PRADYUMNA KUMAR LATH,JHARSUGUDA vs. ITO, WARD-2, JHARSUGUDA

आयकर अपीऱीय अधिकरण, “एस.एम.सी” न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH CUTTACK BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER आयकर अपीऱ सं./ITA No.428/CTK/2017 (नििाारण वषा / Assessment Year :2010-2011) Pradyumna Kumar Lath, Vs. ITO, Ward-2, Jharsuguda At-Dalki, Jharsuguda, PIN-768201 स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No. : AAOPL 7797 H (अपीऱाथी /Appellant) (प्रत्यथी / Respondent) .. निर्ााररती की ओर से /Assessee by : Shri Sidhartha Ray, AR राजस्व की ओर से /Revenue by : Shri D.K.Pradhan, DR सुनवाई की तारीख / Date of Hearing : 27/12/2017 घोषणा की तारीख/Date of Pronouncement 28/12/2017 आदेश / O R D E R This is an appeal filed by the assessee against the order of the CIT(A), Sambalpur, dated 12.9.2017. 2. The sole issue involved in this appeal is that the CIT(A) was not justified in not accepting the statement of the assessee that the gross receipts from transportation charges of Rs.2,08,07,970/- was reimbursement of expenses to the assessee and estimating income on transportation charges receipts by applying rate of 4%. 3. Brief facts of the case are that the AO observed that the assessee has received transportation charges of Rs.2,08,07,970/- from various companies. He observed that the assessee has paid transport charges to the trucks and tippers which were involved in the transportation of the goods. He observed that on verification of books of account and trading and profit and loss account, it is found that the assessee has shown coal transportation expenses at Rs.42,54726/-, whereas no receipts of

2 ITA No.428/CTK/2017 transport charges was shown in the profit and loss account of assessment year 2010-2011. He observed that in the balance sheet the assessee has shown coal transportation payable at Rs.1,24,28,178/- as on 31.3.2010 and the assessee has not shown the transport charges received in profit and loss account, whereas the liability of Rs.1,24,28,178/- was shown as coal transportation payable in balance sheet as on 31.3.2010. Therefore, the assessee was asked to explain the basis of transport expenses of Rs.42,54,726/- shown in the profit and loss account and transportation payable amount of Rs.1,24,28,178/- shown in the balance sheet. The assessee submitted that transportation charges has been incurred by Urja Udyog for transportation of coal from mines to manufacturing site at Dalki and enclosed the ledger of same expenses. Further, with regard to coal transportation payable at Rs.1,24,28,178/- the assessee submitted that in his personal capacity i.e. in the name of Pradyumna Kumar Lath he has sold the coal to various companies and transport charges involved on delivery of coal was paid on behalf of the customer company. Accordingly, he submitted the bill of coal sale and transport charges separately to the customer company. The bills received on account of sale of coal was shown as sale turnover and shown in the Trading in the trading and profit and loss account for the assessment year 2010-2011. It was mentioned that the total amount received on transportation was reimbursement of coal transportation expenses incurred on behalf of the company and, therefore, was not a revenue income of the assessee. The AO did not accept the explanation of the assessee and estimated the income by

3 ITA No.428/CTK/2017 applying rate of 5% on the gross receipts of Rs.2,08,07,970/- and added Rs.10,40,399/- to the income of the assessee. 4. The assessee carried the matter in appeal before the CIT(A), who reduced the estimation of income to 4% in place of 5% of the gross transportation receipt applied by the AO and thereby restricting the addition of Rs.8,32,319/- 5. Before me, the AR of the assessee filed copy of a certificate from M/s Concast Steel & Power Ltd., dated 20.12.2012, wherein it is stated that M/s P.K.Lath was awarded purchase order for supply of coal on F.O.R. basis. The cost of the transportation charges is to be borne by the party which will be reimbursed on actual basis i.e as per the rate mentioned in each purchase order and, therefore, it was instructed that all the transportation bills and coal purchase bills rose separately as per rates mentioned in each purchase order. On the basis of this certificate, he submitted that the transportation charges received by the assessee was the receipt of actual transportation charges incurred by the assessee on behalf of the purchasers of coal. The assessee was not carrying on any transportation business and, hence, no income for transportation charges was shown by the assessee. 6. On the other hand, ld. DR relied on the orders of lower authorities and submitted that the certificate filed now before the Tribunal was never filed before the AO or the CIT(A) and, therefore, the same should not be accepted.

4 ITA No.428/CTK/2017 7. I have heard rival submissions, perused the orders of lower authorities and materials available on record. In the instant case, the AO found that the assessee has received transportation charges of Rs.2,08,07,970/- and has also shown in the balance sheet transportation charges payable at Rs.1,24,28,178/-. The AO observed that in trading and profit & loss account the assessee has not shown any income from transportation charges. He also observed that the assessee has shown transportation expenses of Rs.42,54,726/-. On query by the AO the assessee submitted that the transportation charges received by the assessee during the year where reimbursement of expenses incurred by the assessee on behalf of the buyer of coal. Therefore, it was is explanation that as the assessee has not done transportation business, no income from the same was shown in the trading and profit and loss account. It was also submitted that the transportation charges payable shown in the balance sheet on 31.3.2010 at Rs.1,24,28,178/- was the amount receivable from the persons on whose behalf the assessee has incurred the transportation charges. The AO did not accept the explanation of the assessee and estimated the income from transport receipts of Rs.2,08,07,970/- by applying rate of 5% on the transportation receipts. On appeal, the CIT(A) reduced the income from transportation receipts to 4% in place of 5% of the gross transportation receipts and thereby sustained the addition at Rs.8,32,319/- in place of Rs.10,40,399/- made by the AO.

5 ITA No.428/CTK/2017 Before me, the AR of the assessee has filed the certificate from M/s Concast Steel & Power Ltd., wherein they have stated that the cost of the transportation charges was to be borne by the purchaser and was to be reimbursed to the assessee on the basis of actual expenditure incurred. It is not in dispute that this certificate dated 20.12.2012 was not before the AO or the CIT(A). The AR of the assessee very fairly agreed that the matter should be restored back to the file of AO for adjudication of the issue afresh after considering the certificate now filed before the Tribunal and after allowing reasonable and proper opportunity of hearing to the assessee. The DR had no objection to the submissions of the AR of the assessee. I, therefore, set aside the order of CIT(A) and remand the matter back to the file of AO to adjudicate the issue afresh after allowing reasonable and proper opportunity of hearing to the assessee. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 28/12/2017. Sd/- (N. S. SAINI) ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनांक Dated 28/12/2017 प्र.कु.मम/PKM, Senior Private Secretary आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant- 2. प्रत्यथी / The Respondent- आयकर आयुक्त(अपील) / The CIT(A), 3. आयकर आयुक्त / CIT 4. निभागीय प्रनतनिनर्, आयकर अपीलीय अनर्करण, कटक / DR, ITAT, Cuttack 5. आदेशािुसार/ BY ORDER, गार्ड फाईऱ / Guard file. 6. सत्यापपत प्रतत //True Copy// (Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack