Income Tax Appellate Tribunal - Jaipur
Mahendra Kumar Sharma , Jaipur vs Assessee on 30 October, 2015
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM
vk;dj vihy la-@ITA No. 62/JP/2012
fu/kZkj.k o"kZ@Assessment Year : 2008-09
Mahendra Kumar Sharma, cuke I.T.O.
Prop.- Sikar Ludhiyana Road Lines, Vs. Ward 4(2), Jaipur.
Near Sikar Road, VKI Area, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ANWPS 9860 L
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Manish Agarwal (CA)
jktLo dh vksj ls@ Revenue by : Shri Rajendra Singh (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 15/10/2015
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 30/10/2015
vkns'k@ ORDER
PER: T.R. MEENA, AM This is an appeal filed by the appellant against the order dated 29/11/2011 passed by the learned CIT(A)-II, Jaipur for A.Y. 2008-09. The respective grounds of appeal raised by the appellant are as under:-
"1 That the ld. Assessing Officer grossly erred in law and in facts in making addition of Rs. 87,97,747/- under Section 40(a)(ia) of the Income Tax Act, 1961 and Commissioner 2 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO of Income Tax (Appeals) grossly erred in law and facts in confirming the order of Assessing Authority.
2. That the ld assessing authority grossly erred in law and facts in disallowing the expenses and in making addition of Rs. 87,97,747/- in the income declared by the appellant in the return.
3. That the ld. Lower authorities grossly erred in law and facts in passing order on the basis of assumption and presumptions.
4. That the order of ld. Lower authorities are against principles of natural justice. Appellant was not confronted with the material used against the appellant and was not given opportunity of rebuttal."
2. The assessee is a transport contractor filed its return on 31/3/2009 declaring total income of Rs. 3,68,633/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The assessee is an individual and enjoys income from commission agency in the name and style of M/s Sikar Ludhiyana Road Lines. During the assessment proceedings written submissions were filed and books of account were produced, which were examined on text check basis by the Assessing Officer.
2.1 All the four grounds of appeal are interlinked and are against not deducting TDS on payment of Rs. 87,97,747/-, payments to drivers U/s 194C(2) of the Act. The ld Assessing Officer observed that on verification of books of account, it was found that the assessee had shown gross 3 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO receipts at Rs. 7,35,550/- on account of book receipts. Whereas, as per TDS certificates claimed by the assessee, his gross receipts were Rs. 1,01,08,222/-. Therefore, the ld Assessing Officer gave show cause notice on him. The assessee submitted reply vide letter dated 06/12/2010 and 10/12/2010. After considering the assessee's reply, the ld Assessing Officer held that the assessee is a transport contractor. During the normal course of his business, the assessee sublets its work to other truck owners on payment of freight charges agreed between the assessee and the truck owners. The freight being received by the assessee from principal parties has nothing to do with when the freight is decided between the assessee and the truck owners. Here the assessee makes agreement with the truck owner in his own capacity. The truck owner/driver received payment on behalf of assessee from the consignor or consignee, as the case may be for which after making TDS U/s 194C, the awarder/consignor party issued TDS certificates in the name of assessee. In nutshell, the payments made by the assessee to truck owners were covered within meaning of Sub Contract making the assessee liable to make TDS U/s 194C(2) of the Act. It is further mentioned by the Assessing Officer that gross receipts of assessee as per TDS certificates in A.Y. 2007-08 were also more than the limit prescribed for carrying out audit U/s 44AB in just preceding year as 4 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO required U/s 194C(2) of the Act. During the A.Y. 2007-08 his gross receipts as per TDS certificates was Rs.1,12,21,213/-. During the year under consideration total receipts of assessee, as per GRs, were Rs. 1,49,94,496/-, but the assessee failed to get his books of accounts audited U/s 44AB, therefore, the ld Assessing Officer initiated penalty proceeding U/s 271B of the Act. During the year under consideration, the supplier of goods had made TDS from the transport agent and had also issued TDS certificate in the name of assessee. As per Assessing Officer, it is clear that contract between supplier of goods and transport agent exist, which is also evidenced from the TDS certificates issued in the name of assessee and agent had also claimed credit of TDS amount as per those certificates. On the basis of GR produced by the assessee, it had been concluded by the Assessing Officer that the assessee was engaged for transportation of goods of suppliers. Whenever, the suppliers made payment to these truck owners/drivers, the payment was debited to the account of assessee as appearing in the books of supplies, it made TDS U/s 194C and issued certificates for the same in the name of agent i.e. assessee. There are so many trucks which had been engaged by the assessee repeatedly during the year under reference and hence by conduct of both the parties, existence of contract between them cannot be denied. It is settled legal 5 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO position that there need not be a written agreement so as to prove existence of contract. The existence or otherwise of a contract was to be seen from the conduct of both the parties. In case there were frequent dealings to render transport services between the assessee and truck owners and hence it does tantamount to contract. This work is again sub- let by the assessee to different truck owners engaged from the market repeatedly. The assessee is liable to make TDS U/s 194C(2) of the Act, which he had failed to deduct TDS, therefore, he applied provisions of Section 40(a)(ia) of the Act. In view of the above facts and circumstances, the assessee had committed default he made payment exceeding Rs. 50,000/- during the year and where a single payment exists Rs. 20,000/- had been annexed as per Annexure A to the assessment order. Total of such payments made out by the Assessing Officer at Rs. 87,97,747/- and same was added U/s 40(a)(ia) of the Act. Similar additions were made by the Assessing Officer in A.Y. 2006-7. The assessee filed appeal against this order before the ld CIT(A), who had decided the assessee's case vide order in appeal NO. 724/JPR/2008-09 dated 29/01/2010. The ld CIT(A) has held that this is a case of payment to sub-contractors without deducting TDS, therefore, he decided the appeal against the assessee.
6 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO
3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the order of the Assessing Officer by observing that the contractor has to submit form No. 15-J to the designated CIT (TDS) alongwith form No. 15-I on or before 30/06/2008. The appellant having failed to do so, therefore, the benefit of Rule 29D was not available to him. The Assessing Officer held that the form submitted after the specified date was not valid. The appellant in the present case had failed to file these documents before the ld CIT(TDS). The ld Assessing Officer placed reliance on the decision of Hon'ble Jurisdictional High Court in the case of Chhogmal Chiranji Lal Vs. CIT 257 ITR 51 wherein it was held that if the assessee had not obtained Form No. 15-H at the time of making payment or before the expiry of the financial year but actually obtained them on 01/4/1999, the assessee could not contend that there had only been a technical breach since that would amount to rendering the deeming clause in Section 201 redundant. The provisions of law could never be redundant and section 201 was required to be operated against the assessee and he had to be deemed to be assessee in default. Further GR was held to be a separate contract if goods were transported at one time. But if the goods were transported continuously, all the GRs relating to that period or quantity would have to 7 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO be aggregated for the purpose of TDS. The A.O. held that gross receipts of the assessee for A.Y. 2007-08 as per TDS certificates were more than the limit prescribed for carrying out the audit u/s 44AB of the Act. In the current year, the gross receipts of the assessee as per GRs were at Rs. 1,49,94,496/-, therefore, the appellant had failed to get his books of account audited U/s 44AB of the Act. Further the customers whose goods were transported by the assessee had also issued TDS certificates in the name of the assessee. On perusal of GRs, the A.O. noticed that he was repeatedly hiring the same trucks and therefore conduct of both the parties revealed that there existed a contract between the assessee and various truck owners. The ld CIT(A) further held that the assessee had not filed Form No. 15-I before the Assessing Officer or CIT(TDS) on or before 30/06/2008 for relevant to assessment year 2008-09. The Form No. 15-J was dated 29/06/2008, however, it did not bear the stamp and signature of concerned receipt clerk. The Form No. 15-J therefore had no legal sanctity. The annexure forming part of Form No. 15-J contained the details of individual truck owners and the amount of freight credited to their accounts. The alleged Form No. 15-I were predated so as to given shade of genuineness to the alleged documents. Therefore these documents are liable to be rejected. Photo copy of the Form No. 15-J filed during the 8 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO course of appellate proceedings, which was originally to be filed before the Addl.CIT, Range-4, Jaipur on 30/06/2008, which was adjudicated by the ld CIT(A) as additional evidence under Rule 46A of the I.T. Rules. On perusal of the Form No. 15-J, it was baffling to note that it did not contain any receipt number, which is always allotted at the time of receipt of a particular document. The ld CIT(A) verified the receipt register of Addl.CIT, Range-4, Jaipur. The documents as annexed as Annexure-B of the ld CIT(A)'s order were received in the office of Addl.CIT, Range-4, Jaipur on 30/06/2008 as per entry in the receipt register. As per Annexure-B, the ld CIT(A) held that alleged Form No. 15-J, which should have been filed with CIT (TDS) was neither filed with CIT(TDS) nor filed in the office of Addl.CIT, Range-4, Jaipur. The appellant is therefore guilty of filing fabricated/forged document during the course of appellate proceedings. The additional evidence filed by the appellant is therefore rejected as it has been forged with the sole intention of fraud and evading taxes. As per Section 194C, the assessee is a contractor, who had taken the contract of transportation of goods on behalf of his principals. It is immaterial that assessee has formal written contract between awardee and assessee with sub-contractor (owners of the truck). The assessee had made payment exceeding Rs. 50,000/- during the year under consideration, therefore, he 9 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO is liable to be deducted TDS U/s 194C(2) of the Act. He further given example of truck number HR-47A-9435 has continuously plied between 07/02/2007 to 26/03/2008 on 17 occasions. The truck No. HR-47A-0765 has continuously plied between 05/09/2007 to 28/12/2007 on 8 occasions. The truck number RJ-14-2G-2926 has continuously plied between 15/05/2007 to 29/03/2008 on 9 occasions. The truck No. RJ-14-GA-2603 has continuously plied between 16/01/2008 to 01/09/2008 on 14 occasions. The truck No. RJ-23G-1444 has continuously plied between 05/08/2007 to 24/03/2008 on 15 occasions. The truck number RJ-23G- 1512 has continuously plied between 15/12/2007 to 17/02/2008 on 13 occasions. On the basis of above, he held that the assessee had continuous contract for the transportation between the assessee and various truck owners. The assessee's argument that each payment was less than 20,000/- but it was also found by the ld CIT(A) unacceptable on the basis of total payment made through GR. The ld CIT(A) further relied on the decision of Hon'ble Jodhpur ITAT in the case of Shree Choudhary Transport Co. Vs. ITO 119 TTJ 3 wherein identical issue has been considered and held liable to be deducted TDS U/s 194C of the Act, therefore, he confirmed the order of the ld Assessing Officer.
10 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO
4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that the assessee is running a transport agency in the name of M/s Sikar Ludhiyana Roadlines at Sikar Road, VKI, Jaipur. The nature of business activity undertaken by the assessee as under:-
(a) Arrange trucks from open market (mostly individual truck owners) for customers who require transportation services for their goods;
(b) Settle the freight amount between the customers and truck owners and;
(c) Issue Goods receipt (G.R.) for the goods transported.
(d) In consideration of this service rendered by him, assessee charges commission from the customers.
(e) In case, where the G.R. is- "freight paid", the payment of advance amount is made directly to the truck driver/owner of the vehicle by the customer/consignor. And, in case, where the G.R. is-"freight to pay", the freight/advance is collected by the truck owners from the consignee at the time of delivery of goods and balance amount, if any, is received by the truck owners on presenting the delivery receipts to the consignor.
(f) Thereafter, the assessee collects his commission from the truck owner.
Therefore, from a perusal of the nature of business activity undertaken by assessee, it is clear that the assessee is only acting as a facilitator or intermediary between the customers and truck owners and for his service rendered i.e. arranging trucks from market and issuing GR in his transport agency name, receives the commission income.
11 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO The assessee neither received direct payment from the customers, nor did he make payment to the truck owners. The payment by customers as mentioned above is made directly to the truck driver/owner, who thereafter pays commission to assessee. At the time of making this payment to the truck drivers/owners, the customers deduct tax at source in the name of assessee and accordingly, issue TDS certificates in name of assessee. With effect of deduction of tax at source, the payment made to truck owners falls short, and such difference amount is paid by assessee to the truck owners out of his own pocket and such amount is recorded as liability in the account of respective truck owner. Upon receiving refund from the department of the tax deducted at source, the accounts of respective truck owners are settled.
There was no contract of carriage of goods between the assessee and the truck owners/drivers.
The ld AR further argued that the assessee is only acting as a facilitator or intermediary between the customer and truck owner and for his service rendered i.e. arranging truck from the market and issuing GR in his transport agency name, received commission income. The assessee neither received direct payment from the customer nor he made payment to the truck owners. The payment by the customer made directly to the truck owners. But it is undisputed fact that the TDS was deducted on payment of hiring charges in the name of assessee w.e.f. deduction of tax at source, the payment made to the truck owner falls short and such 12 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO difference is paid by the assessee to the truck owner out of from his pocket and such amount is recorded as liability in the account of respective truck owners. Upon receiving the refund from the department of tax deducted at source the accounts of the respective truck owners are settled. The assessee has not claimed any expenditure in the P&L account, therefore, no disallowance can be made U/s 40(a)(ia) of the Act and accordingly no TDS U/s 194C is liable to be deducted from the truck owners. He further argued that the assessee has got Form No. 15-I from the truck owners, therefore, any payment made to the truck drivers/owner is not liable to be deducted tax at source. Therefore, there is no violation of Section 40(a)(ia) of the Act. These evidences were submitted before the Assessing Officer, who rejected the assessee's claim on the ground that they were not submitted on 30/06/2008 in the prescribed Form 15J. Further the assessee had also submitted Form No. 15-I during the course of assessment proceedings before the Assessing Officer, for which he relied on the decision of Hon'ble ITAT, Jaipur Bench, Jaipur in the case of Shri Ashok Kumar Jain, Jaipur Vs ITO, Tonk, Rajasthan in ITA No. 1018/JP/2010 wherein it was held that submission of Form No. 15-J by the parties, the borrower is not liable to deduct tax at source. Therefore, order of the ld CIT(A) is deserved to be deleted. Further he relied on the decision 13 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO of Hon'ble ITAT, Mumbai Bench "E" decision in the case of M/s Travels and Shipping Pvt. Ltd, Vs. ITO in ITA No. 3854/Mum/2011 wherein it has been held that the same is recovered from its client on payment on actual basis, such payments made on their behalf has neither been debited nor claimed as expenses in the profit and loss account. Thus, the assessee is acting mere as conduit or intermediary and whatever payments are made to the concerned shipping company and to various other government agencies, the same is recovered by the clients. It is neither the case of the Assessing Officer not of the CIT(A) that assessee has claimed any such expenses in the profit and loss account. Once any expenses has not been claimed as deduction, the provision of Section 40(a)(ia) cannot be invoked. He further relied on the following case laws:-
(1) Chandrakant Thacker Vs. ACIT 129 TTJ 1 (Ctk).
(2) R.R. Carrying Corporation Vs. ACIT 126 TTJ 240 (Ctk).
(3) ACIT Vs. Seaward Exports (P) Ltd. 150 TTJ 13 (JP 'B')(UO).
(4) CIT Vs Cargo Linkers (2009) 179 Taxman 151 (Delhi).
(5) CIT Vs. Hardarshan Singh (2013) 350 ITR 427.
(6) ITO Vs. Harjeet Singh (ITAT Delhi Bench) ITA No. 6492/Del/2012.
(7) M/s Travels and Shipping Pvt. Ltd. Vs. ITO in ITA No. 3854/Mum/2011.
(8) Kuldeep Kumar Sharma (Prop. M/s KS Freight Carrier) Vs ITO ITA No. 5672/Del/10. Therefore, he prayed to delete the addition confirmed by the ld CIT(A).
14 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO
5. At the outset, the ld DR has vehemently supported the order of the ld CIT(A).
6. We have heard the rival contentions of both the parties and perused the material available on the record. After considering the order of ld Assessing Officer and ld CIT(A), it is found that the assessee is a transporter but did not own any truck but arrange the truck from the market. The customer is generally made contract to transporter for arranging the trucks for transportation of goods. In the present case, the assessee is an intermediary and conduit to make available the trucks from the market and issue GR in his own name but only charged commission for making builty. It is a fact that the customers deduct tax in the name of appellant but the truck owners was to be paid the amount of TDS by the assessee. The assessee got the refund and adjust the refund against the payment made by him to the truck drivers. The assessee has not debited any expenses on account of freight charges in the P&L account. Therefore, Section 40(a)(ia) is not applicable and is also not liable to be deducted TDS U/s 149C of the Act. The case laws referred by the assessee are squarely applicable on it. The assessee also had filed Form No. 15J before the Addl.CIT and at the time of assessment proceedings before the Assessing Officer, which has not been controverted by the DR. if the assessee has 15 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO produced the evidence regarding submission of Form No. 15-J before the lower authority, in which some fault had been found on the ground that no signature, number of receipts has been provided by the Range office, is not any fault on part of the assessee. The assessee has furnished the Form No. 15-J in the office of the Commissioner. Various Courts also even considered and held justified Form No. 15-J before the Assessing Officer at the time of assessment proceedings. Therefore, we reverse the order of the ld CIT(A). Accordingly, this appeal is allowed.
7. In the result, the assessee's appeal is allowed.
Order pronounced in the open court on 30/10/2015.
Sd/- Sd/-
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(R.P.Tolani) (T.R. Meena)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 30th October, 2015
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Mahendra Kumar Sharma, Jaipur.
2. izR;FkhZ@ The Respondent- The ITO, Ward 4(2), Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A) 16 ITA 62/JP/2012_ Mahendra Kumar Sharma Vs. ITO
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 62/JP/2012) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar