M/S PAWAN INDUSTRIES, Bhopal V. THE ITO-3(1), Bhopal

ITA 14/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6091 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 08-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: P D NAGAR
• Keywords: Reopening of assessment; Question of law; Non-deduction of tax; Difference of opinion; Change of opinion
• Section: 143(3); 194C; 147; 148; 139

Judgement Text

M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 1 OF 12 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE , . . , # BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER M/S. PAWAN INDUSTRIES 64, OLD SINDHI COLONY BHOPAL 462001 V. ITO 3(1) BHOPAL $ / APPELLANT %&$ / RESPONDENT . . ./ PAN: AAIFP 4944 Q $ ' / APPELLANT BY SHRI P.D. NAGAR , CA %&$ ' / RESPONDENT BY SHRI MOHD. JAVED, SR. D.R. ' / DATE OF HEARING 01 - 05 - 2017 +,- ' / DATE OF PRONOUNCEMENT 04 - 05 - 2017 / O R D E R PER O.P. MEENA, ACCOUTANT MEM BER. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-1, BHOPAL [HER EINAFTER REFERRED TO AS THE CIT(A)] DATED 16.04.2014 AND PER TAINS TO ASSESSMENT YEAR 2008-09 AS AGAINST APPEAL DECIDED IN ASSES SMENT ORDER U/S. 143(3) READ WITH SECTION 147 DATED 08.1 2.2008 OF INCOME TAX ACT,1961( HEREIN AFTER REFERRED TO AS 'T HE ACT) DATED OF ITO WARD 2(2) BHOPAL [HEREINAFTER REFERRED TO AS TH E AO]. THE ASSESSEE HAS RAISED THE GROUND THAT NO DISALLOWANCE UNDER SECTION . . ./ I.T.A. NO. 14 /IND/2016 - / ASSESSMENT YEAR: 20 06 - 07 M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 2 OF 12 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOU RCE IN PURSUANCE OF WORK CONTRACT U/S. 194C IS CALLED FOR. 2. ADDITIONAL GROUND OF APPEAL: DURING THE CURRENCY OF APPEAL, THE ASSESSEE HAS ALSO FILED AN ADDITIONAL GROUND OF APPEAL AGAINST THE REASSESSMENT U/S.147/143(3) WHICH READ AS UNDER :- 1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN LAW IN HOLDING THAT REOPENING OF ASSESSMEN T U/S.147 OF THE ACT WAS VALID IGNORING THE FACTS THA T THE ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) OF T HE ACT AFTER DUE VERIFICATION OF BOOKS OF ACCOUNTS. HE OUG HT TO HAVE APPRECIATED THAT NO ACTION CAN BE TAKEN U/S. 1 47 OF THE ACT AFTER EXPIRY OF FOUR YEARS FROM THE END OF ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE, THERE BEING NO FAILURE, THE ORDER SO PASS ED WAS BARRED BY LIMITATION HENCE, DESERVE TO BE QUASHED. 3. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE VA LIDITY OF ASSESSMENT U/S.147 OF THE ACT WAS NOT CHALLENGED BE FORE THE AO BUT IT WAS RAISED BEFORE CIT(A). THE ADDITIONAL GROUND OF APPEAL BE ADMITTED AS IT IS BEING PURELY A LEGAL ISSUE, GOES TO THE ROOT OF THE MATTER AND NO FURTHER INQUIRY IS REQUIRED FOR DECIDING TH E SAME AS ALL FACTS ARE ALREADY ON RECORD AND ISSUE ARISE OUT OF IMPUGNED M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 3 OF 12 ORDER. ON THE OTHER HAND, THE LD. SR. D.R. OPPOSED T HE ADMISSION OF ADDITIONAL GROUND. 4. WE HAVE CONSIDERED THE FACTS AND MATERIAL ON RECORD . THE ADDITIONAL GROUND BEING LEGAL ONE, HENCE, ADMITTED. RELIANCE IS PLACED ON THE DECISION OF APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383(SC) WHEREI N IT WAS HELD THAT THE ADDITIONAL GROUND OF APPEAL CAN BE ADMITTE D WHERE THE ISSUE INVOLVED IS PURE QUESTION OF LAW NOT INVOLVI NG ANY INVESTIGATION OF FACTS. NOW WE WILL DEAL WITH THE A DDITIONAL GROUND. 5. BRIEFLY, STATED THE FACTS OF THE CASE ARE THAT THE ASSESSMENT WAS MADE UNDER SECTION 143 (3) ON 26-12-2008 ASSESS ING TOTAL INCOME AT RS. 83,520/- AS AGAINST RETURNED INCOME O F RS. 53,520/-. THERE AFTER NOTICE U/S.148 WAS ISSUED ON 17-03-2012 ON THE G ROUND THAT NO TDS WAS DONE ON THE AMOUNT OF RS. 7,80,810/ - DEBITED IN PROFIT & LOSS ACCOUNT IN THE NAME OF R N TRADERS AN D ANAND ENTERPRISE. HENCE, SAME WAS DISALLOWABLE UNDER SECT ION 40(A)(IA) OF THE ACT. ON APPEAL, LD. CIT (A) HAS UPHELD THE REOPENING OF ASSESSMENT ON THE GROUND THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WHICH WAS MORE THAN RS. 1 LAKH. 6. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEF ORE THE TRIBUNAL. THE LD. A.R. FOR THE ASSESSEE SUBMITTED T HAT THE LD. CIT (A) DID NOT CONSIDER THE FACTS THAT THE ASSESSMENT HAS BEEN REOPENED AFTER EXPIRY OF FOUR YEARS FROM THE END OF ASSESSMENT M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 4 OF 12 YEAR. THEREFORE, AS PER FIRST PROVISO TO SECTION 14 7, THERE SHOULD BE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THAT AS SESSMENT YEAR. BOTH SECTION 147 AND 149 ARE TO BE READ TOGETHER. T HE LD. A.R. SUBMITTED THAT COPY OF TRUCK FREIGHT EXPENSES WERE FILED DURING ORIGINAL ASSESSMENT PROCEEDINGS (PB 10 TO 16) AND BILLS AND RECEIPTS RELATED TRUCK EXPENSES WERE VERIFIED BY TH E THEN AO. TAX AUDIT REPORT U/S. 44AB OF THE ACT WAS ALSO FILED DU RING THE COURSE OF ASSESSMENT PROCEEDINGS AND VIDE PARA 17(F) AND 27 O F TAX AUDIT REPORT, THE AUDITOR HAS ALSO CERTIFIED THAT THERE W AS NO LIABILITY TO DEDUCT TAX AT SOURCE ON ANY PAYMENTS (PB-94-100). T HEREFORE, WHEN THE DETAILS OF TRUCK FREIGHT EXPENSES WITH NAM ES OF THE AGENTS, THEIR BILLS , MOTOR TRANSPORTERS RECEIPT A S WELL AS TAX AUDIT REPORT WAS PLACED ON RECORD, IT CANNOT BE SAID THAT THERE WAS ANY NON-DISCLOSURE LEADING TO ANY FAILURE ON THE PART OF T HE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS. THER E WAS NO NEW INFORMATION WHICH CAME INTO POSSESSION OF THE AO HE NCE, REOPENING OF ASSESSMENT U/S.147 OF THE ACT AFTER EXPIRY OF FO UR YEARS FROM THE END OF ASSESSMENT YEAR, WAS INVALID. A DIFFERENT VI EW ON SAME FACTS WILL AMOUNT TO CHANGE OF OPINION WHICH IS NOT PERMI SSIBLE IN LAW. EVEN IF THE AO DID NOT APPLY HIS MIND AND COMMITTED A LAPSE , THERE IS NO REASON WHY THE ASSESSEE SHOULD BE MADE SUFFER THE CONSEQUENCES OF THAT LAPSE AS HELD IN THE CASE OF C IT VS. KELVINATOR M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 5 OF 12 OF INDIA LTD. [2010] 320 ITR 561/187 TAXMAN 312(SC) . THE LD. A.R. ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS: DH ARMPUR SUGAR MILLS LTD. V. ACIT (2011) 330 ITR 72 (ALL) , CIT V. EICHER LTD. 920070 294 ITR 0310(DEL) , HINDUSTAN LEVER LTD. V. R B WAD KAR (2004) 268 ITR 332(BOM), ARTHUR ANDERSON & CO. V. ACIT (2010) 324 ITR 240 (BOM). THE LEARNED AR FURTHER SUBMITTED WITHOUT PRE JUDICE THAT THE AMOUNT PAID DID NOT REMAIN PAYABLE AT THE CLOSE OF THE YEAR SINCE SUCH FREIGHT WAS PAID BY THE AGENTS IMMEDIATELY ON DELIVERY OF THE GOODS DISPATCHED TO THEM FOR SALE. THEREFORE, THE P ROVISIONS OF SECTION 40(A)(IA) OF THE ACT WAS NOT ATTRACTED AS H ELD IN THE FOLLOWING DECISIONS: MARILYN SHIPPING AND TRANSPORT ERS V. ADDL. CIT (2012) 16 ITR (TRIB)1 (SB)(VISHAKHAPATNAM) AND VECT OR SHIPPING SERVICES PVT. LTD. (2013) 1 ITR (TRIB) 422 (DEL) (20 13) 357 ITR 642 (ALL) 7. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE AS SESSEE FIRM HAD REIMBURSED PAYMENT OF FREIGHT TO ITS AGENTS VIZ M/S. R N TRADERS INDORE AND M/S. ANAND TRADERS, INDORE WHO A UTHORISED AGENTS TO EFFECT THE SALE OF GOODS ON BEHALF OF THE ASSESSEE. IT WAS EVIDENT FROM THE MOTOR TRANSPORT RECEIPT ISSUED BY THE TRANSPORTERS WHILE DISPATCHING GOODS THE ADITYAS, WHO CLAIMED REIMBURSEMENT OF ALL EXPENSES FROM THE ASSESSEE INC LUDING FREIGHT PAID BY THEM AND THERE WAS NO LIABILITY ON THE PART OF THE AS SESSEE TO DEDUCT TAX AT SOURCE. THE LEARNED COUNSEL FILED COPY OF THE M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 6 OF 12 ACCOUNT OF THE ASSESSEE AS APPEARING IN THE BOOKS O F THE AGENTS TO DEMONSTRATE THAT THEY DEBITED THE AMOUNT OF FREIGHT AGAINST SALE REALIZATION AND REMITTED BALANCE AMOUNT (PAGE NUMBE R 17 TO 54 OF PB). THESE AGENTS HAVE ACTED ON BEHALF OF THE ASSES SEE AND THE TRANSACTION OF SALES EFFECTED BY THEM WERE NOT IN P RINCIPAL-TO- PRINCIPAL BASIS. THEREFORE, NO RESPONSIBILITY WAS C AST UPON THE ASSESSEE TO DEDUCT TAX ON FREIGHT PAID BY THE AGENT S ON BEHALF OF THE ASSESSEE. THE LD. A.R. RELIED IN THE CASE OF HIGH T ENSION SWITCHGEARS PRIVATE LIMITED V. CIT (2016) 385 ITR 525 (CAL), CI T V. BHAGWATI STEEL (2010) 326 ITR 108(P&H), MAMTA MACHINERY PVT. LTD. V. DCIT (20130 37 CCH 376 (AHD-TRIB) AND PEE CEE COSMA SOPE V. JT. CIT (2013) 22 ITJ 378 (AGRA-TRIB) FOR HIS PROPOSITION. IT WAS FURTHER SUBMITTED THAT PAYMENTS MADE TO VARIOUS TRANSPORTER S BY THE AGENTS AND MOST OF TRANSPORTERS WERE HAVING PAN AS COULD BE SEEN FROM PARTY-WISE DETAILS SUBMITTED AT PB 61 TO 88. O N PERUSAL OF SUCH DETAILS AND COPIES MOTOR TRANSPORT RECEIPT, IT IS E VIDENT THAT THERE WAS NOT A SINGLE TRANSPORTERS WHO WAS PAID A SUM E XCEEDING RS. 20,000/- AT ONE TIME OR SUM EXCEEDING RS.50,000 IN AGGREGATE DURING ENTIRE YEAR BY ABOVE AGENTS. THEREFORE, EVEN OTHERWISE, THE LIABILITY TO DEDUCT TAX AT SOURCE DID NOT ARISE EI THER ON THE APPELLANT OR ON THE AGENTS, HENCE, THE DISALLOWANCE UNDER SEC TION 40(A)(IA) OF THE ACT WAS NOT CALLED FOR WHICH DESERVE TO BE QUASHED. M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 7 OF 12 8. ON THE OTHER HAND, THE LEARNED SR. D.R. RELIED ON T HE AUTHORITIES BELOW AND VEHEMENTLY SUPPORTED THE FIND ING OF AO AS WELL AS LD. CIT (A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO HAS REOPENED THE ASSESSMENT ON THE GROUND THAT THE ASSESSEE HAS MADE PAYMENT OF RS. 7, 80, 801/-WITHOUT DEDUCTION O F TAX AT SOURCE. WHETHER THIS MATERIAL INFORMATION WAS IN POSSESSION OF THE AO ON NOT IS IMPORTANT FACTOR. WE FIND THAT THE NOTICE U NDER SECTION 148 HAS BEEN ISSUED AFTER EXPIRY OF 4 YEARS FROM THE EN D OF RELEVANT ASSESSMENT YEAR. THE ASSESSMENT WAS ORIGINALLY MADE UNDER SECTION 143 (3), AND 4 YEARS HAVE ELAPSED, FROM THE END OF THE RELEVANT FINANCIAL YEAR, THEN THE AO CANNOT ISSUE N OTICE UNDER SECTION 148, UNLESS IT IS ESTABLISHED THAT INCOME C HARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND T RULY NECESSARY FOR ASSESSMENT. IN THE REASONS RECORDED FOR REOPENING O F ASSESSMENT (PB-9), THE AO NOWHERE DEMONSTRATED THIS FACT, NEIT HER THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL FACTS NECESSARY FOR THE ASSESSMENT. WE FIND THAT THE AO HAS STARTED HIS REASONING THAT THE AMOUNT OF RS. 7, 80, 801/-DE BITED IN THE PROFIT & LOSS ACCOUNT UNDER THE HEAD TRUCK FREIGHT EXPENDITURE PAID TO TWO PARTIES, WITHOUT DEDUCTING TDS, HENCE, SAME WAS NOT M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 8 OF 12 ALLOWABLE AS DEDUCTION AS THE PROVISIONS OF SECTIO N 194C OF THE ACT. THEREFORE, THE SAID AMOUNT WAS DISALLOWABLE UNDER S ECTION 40(A)(IA) OF THE ACT. WE FIND THAT THE ASSESSMENT W AS MADE UNDER SECTION 143 (3) AND THIS FACT OF HAS BEEN AVAILABLE WITH THE AO. WE FIND FROM THE COPIES OF TRUCK FREIGHT EXPENSES WER E FILED DURING ORIGINAL ASSESSMENT PROCEEDINGS (APPEARING AT PAGE NO 10 TO 16 OF PAPER BOOK) AND BILLS AND RECEIPTS RELATED TRUCK E XPENSES WERE VERIFIED BY THE THEN AO. TAX AUDIT REPORT U/S. 44AB OF THE ACT WAS ALSO FILED DURING THE COURSE OF ASSESSMENT PROCEEDI NGS AND VIDE PARA 17(F) AND 27 OF TAX AUDIT REPORT, THE AUDITOR HA S ALSO CERTIFIED THAT THERE WAS NO LIABILITY TO DEDUCT TAX AT SOURCE ON ANY P AYMENTS (PB-94-100). THEREFORE, WHEN THE DETAILS OF TRUCK F REIGHT EXPENSES WITH NAMES OF THE AGENTS , THEIR BILLS , MOTOR TRAN SPORT RECEIPT AS WELL AS TAX AUDIT REPORT WAS PLACED ON RECORD, IT C ANNOT BE SAID THAT THERE WAS ANY NON-DISCLOSURE LEADING TO ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MAT ERIAL FACTS. WE ALSO FIND FROM REASON RECORDED FOR REOPENING OF ASSESSME NT THAT THERE WAS NO NEW INFORMATION CAME INTO POSSESSION OF THE AO, HENCE, REOPENING OF ASSESSMENT U/S.147 OF THE ACT AFTER EX PIRY OF FOUR YEARS FROM THE END OF ASSESSMENT YEAR, WAS INVALID. TO APPRECIATE THE FACTS IN PROPER PERSPECTIVE, IT IS IMPORTANT TO REPRODUCE THE 1 ST PROVISO TO SECTION 4 147 OF THE ACT WHICH IS AS UNDER: M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 9 OF 12 PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASO N OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SE CTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FU LLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: 10. THE PERUSAL OF ABOVE FIRST PROVISO APPENDED TO SEC TION 147 SHOWS THAT IT PUTS AN EMBARGO UPON THE POWERS OF TH E AO FOR REOPENING OF THE ASSESSMENT IN A CASE WHERE ORIGINA L ASSESSMENT WAS MADE UNDER SECTION 143 (3), AND FOUR YEARS HAVE PASSED FROM THE END OF THE RELEVANT FINANCIAL YEAR, THEN, THE A SSESSING OFFICER CANNOT ISSUE NOTICE UNDER SECTION 148, UNLESS, IT I S ESTABLISHED, THAT INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY. WE FIN D THAT ALL THE MATERIAL FACTS REGARDING PAYMENT TRANSPORTERS ON AC COUNT OF FREIGHT EXPENSES WAS AVAILABLE ON THE FILE OF THE AO, AS SA ME WERE DULY FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS BY THE ASSESSEE, FURTHER THESE FACTS WERE REFLECTED IN TAX AUDIT REPORT US M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 10 OF 12 44AB OF THE ACT FURNISHED BY THE ASSESSEE, THEREFO RE, REOPENING OF ASSESSMENT ON SAME SET OF FACTS, AMOUNTS TO CHANGE OF OPINION AS HELD BY HON`BLE SUPREME COURT IN THE CASE OF CIT VS . KELVINATOR OF INDIA LTD. [2010] 320 ITR 561/187 TAXMAN 312(SC) WH EREIN IT WAS HELD THAT WHERE NO NEW MATERIAL COME TO NOTICE OF T HE AO AFTER COMPLETION OF ASSESSMENT AND ASSESSMENT HAS BEEN R EOPENED ON THE BASIS OF SAME MATERIAL IS NOT PERMISSIBLE. THER EFORE REOPENING OF ASSESSMENT IN THE INSTANT CASE IS NOT SUSTAINABL E IN LAW, AND HENCE, SAME IS QUASHED. 11. SINCE, WE HAVE HELD THE REOPENING OF ASSESSMENT AS INVALID, THE OTHER GROUNDS OF APPEAL REGARDING DISALLOWANCE OF FREIGHT EXPENSES ON ACCOUNT OF NON-DEDUCTION OF TDS BECOME S ACADEMIC IN NATURE. HOWEVER, AS A PASSING REFERENCE, ON MERIT W E FIND THAT THE PAYMENT WAS MADE TO THE TRANSPORTERS ON ACCOUNT OF FREIGHT, ON BEHALF OF THE ASSESSEE BY THE AGENTS. THE COPIES OF ACCOUNTS OF THE ASSESSEE FILED BY THE ASSESSEE, AS APPEARING IN THE AGENTS ACCOUNTS DEMONSTRATE THAT THE AMOUNT WAS REIMBURSED BY THE A SSESSEE TO THE AGENTS ON ACCOUNT OF FREIGHT EXPENSES PAID BY THEM ON BEHALF OF THE ASSESSEE TO THE TRANSPORTERS. THESE PAYMENTS MADE T O INDIVIDUAL TRANSPORTER EACH DOES NOT EXCEED THE AMOUNT OF RS. 20,000/- AT ONE TIME OR SUM OF RS. 50,000 IN AGGREGATE DURING THE E NTIRE YEAR. THEREFORE, THE PROVISION OF SECTION 194C NOT ATTRAC TED IN THIS CASE. THEREFORE, THERE WAS NO LIABILITY TO DEDUCT TAX ON ACCOUNT OF FREIGHT M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 11 OF 12 PAYMENTS TO THE TRANSPORTERS. THE LD. A.R. FOR THE ASSESSEE, ALSO PLACED RELIANCE IN THE CASE OF HIGHTENSION SWITCHGE ARS PRIVATE LIMITED V. CIT (2016) 385 ITR 575 (CAL) WHEREIN IT WAS HELD THAT THE ASSESSEE HAD MERELY REIMBURSED THE COST OF TRAN SPORTATION INCURRED BY THE SELLER THE LIABILITY TO DEDUCT AND PAY THE TAX WAS THAT OF THE SELLER WHO HAD ADMITTED TO HAVE DONE THAT. I N CASE THE SELLER WAS UNABLE TO DO SO THAT HE HAD MADE THE DEDUCTION, SECTION 40(A)(IA) MIGHT BE APPLIED TO HIS CASE BUT NOT THE CASE OF TH E ASSESSEE WHO WAS THE BUYER. IT WAS FURTHER OBSERVED BY THE HONOURABLE HIGH COUR T IN PARAGRAPH 15 THAT EVEN ASSUMING THAT THE SUPPLIER IN TRANSPORTING THE GOODS TO THE ASSESSEE ACTED AS AN AGENT OF THE ASSESSEE AND THE ASSESSEE HAS REIMBURSED THE FREIGHT CHARGES TO THE SUPPLIERS, WHO IN TURN HAVE PAID TO THE CONCERNED TRANSPORTERS AS H ELD BY THE LEARNED TRIBUNAL IS CONCEPTUALLY CORRECT, NOR OTHER CONCLUS ION IS POSSIBLE. THE AGENT BEING THE SUPPLIER IN THIS CASE HAS ADMITTEDL Y PAID TO THE TRANSPORTERS AND HAS ALSO DEDUCTED TAX AT SOURCE. W HEN THE AGENT HAS COMPLIED WITH THE PROVISION, THE PRINCIPAL CANNOT B E VISITED WITH PENAL CONSEQUENCES. FOR ONE PAYMENT THERE COULD NOT HAVE BEEN TWO DEDUCTIONS. MOREOVER, WHEN IA PERSON ACTS THROUGH ANO THER, IN LAW, HE ACTS HIMSELF. 12. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT N O DISALLOWANCE UNDER SECTION 40(A)(IA) IS CALLED FOR EVEN ON MERIT. SIMILAR FINDING WERE ALSO GIVEN BY HON`BLE PUNJAB & HARYANA HIGH M/S. PAWAN INDUSTRIES / I.T.A. NO. 14 /IND/2016/A.Y .:06-07 PAGE 12 OF 12 COURT IN THE CASE OF CIT V. BHAGWATI STEELS [2010] 326 ITR 108 (P&H) WHEREIN IT WAS RULED THAT THE ASSESSEE COULD NOT BE SAID TO BE IN DEFAULT FOR NON-DEDUCTION OF TAX AT SOURCE IN TE RM OF SECTION 194C OF THE ACT ON THE AMOUNT OF FREIGHT BILLED SEPARATE LY BY T. AS CONSEQUENCE, THE PROVISIONS OF SECTION 40(A)(IA) OF T HE ACT COULD NOT BE APPLIED TO DISALLOW THE AMOUNT OF SUCH FREIGHT. THE LD. A.R. HAD FILED COPIES OF THE ACCOUNT OF THE ASSESSEE AS APPE ARING IN THE BOOKS OF THE AGENTS TO DEMONSTRATE THAT THEY DEBITED THE AMOUNT OF FREIGHT AGAINST SALE REALISATION AND REMITTED BALANCE AMOUN T (PAGE NUMBER 17 TO 54 OF PB). THEREFORE, IN VIEW OF FACTS AND CI RCUMSTANCES, EVEN ON MERIT DISALLOWANCE UNDER SECTION 40(A)(IA) IS UN CALLED FOR. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 14. THE ORDER PRONOUNCED IN THE OPEN COURT ON 04-05-2017. SD/- SD/- ( C.M. GARG ) (O.P.MEENA) JUDICIAL MEMBER A CCOUNTAN EMBER /DATED: 04 - 05 - 2017