Income Tax Appellate Tribunal - AhmedabadMeetali Road Carriers, Ahmedabad vs Department Of Income Tax on 7 April, 2016आयकर अपील
य अ धकरण, अहमदाबाद  यायपीठ 'B' अहमदाबाद ।
          IN THE INCOME TAX APPELLATE TRIBUNAL
                  "B" BENCH, AHMEDABAD

  BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
                     AND
   SHRI MANISH BORAD, ACCOUNTANT MEMBER

               आयकर अपील सं./ ITA.No.1839/Ahd/2012
                    नधा रण वष /Asstt. Year: 2008-2009


    M/s.Meetali Road carriers                  ITO, Ward-9(4)
    25, GF, Swastik Centre                  Vs Ahmedabad.
    Narol Char Rasta
    Narol, Ahmedabad.
    Ahmedabad.

    PAN : AAOFM 6306 M
               आयकर अपील सं./ ITA.No.2177/Ahd/2012
                    नधा रण वष /Asstt. Year: 2008-2009


    ITO, Ward-9(4)                             M/s.Meetali Road carriers
    Ahmedabad.                              Vs 25, GF, Swastik Centre
                                               Narol Char Rasta
                                               Narol, Ahmedabad.

          अपीलाथ!/ (Appellant)                      "#यथ!/ (Respondent)

    Assessee by            :                 None
    Revenue by             :                 Shri Narendra Singh, Sr.DR

          सन
           ु वाई क	 तार ख/ Date  of Hearing      :        10/03/2016
          घोषणा क	 तार ख   / Date of Pronouncement:       07/04/2016


                                  आदे श/O   RDER

PER RAJPAL YADAV, JUDICIAL MEMBER:The assessee and the Revenue are in cross-appeal against the order of
the ld.CIT(A) dated 2-7-2012 passed for the Asstt.Year 2008-09.ITA No.1839 and 2177/Ahd/201222.    In response to the notice of hearing no one has come present on behalf
of the assessee. Therefore, service of notice was directed to be effected
through the department. The ITO, Ward-4(2)(4), Ahmedabad wrote a letter to
the Tribunal on 3.12.2015 which was received on 5.11.2015 that service has
been effected upon the assessee and email was also sent to the assessee.
Thereafter, fresh notice was sent through the department, which has been duly
served upon the assessee. Copies of the reports submitted by the AO are
placed on record. In spite of service of notice, no one has come present on
behalf of the assessee.3.    With the assistance of the ld.DR, we have gone through the record
carefully and proceeded to decide the appeal ex parte qua the assessee.4.    Solitary issue involved in both these appeals relates to quantification of
disallowance, if any, required to be disallowed undersection 40(a)(ia)of the
Income Tax Act, on account of non-deduction of TDS.5.    Brief facts of the case are that the assessee-firm is engaged in the
business of transportation. It has filed its return of income on 9.9.2008
declaring total income at Rs.50,680/-. The case of the assessee was selected
for scrutiny assessment and notice undersection 143(2)was issued and served
upon the assessee. On verification of the books of accounts, bills, vouchers
and other details furnished by the assessee, it came to the notice of the AO
that during the year, the assessee firm has paid freight amounting to
Rs.71,51,715/- to various sub-contractors exceeding Rs.50,000/- during the
year. The ld.AO has noted that the break-up of these payments in para-3 of
the assessment order. The ld.AO has further observed that the assessee-firm
failed to deduct TDS undersection 194Cof the Income Tax Act, therefore, it
                                                         ITA No.1839 and 2177/Ahd/20123not entitled for the expenses of Rs.71,51,715/-. After hearing the assessee,
the ld.AO has disallowed the claim of the assessee.6.    Dissatisfied with the order of the ld.AO, the assessee carried the matter
in appeal before the CIT(A). The assessee had raised various arguments
including that it is not liable to deduct TDS because each contract is to be
treated as sub-contract for hiring the transporter for which payments have
been made.     The ld.CIT(A) has considered all these arguments of the
assessee, but rejected them.    However, the ld.CIT(A) has followed the
judgment of the Special Bench in the case of M/s.Merilyn Shipping &
Transports Vs. ACIT, 146 TTJ 1 (Vizag) and held that the disallowance
undersection 40(a)(ia)of the Act is to be made qua the amounts which are
payable by the assessee. As far as the amounts paid during this year, the
disallowance undersection 40(a)(ia)cannot be made. The ld.CIT(A) has
segregated both these amounts. Accordingly, the disallowance to the extent
of Rs.51,65,500/- was deleted by the CIT(A). This order is being impugned
by the Revenue in its appeal, whereas, the amounts which were outstanding as
on 31st March, and on which TDS has not been deducted by the assessee, the
ld.CIT(A) has upheld the disallowance. Thus, addition was confirmed at
Rs.19,06,615/-. The assessee is impugning this addition.7.    At the very outset, the ld.DR contended that the issue in dispute is
squarely covered in favour of the Revenue by the decision of the Hon'ble
Gujarat High Court in the case ofCIT Vs. Sikandarkhan N Tunvarin Tax
Appeal No.905 of 2012 and others. The Hon'ble High Court has framed the
following questions of law:ITA No.1839 and 2177/Ahd/20124"1. Whether disallowance underSection 40(a)(ia)of the Income Tax
      Act, 1961 could be made only in respect of such amounts which are
      payable as on 31st March of the year under consideration?2. Whether decision of Special Bench of the Tribunal in the case of M/s.Merilyn Shipping & Transports vs. ACIT (supra) lays down correct
      law?"The Hon'ble High Court has answered both these questions in favour of
the Revenue. The observation of the Hon'ble High Court contained in page
no.39 and 40 of the judgment reads as under:"39.   We answer the questions as under:-Question (1) in the negative i.e. in favour of the Revenue and
             against the assessees. Question (2) also in the negative i.e. in
             favour of the Revenue and against the assessees.40. All Tax Appeals are allowed. Decisions of the Tribunal under
      challenge are reversed. In the earlier portion of the judgment, we had
      recorded that the Tribunal in all cases had proceeded only on this short
      basis without addressing other issues. We, therefore, place all these
      matters back before the Tribunal for fresh consideration of other
      issues, if any, regarding disallowance underSection 40(a)(ia)of the
      Act. All appeals are disposed of accordingly."Thus, the Hon'ble High Court has overruled the order of the Special
Bench in the case of M/s. Merilyn Shipping & Transports vs. ACIT (supra).8.    In light of Hon'ble High Court's decision, we have to examine the facts
of the present case. We find that the CIT(A) has rejected all arguments of the
assessee on merit. It is worth to note the findings recorded by the CIT(A). It
reads as under:"5. I have perused the facts and submission of the appellant. I have also
      perused the case laws relied on by appellant. After careful
      consideration of contention of both A.O. as well as appellant, I am not
                                                     ITA No.1839 and 2177/Ahd/20125inclined to accept the contentions of the appellant in totality. With due
regard to various case laws relied on by appellant, the ratio of all these
case laws are applicable in the case where all the facts are revealed
and subjected to scrutiny. In the case of appellant despite being given
more than enough opportunities, appellant failed to produce GRs in
respect of freight debited as asked by my predecessor and later on by
me during appeal proceedings. Whether the appellant was having any
contract with parties/persons through whom he got completed his
contract with "Drive India Ent. Solution Ltd." can only be examined on
the basis of terms & conditions mentioned on GRs which are duly
agreed and signed by party/person of truck owner utilized by appellant.
It is only verification of this all important and meaningful document, it
can be determined whether the appellant was having subcontractor
relationship with these parties as per the ratio of Hon'ble supreme
court judgment in the case of Associated cement (supra). As per clause
and unambiguous word "any work" used insection 194 Cof the Act,
the liability to deduct IDS fastens on the appellant even if the contract
is not oral or written but implied. But, the appellant except submitting
the self serving contention with the help of ratio of various case laws
preclude the verification of facts. As per the verification of A.O. at para
3 of the Asstt. order there is no doubt about the payment in excess of
Rs. 50,000 in aggregate to total 11 parties amounting to Rs. 71,37,065
is mentioned. Further appellant failed to offer any reply before A.O, in
response to show cause, therefore verification of GRs become all
crucial considering the grounds of appeal and contention of the
appellant but appellant failed to show any of such GRs. The appellant
in the statement of fact at point no. 11 contended (without prejudice)
that CBDT circular No. 714 dt. 03/08/95, Question No. 9 stipulate that
each bilty or each transport transaction shall be considered as
separate contract and the A.O. has not given any finding to the fact that
payment for each separate bilty /GRs/instruction/transaction exceeds
the afore mentioned statutory' limit is a contrary contention in view of
no explanation before A.O. and non production of any of such
detail/evidences before any of the authority. In point no. 12 of SOF it is
contended that there is no revenue loss since all the transporters to
whom payments made had already filed their IT. returns and paid taxes
on it and hence, relying on Hon'ble supreme court case of Hindustan
coca cola, the appellant is no longer an 'assessee in default' and
therefore provisions ofsection 194 Cr.w.s. 201(1 A) shall not applied.
This contention is also a self serving contention because appellant has
                                                      ITA No.1839 and 2177/Ahd/20126not submitted any detail with name, address, PAN and detail of these
parties for filing of return of income and payment of taxes as
contended. It is therefore, appellant contention for non applicability of
provision ofsection 194 Cr.w.s. 40 (a)(ia) of theIT Actis rejected
since not supported with documentary evidences and case relied on are
treated as not applicable in the case of appellant. The A.O. 's action of
disallowanceu/s 40(a)(ia)of the Act of the payments made by appellant
in excess of Rs. 50,000 in aggregate as discussed in earlier para are
therefore upheld. But, the appellant in written submission contended
that the applicability of disallowanceu/s 40 (a)(ia)of the Act is applied
only to the amounts remained payable as on 31st March of previous
year in view of Hon'ble ITAT special bench order in the case of M/s.
Marilyn Shipping & transport v/s ACIT (supra). It is in this regard
appellant filed a detail showing outstanding balance being payable to
these eleven parties in a tabular form as follows:"Meetali Road Carriers"Name of the Vendor               Expenses        Payments Payments
                                 Incurred        Made       Outstanding
                                                 During the
                                                 Year
Balaji Transportation            75,600          -          75,600
Corporation

Chetak Roadweways                55,200          -                55,200

Ganesh Freight Carriers          85,600          -                85,600

Mayur Roadways                   63,600          -                63,600

Nanalal R shah                   500,000         215,000          284,500

New Supreme Tran                 1,705,000       1,480,000 225,000

Ravi Kiran Transport             4,282,115       3,385,000 897,115

R R Roadways                     66,750          -                66,750

Shri Laxmi Transport             64,950          25,000           39,950
                                                           ITA No.1839 and 2177/Ahd/20127Surya Goods Carriers            91,800          50,000          41,800

       Tejas Roadways                  81,500          10,000          71,500


                                       7,072,115       5,165,500 1,906,615I am inclined to accept this contention of the appellant following the
       ratio of Hon'ble special bench of ITAT. It is in this regards, the total
       disallowances which can be upheld being sustainableu/s 40(a)(ia)of
       the Act is Rs. 19,06,615 only. The disallowance and addition to this
       extent is therefore confirmed. For the balance amount i.e. Rs.
       51,65,500 (70,72,115-19,06,615), the A.O. is directed to verify from
       case record i.e. audited P&L a/c. and balance sheet and allow the
       payments made to these parties during the previous year. The appellant
       gets relief accordingly."9.     We find that the ld.CIT(A) has rejected the contentions of the assessee
on merit on the ground that the assessee failed to submit details even called
for by the ld.CIT(A). The details ought to have been submitted before the
AO, but in the interest of justice, the ld.CIT(A) has also called for the details
viz. copies of GRs. not submitted by the assessee with regard to the 11
parties.   The assessee did not file their income tax details in order to
determine whether these parties have paid taxes on the amounts paid by the
assessee to them without deduction of taxes. Thus, a perusal of the CIT(A)'s
order would indicate that the ld.CIT(A) was conscious of the fact that other
issues have also bearing on the controversy and they are required to be
examined. Before us, neither any paper book has been filed by the assessee
nor any one has appeared in spite of service of notice. Therefore, we do not
have any material on the strength of that we could dispute the finding of the
facts recorded by the CIT(A). In view of the above discussion, we allow the
                                                       ITA No.1839 and 2177/Ahd/20128appeal of the Revenue and dismiss the appeal of the assessee.                 The
assessment order is restored.10.   In the result, the appeal of the assessee is dismissed and that of the
Revenue is allowed.Order pronounced in the Court on 7th April, , 2016 at Ahmedabad.Sd/-                                                   Sd/-
(MANISH BORAD)                                        (RAJPAL YADAV)
ACCOUNTANT MEMBER                                   JUDICIAL MEMBER