Iqbal Khan, V. Income-tax Officer,

CO 61/PUN/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 7409 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Additional evidence
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO . 103 /PN/20 1 3 ASSESSMENT YEAR : 200 9 - 10 INCOME TAX OFFICER, WARD - 9(2), PUNE VS. MR. IQBAL KHAN, PLOT NO. 45, SECTOR NO. 23, R.K. LOLGISTIC FREIGHT CARRIERS, TRANSPORT NAGAR, NIGDI, PUNE (APPELLANT) (RESPONDENT) PAN NO. ANTPK6746R CO NO . 61 /PN/2014 ASSESSMENT YEAR : 2009 - 10 IQBAL KHAN, S/O SHAMIR KHAN, PROP. OF M/S. G.N. TRAILER TRANSPORT SERVICES, VILLAGE KHANPURA, NEAR HMT, AJMER (RAJASTHAN) - 305001 VS. INCOME TAX OFFICER, WARD - 9(2), PUNE ( CROSS OBJECTOR ) (RESPONDENT) PAN NO. ANTPK6746R REVENUE BY: SHRI P.S. NAIK ASSESSEE BY: SHRI PRAMOD SHINGTE DA TE OF HEARING : 13 - 11 - 2014 DATE OF PRONOUNCEMENT : 31 - 1 2 - 2014 ORDER PER R.S . PADVEKAR , JM : - TH IS APPEAL IS FILED BY THE REVENUE AND C ROSS O BJECTION IS FILED BY THE ASSESSEE , CHALLENGING THE IMPUGNED ORDER S OF THE LD. CIT(A) - V , PUNE DATED 08 - 10 - 2012 FOR THE A.Y . 2009 - 10 . 2. WE FIRST TAKE THE APPEAL FILED BY THE REVENUE BEING ITA NO. 103/PN.2013. THE REVENUE HAS TAKEN THE FOLLOWING GROUND IN THE APPEAL: WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DI SALLOWANCE U/S. 40(A)(IA) BY HOLDING THAT 2 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE TDS DISALLOWANCE APPLIES ONLY TO AMOUNTS PAYABLE AS ON 31 ST MARCH AND NOT TO AMOUNTS ALREADY PAID DURING THE YEAR? 3 . THE FACTS WHICH REVEALED FROM THE RECORD A RE AS UNDER. THE ASSESSEE IS ENGAGED IN THE TRAN SPORT BUSINESS UNDER THE NAME AND STYLE AS M/S. G. N. TRAILER TRANSPORT SERVICES. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2009 - 10 DECLARING TOTAL INCOME OF RS.5,90,910/ - . AS NOTED BY THE ASSESSING OFFICER , THE ASSESSEE HAS DECLARED THE TOTAL TRANSPORT RECEIPTS OF RS.4,47,20,280/ - AGAINST THAT THE ASSESSEE HAD DEBITED EXPENSES OF AN AMOUNT OF RS.4,29,03,093/ - UNDER THE HEAD LORRY HIRE CHARGES (LHC). ON THE BASIS OF THE AUDIT REPORT , IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE FROM THE PAYMENT MADE TO THE DRIVERS /OWNERS OF THE LORR IES WHICH WERE HIRED BY THE ASSESSEE. IN THE OPINION OF THE ASSESSING OFFICER , THE ASSESSEE SHOULD HAVE DEDUCTED THE TAX AT SOURCE (TDS) FROM THE LORRY HIRE CHARGES PAID AND AS THE ASSESSEE HAS FAILED TO MAKE THE TDS , HE PROCEEDED TO MAKE THE DISALLOWANCE OF RS. 4 ,29,03,093/ - BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE INCOME - TAX ACT. THE ASSESSEE RESISTED THE ACTION OF THE ASSESSING OFFICER BY RELYING ON THE FEW DECISIONS BUT WITHOUT SUCCESSES. AS OBSERVED BY THE ASSESSING OFFICER THE PROVISIONS OF SEC. 40(A)(IA) ARE APPLICABLE TO THE ASSESSEE AND THE ASSESSING OFFICER ALSO RELIED ON THE FEW DECISIONS OF THE OTHER CO - ORDINATE BENCHES. THE ASSESSING OFFICER, THEREFORE, DISALLOWED RS.4,29,03,093/ - BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT ON THE REASON THAT THE ASSESSEE HAS FAILED TO MAKE TDS AS PER THE PROVISIONS OF SEC. 194C FROM THE TRANSPORT HIRE CHARGES PAID/ D EBITED TO IN HIS BOOKS OF ACCOUNT AND WHICH WAS ALSO CLAIMED AS EXPENDITURE. 3.1 THE ASSESSING OFFICER, ACCORDINGLY, MADE THE HIGH PITCH ADDITION TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC. 40(A)( IA) OF THE ACT BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) THE ASSESSEE CONTENDED 3 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE THAT THE ASSESSEE IS NOT REQUIRED TO DEDUCT THE TDS IN RESPECT OF LORRY HIRE CHARGES IN TERMS OF 2 ND PROVISO TO SEC. 194C (3)(I) OF THE INCOME - TAX ACT AS THE RECIPIENTS WER E NOT OWING MORE THAN TWO VEHICLES. THE ASSESSEE ALSO SUBMITTED THAT ADDITIONAL EVIDENCE BY WAY OF COPY OF FORM 15J AND REQUESTED FOR ADMITTING THE SAME. I T WAS CLAIMED BY THE ASSESSEE THAT THE SAID FORM I.E. 15J WAS FILED BEFORE ITO (TDS), AJMER ON 16 - 0 6 - 2009. THE ASSESSEE ALSO FILED ANOTHER FORM OF 15 J WHICH WAS FILED IN THE OFFICE OF CIT - V, PUNE ON 18 - 07 - 2012. THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT AS THE ASSESSEE HAD A BRANCH OFFICE IN AJMER. THE FORM WAS FILED IN THE AJMER BEFORE THE IT O (TDS) BUT AS AN ABUNDANT PRECAUTION SUBSEQUENTLY THE ASSESSEE ALSO FILED FORM NO. 15 J BEFORE THE CIT - V, PUNE. THE ASSESSEE ALSO RELIED ON THE DECISION OF THE HON'BLE SPECIAL BENCH OF THE ITAT VISAKHAPATNAM BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPO RT VS. ADDL. CIT, RANGE - 1, VISAKHAPATNAM, 146 TTJ AND PLEADED THAT TO THE EXTENT OF THE AMOUNT OUTSTANDING ONLY THE DISALLOWANCE MAY BE MADE. IN RESPECT OF THE FIRST CONTENTION OF THE ASSESSEE REGARDING THE FILED OF FORM NO. 15 J THE LD. CIT(A) DID NOT ACC EPT THE SAME BUT GAVE RELIEF TO THE ASSESSEE FOLLOWING THE DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORT (SUPRA). NOW, THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD. CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PER USED THE RECORD. THE GRIEVANCE OF THE REVENUE IS IN RESPECT OF ALLOWING THE RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORT (SUPRA). THE LD. DR SUBMITS THAT THE SAID DECISION HAS BEEN REVERSED BY THE HON'BLE H IGH COURT OF KOLKATA IN THE CASE OF CIT, KOLKATA VS. CRESCENT EXPORT SYNDICATE (201 3) 216 TAXMANN 258 (KOL) AS WELL AS THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SIKANDARKHAN N TUNVAR (2013) 220 TAXMANN 256 (GUJ . H.C.). HE SUBMITS THAT BOTH THE DECISIONS HAVE BEEN FOLLOWED BY THE ITAT, B BENCH, PUNE IN THE CASE OF ASSTT. CIT, CIRCLE - 2, KOLHAPUR VS. SHRI BHARAT DHANPAL PATIL, SINDHUDURG BEING ITA NO. 600/PN/2012 AND CO NO. 4 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE 18/PN/2013 ORDER DATED 30 - 07 - 2013. HE SUBMITS THAT THE MERILYN SHIPPIN G & TRANSPORT (SUPRA) IS NO MORE GOOD LAW AND HE PLEADED FOR FOLLOWING THE DECISION IN THE CASE OF SHRI BHARAT DHANPAL PATIL, SINDHUDURG (SUPRA). WE HAVE ALSO HEARD THE LD. AR. 5. IN THE CASE OF SHRI BHARAT DHANPAL PATIL, SINDHUDURG (SUPRA) THE TRIBUNAL HAS HELD AS UNDER: 3.1 ADMITTEDLY, ALL THE PAYMENTS ARE MADE ON ONE DATE I.E. 30 - 05 - 2007 THAT IS ALMOST AFTER TWO MONTHS FROM THE END OF THE FINANCIAL YEAR I.E. 31 - 03 - 2007, THE DATE OF THE BILLS ARE PRIOR TO MARCH 2007. NOW THE ISSUE STANDS COVERED AGAINS T THE ASSESSEE BY THE FOLLOWING TWO DECISIONS (I) CIT VS. SIKANDARKHAN N TUNVAR (2013) 33 TAXMANN.COM 133 (GUJARAT) AND (II) CIT, KOLKATA VS. CRESCENT EXPORT SYNDICATE (2013) 33 TAXMANN.COM 250 (KOLKATA). IN THE CASE OF CRESCENT EXPORT SYNDICATE (SUPRA) T HE DECISION OF THE HON'BLE SPECIAL BENCH OF THE ITAT IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS 136 ITD 23 (SB) (VISAKHA) HAS COME FOR THE JUDICIAL SCRUTINY IN WHICH IT WAS HELD THAT THE DISALLOWANCE U/S. 40(A)(IA) APPLIES ONLY TO AMOUNTS PAYABLE AS ON 31 ST MARCH OF THE PREVIOUS YEAR ON WHICH THE TDS HAS NOT BEEN DEDUCTED AND NO DISALLOWANCE TO BE MADE IN RESPECT OF SUMS PAID DURING THE PREVIOUS YEAR WITHOUT DEDUCTING TDS. THE HON'BLE HIGH COURT REVERSED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORT (SUPRA). THE OPERATIVE PART OF THE JUDGMENT IS AS UNDER: IN VIEW OF ABOVE DISCUSSION, WE ANSWER THE QUESTION AS UNDER: - THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961, ARE APPLICABLE NOT ONLY TO THE AMOUNT WHICH IS SHOWN AS PAYABLE ON THE DATE OF BALANCE - SHEET, BUT IT IS APPLICABLE TO SUCH EXPENDITURE, WHICH BECOME PAYABLE AT ANY TIME DURING THE RELEVANT PREVIOUS YEAR AND WAS ACTUALLY PAID WITHIN THE PREVIOUS YEAR. IN THE RESULT THE QUESTION IS DECIDED IN F AVOUR OF REVENUE AND AGAINST THE ASSESSEE.' BEFORE DEALING WITH THE SUBMISSIONS OF THE LEARNED COUNSEL APPEARING FOR THE ASSESSEES IN BOTH THE APPEALS WE HAVE TO EXAMINE THE CORRECTNESS OF THE MAJORITY VIEWS IN THE CASE OF MERILYN SHIPPING. 5 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE WE ALREADY HAVE QUOTED EXTENSIVELY BOTH THE MAJORITY AND THE MINORITY VIEWS EXPRESSED IN THE AFORESAID CASE. THE MAIN THRUST OF THE MAJORITY VIEW IS BASED ON THE FACT 'THAT THE LEGISLATURE HAS REPLACED THE EXPRESSION 'AMOUNTS CREDITED OR PAID' WITH THE EXPRESSION 'PAYABL E' IN THE FINAL ENACTMENT. COMPARISON BETWEEN THE PRE - AMENDMENT AND POST AMENDMENT LAW IS PERMISSIBLE FOR THE PURPOSE OF ASCERTAINING THE MISCHIEF SOUGHT TO BE REMEDIED OR THE OBJECT SOUGHT TO BE ACHIEVED BY AN AMENDMENT. THIS IS PRECISELY WHAT WAS DONE BY THE APEX COURT IN THE CASE OF CIT VS. KELVINATOR REPORTED IN 2010(2) SCC 723. BUT THE SAME COMPARISON BETWEEN THE DRAFT AND THE ENACTED LAW IS NOT PERMISSIBLE. NOR CAN THE DRAFT OR THE BILL BE USED FOR THE PURPOSE OF REGULATING THE MEANING AND PURPORT OF THE ENACTED LAW. IT IS THE FINALLY ENACTED LAW WHICH IS THE WILL OF THE LEGISLATURE. THE LEARNED TRIBUNAL FELL INTO AN ERROR IN NOT REALIZING THIS ASPECT OF THE MATTER. THE LEARNED TRIBUNAL HELD 'THAT WHERE LANGUAGE IS CLEAR THE INTENTION OF THE LEGISLATUR E IS TO BE GATHERED FROM THE LANGUAGE USED'. HAVING HELD SO, IT WAS NOT OPEN TO SEEK TO INTERPRET THE SECTION ON THE BASIS OF ANY COMPARISON BETWEEN THE DRAFT AND THE SECTION ACTUALLY ENACTED NOR WAS IT OPEN TO SPECULATE AS TO THE EFFECT OF THE SO - CALLED R EPRESENTATIONS MADE BY THE PROFESSIONAL BODIES. THE LEARNED TRIBUNAL HELD THAT 'SECTION 40(A)(IA) OF THE ACT CREATES A LEGAL FICTION BY VIRTUE OF WHICH EVEN THE GENUINE AND ADMISSIBLE EXPENSES CLAIMED BY AN ASSESSEE UNDER THE HEAD 'INCOME FROM BUSINESS AND PROFESSION' IF THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES ARE DISALLOWED'. HAVING HELD SO WAS IT OPEN TO THE TRIBUNAL TO SEEK TO JUSTIFY THAT 'THIS FICTION CANNOT BE EXTENDED ANY FURTHER AND, THEREFORE, CANNOT BE INVOKED BY ASSESSING OFFICER TO DIS ALLOW THE GENUINE AND REASONABLE EXPENDITURE ON THE AMOUNTS OF EXPENDITURE ALREADY PAID'? DOES THIS NOT AMOUNT TO DELIBERATELY READING SOMETHING IN THE LAW WHICH IS NOT THERE? WE, AS SUCH, HAVE NO DOUBT IN OUR MIND THAT THE LEARNED TRIBUNAL REALIZED THE ME ANING AND PURPORT OF SECTION 40(A)(IA) CORRECTLY WHEN IT HELD THAT IN CASE OF OMISSION TO DEDUCT TAX EVEN THE GENUINE AND ADMISSIBLE EXPENSES ARE TO BE 6 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE DISALLOWED. BUT THEY SOUGHT TO REMOVE THE RIGOUR OF THE LAW BY HOLDING THAT THE DISALLOWANCE SHALL BE RE STRICTED TO THE MONEY WHICH IS YET TO BE PAID. WHAT THE TRIBUNAL BY MAJORITY DID WAS TO SUPPLY THE CASUS OMISSUS WHICH WAS NOT PERMISSIBLE AND COULD ONLY HAVE BEEN DONE BY THE SUPREME COURT IN AN APPROPRIATE CASE. REFERENCE IN THIS REGARD MAY BE MADE TO TH E JUDGMENT IN THE CASE OF BHUWALKA STEEL INDUSTRIES VS. BOMBAY IRON & STEEL LABOUR BOARD REPORTED IN 2010 (2) SCC 273. 'UNPROTECTED WORKER' WAS FINALLY DEFINED IN SECTION 2 (II) OF THE MATHADI ACT AS FOLLOWS: - UNPROTECTED WORKER' MEANS A MANUAL WORKER WHO IS ENGAGED OR TO BE ENGAGED IN ANY SCHEDULED EMPLOYMENT.' THE CONTENTION RAISED WITH REFERENCE TO WHAT WAS THERE IN THE BILL WAS REJECTED BY THE SUPREME COURT BY HOLDING AS FOLLOWS: - 'IT MUST, AT THIS JUNCTURE, BE NOTED THAT IN SPITE OF SECTION 2(11), WH ICH INCLUDED THE WORDS 'BUT FOR THE PROVISIONS OF THIS ACT IS NOT ADEQUATELY PROTECTED BY LEGISLATION FOR WELFARE AND BENEFITS OF THE LABOUR FORCE IN THE STATE', THESE PRECISE WORDS WERE REMOVED BY THE LEGISLATURE AND THE DEFINITION WAS MADE LIMITED AS IT HAS BEEN FINALLY LEGISLATED UPON. IT IS TO BE NOTED THAT WHEN THE BILL CAME TO BE PASSED AND RECEIVED THE ASSENT OF THE VICE - PRESIDENT ON 05 - 06 - 1969 AND WAS FIRST PUBLISHED IN THE MAHARASHTRA GOVERNMENT GAZETTE EXTRAORDINARY, PART IV ON 13 - 06 - 1969, THE AF OREMENTIONED WORDS WERE OMITTED. THEREFORE, THIS WOULD BE A CLEAR POINTER TO THE LEGISLATIVE INTENT THAT THE LEGISLATURE BEING CONSCIOUS OF THE FACT AND BEING ARMED WITH ALL THE COMMITTEE REPORTS AND ALSO BEING ARMED WITH THE FACTUAL DATA, DELIBERATELY AVO IDED THOSE WORDS. WHAT THE APPELLANTS ARE ASKING WAS TO READ IN THAT DEFINITION, THESE PRECISE WORDS, WHICH WERE CONSCIOUSLY AND DELIBERATELY OMITTED FROM THE DEFINITION. THAT WOULD AMOUNT TO SUPPLYING THE CASUS OMISSUS AND WE DO NOT THINK THAT IT IS POSSI BLE, PARTICULARLY, IN THIS CASE. THE LAW OF SUPPLYING THE CASUS OMISSUS BY THE COURTS IS EXTREMELY CLEAR AND SETTLED THAT THOUGH THIS COURT MAY 7 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE SUPPLY THE CASUS OMISSUS, IT WOULD BE IN THE RAREST OF THE RARE CASE AND THUS SUPPLYING OF THIS CASUS OMISSUS WO ULD BE EXTREMELY NECESSARY DUE TO THE INADVERTENT OMISSION ON THE PART OF THE LEGISLATURE. BUT, THAT IS CERTAINLY NOT THE CASE HERE'. WE SHALL NOW ENDEAVOUR TO SHOW THAT NO OTHER INTERPRETATION IS POSSIBLE. THE KEY WORDS USED IN SECTION 40(A)(IA), ACCORDIN G TO US, ARE 'ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B'. IF THE QUESTION IS 'WHICH EXPENSES ARE SOUGHT TO BE DISALLOWED?' THE ANSWER IS BOUND TO BE 'THOSE EXPENSES ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B. ONCE THIS IS R EALIZED NOTHING TURNS ON THE BASIS OF THE FACT THAT THE LEGISLATURE USED THE WORD 'PAYABLE' AND NOT 'PAID OR CREDITED'. UNLESS ANY AMOUNT IS PAYABLE, IT CAN NEITHER BE PAID NOR CREDITED. IF AN AMOUNT HAS NEITHER BEEN PAID NOR CREDITED, THERE CAN BE NO OCCA SION FOR CLAIMING ANY DEDUCTION. THE LANGUAGE USED IN THE DRAFT WAS UNCLEAR AND SUSCEPTIBLE TO GIVING MORE THAN ONE MEANING. BY LOOKING AT THE DRAFT IT COULD BE SAID THAT THE LEGISLATURE WANTED TO TREAT THE PAYMENTS MADE OR CREDITED IN FAVOUR OF A CONTRACT OR OR SUB - CONTRACTOR DIFFERENTLY THAN THE PAYMENTS ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES BECAUSE THE WORDS 'AMOUNTS CREDITED OR PAID' WERE USED ONLY IN RELATION TO A CONTRACTOR OR SUB - CONTRACTOR. THIS DIFFERENTIAL TREATMENT WAS NOT INTENDED. THEREFORE, THE LEGISLATURE PROVIDED THAT THE AMOUNTS, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B PAYABLE ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROF ESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES OR TO A CONTRACTOR OR SUB - CONTRACTOR SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME OF AN ASSESSEE IN CASE HE HAS NOT DEDUCED, OR AFTER DEDUCTION HAS NOT PAID WITHIN THE SPECIFIED TIME. THE LANGUAGE USED BY T HE LEGISLATURE IN THE FINALLY ENACTED LAW IS CLEAR AND UNAMBIGUOUS WHEREAS THE LANGUAGE USED IN THE BILL WAS AMBIGUOUS. A FEW WORDS ARE NOW NECESSARY TO DEAL WITH THE SUBMISSION OF MR. BAGCHI AND MS. ROYCHOWDHURI. THERE CAN BE NO DENIAL 8 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE THAT THE PROVISION IN QUESTION IS HARSH. BUT THAT IS NO GROUND TO READ THE SAME IN A MANNER WHICH WAS NOT INTENDED BY THE LEGISLATURE. THIS IS OUR ANSWER TO THE SUBMISSION OF MR. BAGCHI. THE SUBMISSION OF MS. ROYCHOWDHURI THAT THE SECOND PROVISO SOUGHT TO BECOME EFFECTIVE FR OM 1ST APRIL, 2013 SHOULD BE HELD TO HAVE ALREADY BECOME OPERATIVE PRIOR TO THE APPOINTED DATE CANNOT ALSO BE ACCEDED TO FOR THE SAME REASON INDICATED ABOVE. THE LAW WAS DELIBERATELY MADE HARSH TO SECURE COMPLIANCE OF THE PROVISIONS REQUIRING DEDUCTIONS OF TAX AT SOURCE. IT IS NOT THE CASE OF AN INADVERTENT ERROR. FOR THE REASONS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE MAJORITY VIEWS EXPRESSED IN THE CASE OF MERILYN SHIPPING & TRANSPORTS ARE NOT ACCEPTABLE. THE SUBMISSIONS ADVANCED BY LEARNED ADVOCA TES HAVE ALREADY BEEN DEALT WITH AND REJECTED. THE APPEAL IS, THUS, ALLOWED IN FAVOUR OF THE REVENUE. 4. WE, THEREFORE, REVERSE OF ORDER OF THE LD. CIT(A) AND RESTORE THE ORDER OF THE ASSESSING OFFICER AND ALLOW THE GROUNDS TAKEN BY THE REVENUE. IN THE R ESULT, THE REVENUES APPEAL IS ALLOWED. 6. WE, THEREFORE, FOLLOWING THE DECISION IN THE CASE OF SHRI BHARAT DHANPAL PATIL, SINDHUDURG (SUPRA) REVERSE THE ORDER OF THE CIT(A), PUNE AND ALLOW THE GROUND TAKEN BY THE REVENUE. IN THE RESULT, THE REVENUES AP PEAL IS ALLOWED. 7. NOW WE TAKE UP CROSS OBJECTION FILED BY THE ASSESSEE BEING CO NO. 61 /PN/201 4 . THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE CROSS OBJECTION : 1. THE LD. AO AND LD. CIT (A) HAS ERRED IN NOT CONSIDERING THE FACTS THAT ASSESSEE HAS OB TAINED FORM NO. 15 I AT THE TIME OF PAYMENT TO SUB CONTRACTORS AND IT IS AT THAT POINT OF TIME SECOND PROVISO TO SECTION 194C(3)(I) WOULD COME INTO PLAY AND HENCE NOT DEDUCTED TDS ON FREIGHT PAYMENTS, WHEREAS COMPLIANCE OF THIRD PROVISO CAN BE DEFERRED TILL 30TH JUNE OF NEXT FINANCIAL YEAR. THE L D. CIT (A) WAS ALSO NOT JUSTIFIED IN CONCLUDING THAT ASSESSEE HAD NOT FULLY COMPLIED WITH THE RULE 29D READ WITH PROVISO TO CLAUSE (I) OF SECTION 194C(3) OF I.T. ACT, 1961. 9 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE 2. THE L D. CIT (A) WAS ALSO NOT JUSTIFIED IN REJECTING APPELLANT'S CLAIM THAT HE HAS NOT RECEIVED ANY NOTICE U/S 143 (2) BEFORE THE PRESCRIBED TIME LIMIT. THE ID. CIT (A) HAS CONFIRMED THAT NOTICE WAS ISSUED ON 18.08.2010 BUT NOT CONFIRMED THAT THE NOTICE WAS SERVED UPON THE ASSESSEE BEFORE 30.9.2010 . 8. THE LD. AR SUBMITS THAT AS PER THE INSTRUCTION OF THE ASSESSEE, HE IS NOT PRESSING GROUND NO. 2. AS GROUND NO. 2 IS NOT PRESSED, THE SAME IS DISMISSED AS NOT PRESSED. 9. THE ASSESSEE IS ENGAGED IN THE TRANSPORT BUSINESS AND HIRING THE TRUCKS. IT WAS CONTENDED BY THE ASSESSEE THAT HE WAS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE (TDS) AS PER THE APPLICABLE LAW I.E. 2 ND PROVISO TO SEC. 194C (3)(I) OF THE INCOME - TAX ACT AS HE HAS OBTAINED THE DECLARATION S FROM THE TRUCK OWNERS/DRIVERS IN THE PRESC RIBED FORM THAT THE CONCERNED TRUCK OWNER WAS NOT HAVING MORE THAN TWO GOODS CARRIERS AT ANY TIME DURING THE PREVIOUS YEAR. IT WAS FURTHER CONTENDED THAT THE ASSESSEE HAS ALSO FILED RETURN IN FORM NO. 15J AS PER THE PROVISIONS OF RULE 29D OF THE I.T. RULE S, 1962. IT IS STATED THAT THE ASSESSEE FILED THE COPY OF FORM NO. 15J IN THE OFFICE OF ITO (TDS), AJMER ON 16 - 06 - 2009 AS THE ASSESSEE WAS HAVING THE BRANCH OFFICE IN AJMER. THE ASSESSEE ALSO FILED ANOTHER COPY OF THE FORM NO. 15J IN THE OFFICE OF CIT - V, PUNE ON 18 - 07 - 2012. THE LD. CIT(A) CONFRONTED THE ASSESSEE WHY HE HAS FILED FORM NO. 15J IN THE OFFICE OF THE ITO (TDS), AJMER WHEN HE WAS REQUIRED TO FILE THE SAME IN THE OFFICE OF THE CIT - V, PUNE. THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT IT W AS DUE TO THE IGNORANCE AND ALSO BECAUSE THE ASSESSEE HA S BRANCH OFFICE IN AJMER. THE ASSESSEE ALSO SUBMITTED THAT FORM NO. 15J WAS FILED IN THE OFFICE OF THE CIT - V, PUNE AS AN ABUNDANT PRECAUTION. THE LD. CIT(A) H AS NOT IMPRESSED WITH THE CONTENTION OF THE ASSESSEE AND HE REJECTED THE SAME. 10. THE LD. AR SUBMITS THAT AS PER LAW APPLICABLE PRIOR TO THE AMENDMENT TO SEC. 194C BY THE FINANCE (NO. 2) ACT, 2009 W.E.F. 01 - 10 - 10 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE 2009 , IF THE ASSESSEE IS ENGAGED IN THE GOODS TRANSPORT BUSINESS AND HIRING THE TR UCKS OF THE THIRD PARTIES IN THAT SITUATION AS PER THE 2 ND PROVISO TO SEC. 194C(3)(I) OF THE ACT , THE ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE IF THE TRUCK OWNER FILES A DECLARATION IN FORM NO. 15I THAT HE IS NOT OWNING MORE THAN TWO TRUCKS. LD. AR ARGUES THAT IT WAS ALSO CREATED A HARDSHIP TO THE PERSONS WHO WERE ENGAGED INTO THE TRANSPORT BUSINESS BUT DO NOT HAVE THE TRUCKS AND WHO ARE HIRING THE TRUCKS FROM THE OPEN MARKET FOR CARRYING OUT THE TRANSPORT OF THE GOODS AND HENCE, THE PARLIAMEN T IN ITS WISDOM FURTHER RELAX ED THE CONDITION FOR DEDUCTING THE TAX IN RESPECT OF THE HIRING CHARGES PAID TO THE TRUCK OWNERS BY INSERTION OF SUB - SEC. ( 6 ) TO SEC. 194C OF THE ACT . A S PER THE AMENDED PROVISION , THE REQUIREMENT OF OWNING A MINIMUM NUMBER OF TRUCK IS DONE AWAY WITH BUT MERELY FILING THE PAN NO. IS SUFFICIENT. HE SUBMITS THAT MERELY BECAUSE THE ASSESSEE HAS FILED FORM NO. 15J WITH THE WRONG TAX AUTHORITY H E SHOULD NOT BE PUNISHED FOR HIS IGNORANCE . H E PLEADED FOR DELETING THE ADDITION MADE B Y THE ASSESSING OFFICER U/S. 40(A)(IA) OF THE ACT , IN A CASE IF THE REASONS GIVEN BY THE LD. CIT(A) FOR DELETING THE ADDITION FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MERILYN SHIPPING & TRANSPORT (SUPRA) IS NOT ACCEPTED. HE FURTHER SUBMITS THAT THERE IS DECISION OF THE HON'BLE ALLAHABAD HIGH COURT WHICH IS IN FAVOUR OF THE ASSESSEE. PER CONTRA, THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A). 11. WE FIND FORCE IN THE ARGUMENT OF THE LD. AR . T HE ASSESSEE HAS FILED A COPY OF THE FORM NO. 15J IN THE COMPILATION (PAGE NO. 13) . ON PERUSAL OF SAID COPY , IT IS SEEN THAT THERE IS AN ACKNOWLEDGEMENT OF THE ITO (TDS), AJMER DATED 16 - 06 - 2009. THE ASSESSEE HAS ALSO FILED THE COPY OF FORM NO. 15J WHICH IS PLACED AT PAGE NO. 14 OF T HE COMPILATION AND THERE IS AN ACKNOWLEDGMENT OF THE CIT - V, PUNE DATED 18 - 07 - 2012 WHICH IS ACCOMPANIED BY THE DETAILS OF THE TRUCKS INCLUDING THE REGISTRATION OF THE VEHICLES, DATE OF REGISTRATION, NAME OF THE OWNER OR DRIVER AND ADDRESS. IN RESPECT OF TH E VEHICLES OF TRANSPORT OF THE GOODS AS PER THE 11 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE ORIGINAL SEC. 194C(3) 2 ND PROVISO , THE PERSON RESPONSIBLE FOR PAYING THE HIRE CHARGES TO THE GOODS CARRIERS OR TRUCKS WAS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE IF THE DECLARATION FORM THE TRUCK OWNER WAS O BTAINED IN THE PRESCRIBED FORM THAT HE IS NOT OWNING MORE THAN TWO TRUCKS IN THE RESPECTIVE YEARS. THE SAID PROVISION SUGGEST THAT CONSIDERING THE NATURE OF THE TRANSPORT BUSINESS , IT WAS DIFFICULT FOR THE PERSON HIRING THE TRUCKS IN THE OPEN MARKET , WHIC H IS MOBILE MARKET , TO DEDUCT THE TAX AT SOURCE AND COMPLY WITH THE OTHER PROVISIONS OF THE TDS LIKE FURNISHING OF THE FORM , FILING OF THE RETURN OR OTHER THINGS . W HEN SEC. 194C HAS UNDERGONE THE AMENDMENT BY THE FINANCE (NO. 2) ACT, 2009 W.E.F. 01 - 10 - 200 9 , THE TRANSPORT BUSINESS GOT MORE RELAXATION AND IT IS CLEAR FROM SUB - SEC. ( 6 ) OF SEC. 194C , NOW REQUIREMENT IS MERELY TO OBTAIN THE PAN NO. FROM TRUCK OWNER IRRESPECTIVE OF WHETHER THERE ARE TWO VEHICLES OR MORE THAN TWO VEHICLES . THIS ALSO SUGGESTS THE INTENTION OF THE PARLIAMENT TO MITIGATE HARDSHIP CAUSE TO THE TRANSPORTERS. IN THE PRESENT CASE THE ASSESSEE HAS FILED THE FORM NO. 15J IN THE OFFICE OF THE ITO (TDS), AJMER AS HE IS HAVING BRANCH OFFICE IN AJMER. SUBSEQUENTLY, THE ASSESSEE ALSO FILED F ORM NO. 15J IN THE OFFICE OF CIT - V, PUNE. THE LD. AR ALSO RELIED ON THE DECISION OF THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF VALIBHAI KHANBHAI MANMAD VS. DCIT (OSD) 261 CTR 538 (GUJ). IN THE SAID CASE THE RESPONDENT - ASSESSEE WAS ENGAGED IN THE TR ANSPORT BUSINESS. HE MADE THE PAYMENT TO THE EXTENT OF RS.11 , 21 , 9 0, 788 / - TO SUB - CONTRACTS TRANSPORTERS BUT HAD NOT DEDUCTED THE TAX AT SOURCE. THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE BY INVOKING THE PROVISIONS OF SEC. 40( A)(IA) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED FORM NO. 15J BEFORE 30 TH JUNE AS REQUIRED UNDER RULE 29D OF THE INCOME - TAX RULES, 1962. WHEN THE MATTER REACHED BEFORE THE HON'BLE HIGH COURT THEIR LORDSHIPS HELD AS UNDER: 6) SECTION 194 C, AS ALREADY NOTICED, MAKES PROVISION WHERE FOR CERTAIN PAYMENTS, LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE ARISES. THEREFORE, IF THERE IS ANY BREACH OF SUCH REQUIREMENT, 12 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE QUESTION OF APPLICABILITY OF SECTION 40(A)(IA) WOULD ARISE. DESPITE SUCH CIRCUM STANCES EXISTING, SUB - SECTION (3) MAKES EXCLUSION IN CASES WHERE SUCH LIABILITY WOULD NOT ARISE. WE ARE CONCERNED WITH THE FURTHER PROVISO TO SUB - SECTION (3), WHICH PROVIDES THAT NO DEDUCTION UNDER SUB - SECTION (2) SHALL BE MADE FROM THE AMOUNT OF ANY SUM C REDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE SUB - CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM IN THE PRESCRIBED FORM AN D VERIFIED IT IN THE PRESCRIBED MANNER WITHIN THE TIME AS MAY BE PRESCRIBED, IF SUCH SUB - CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR. 7) THE EXCLUSION PROVIDED IN SUB - SECTION (3) OF SECTI ON 194C FROM THE LIABILITY TO DEDUCT TAX AT SOURCE UNDER SUB - SECTION (2) WOULD THUS BE COMPLETE THE MOMENT THE REQUIREMENTS CONTAINED THEREIN ARE SATISFIED. SUCH REQUIREMENTS, PRINCIPALLY, ARE THAT THE SUB - CONTRACTOR, RECIPIENT OF THE PAYMENT PRODUCES A NE CESSARY DECLARATION IN THE PRESCRIBED FORMAT AND FURTHER THAT SUCH SUB - CONTRACTOR DOES NOT OWN MORE THAN TWO GOODS CARRIAGES DURING THE ENTIRE PREVIOUS YEAR. THE MOMENT, SUCH REQUIREMENTS ARE FULFILLED, THE LIABILITY OF THE ASSESSEE TO DEDUCT TAX ON THE PA YMENTS MADE OR TO BE MADE TO SUCH SUB - CONTRACTORS WOULD CEASE. IN FACT HE WOULD HAVE NO AUTHORITY TO MAKE ANY SUCH DEDUCTION. 8) THE LATER PORTION OF SUB - SECTION (3) WHICH FOLLOW THE FURTHER PROVISO IS A REQUIREMENT WHICH WOULD ARISE AT A MUCH LATER POINT OF TIME. SUCH REQUIREMENT IS THAT THE PERSON RESPONSIBLE FOR PAYING SUCH SUM TO THE SUB - CONTRACTOR HAS TO FURNISH SUCH PARTICULARS AS PRESCRIBED. WE MAY NOTICE THAT UNDER RULE 29D OF THE RULES, SUCH DECLARATION HAS TO BE MADE BY THE END OF JUNE OF THE NEXT ACCOUNTING YEAR IN QUESTION. 9) IN OUR VIEW, THEREFORE, ONCE THE CONDITIONS OF FURTHER PROVISO OF SECTION 194C(3) ARE SATISFIED, THE LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE WOULD CEASE. THE REQUIREMENT OF SUCH PAYEE TO FURNISH DETAILS TO THE INCOME TAX AUTHORITY IN THE PRESCRIBED FORM WITHIN PRESCRIBED TIME WOULD ARISE LATER AND ANY INFRACTION IN SUCH A REQUIREMENT WOULD NOT MAKE THE REQUIREMENT OF DEDUCTION AT SOURCE APPLICABLE UNDER SUB - SECTION (2) OF SECTION 194C OF THE ACT. IN OUR VIEW, THEREFOR E, THE TRIBUNAL WAS PERFECTLY JUSTIFIED IN TAKING THE 13 ITA NO . 103 /PN/2013 & CO NO. 61/PN/2014, MR. IQBAL KHAN, PUNE VIEW IN THE IMPUGNED JUDGMENT. IT MAY BE THAT FAILURE TO COMPLY SUCH REQUIREMENT BY THE PAYEE MAY RESULT INTO SOME OTHER ADVERSE CONSEQUENCES IF SO PROVIDED UNDER THE ACT. HOWEVER, FULFILLMENT OF SUCH R EQUIREMENT CANNOT BE LINKED TO THE DECLARATION OF TAX AT SOURCE. ANY SUCH FAILURE THEREFORE CANNOT BE VISUALIZED BY ADVERSE CONSEQUENCES PROVIDED UNDER SECTION 40(A)(IA) OF THE ACT. 12. IN THE PRESENT CASE EVEN THOUGH THE ASSESSEE HAS FILED THE ORIGINAL F ORM NO. 15J WITH THE ITO (TDS), AJMER WITHIN PRESCRIBED TIME LIMIT AS PROVIDED IN RULE 29D, SUBSEQUENTLY HE ALSO FILED THE FORM WITH REQUIRED DETAILS IN THE OFFICE OF THE CIT - V, PUNE ALSO. IN OUR OPINION THE PRINCIPLES LAID DOWN IN THE CASE OF VALIBHAI KH ANBHAI MANDAD (SUPRA) ARE APPLICABLE TO THE ASSESSEES CASE. WE, ACCORDINGLY, ALLOW THE GROUND NO. 1 AND DELETE THE ADDITION MADE BY THE ASSESSING OFFICER. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASS ESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 31 - 1 2 - 201 4 SD/ - SD/ - ( G . S . PAN NU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED : 31 ST DECEMBER, 201 4 RK/PS COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - V, PUNE 4 THE CIT - V, PUNE 5 6 THE DR, ITAT, B BENCH, PUNE. GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE