AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (11) TMI 306
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....d, modify, add or forego any ground of appeal at any time before or during the hearing of this appeal." 2. The relevant facts of the case are that the assessee in the year under consideration was engaged in the business of earning commission on sale of vegetables and declared therefrom an income of Rs.2,29,190/- on 31.10.2005. The return was processed u/s 143(1) and subsequently it was selected for scrutiny by way of issuance of notice u/s 143(2) and 142(1) accompanied by questionnaire etc wherein the AO required the assessee to furnish complete details of the commission account. On a perusal of the ledger account, the assessee was further required to furnish photocopy of the vouchers by letters dated 13.04.2007, 26.07.2007, 13.10.2004, 14.03.2005 and 31.03.2005 in respect of commission shown as received along with complete note addressing the basis of receipt of commission and its accounting. On a perusal of the same, the AO observed that in the 'Sale Advice Documents' for the five dates selected the gross sale value of the products had been shown and it was noticed that the assessee had further charged the account on account of the following :- a) Commission, b) Freight,....
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....L account as an expense. It was also stated that wherever applicable the assessee has deducted TDS u/s 194C, copy of the TDS return acknowledgement was filed in support of the assertion. This assertion was further supported by the affidavit that this was the market practice according to which the sender of vegetables had to deliver the goods and the freight is borne by them. Accordingly, the freight paid to the transporters on their behalf is recovered from the sale proceeds of the vegetables, consequently it does not form part of the expenses of the assessee and is not routed through the P&L account. 2.4. The submissions and affidavit were also supported by a sample advice. The same is reproduced from the assessment order for ready-reference:- "This is further in continuation of our letter filed before your goodself in last hearing explaining the nature of freight expenses which is an expenses of the party from whom vegetables are received for sale on commission basis. We further elaborate its by mentioning the accounting entries as under :- Party's name Abdul Haq-AB (HWH) 31.03.2005 Gross sale on his behalf 59,577/- Less: Expenses incurred on his behalf Freig....
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....understands that whatever amount the assessee received in Freight Account is nothing but its commercial receipts and income and the plea but forward during assessment proceedings is nothing but a feeble effort and afterthought story to cover up the transactions entered by the assessee in its books." 3.1. Accordingly he made an addition of Rs.78,79,967/- i.e denying 50% of the total freight receipt of 1,57,59,933 as 50% was considered to be reasonable to meet the ends of justice. 4. Aggrieved by this, the assessee came in appeal before the CIT(A). Apart from reiterating the submissions advanced before the AO, reliance was also placed upon the affidavit of Sh. Subhash Chand Dua, Director of the company. It was further submitted that the assessee has been in this line of business for a long time. Earlier the business was run as a partnership firm under the name and style of Suresh Mahesh & Co. upto year ending March 2001. In the said partnership firm all the 4 persons who are presently the directors of the company were partners. The said partnership firm it was stated had been regularly assessed to income tax and the last assessment order for 2001-02 of the said partnership firm....
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....evidence obtained from the APMC, Azadpur Mandi confirmed the fact that assessee was operating as a commission agent on behalf of the principals. In view of this fact, the argument of the AO that the freight receipts as well as payment from the sale advice documents should have been made part of the P&L account by crediting the freight receipt and debiting the freight paid was considered to be of no relevance as it would not make any material difference for the purpose of the income tax assessment as both sides would have matched. 4.2. The assessee also assailed the conclusion of the AO on the position of TDS deducted. It was submitted that the AO ignored the fact that the assessee is getting its books audited u/s 44AB which was a fact available on record. The observations of the AO were also assailed as he had observed that the TDS amount on the freight payment of Rs.1.57 crores u/s 194C at the prescribed rate of 2% would have come to Rs.7 lacs whereas according to the AO, the assessee had deducted only Rs.14,091/-. The said finding was assailed by the assessee on the ground that u/s 194C, TDS @ 2 % was to be made only in cases where the payments exceeded the sum of Rs.20,000/- ....
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....hich exceeded Rs.20,000/- and what was the amounts on which the payments were less than Rs.20,000/-. Similarly, no finding has been given on the fact that TDS of only Rs.14,091/- had been deducted or was it the amount which had been deposited belatedly. On all these issues mere assertions are made, no finding has been recorded by the CIT(A). 6.1. The fact that in the subsequent year no addition on account of freight has been paid, it was submitted that each year is a separate assessment year and this argument per se cannot be the reason for upholding the order as more than adequate opportunity has been given at the assessment stage to the assessee to come clean with facts and consequently a very detailed order has been passed by the AO. In the said order, it was submitted that although the findings have been assailed by the assessee but the CIT(A) has not given any specific finding on facts and has merely accepted general arguments. It was his submission that in the subsequent year, the assessee may have supported its claims by plausible evidences as such this fact alone is not sufficient to uphold the impugned order. Heavy reliance was placed on the assessment order. 6.2. It....
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....e faulted with. However on the submissions that the assessee has deducted TDS of an amount higher than Rs.14,091/- which infact was the amount reflected in scheduled "G" of Tax Audit Report referred only to belated payments no findings have been recorded by the CIT(A). Similarly, what was the total amount of TDS deducted by the assessee on payments exceeding Rs.20,000/- and what were the sum total of the freight account which pertained to payments less than Rs.20,000/-, no finding has been recorded. It is also seen that the assessee has also advanced general arguments referring to trade practice and has assailed the finding in the assessment order qua the TDS but what was the actual amount on which no TDS was required to be deducted has not been addressed by the assessee. Mere assertion that it was more than Rs.14,091/- is not sufficient. The position in law qua the requirement of deduction of TDS u/s 194C for less than and more than Rs.20,000/- is clear but what was the actual position on facts has not been addressed. It is seen that the assessee has relied upon the position of 2008-09 assessment year wherein no such addition has been made the argument of the DR that evidences fil....