M/S. MGB TRANSPORT,BURDWAN vs. ITO, WARD - 3(1), ASANSOL, ASANSOL

ITA Nos.724-726/Kol/2019 A.Ys. 08-09 to10-11 M.G.B. Transport Vs. ITO Wd-3(1), Asl. Page 2 2. It transpires during the course of hearing that the assessee’s former substantive grievance in and only substantive ground raised in assessment year 2009-10 involving seeks to reverse both the lower authorities’ action disallowing its hire charges amounting to ₹45,70,140/- and ₹19,77,460/-; assessment year-wise (respectively), on account of non-deduction of TDS invoking sec. 40(a)(ia) of the Act. There is no dispute that this assessee is a partnership firm engaged in transportation business. It had made the payments in question to the payees / recipients for transporting the goods from customers to their respective destination. The assessing authority of the view that the assessee had neither obtained / deposited Form15-I nor submitted Form-15-J before the CIT. And also that the impugned sub-contractual payments exceeded the corresponding threshold limit and therefore, it was bounden duty of the assessee to comply sec. 194-C of the Act. All this has resulted in the impugned disallowance.

We have given our thoughtful consideration to rival pleadings against and in support of their stands adopted throughout. We notice at the outset that the assessee’s case has been that no TDS was deducted qua the impugned payment since there was no contractor / sub-contractor relationship with the payees. The Revenue’s case on the other hand is that all the impugned payments have made been in a particular manner which sufficiently suggests that oral transportation contracts very well existed before them. We find no merit in Revenue’s arguments. We make it clear that apart from drawing an inference of existence of oral contracts between assessee and its payees, there is not an iota of discussion or finding in the lower authorities respective order(s) that the payees had ever undertaken any contractual liability in case of transportation of goods. Hon'ble jurisdictional high court’s decision in Commissioner of Income Tax Kolkata-XVI vs. M/s Stumm India in of 2009 dated 16.08.2010 holds that the impugned disallowance does not apply in absence of contract that relationship between payer / payees so as to ITA Nos.724-726/Kol/2019 A.Ys. 08-09 to10-11 M.G.B. Transport Vs. ITO Wd-3(1), Asl. Page 3 attract sec. 194-C of the Act. The assessee succeeds in the instant issue therefore. Its former substantive ground and sole substantive grievance in these two assessment year(s) (supra) are accepted. 2009-10 succeeds therefore.

We stay back in assessment year 2008-09 wherein assessee’s appeal raises the second substantive issue of correctness of sec. 68 addition amounting to ₹13,48,894/- made by the Assessing Officer and restricted to the extent of ₹4,92,856/- in the lower appellate proceedings. Suffice to say, the impugned sum is in the nature of capital in partner’s account only. Hon'ble Gujarat high court’s decision in PCIT vs. Vaishnodevi Refoils & Solvex (2018) 89 taxmann.com 80 (Guj) holds that such a sum in partner’s capital account cannot be added as unexplained cash credits u/s 68 of the Act. We therefore delete the impugned latter issue as well. This assessee’s appeal ITA No.724/Kol/2019 is also allowed.

Coming to last assessment year 2010-11 involving assessee’s appeal we notice that the CIT(A) passed his lower appellate order ex parte after holding that the assessee had not put in appearance despite service of notice. Learned departmental representative fails to dispute that the CIT(A)’s order under challenge has nowhere discussed merits of the various issues as contemplated u/s.250(6) of the Act requiring framing of points of determination followed a detailed adjudication. We therefore deem it appropriate to restore the assessee’s instant last appeal back to CIT(A) for afresh adjudication as per law after affording adequate opportunities of hearing. The assessee is directed to appear before the CIT(A) on or before 30.06.2020 along with a copy of the instant common order for further consequential proceedings. This last appeal ITA No.726/Kol/2019 is accepted for statistical purposes. No other ground has been agitated before us at the assessee’s behest during the course of hearing.