SH. JAGDEEP SINGH,PANIPAT vs. ITO, PANIPAT

This appeal filed by the assessee is directed against the order dated 29.03.2016 of the CIT(A)-2, Gurgaon.

The appeal filed by the assessee is barred by limitation of 275 days. The assessee filed condonation application together with the affidavit of the assessee for condonation of delay in filing the appeal. The AR of the assessee submitted that the order of the CIT(A) dated 29.03.2016 was received by post in the middle of April, 2016 which was misplaced and was found on 25.01.2017 out of the dead record of the assessee and was immediately given to the counsel Sh. K. C. Aneja for filing the appeal.

Unfortunately Sh. K. C Aneja fell ill and had heart attack on 28.01.2017 and was advised complete bed rest by doctors. In support of the same he has filed copy of prescription of the doctors Kamal Dhamija hence he prayed that the delay in filing the appeal was not intentional and was due to unfortunate circumstances and therefore the delay for filing the appeal be condoned and the appeal admitted for hearing.

The Ld. DR on the other hand opposed the submission for condonation of delay in filing the appeal by the assessee. He relied on the decision of Hon’ble Punjab and Haryana High Court in the case of Shri Subodh Prakash Vs. JCIT reported in 2017- TIOL- 2249-HC – P & H – IT and submitted that Hon’ble has held that where the party approaching the court shows sufficient cause for not availing remedy within the prescribed period the delay may be condoned. Further he also relied on the decision of Hon’ble Delhi High Court in the case of B. U. Bhandari Nandgude Patil Associates Vs. CBDT [2018] 91 taxmann.com 241 (Del.) where it was held that the assessee filed its return after five months and nearly after a period of four years and appealed for condonation of delay in filing the return before the CBDT for the sole reason of illness of auditor. The same cannot be condoned for want of details of illness and proof namely Doctors prescription. He submitted that in the instant case also the assessee has not shown the sufficient cause for condonation of delay, therefore, the delay should not be condoned and appeal of the assessee should be dismissed. In the rejoinder of the Ld. AR of the assessee submitted that the assessee has filed prescription of Doctor as evidence of illness of the counsel of the assessee and therefore, the decision of Hon’ble Delhi High Court which states that delay should be condoned where proof of illness of the concerned person is filed such as doctors prescription, is in favour of the assessee and following the same the delay should be condoned.

After hearing the rival submissions and perused the materials available on record. I find that the assessee by filing the doctors prescription for his counsel Sh. K. C. Aneja’s illness has shown sufficient cause for delay in filing the appeal and therefore, being satisfied with the sufficient cause shown by the assessee and keeping in view the decision of Hon’ble Supreme Court in the case of CIT Vs. West Bengal Infrastructure Development Finance Corporation Ltd. reported in (2011) 344 ITR 269 (SC) where it has been held that in all cases where there is delay on the part of the Department, the Hon’ble High Court ought to consider imposing cost. But, certainly, the High Court should examine the cases on the merits and should not dispose of the cases merely on the ground of delay, particularly when huge stakes are involved. I condone the delay of 275 days in filing the appeal and admit the same for hearing.

The sole issue involved in this appeal is that the CIT(A) was not justified in confirming the addition of Rs.18,00,100/-for non deduction of TDS u/s 194 C of the Act by invoking the provisions of section 40(a)(ia) of the Act.

The Assessing Officer found that the assessee has paid truck hire charges exceeding Rs.50,000/- each to 26 persons aggregating Rs.18,00,100/- without deducting TDS u/s 194C. Therefore, he disallowed the deduction for the same in computing the income of the assessee by applying the provisions of section 40 (a)(ia) of the Act. The contention of the assessee was that the assessee has assessment proceedings proximately 30 trucks owned by him for doing the transportation business. In order to meet extra needs of truck the assessee took trucks on hire for transportation of goods as and when the need arises. Thus, there is no written or oral contract between the assessee and the transporter hence, the assessee was not required to deduct TDS u/s 194C of the Act. The Assessing Officer was not satisfied with the explanation of the assessee and therefore, disallowed the entire truck hire charges of Rs.18,00,100/-.

On appeal the CIT(A) confirmed the action of the Assessing Officer.

Before me the AR of the assessee relied on the decision of Hon’ble Himachal Pradesh High Court CIT Vs. Ambuja Darla Kashlog Mangu Transport Co-op. Society reported in 188 Taxman 134 (Himachal Pradesh) and submitted that the Hon’ble High Court held that where there was no contract between the assessee and the transporter provision of section 194C are not attracted. He submitted that SLP filed by the revenue against the said order of the High Court has been dismissed by the Hon’ble Supreme Court.

He further relied on the decision of Hon’ble Delhi High Court in the case of CIT Vs. Hardarshan Singh reported in 350 ITR 427 (Delhi) where it was held that the assessee received freight charges from the clients who intended to transport their goods through separate transporters. The entire amount collected from the clients is paid to the transporters after deducting commission from the amount. Thus, the Tribunal was justified in holding that the contract was between the assessee client and the transporters and that the assessee had mainly acted as facilitator or as an intermediary and therefore there was no liability to deduct TDS u/s 194C of the Act from the payments made by the assessee. Hence, it was prayed that the addition made should be deleted.

The Ld. DR on the other hand supported the orders of the lower authorities.

I have heard the rival submissions and perused the orders of the lower authorities and materials available on record. In the instant case the assessee is in the business of transportation of goods. It has 30 numbers of owned trucks and in case of any of extra trucks the assessee hires the same as and when required. The assessee during the year made payment of Rs.18,00,100/-to the persons from whom the trucks were hired. The contention of he was that he was an intermediary between the transporters of goods and the parties who wanted their goods to be transported. He thus facilitated the persons who wanted the goods to be transported and thus there was no privity of contract between the assessee and truck owners and hence he was not required to deduct TDS from the payments made to truck owners. The Assessing Officer was not satisfied with the explanation and therefore, disallowed the entire truck hire charges paid of Rs.18,00,100/- by applying section 40 (a) (ia) of the Act.

On appeal the CIT(A) confirmed the action of the Assessing Officer observing that in the instant case payment in each case exceeded Rs.50,000/- in the aggregate during the year and therefore, the assessee is liable to deduct TDS u/s 194C of the Act which was not done and hence the payments made to the truck owner was liable to be disallowed section 40 (a) (ia) of the Act.

Before us the AR of the assessee argued that in the instant case the assessee acted as facilitator for transport goods by hiring trucks for persons who wanted to transport their goods and earned commission therefrom. Thus, the privity of contract was between the party and the truck owner and hence the assessee was not liable to deduct TDS u/s 194C of the Act. I find from the order of the Assessing Officer that this submission was also made before the Assessing Officer. The Assessing Officer simply brushed aside the submission of the assessee and held that the assessee was liable to deduct TDS u/s 194C of the Act. I find that the case of the assessee is squarely covered by the decision of Hon’ble Delhi High court in the case of Hardarshan Singh (supra) where it was held that the assessee was not liable to deduct TDS u/s 194C of the Act where it acted as a facilitator or intermediary between client and truck owner and that there was no privity of contract between assessee and client for carriage of goods. Therefore, I set aside the orders of the lower authorities and delete the addition of Rs.18,00,100/- and allow the ground of the appeal of the assessee.

In the result, the appeal filed by the assessee is allowed.