TMI Blog2011 (6) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... e is dismissed. - ITA NO.2367/MUM/2009 - - - Dated:- 15-6-2011 - SHRI N.V.VASUDEVAN, SHRI R.K.PANDA, JJ. Appellant by : Shri K.Gopal Respondent by : Shri Goli Srinivas Rao ORDER PER N.V.VASUDEVAN, J.M, This is an appeal filed by the assessee against the order dated 6/3/2009 of CIT-XXIII, Mumbai passed under section 263 of the Income Tax Act, 1961 (the Act). 2. The circumstances under which the order u/s. 263 of the Act, was passed by the CIT are as follows: The assessee is an individual. He is engaged in the business of transportation of cargo in heavy load containers from and to various ports, yards, godown, factories etc. The assessee filed the return of income for A.Y 2005-06 on 29/10/2005 declaring total income of Rs. 8,20,360/-. The A.O issued a questionnaire dated 28/11/2006. One of the queries raised by the AO was calling upon the assessee to furnish details of annual returns of TDS along with copy of challan for payment made to the Government accounts. The assessee was also asked to indicate whether any interest under section 201(1A) was included in the payment on account of delayed deposit of TDS. The assessee vide letter dated 14/11/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee was engaged in the business of transportation of goods for importers and exporters. The nature of work, as per contract with parties, was to transport containers containing goods by road from ports, yards etc. to factory, depot etc. and return of the empty containers to the shipping lines in their designated places. To carry out such contract, the assessee used to engage his own vehicles and vehicles from other truck owners as and when required. This activity was recorded in trips sheet or GR (goods receipt note). The assessee contended that whenever he received transportation delivery order, the contract was entrusted to other truck owners pursuant to the work order as a sole, single separate and individual contract, executed and completed by the other truck owner having no relation to other contract, period or quantity. He was under no obligation to hire vehicle from any particular truck owner. He had never executed any oral or written contract with any sub-contractor for continuous deployment of their vehicles and their business was merely to supply vehicles to the principal transporters i.e. transport contractors. Every trip of work was completed by the other tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the questionnaire letters or in the order sheet, recording the discussions held at the time of hearing. Therefore, he held that the neither the AO made proper enquires nor did the Assessee furnish the require details with regard to motor fleet hire payments. Consequently he held that there was no proper application of mind by the AO as to the applicability of Sec.40(a)(ia) of the Act. The CIT therefore held that the acceptance of assessee s claim for motor fleet hire payment of Rs. 3,14,41,096/- without examining the applicability of sec. 40(a)(ia) vis- -vis sec. 194C was not only erroneous but also prejudicial to the interest of revenue. He therefore held that proceedings u/s.263 of the Act were appropriate. 9. On merits of the submissions made by the Assessee, the CIT agreed with the Assessee that provisions of sec. 194C(1) of the Act, were not applicable to individual for A.Y 2005-06. The CIT however found that the assessee had disclosed contract receipts on account of execution of transport contract for several parties. The assessee has also disclosed payment of fleet hire charges and has not denied engaging other truck owners for transportation of containers to parties. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to show engagement of agents/suppliers for supply of vehicles to whom payment of Rs.27,27,821/- was made. Thus, it is clear that the assessee is unable to corroborate his claim of absence of liability u/s. 194C(2) to deduct tax at source, at lease, on such payments. It is interesting to note that the assessee had nowhere made such claim before the AO. Regarding payment to the parties for amounts below Rs. 20,000/- perusal of Exhibit-I Exhibit II shows that the assessee had paid transport charges at an amount less than 20,000/- per each bill but the cumulative total of payments made to many of such parties during the year exceeded Rs.50,000/-. Thus, contention of the assessee that he had no liability to deduct tax because under provisions of sec. 194C(3) aggregate amounts of payments to the parties did not exceed Rs. 50,000/- is also found not totally correct. Lastly, the claim that each payment was made to a supplier of vehicle as a single contract, no connected with any quantity of goods or period of time, is not acceptable without verification of the work done in respect of transportation of goods undertaken by the assessee either for importer or exporters at a particular p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further submitted that as between the assessee and the other truck owners there was a principal to principal relationship and, therefore, it cannot be said that the payment made by the assessee to the other truck owners were in pursuance of a sub-contract. In this regard it was also argued that there was no connection between the persons who engaged services of the assessee and the truck owners through whom the assessee effected transportation of cargo. The ld. Counsel for the assessee further drew our attention to the bills raised by the other truck owners which would show that they were dealing with the Assessee on principal to principal basis and not as sub-contractor. Heavy reliance was placed by the ld. Counsel for the assessee on the decision of the ITAT Visakhapatnam Bench in the case of Mythri Transport Corporation vs. ACIT 124 ITD 40 (Visakha). In that case, the Assessee, a transport contractor, entered into an agreement with some parties whereby the assessee undertook to transport bitumen to various points as per their directions. Since the Assessee did not have required number of lorries, it had to hire lorries from others who simply placed the vehicles at the dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. It was further submitted by him that the law is well settled that failure to make enquiries by the Assessing Officer on a particular issue on which, in a given facts and circumstances, where the Assessing Officer should have made enquiries, is itself sufficient to hold that the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue. According to him the order of the CIT under section 263 has to be upheld on this ground. It was submitted by him that the question whether there was a sub-contract and provisions of section 194C(2) is applicable on all matters which the Assessing Officer will examine in the assessment proceedings pursuant to the order under section 263 of the Act and the Assessee will have full opportunity in this regard. 13. We have considered the rival submissions. As rightly contended by the ld. D.R., the main ground on which the CIT exercised jurisdiction under section 263 of the Act, was the failure on the part of the Assessing Officer to make enquiries with regard to the applicability of the provisions of section 194C to the payments made by the assessee to other truck owners in the course of his business of transp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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