K.Balakrishnan, Tuticorin V. ITO Ward 1, Tuticorin

ITA 1318/CHNY/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9267 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 30-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S BHARATHCIT
• Assessee Lawyers: S SANKARALINGAM CITRETD
• Keywords: Assessment record; TDS; Set aside
• Section: 143(3); 40(a)(ia); 194C; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . , !' # $% , & !' %' BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER # ./ ITA NO.1318/CHNY/2019 ( )( /ASSESSMENT YEAR: 2014-15 SHRI K. BALAKRISHNAN, NO.7/50B, THAVSIPERUMAL SALAI, MULLAKADU, TUTICORIN. VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX, MADURAI-1. [PAN: ADIPB 1496N ] ( *+ /APPELLANT) ( ,-*+ /RESPONDENT) *+ . / / APPELLANT BY : SHRI S.SANKARALINGAM, CIT(RETD.) ,-*+ . / /RESPONDENT BY : SHRI S.BHARATH, CIT . 0& /DATE OF HEARING : 09.07.2019 12) . 0& /DATE OF PRONOUNCEMENT : 04.10.2019 !3 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, MADURAI-1, IN C.NO.401/ 74/PCIT/MDU-1/2018- 19 DATED 30.03.2019 FOR THE ASSESSMENT YEAR (AY) 20 14-15. 2. SHRI K.BALAKRISHNAN, THE ASSESSEE, IS AN INDIVID UAL, AND IS IN CONTRACT BUSINESS AND LORRY HIRE BUSINESS. ON EXAMINATION O F THE ASSESSMENT RECORDS FOR THE AY 2014-15, THE LD. PCIT FOUND THAT THE ASS ESSEE HAD CLAIMED TOTAL TRANSPORT CHARGES OF RS. 5,42,78,540/-. THE ASSESS EE WAS LIABLE TO DEDUCT TAX @ 2% AS PRESCRIBED IN S. 194C OF THE ACT. HOWEVER, ON THE PAYMENTS MADE TO ITA NO.1318/CHNY/2019 :- 2 -: 14 TRANSPORT CONTRACTORS AT RS. 5,09,08,500/-, THE ASSESSEE OBTAINED THE PANS OF SUCH PARTIES AND SUBMITTED THAT NONE OF THE LORR Y OWNERS HAD MORE THAN 10 LORRIES. THE AO ALLOWED THE ASSESSEES CLAIM IN TH E ASSESSMENT ORDER DATED 30.06.2016. SUBSEQUENTLY, THE LD. PCIT FOUND THAT O N THE IMPUGNED TRANSACTIONS, THE ASSESSEE HAD NOT COMPLIED DULY BE FORE THE PRESCRIBED AUTHORITY AS REQUIRED U/S. 194C(7) BEFORE THE DUE D ATE. THEREFORE, THE ENTIRE PAYMENT OF RS. 5,09,08,500/- REQUIRED TO BE DISALLO WED U/S. 40(A)(IA) OF THE ACT. SINCE, THIS ASPECT WAS NOT CONSIDERED BY THE AO, HE ISSUED A NOTICE U/S. 263 OF THE ACT AND AFTER CONSIDERING THE ASSESSEES REPLY ETC. HELD THAT THE ORDER PASSED U/S. 143(3) OF THE ACT IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND ACCORDINGLY SET ASIDE THE O RDER U/S. 263 OF THE ACT WITH A DIRECTION TO THE AO TO FRAME THE ASSESSMENT. AGG RIEVED AGAINST THAT ORDER, THE ASSESSEE FILED THIS APPEAL. 3. THE LD. AUTHORIZED REPRESENTATIVE PLEADED THAT T HE LD. PCIT FAILED TO NOTE THAT THE AO ENQUIRED ABOUT THE POSSIBILITY OF DISALLOWANCE U/S. 40(A)(IA) OF THE ACT AND HE WAS SATISFIED THAT THE ASSESSEE COMP LIED WITH S. 194C(6), THEREFORE, DID NOT MAKE ANY DISALLOWANCE U/S. 40(A) (IA) OF THE ACT. THE LD. PCIT ALSO ERRED IN HOLDING THAT THE ASSESSEE HAS FA ILED TO COMPLY WITH S. 194C(6) AND S. 194C(7) OF THE ACT IN RESPECT OF TRA NSPORT CONTRACT PAYMENTS TO ESCAPE ARTIFICIAL DISALLOWANCE U/S. 40(A)(IA) OF TH E ACT. THE LD. PCIT FAILED TO NOTE THAT S. 194C(6) AND S. 194C(7) ARE INDEPENDENT AS HELD BY VARIOUS JUDICIAL PRONOUNCEMENTS RELIED ON BY THE ASSESSEE. THE LD. A R RELIED ON THE SAME CASE LAWS, ON WHICH THE ASSESSEE PLEADED ITS CASE B EFORE THE LD. PCIT. ITA NO.1318/CHNY/2019 :- 3 -: 4. PER CONTRA, THE LD. DR SUBMITTED THAT THE ASSESS EE SUBMITTED DETAILS OF PAN OF THOSE PARTIES TO WHOM RS. 5,09,08,500/- HAVE BEEN MADE WITHOUT DEDUCTING THE TAX, AND A DECLARATION THAT NONE OF T HE TRANSPORTS HAVE MORE THAN 10 LORRIES. BASED ON WHICH, THE AO ALLOWED TH E ASSESSEES CLAIM IN THE ASSESSMENT ORDER WITHOUT UNDERTAKING ANY VERIFICATI ON. SUBSEQUENTLY, THE LD. PCIT FOUND THAT ON THE IMPUGNED TRANSACTIONS, THE A SSESSEE HAS NOT MADE ANY COMPLIANCE BEFORE THE PRESCRIBED AUTHORITY U/S. 194C(7) OF THE ACT. THEREFORE, THE LD. PCIT TAKING COGNIZANCE OF SUCH F ACT AND CONSIDERING THE FACT THAT THE AO ALLOWED THE ASSESSEES CLAIM MERELY ON THE ASSESSEES PLEA, WITHOUT MAKING DUE ENQUIRY/VERIFICATION WHICH IS EX PECTED OF HIM AS HELD BY THE JURISDICTIONAL HIGH COURTS IN THE DECISION REPORTED IN 260 ITR 599 AND 220 ITR 647, HELD THAT THE ASSESSMENT ORDER PASSED BY THE A SSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AS THE OFFICER FAILED TO DISCUSS AS TO WHY AND HOW THE CLAIM WAS ACCEPTED. THEREFORE, THE LD. DR PLEADED THAT THE REVISION ORDER PASSED U/S. 263 OF THE ACT IS VERY WELL WITHIN THE SCOPE OF S. 263 OF THE ACT AND HENCE, PLEADED T O DISMISS THE ASSESSEES APPEAL. 5. WE HEARD THE RIVAL SUBMISSION AND GONE THROUGH T HE RELEVANT MATERIAL. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSES SEE HAS FILED A LETTER, WHICH WAS ACKNOWLEDGED BY THE ASSESSING OFFICER ON 30.06. 2016, WHEREIN THE ASSESSEE SUBMITTED THAT AS PER S. 194C OF THE ACT, TDS ON LORRY HIRE CHARGES HAS TO BE DEDUCTED. FOR THE LORRY OWNERS WHO ARE H AVING LESS THAN 10 LORRIES, THEY HAVE FURNISHED A DECLARATION ALONG WITH PAN. SO LIABILITY OF DEDUCTION OF ITA NO.1318/CHNY/2019 :- 4 -: TDS WILL NOT ARISE. ON WHICH THE AO OBSERVED THAT THE EXPLANATIONS OF THE ASSESSEE WERE FOUND TO BE ACCEPTABLE AND THEREFORE NO ADDITION WAS MADE ON THIS ISSUE IN HIS ORDER DATED 30.06.2016. SUBSEQUE NTLY, THE LD. PCIT ON EXAMINATION OF THE RECORDS FOUND THAT ON THE IMPUGN ED TRANSACTIONS, THE ASSESSEE I.E., DEDUCTOR OR THE PAYEE, HAS NOT MADE THE DUE COMPLIANCE IN ACCORDANCE WITH S. 194C(7) R/W R. 31A BEFORE THE PR ESCRIBED AUTHORITY WITHIN THE DUE DATE. TAKING THIS FACT AND THE AOS TREATME NT IN THE ASSESSMENT ORDER, THE LD. PCIT HELD THAT THE AO ALLOWED THE ASSESSEE S CLAIM WITHOUT ANY ENQUIRY REGARDING THE VERACITY OF THE DECLARATION MADE BY T HE ASSESSEE. MERE FILING OF INFORMATION DOES NOT LEAD TO ANY INFERENCE THAT THE RE WAS APPLICATION OF MIND. FURTHER, THE LD. PCIT HOLDS THAT THE AO IS EXPECTED TO MAKE AN ENQUIRY OF INCOME AND IF, HE DOES NOT MAKE AN ENQUIRY, WHICH I S EXPECTED OF HIM. IT WOULD BE A GROUND TO INTERFERE WITH HIS ORDER SINCE SUCH AN ORDER PASSED BY HIM IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE BASED ON THE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT SUPRA. IT IS ALSO CLEAR FROM THE ORDER THAT THE ASSESSEE FURNISHED THE LETTER EX TRACTED, SUPRA, ON 30.06.2016 AND ON THE SAME DATE THE OFFICER HAS PAS SED THE ORDER MERELY EXTRACTING THE CONTENT OF THE ASSESSEES LETTER. F ROM THE ABOVE FACTS AND CIRCUMSTANCES, IT IS CLEAR THAT THE AO HAS NOT DULY EXAMINED THE ISSUE AS REQUIRED AND THERE IS A PRIMA FACIE CASE FOR LACK O F APPLICATION OF MIND. FURTHER, SUBSEQUENTLY, THE LD. PCIT FOUND THAT THE ASSESSEE HAS ALSO NOT MADE DUE COMPLIANCE U/S. 194C(7) OF THE ACT, THIS FACT A LSO SUPPORTS THE VIEW OF NON- APPLICATION OF MIND. THEREFORE, THE CASE FALLS WIT HIN THE JURISDICTION OF S. 263 OF ITA NO.1318/CHNY/2019 :- 5 -: THE ACT. WHEN THE ASSESSEE HAS ADEQUATE OPPORTUNIT Y TO EXPLAIN AND SUPPORT ITS CONTENTION IN THE CONSEQUENTIAL PROCEEDINGS IN ACCORDANCE WITH LAW, THERE IS NO PREJUDICE CAUSED TO IT ALSO. THEREFORE, THE G ROUNDS OF THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH OCTOBER, 2019 IN CHENNAI. SD/- SD/- ( . ) ( DUVVURU RL REDDY) !' /JUDICIAL MEMBER ( . $% ) (S. JAYARAMAN) & !' /ACCOUNTANT MEMBER /CHENNAI, 4!# /DATED: 04 TH OCTOBER, 2019 . EDN, SR. P.S !3 . ,056 76)0 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 80 ( )/CIT(A) 4. 80 /CIT 5. 69: ,0 /DR 6. :( ; /GF