Commissioner Of Income Tax-I,Jodhpur v. M/S. Shreechoudhary Transport(D.b.income Tax Appeal

COMMISSIONER OF INCOME TAX-I,JODHPUR VS. M/S. SHREECHOUDHARY TRANSPORT(D.B.INCOME TAX APPEAL NO.49/15) Dated:- 6.5.16. HON'BLE MR.JUSTICE SANGEET LODHAHON'BLE MR.JUSTICE KAILASH CHANDRA SHARMA Mr.K.K.Bissa, for the appellant. 1.This appeal is directed against order dated 30.7.14 of IncomeTax Appellate Tribunal (ITAT), Jodhpur Bench, Jodhpur, whereby anappeal preferred by the assessee against the order of Commissionerof Income Tax (Appeals) [CIT(A)], Jodhpur, dated 25.11.13,maintaining the disallowance under Section 40(a)(ia) of the IncomeTax Act, 1961 ( for short “the Act”) for Rs.1,15,80,790/- made by theAssessing Officer (AO), has been allowed and the matter has beenrestored to the file of AO for passing the assessment order afresh,after ascertaining the specified issues before coming to any conclusionabout the nature of expenditure and its disallowance under Section 40(a)(ia) of the Act. 2.The directions issued by the ITAT to AO read as under: “(i)To ascertain whether any expenditure in the nature offreight payment is claimed by the assessee in its profit & lossaccount or the assessee's only source of income is from biltycommission. (ii)If it is found that nothing has been claimed asexpenditure in the nature of freight payment while computingthe income, than no disallowance can be made by invokingprovisions of section 40(a)(ia) on the basis of principal laiddown by the by Hon'ble Karnataka High Court in the case of CITvs Balaji Engineering And Construction Works [323 ITR 351(Kar)].(iii)To consider the form No 151 obtained by the assessee, as its non filing with the concerned authority with form No 15Jis not a ground for its disallowance as held by Hon'ble GujratHigh Court in the case of CIT vs Valibhai Khanbhai Mankad [92DTR (Guj) 267]. (iv)If it is held that provisions of section 40(a)(ia) areapplicable than the quantum of disallowances is to be restrictedonly to amount outstanding freight at the end of the year inrespect of persons payment to whom disallowed while passingthe original as well as set aside assessment order, keeping inview the decision of Hon'ble Allahabad High Court in the case ofCIT vs Vector Shipping Services (P) Ltd [357 ITR 642 (All)]. Themaximum amount which can be disallowed works out by the ARof the assessee at Rs.6,43,296/-, the AO is directed to verifythe same. (v) statements of truck owners, if recorded,have to beconfronted to the assessee before using them against theassessee.” 3.Learned counsel appearing for the appellant contended that thelearned ITAT has seriously erred in ignoring that the assessee hadfailed to produce the truck owners and when summoned under Section131 of the Act, 23 truck owners have denied to issue Form No.15-I asclaimed by the assessee. Learned counsel submitted that as per Rule29D of the Income Tax Rules, the Form No.15-I is to be furnished bythe Sub Contractor to the Contractor and in turn, Contractor has tofurnish Form No.15J to CIT by the prescribed date, which is admittedlynot adhered to and thus, the ITAT has seriously erred in deleting theadditions made for violations of provisions of Section 194C. 4.Indisputably, the AO has doubted the genuineness of Form 15-Iproduced by the assessee. Obviously, the statements of the truckowners, if any recorded, were required to be confronted to theassessee before using them against the assessee. It is pertinent tonote that before the CIT (A), an additional ground was raised by theassessee in terms that disallowance made under Section 40(a)(ia) 4.Indisputably, the AO has doubted the genuineness of Form 15-Iproduced by the assessee. Obviously, the statements of the truckowners, if any recorded, were required to be confronted to theassessee before using them against the assessee. It is pertinent tonote that before the CIT (A), an additional ground was raised by theassessee in terms that disallowance made under Section 40(a)(ia) amounting to Rs.1,15,80,790/- is erroneous inasmuch as, the incomeof the assessee is of commission on the booking of truck and thefreight payment to the truck owners was not claimed as expenses inthe profit and loss account. The specific stand of the assessee was thathe has been earning only booking charges and is only a conduit inpassing the freight to the truck owners who were actually plying trucksand since no expenditure of freight payment is claimed in thecomputation of business income, no such disallowance can be made.In the considered opinion of this court, the aforesaid relevant aspectsof the matter, having not been gone into by the AO appropriately, forthe reasons recorded order passed by the ITAT, remanding the matterto the AO to ascertain the issues specified and pass the assessmentorder afresh, does not give rise to any substantial question of law soas to warrant interference by this court in exercise of its appellatejurisdiction. 5.In the result, the appeal fails, it is hereby dismissed in limine. (KAILASH CHANDRA SHARMA),J. (SANGEET LODHA),J.