TMI Blog2009 (12) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... pon any written or oral agreement, the natural outcome is that the provisions of section 194C, not applicable - assessee’s case was not hit by the provisions of section 40(a)(ia ) of the Act – in favor of assessee - IT APPEAL NO. 247 (CTK.) OF 2009 - - - Dated:- 4-12-2009 - I.S. VERMA AND SANJAY ARORA, JJ. S.N. Sahu for the Appellant. S.C. Mohanty for the Respondent. ORDER I.S. Verma, Judicial Member. - In this appeal the assessee has objected to the order of the CIT(A) dated 22-9-2009 by way of as many as 16 grounds furnished along with the memorandum of appeal. However, later on the assessee furnished concise grounds containing only two grounds, which are in the following terms : "1. That the addition under section 40( a )( ia ) is illegal as there was neither any oral nor written agreement between the assessee and transporters for carriage of goods nor it has been proved beyond reasonable doubts by the Assessing Officer that any freight charges were paid to them in pursuance of a contract for a specific period, quantity or price and hence the disallowance of deduction of transport expenses and addition to the income returned under section 40( a )( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OR-09D-5648, OR09E-3058 3. A.C. Rout 4,07,388 OR-09D-6705 4. Ajaya Kumar Sahoo 1,90,590 OR-09D-3935 5. A.K. Patnaik 2,89,754 OR-09D 5940, OR-09D-5988, OR-09D-6561, OR-09D-7380 6. A.K. Shaw 1,53,644 OR-09D-5461 7. A.K. Sinddhu 1,52,328 OR-04D-8249 8. Alam Ansari 2,55,307 OR-09D-1649, OR09E-0294 9. Amit Kumar 59,274 OR-09A-2240 10. Anand Singh 1,26,369 OR-09E-5351 11. A. Parida (Arati Parida) 70,159 OR-09D-5280 12. Arati Parida 82,611 do 13. Arbin Kumar Gupta 4,08,684 OR-09B-4706, OR-09D-5746 14. Arjun Palit 56,569 OR-14J-2851 15. Ashok Sahou (A.K. Shaw) 1,35,254 OR-09D-5461 16. Babulal Mohanta 2,61,391 OR-09B-9330, OR-09B-9331, OR-09B-9332, OR-09B-9335 OR 09B-9701, OR-09C-1697 17. Baldev Singh 18,41,823 JH-05D-8735, OR-14J-5421, OR-14J-5422, OR-14J-5601, OR-14J-6461, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jyoti Ranjan 1,26,876 OR-04D 4040, OR-09D-9264 51. Kashinath Sahoo 1,36,159 OR-09D-5795 52. K. Behera (M. Behera) 59,888 OR-09D 3117 53. Kishore Kumar Mohanta 65,995 OR 09D-1173, OR 09D-1174 54. K. Mahakhud 2,50,866 OR-09D-7558 55. K. Patra 67,823 OR-09D-3957 56. K.T.C. Barbil (Santosh) 1,19,452 OR-09C 8951 57. Lambodar Palai 1,70,474 OR-09D-6004 58. Laxmidhar Munda 1,76,959 OR-09D-4734 59. L. Jaiswal 2,01,835 OR-09D 5032, OR-09D-5042, OR 09C-5364. OR-09C-34 60. M. Behcra 2,05,386 OR-09D-31 17 61. Md. Farid 1,03,610 JH-02C-7260, JH 02C-8629 JH-02C-8628 62. Md. Imran Mallik (Imran Mallik) 9,38,857 OR 09D-7120, OR-09D-3995, OR-09C-9620, JH-05D-23 OR-09E-4113 63. M.D.K. Akhlar 58,971 OR-09D-9191 64. Md. Mobarkh 86,991 OR-15G-8628, OR 16B-9307, OR-15G-8934 65. M.D. Sabudin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,07,371 OR-09D-5890 100. S.N. Jaiswal 1,65,929 OR-04B-9190, OR-09D-2190 101. S. Purohit 50,416 OR-09E-4532, OR-Q9E-4533 102. S.S. Ali 96,255 OR-09D-4844 103. S. Srivastav 58,981 OR-09C-4360, OR-09C-4361 104. S.S. Sahoo 52,915 OR-09D-5098 105. Sukh Lal Munda 61,940 OR-09C-6827 106. Surendra Singh 2,62,295 OR-09D-5406 Total 1,76,35,660 The Assessing Officer reproduced the above list at p. 2 of the assessment order but seems to have omitted to record the registration number of trucks/vehicles owned by each one of them. 4.1 After considering the aforesaid list, the Assessing Officer considered the payments to each one of them as payments to the transporters probably in view of the fact that the names of the truck/vehicle owners were listed in the column "name of the transporter" and therefore, came to the conclusion that these payments were to the transporters and as a result of contract/sub-contract. He, therefore, invoked the provisions of section 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or before the 30th June, following the financial year. Whereas in the instant case the assessee claimed that Form Nos. 15-I and 153 ( sic ) were filed before the ITO, Keonjhar Ward, Keonjhar, as such a reference was made to ITO, Keonjhar and he was requested to confirm the receipt of such declaration in Form Nos. 15-I and 15J from the assessee Sri Chandrakant Thacker. 4.2 In his letter No. ITO/KJR/2008-09/2003, dated 14th March, 2009 the ITO has categorically denied to have received any such declaration in From Nos. 15-I and 15J from the assessee Sri Chandrakant Thacker. As regards the receipt of filing of Form Nos. 15-I and 15J, submitted by the assessee before the learned CIT(A), the ITO has stated that signature/endorsement made therein is not related to officials working in the month of May, 2005 in the office of the ITO, Keonjhar Ward, Keonjhar. The ITO, Keonjhar has also filed the photocopy of attendance register for the month of May, 2005 as token of evidence. 5. The assessee Sri Chandrakant Thacker was also summoned under section 131 of the Income-tax Act 1961 and his statement was recorded wherein he was asked to explain the reason for not producing the copies of For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asstt. CIT, Circle-1(1), Sambalpur [Reported at [2009] 126 TTJ (Ctk.) 240/[2009] 30 DTR (Ctk.)(Trib.) 569 Ed.]. The following extract of the above decision is quoted as under : Thus, we find it undisputed that the assessee is a transporter executing various contracts by engaging its own vehicles and transporters vehicles. The Assessing Officer disallowed the payments by observing that payments were made to the transporter as sub-contractor. There is nothing on record to suggest that any contract existed between the assessee and the alleged transporter as sub-contractor. There is neither written nor oral agreement in this regard. There is no dispute to the settled legal proposition that written agreement is not compulsory. Even oral agreement can be inferred in the facts and circumstances of the case. The Assessing Officer has not made out the case that on the basis of the contract of the business by the assessee there existed contractor and sub-contractor relationship between the assessee and the alleged sub-contractor. The Assessing Officer has not made out the case that the alleged sub-contractor has been engaged on some definite terms and conditions for executing the work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k in pursuance of a contract between the contractor and other listed entities. The appellant has relied upon the decision of Cuttack Bench of Tribunal in the case of R.R. Carrying Corpn. case ( supra ). In this case as well as in the other orders of Tribunal referred to therein have drawn support from the decision of the Punjab and Haryana High Court in the case of CIT v. United Rice Land Ltd. [2008] 217 CTR (Punj. Har.) 332/[2008] 8 DTR (Punj. Har.) 305. A close reading of the judgment in the case of United Rice Land Ltd. ( supra ) reveals that the decision has been rendered in the context of a different set of facts. Here the transporters were not transporting goods but merely arranging the trucks for the assessee for a consideration of Rs. 200 per truck. It will be relevant to reproduce the factual position as described in para 2 of the judgment : These trucks were provided by the transporters who were having links with the truck operators and their consideration for providing such services was about Rs. 200 per truck. This consideration was charged by the transporter from the truck owners/operators. The hire charges were paid by the assessee directly to the truck ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the appellant in this case is that there was no written contract with the concerned parties, it is to be ascertained whether the transactions were governed by any oral agreement/contract. The moot question is what could be the evidence of an oral contract. It has to be ascertained from the acts and conduct of the parties to the arrangement. The undisputable facts in this case are that the appellant had engaged several transporters to carry goods and payments amounting to Rs. 2,19,63,728 were made to them. These are comprehensive business transactions and will not take place on their own. Payments will not flow to the transporters automatically. There has to be discussion between the appellant and these transporters about the carriage of goods, the destination of trucks and the amount of transportation charges to be paid. There has to be a proposal in this regard from one of the parties and when accepted by the other party, it will give rise to an agreement. Even if, it is not reduced to writing, it remains a contract or an oral contract. Therefore, I reject the contention of the appellant that the provisions of section 194C will not be applicable in his case. The disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the parties for carrying of goods. Referring to the present case, the learned Authorised Representative of the assessee submitted that there is no written or oral agreement of the assessee with any one of 106 truck owners and revenue has also not brought any evidence in this regard. According to him, simply to allege that all the 106 truck owners were transporters and were working in the capacity of sub-contractor as a result of oral contract is of no use to the Revenue. He therefore, submitted that in the present case, carrying of goods by 106 truck owners being not in pursuance of a contract entered between the assessee and the truck owners, the assessee was not liable to deduct tax at source under section 194C of the Act and in support of the same, relied on the decision of Hon ble Punjab and Haryana High Court in the case of United Rice Land Ltd. case ( supra ). 5.3 The learned Authorised Representative of the assessee further relied on the following decisions of the Tribunal, Cuttack Bench, wherein the Tribunal, on similar facts and circumstances of the case as that of the assessee, has after following the decision of Hon ble Punjab and Haryana High Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Ram Narain Goel [1997] 224 ITR 180 (Punj. Har.) for the proposition that suspicion, howsoever strong could not take the place of evidence or proof. This was in the context of Authorised Representative of the assessee s submission that revenue authorities have proceeded on the basis of suspicion that the 106 parties were transporters without bringing any material on record. 5.7 Concluding his submissions, the learned Authorised Representative of the assessee submitted that since the facts and circumstances of the assessee s case are similar as to the facts and circumstances as were in the case before the Tribunal, Cuttack Bench as well as the case before the Hon ble Punjab and Haryana High Court, the assessee s case is fully covered by these decisions and therefore, the appeal of the assessee is liable to be allowed. 6. The learned Departmental Representative, on the other hand, supported the order of the CIT(A) by referring to the provisions of section 194C(2) of the Act and the findings of the CIT(A). 7. We have considered the rival submissions, facts and circumstances of the case and various decisions relied upon by the parties as well as the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of United Rice Land Ltd. ( supra ), which has been relied upon by the assessee, wherein the Hon ble High Court has held as under : "Headnote : TDS Under section 194C Payment to transporters for arranging trucks CIT(A) has recorded a finding of fact that there was neither any oral or written agreement between the assessee and the transporters for carriage of goods nor it has been proved that any freight charges were paid to them in pursuance of a contract for a specific period, quantity or price Tribunal too has clearly stated that nothing has been brought on record by the Assessing Officer to prove that there was written or oral agreement between the parties for carriage of goods Therefore, assessee was not liable to deduct tax under section 194C from the payments made to the transporters. 7. As per provisions of section 194C of the Income-tax Act any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract shall at the time of credit of such sum or at the time of payment thereof in cash or by cheque deduct a tax thereon at a prescribed rate. However, no such deduction at source is required to be made if the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounts and conduct of the parties is not sustainable on the facts and circumstances of the case, because no such accounts and conducts of the assessee, which could suggest that there was oral contract, have been brought on record by the revenue. The theoretical observation of the CIT(A) is of no use. 8. In view of the above and on the totality of the facts and circumstances of the case, we are of the opinion that the issue involved in the present case is squarely covered by the decision of Hon ble Punjab and Haryana High Court in the case of United Rice Land Ltd. ( supra ), of Hon ble Himachal Pradesh High Court in the case of Rama Nand Co. ( supra ) and by the four decisions of the Tribunal, Cuttack Bench which have been referred in arguments of the learned Authorised Representative of the assessee and therefore, respectfully following the same we uphold the assessee s plea that hiring of trucks from 106 parties and payments of freight or hiring of charges to them was not in consequence upon any written or oral agreement. 9. Having held as above, we are further of the opinion that when hiring of trucks and payment thereof was not in consequence upon any writte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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