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2020 (12) TMI 1109 - AT - Income TaxSpecial audit u/s 142(2A) - HELD THAT:- Considering the volume of transactions involved ,the details of which, in the documents pertaining to them, were not reconcilable on account of different particulars mentioned therein ,some being signed by truck owners ,others by third parties , and payments being made in parts in cash that too to different parties ,the documents and accounts drawn therefrom were definitely not capable of presenting a clear picture of each transaction. We agree with the Ld.CIT(A) that the different details mentioned in the documents pertaining to each transaction made it very complex requiring deeper verification of each transaction. We therefore do not find any infirmity in the order of the Ld.CIT(A) upholding the reference made for special audit. The reliance placed by the Ld. Counsel for the assessee on various case laws is of no assistance having been rendered on the facts of each case since whether accounts are complex or not involves a question of fact. Having upheld the reference to special audit as above, the challenge by the assessee to the validity of the assessment order as being barred by limitation on account of the extended time taken by the A.O. for passing the assessment order in view of the reference made to special audit, being contested on the ground of invalid reference made,is also dismissed. TDS u/s 194C - Disallowance of freight expenses for not deduction of tax at source as per the provisions of section 40(a)(ia) - HELD THAT:- The discrepancies noted by the special auditor, we find, were to the effect of dismissing assesses claim of having made payment to small truck owners for the purposes of claiming to be exempt from the liability of deduction tax at source as per second proviso to section 194C(3) of the Act. The Revenue at no point has doubted the veracity of the expenses incurred on freight. Having not doubted the factum of incurring freight expenses and the discrepancies only unsettling assesses claim of having made payment to small truck operators, we fail to understand how these very same discrepancies are sufficient for dislodging assesses claim of not entering into any contract of freight. There were separate GR’s for every transportation sub contracted by the assessee. In fact the AO has noted that a separate truck was engaged in almost all cases of transportation, numbering 599, subcontracted. There is no finding by the Revenue of any oral or written contract with the sub-contractors for transportation. Every GR is therefore to be treated as a separate contract. And with each such contract not exceeding the prescribed limit for tax deduction at source, as finds mention in the order of the AO also, we find the assesses claim of no requirement of deduction of tax at source on the same in accordance with law as interpreted by the jurisdictional High Court in the case of United Rice Land [2008 (5) TMI 142 - PUNJAB AND HARYANA HIGH COURT] In view of the same we hold that the Revenue has failed to establish the case of tax deduction at source on the freight payment made in the present case and therefore the disallowance of expenses of freight made for non deduction of tax at source is directed to be deleted.
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