ia) disallowance. We proceed to examine the basic facts in this backdrop. The assessee admittedly has collected the impugned payments from its payers thereby undertaking all the risk involved in the transportation of the goods in question. He has thereafter engaged his payees' vehicles numbering more than 3500 to perform the said transportation job in lieu of the impugned freight payments. The Assessing Officer as well as the CIT(A) in this backdrop of facts conclude that there existed oral contract (s) between assessee and his payees u/s.194C of the Act. We find no reason to agree to such a conclusion. We observe that both the lower authorities have not demonstrated by way of a single documentary evidence revealing the payees concerned to have undertaken any risk involved in performing the transportation duty in question. Nor have they called any payee to depose in the same tune that the assessee had paid them in the capacity of a subcontractor. This tribunal's decision in ITA No.3536/Mum/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) has accepted the fact that the outside tank owners do not had any responsibility or liability towards the principal, then it cannot be held that these outside parties were privity to the contract between the appellant and its principal. Thus the payment made to the outside parties do not come or fall within the purview of section 194C, as the "carrying out any work" indicates doing something to conduct the work in pursuance of contract and here in this case, it was solely between appellant and its principal. 8.2 The judgment of Hon'ble Madras High Court in the case of CIT vs. Pompuhar Shipping Corporation Ltd. (supra) also fortifies the case of the appellant. In this case the assessee which was a Tamil Nadu Government undertaking was engaged in the business of transportation of coal from the ports of Haldia, Visakhapatnam and Paradeep to Chennai and Tuticorin under contracts executed with the Tamil Nadu Electricity Board. The assessee owned three ships. Since three ships were not sufficient to carry out the contracts entered into with Tamil Nadu, the assessee hired ships belonging to other shipping companies and paid hire shipping charges for using the ships. The assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee ought to have deducted tax at source under section 194C of the Act. Further, the other argument of counsel was, section 194C was amended with effect from July 1, 1995, incorporating the Explanation and the said Explanation clarifies the existing provision of section 194C of the Act. Hence, it would be applicable retrospectively. We are concerned with the assessment year 1994-95. In a recent judgment, the Supreme Court in the case of Sedco Forex International Drill Inc. v. CIT [2005] 279 ITR 310, considering the scope of the Explanation, held that there is no principle of interpretation which would justify reading the Explanation as operating retrospectively, when the Explanation comes into force with effect from a future date. In this case, the Explanation introduced is with effect from July 1, 1995. Hence it will be applicable only for the future assessment orders and it will not be applicable to the assessment year in consideration. The Tribunal also considered the fact that the shipping companies which received the hire charges are also income-tax assessees and they had shown the hire charges in their respective income-tax returns and paid the taxes on the same. The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICICI bank. Since appellant failed to submit source of such cash with documentary evidences despite being specific show cause, even books of accounts or cash book was also not produced hence the appellant was held to be failed in discharge of his onus for explaining source of such cash deposit. The A.O. relied on Hon'ble Calcutta High Court decision in the case of CIT vs. United Comm. and Industrial Co. Pvt. Ltd. (supra) and made the addition u/s.68 of the Act. I am partly inclined with the contention of the A.O. that appellant has not submitted complete detail. But, as evident from the letter dated 8.11.2011 submitted by appellant to A.O. that a complete statement of bank account with bank book was submitted to A.O. The appellant has S.B. account No.08100120019760 and current account in the name of prop. concern M/s. Ideal Cotton Carrier with No.08102000005417 at Kotak Mahindra Bank. Both these banks account is disclosed bank account. Further, the appellant's books of accounts are subject to audit u/s.44AB of the Act and no adverse comments are mentioned by tax auditor in this regard. The verification of case record reflects that appellant filed a reconciliation of frei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord, it is observed that cash deposits to the tune of Rs.39,40,726/- and Rs.15,93,081/- were found to be made by the assessee in his bank accounts maintained with Kotak Mahindra Bank, Nariman Point Branch, Mumbai and ICICI Bank, Drive-in-Cinema Branch, Ahmedabad respectively. Out of these two bank accounts, the bank account with Kotak Mahindra Bank, as found by the learned CIT(A) on verification of relevant evidence, was regularly maintained by the assessee and the same was duly reflected in the books of account. After taking into consideration all the facts including the total volume of the assessee's business, prevalent practice of making cash payments in the transportation business, higher net profit rate declared by the assessee etc., the learned CIT(A) held that the cash deposits found to be made in the bank account of the assessee with Kotak Mahindra Bank were duly explained. He also noted that there were substantial cash withdrawals made by the assessee from his bank account for which telescoping effect was required to be given. He further noted that there was not even a single instance pointed out by the assessee on verification of the cash book showing a negative cash ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e head "unsecured loan". The appellant's tax audit report being the correct source of such detail / information but the same is not used by AO. The Tax audit report dated 28.9.2009, at cl.24(a) & 24(b) given the details in Annexure 'B' & Annexure 'C' (copy of such Ann.'B' & Ann.'C' enclosed for ready reference). These table reflect that appellant borrowed money from M/s.Ideal Roadways Corporation which is a prop. concern of appellant's father Shri Dilip Palany, assessed to tax with same A.O. and for A.Y. 2009-10, scrutiny asstt. completed simultaneously by same A.O. on same date u/s. 144 o the Act. In the case of other four parties, the loan accepted was of as follows: (i) Keyur Shah 14,89,000 (ii) Ashwin T Shah 3,12,000 (iii) Dipan Pharma Chem 4,36,000 (iv) Mulchandbhai & Sons 1,00,000 23,37.000 Out of these four parties, loan taken from M/s. Dipan Pharma Chem Ltd and M/s. Mulchandbhai & Sons were squared up while in other cases partly paid back. It is certified that in none of the case loan were accepted or repaid in cash by the tax auditor. It is therefore, only in the case of Shri Ashwin T Shah and Shri Keyur Shah, the loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot showing the same at Investment' of Schedule 5 is not understandable. Further, the Tax auditor at Annexure 'D' i.e. Notes forming part of Form No.3CD at Cl.3 mentioned that 'whenever original bills/vouchers are not available for our verification, we have verified the same on the basis of vouchers/bills duly signed by the proprietor. "The appellant in its letter dated 8.11.2011 at point No.3 mentioned that The assessee is not maintained personal account or personal balance sheet during above asstt.year." It is therefore, there is no detail as well as explanation of source of such purchase. Therefore the addition so made by A.O. is upheld and confirmed. The ground is dismissed." 8.1 After considering the rival submissions and perusing the relevant material available on record, it is observed that the investment made by the assessee in gold ornaments amounting to Rs.31,639/- was duly recorded in the books of account of the assessee regularly maintained inasmuch as the same was duly reflected in the block of assets as noted by the authorities below. In our opinion, it therefore cannot be said that the source of the said investment, which was duly recorded in the book ..... X X X X Extracts X X X X X X X X Extracts X X X X
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