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Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
आदेश / O R D E R
PER MAHAVIR PRASAD, JUDICIAL MEMBER :
This is an appeal by the assessee against the order of the Pr. Commissioner of Income Tax(Appeals)-3, Ahmedabad, dated 23.03.2015 for the Assessment Year (AY) 2010-11, on the following Grounds: i. In law and in facts and circumstances of the appellant’s case, the order u/s.263, passed by the Hon’ble Pr.CIT-3, Ahmedabad, is bad in law and requires to be quashed. ii. In law and in the facts and circumstances of the appellant’s case, the Hon’ble Pr.CIT of Income tax grossly erred in considering the
ITA No.1481/Ahd/2015 Ashokkumar S. Bansal vs. PCIT Asst.Year – 2010-11. - 2 - assessment order 143(3) passed by the Ld.AO to be erroneous and prejudicial to the interest of the revenue and he erred in invoking the provisions of section 263 of the Act. iii. In law and in the facts and circumstances of the appellant's case, the Hon'ble Pr. Commissioner of Income Tax grossly erred in directing, set aside for being made de novo assessments by invoking the provisions of section 263. iv. In law and in the facts and circumstances of the appellant's case, the Hon'ble Pr. Commissioner of Income Tax grossly erred in invoking the provisions of section 263 merely based on the change of opinion on the basis of the objection raised by the audit party. v. In law and in the facts and circumstances of the appellant's case, the Hon'ble Pr. Commissioner of Income Tax grossly erred in not considering the fact that the detention charges were not charged to the profit and loss account and hence Sec.40(A)(3a) is not applicable and accordingly the appellant was not liable to pay tax. Hence, there is no impact on the tax liability and the order passed by the Ld. AO cannot be said to be prejudicial to the interest of the revenue. vi. In law and in the facts and circumstances of the appellant's case, the Hon'ble Pr. Commissioner of Income Tax grossly erred in not considering the fact that Sec 40 (A) (3) is not applicable where the intermediaries/agents make collection on behalf of more than one driver/ owner and are exempted under Rule 6DD(k) of Income Tax Rule. Accordingly the appellant was not liable to pay tax and hence, there being no impact on the tax liability, the order passed by the Ld AO can never be said to be prejudicial to the interest of the revenue. vii. In law and in the facts and circumstances of the appellant's case, the Hon'ble Pr. Commissioner of Income Tax grossly erred in not considering the letter submitted after assessment order, whereas the same was covered under the meaning of "records" as defined in Explanation (b) to the Sec. 263 (1) of the Act. viii. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or at the time of the hearing of the appeal.
ITA No.1481/Ahd/2015 Ashokkumar S. Bansal vs. PCIT Asst.Year – 2010-11. - 3 - 2. The relevant facts as culled out from the materials on record are as under:- On perusal of the assessment records, it was observed that the Assessing Officer while passing the assessment order had not made disallowance u/s.40A(3) of the Act on cash payment exceeding on cash payment exceeding Rs.35,000/- in a single day to a single person which was made in respect of ‘Lorry Hire payable ledger account’ totaling to Rs.1,16,500/- (correct figure is Rs.1,06,500/-). During the course of assessment proceedings, the Assessing Officer raised query as regard to disallowance of this expenditure. To this, the assessee had replied that due to some technical problem while taking print out of copy of ‘Lorry Hire payable ledger account’ not appear. The assessee had filed a copy of ‘Lorry Hire payable ledger account’, which according all the details available. After examination the details, the AO did not disallow the expenditure u/s.40A(3) if the I.T. Act and passed the order. However, it is noticed from the copy of ‘Lorry Hire payable ledger account’ submitted alongwith reply dated 06.12.2012 that though the payment made on a particular date matches with the payment appearing in copy of ‘Lorry Hire payable ledger account’ filed alongwith reply dated 01.08.2012, the narration about payment made in respect of a particular credit note differ. The payment made in respect of credit note 17057, 17058 and 17060 was for Rs.35,500/- on each occasion as per copy of ‘Lorry Hire payable ledger account’, submitted on 01.08.2012, this payment is appearing at Rs.30,500/- in respect of all these three credit notes, as per copy of "Lorry Hire payable ledger account', submitted on
ITA No.1481/Ahd/2015 Ashokkumar S. Bansal vs. PCIT Asst.Year – 2010-11. - 4 - 06.12.2012. The balance amount of Rs.5,000/- each is shown against three credit notes bearing number 17065, 17067 and 17068 which were not finding mention in copy of 'Lorry Hire payable ledger account', submitted earlier. To match the amount of payment on 27.03.2010, payment in respect of credit notes bearing number 17065, 17067 and 17068 is shown at Rs.25,000/- each and payment in respect of credit note 17057,17058 and 17060 is shown at Rs.5,000/- in copy of 'Lorry Hire payable ledger account' filed on 06.12.2012 while in copy of 'Lorry Hire payable ledger account' filed on 01.08.2012, payment in respect of each of credit notes bearing number 17065, 17067 and 17068 was shown at Rs.30,000/-. It is very difficult to believe that any software related problem can include or exclude any credit note and change the amount of payment while taking print out. The explanation offered by assessee was not beyond suspicion and seemed to have been fabricated. Under these circumstances, the AO ought to have obtained the original credit notes so as to verify the amount of payment mode in respect of credit note bearing no.17057, 17058, 17060, 17065, 17067 and 17068 before accepting the assessee’s version. The AO failed to do so and accepted the explanation without making enquiries. The order passed by the AO is therefore, erroneous as well as prejudicial to the interest of revenue on this count.
In view of the above facts, a show-cause notice u/s.263 was issued on 04.03.2015 asking the assessee as to why the assessment order passed by the Assessing Officer be not held as erroneous and prejudicial to the interest of the Revenue. The assessee was, therefore, asked to show-cause
ITA No.1481/Ahd/2015 Ashokkumar S. Bansal vs. PCIT Asst.Year – 2010-11. - 5 - as to why the said assessment order should not be modified or set-aside to be made de-novo.
In response to the notice, assessee filed following reply: “3.2.2 The assessee has stated that the assessee is a transporter and after taking booking from the parties, the assessee acquired the trucks from the open markets through the brokers and send the goods. The payments are not made to the truck driver or to the truck owner. The payment is made to the brokers who provided the truck which was engaged for the goods. These brokers paid to the truck owners. The freight expenditure ledger account show that no payment was made to the truck driver or truck owner by the assessee. Hence the provision of section 40A(3) are not applicable. The assessee has further stated that the issue regarding Challan No. 17057, 17058 and 17060 showing amount of Rs.35,500/- each were erroneously entered by the Accountant. But they were rectified by the Auditor.”
The ld. Pr. CIT(A) was not satisfied with the contention of the assessee. Assessment Order dated 30.01.2013 was held to be erroneous and prejudicial to the interest of the revenue and set aside for being made de-novo after giving opportunity to the assessee.
We have gone through the impugned order and documents filed by the assessee. Ld. AR stated that during the assessment proceedings, we have already clarified that the assessee is a transporter and after taking booking from the consignor/consignee for transportation assessee acquires the trucks from the open market through the intermediaries/brokers on behalf of the consignor/consignee. This clearly shows that he was acting on agent of the consignor/consignee. No payment was directly made to truck drivers as the assessee was not
ITA No.1481/Ahd/2015 Ashokkumar S. Bansal vs. PCIT Asst.Year – 2010-11. - 6 - concerned with the truck owners/truck drivers. Moreover, it is also to be noted that truck drivers not always truck owners. The truck driver is an employee of the truck owner.
So far query in respect of payment of Detention charges is Rs.20,000/- is concerned. Ld. AR stated that detention holds onto the truck owner’s truck outside the factory, godown or depot the free time allotted. Detention is charged when trucks have been loaded or unloaded beyond the free time that is allotted to the consigner or consignee. If the trucks are not loaded or unloaded during this free time, the truck owner will charge detention for the additional days the truck is in the possession of the consigner or consignee and further stated that no detention charges has been charged to Profit and Loss Account and it is only a mode of collection by the assessee on behalf of truck owners/truck drivers from the consignee or consignor. Also stated by the AR that since the assessee never claimed any expenditure/income in respect of detention charges in the relevant assessment year as well as in the earlier assessment year and accordingly Section 40A(3)/40A(3A) is not applicable.
So far query regarding payment in respect of freight charges more than Rs.35,000/- in cash on and after 01.10.2009 is concerned. AR stated that all the payments were made by the assessee to the intermediaries/brokers during the year and nothing was paid to the truck drivers/truck owners directly. Ld. AR stated that whatever query has been made by the ld. Pr.CIT(A), similar query were made in the
ITA No.1481/Ahd/2015 Ashokkumar S. Bansal vs. PCIT Asst.Year – 2010-11. - 7 - assessment order u/s.143(3). Ld. AR cited judgments of Apex Court in the in several matters: CIT vs. Max India Ltd. (2007) 295 ITR 282 (SC): “it was held that the phrase prejudicial to the interests of the under section 263 has to be read in conjunction with the expression erroneous order passed by the assessing Every loss of revenue as a consequence of an order of the assessing officer cannot be treated as prejudicial interests of the revenue. For example, when an Income Tax Officer adopted one of the courses permissible in it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest revenue, unless the view taken by the Income Tax Officer is unsustainable in law.” Siddh International vs. CIT(2009) 28 (II) ITCL 75 (Ahd-Trib): “It was held that where the view adopted by assessing officer was a possible view same could not be amenable to revisional jurisdiction on ground that it was an erroneous and pre-judicial order.”
CIT v. R.K. Construction Co. (2009) 313 ITR 65 (Guj): (2008): “It was held that where payments made to sub-contractors were genuine and assessing officer had adopted a possible view on the basis of evidences furnished by assessee Commissioner had no jurisdiction to invoke section 263 after taking a different view.” 9. In our considered opinion, ld. AO already made an enquiry on which ld. Pr.CIT issued a show-cause notice u/s.263 as assessee never claimed such expenditure while computing income as define u/s.40(A)(3). Accordingly, claim of the assessee cannot be disallowed u/s.40(A)(3).
Therefore, in view of the above observation and Judicial precedence, we quash the order passed u/s.263.
ITA No.1481/Ahd/2015 Ashokkumar S. Bansal vs. PCIT Asst.Year – 2010-11. - 8 -
In the result, appeal filed by the assessee is allowed.
This Order pronounced in Open Court on 22/11/2017
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Priti Yadav, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The Pr.CIT(A)-3, Ahmedabad 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 03/11/2017 (dictation-pad 7 pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member 16/11/2017 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S……. 7. Date on which the file goes to the Bench Clerk………………… 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………