Income Tax Appellate Tribunal - Mumbai
Deepak D Mehta, Navi Mumbai vs Department Of Income Tax on 2 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "C", MUMBAI
BEFORE SHRI B.R. MITTAL,J.M. AND SHRI RAJENDRA SINGH, A.M.
ITA No. : 3134/Mum/2011
Assessment Year : 2005-06
Income tax Officer Shri Deepak D. Mehta
Ward 22(3)(1) Prop. of Mehta Cargo Movers
Tower No.6, 3rd Floor Plot No.164, Mehta House,
Vashi Railway Station Bldg. Sector-19C, Turbhe
Room No.306, Vashi Vs. Vashi
Navi Mumbai-400 703. Navi Mumbai-400 705.
PAN NO: AFNPM 4413 K
(Appellant) (Respondent)
ITA No. : 3166/Mum/2011
Assessment Year : 2005-06
Shri Deepak D. Mehta Income tax Officer
Navi Mumbai-400 705. Ward 22(3)(1)
Vs. Navi Mumbai-400 703.
(Appellant) (Respondent)
Department by : Shri C.G.K. Nair
Assessee by : Shri Kishore I. Mehta
Date of Hearing : 02.04.2012
Date of Pronouncement : 02.04.2012
ORDER
PER RAJENDRA SINGH, AM :
These cross appeals are directed against the order dated 31.1.2011 of CIT(A) for the assessment year 2005-06. The disputes raised in these appeal relate to legal validity of re-opening of the 2 ITA No. 3134 & 3166/M/11 A.Y.05-06 assessment, disallowance of freight charges under section 40(a)(ia) and addition on account of discrepancy in turnover.
2. The facts in brief are that the assessee who was engaged in the business of transportation had declared gross receipts of Rs.1,28,53,052/- in the P&L Account. The AO noted that the gross receipts as per TDS certificates were to the tune of Rs.1,34,09,488/-. The assessee could not explain the discrepancy satisfactorily and AO therefore added a sum of Rs.5,56,436/- on this account. The AO also noted that the assessee had debited freight charges of Rs.88,96,042/- in the P&L Account. The AO observed that in view of the proviso to section 194C inserted w.e.f. 1.6.2002, any payment made to a sub- contractor by individual or HUF whose gross receipts/turnover exceed Rs.40.00 lacs was required to deduct tax at source which had not been done in this case. The AO noted that as per provisions of 40(a)(ia), in case, tax was not deducted in respect of any payment to contractor/sub-contractor, such payment was not allowable as deduction. The AO, therefore disallowed the freight charges of Rs.88,96,042/-. In appeal CIT(A) held that payments to the tune of Rs.8,21,701/- had been made prior to 1.10.2004 and therefore, proviso to section 194C(3) were not applicable and these payments were exempt under section 194C. He, therefore, deleted Rs.8,21,701/- on this account. CIT(A) further held that payments aggregating Rs.16,74,036/- consisted of amounts not exceeding Rs.50,000/- which are excluded from section 194C. He, therefore, deleted the addition to the above extent. In respect of the balance amount, the assessee claimed that these payments had been made to the parties who had less than two trucks. CIT(A) however, noted that the assessee had not furnished any declaration in Form-15-I before AO. Assessee also claimed that provisions of section 194C(2) were not 3 ITA No. 3134 & 3166/M/11 A.Y.05-06 applicable as the payees were not sub-contractors. CIT(A) did not accept the claim and held that these payments were made to sub- contractors. Accordingly, CIT(A) confirmed the addition of Rs.66,00,305/-. Aggrieved by the said decision, both the parties are in appeal on this issue. In addition, assessee has also disputed the decision of CIT(A) of holding legal validity of reassessment proceedings. The assessee is also aggrieved with the order on the ground that CIT(A) had not adjudicated the addition in relation to discrepancy in gross receipts.
3. We have heard both parties in the matter. The ld. DR submitted that CIT(A) had given relief of Rs.16,74,036/- based on the additional evidence in respect of which no opportunity had been given to the AO. The ld. AR fairly conceded the position. Therefore, this issue is required to be sent back to CIT(A) for giving opportunity to the AO. Regarding addition confirmed by CIT(A) under section 40(a)(ia), ld. AR submitted that CIT(A) had not accepted the claim of the assessee that the payees were not sub-contractors without any examination. Both the parties had no objection if the issue of addition/relief under section 40(a)(ia) by CIT(A) is referred back to him for fresh decision after opportunity of hearing to the assessee. Further, the addition on account of discrepancy in turnover is also required to be sent to CIT(A) as the same has not been adjudicated. Since the disputes raised on merit before us require fresh decision by CIT(A), we do not consider it necessary to go into the ground relating to reassessment proceedings as it will not be appropriate to dispose of the appeal in a piece meal manner. We, therefore, set aside the order of CIT(A) and restore the matter back to him for passing a fresh order after necessary examination in the light of the observations made above and after allowing opportunity of hearing to the assessee. Needless to mention 4 ITA No. 3134 & 3166/M/11 A.Y.05-06 that the parties will be free to approach the Tribunal in case they are not satisfied with the fresh order.
4. In the result, both the appeals stand allowed for statistical purposes.
Order pronounced in the open court on 2.4.2012.
Sd/- Sd/-
( B.R. MITTAL ) (RAJENDRA SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dated: 2.4.2012.
Jv.
Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
The CIT(A) Concerned, Mumbai
The DR " " Bench
True Copy
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.