DCIT, Madurai V. Polyspin Exports Limited, Rajapalayam

ITA 1890/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7813 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 15-12-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 22-06-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTA
• Assessee Lawyers: V SRIKRISHNAN
• Section: 143(3); 194C

Judgement Text

, ' ' , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , $ % BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ' ( / APPELLANT BY : SHRI A V SREEKANTA, JCIT +,' ( / RESPONDENT BY : SHRI V SRI KRISHNAN, CA ( /DATE OF HEARING : 15.12.2016 ( /DATE OF PRONOUNCEMENT : 19 .12.2016 /O R D E R PER BENCH: THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, MADURAI IN ITA NO. 0028/201 5-16, DATED 24.03.2016 PASSED U/S. 143(3) AND 250 OF THE INCOME TAX ACT. ./ I.T.A. NO. 1890/MDS/2016 / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE - 2, MADURAI. VS. M/S. POLYSPIN EXPORTS LIMITED, DOOR NO. 351, PACR SALAI, RAJAPALAYAM - 62 117. [PAN: AAACP 9339C] ( / APPELLANT) ( /RESPONDENT) :-2-: I.T.A. NO. 1890/MDS/2016 2. THE SOLE SUBSTANTIVE GROUND RAISED BY THE REVENU E THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 64,99,881/- U /S. 40(A)(IA) FOR NON-COMPLIANCE OF TDS PROVISIONS IN RESPECT OF FREIGHT CHARGES. THE LD. CIT(A) HAS ALSO FAILED TO CONSIDER THAT SECTION 194C(6) AND 194C(7) OF THE AC T ARE NOT INDEPENDENT AND SHOULD BE READ TOGETHER. THE CIT(A) ERRED IN ALLOW ING THE CLAIM WHEN THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISION 194C(7) R.W .R.31A IN FILING DETAILS WITH THE INCOME TAX AUTHORITIES. 3. THE BRIEF FACTS OF THE CASE, ARE THAT THE ASSESS EE COMPANY IS ENGAGED IN MANUFACTURE AND SALE OF FIBC BAGS IN DOMESTIC MARKE T AND EXPORT MARKET AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-1 3 ON 28.09.2012 WITH TOTAL INCOME OF RS. 1,40,23,789/-. SUBSEQUENTLY, RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT AND NOTICE U/S. 143(2) WAS ISSUED . IN COMPLIANCE TO THE NOTICE, THE LD. AR APPEARED FROM TIME TO TIME AND SUBMITTED DOCUMENTS AND PARTICULARS WITH REFERENCE TO THE BOOKS OF ACCOUNTS. THE LD. A O FOUND THAT THE ASSESSEE COMPANY HAS CLAIMED A SUM OF RS. 64,99,881/- UNDER FREIGHT CHARGES PAID TO VARIOUS PARTIES. ON VERIFICATION THE ASSESSEE HAS NOT DEDU CTED TDS AND SUBMITTED THAT THE PAYMENTS MADE TO TRANSPORT CONTRACTORS AND THE CONT RACTORS HAVE PROVIDED PAN NOS TO THE ASSESSEE. THE ASSESSING OFFICER IS OF THE O PINION THAT THE PROVISIONS OF SECTION 194C(6) AND 194C(7) OF THE ACT ARE NOT INDE PENDENT AND THEY HAVE TO BE READ TOGETHER AND THE ASSESSEE HAS TO FILE THE FROM NO. 26Q UNDER THE TDS PROVISIONS OF SECTION 194C(7) R.W.R. 31A OF THE INC OME TAX RULES, 1962. WHEREAS, THE ASSESSEE HAS COMPLIED ONLY ONE REQUISITE CONDIT ION OF OBTAINING PAN NOS AND :-3-: I.T.A. NO. 1890/MDS/2016 NOT PRODUCED EVIDENCE OF FILING OF FORM NO. 26Q IN THE ASSESSMENT PROCEEDINGS. HENCE, AN AMOUNT OF RS. 64,99,881/- PAID TOWARDS FR EIGHT CHARGES WAS DISALLOWED U/S. 40(A)(IA) OF THE ACT AND PASSED ORDER UNDER 14 3(3) DATED 31.03.2013. 4. AGGRIEVED BY THE ORDER, ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). IN APPELLATE PROCEEDINGS, THE LD. AR SUBMITTED THAT THE ASSESSEE OBTAINED PAN OF THE DEDUCTEES WHILE MAKING PAYMENTS AS PER THE PROV ISION REQUIRED U/S. 194C(6) OF THE ACT. FURTHER, THE ASSESSEE COMPANY HAS FURNISH ED THE INFORMATION TO THE TAX AUTHORITIES U/S. 194C(7) OF THE ACT AND SUBSEQUENTL Y, FILED REVISED FORM NO. 26Q, AND THE LD. AR RELIED ON THE DECISION OF THE HYDERA BAD TRIBUNAL IN CASE OF ACIT VS MR. MOHAMED SUHAIL IN ITA NO. 1536/HYD/2014 DATED 1 3.02.2015 AND CIT VS. VECTOR SHIPPING SERVICES PVT. LTD., (357 ITR 642) O N DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. THE LD. CIT(A) HAS CONSIDERED THE FINDING S OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE ASSESSEE, AND JUDICIAL DECISIONS IS OF THE OPINION THAT THE ASSESSEE COMPANY HAS OBTAINED PAN FROM DEDUCTEES BA SED ON THE INFORMATION PRODUCED ALONG WITH THE QUARTERLY RETURN IN THE FOR M NO. 26Q, SINCE THERE IS COMPLIANCE OF PROVISIONS OF SECTION 194C(6) AND 194 C(7) OF THE ACT. THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO DELETE THE AD DITION AND ALLOWED THE APPEAL. 5. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE HAS FILED AN APPEAL BEFORE THIS TRIBUNAL. THE LD. DR ARGUED THAT THE CIT(A) H AS ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE CLAIM OF RS. 64,99, 881/- IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON FREIGHT PAYMEN TS AND NOT PRODUCED FORM NO.26Q TO THE ASSESSING OFFICER. WHEREAS, THE LD. AR ARGUED THAT THE ASSESSEE HAS :-4-: I.T.A. NO. 1890/MDS/2016 COMPLIED THE PROVISION OF 194C(6) AND 194C(7) OF TH E ACT AND PRODUCED THE EVIDENCE OF FILING FORM NO. 26Q WITH THE APPELLATE AUTHORITY AND RELIED ON ORDER OF THE CIT(A) AND OPPOSED THE GROUNDS. 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND THE JUDICIAL DECISIONS, THE CRUX OF THE ISSUE LIES, WER E THE ASSESSEE HAS CLAIMED THE EXPENDITURE OF FREIGHT CHARGES WITHOUT DEDUCTING TD S UNDER PROVISIONS U/S. 194C(6) AND 194C(7) AND WE READ THE PROVISIONS AS UNDER: '194C (6) NO DEDUCTION SHALL BE MADE FROM ANY SUM C REDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING , HIRING OR LEASING GOODS CARRIAGES, WHERE SUCH CONTRACTOR OWNS TEN OR LESS GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR AND FURNISHES A DECL ARATION TO THAT EFFECT ALONG WITH HIS PERMANENT ACCOUNT NUMBER, TO THE PE RSON PAYING OR CREDITING SUCH SUM. 194C (7) THE PERSON RESPONSIBLE FOR PAYING OR CRED ITING ANY SUM TO THE PERSON REFERRED TO IN SUB-SECTION(6) SHALL FURNISH , TO THE PRESCRIBED INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY I T, SUCH PARTICULARS, IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBE D.' 7. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS OBTA INED PAN OF THE DEDUCTEES AND FILED THE FORM NO.26Q UNDER RULE 31A OF IT RULES AND THE LD. CIT(A) RELIED ON FORM NO. 26Q AND JUDICIAL DECISIONS AND I S OF THE OPINION THAT THERE IS NO VIOLATION OF THE PROVISIONS OF 194C(7) OF THE ACT A ND ALLOWED THE APPEAL. WE FOUND FORM NO. 26Q FILED BY THE ASSESSEE WAS SUBMITTED WI TH THE CIT(A) AND THE ASSESSING OFFICER HAS NOT VERIFIED THE GENUINENESS TO COUNTER CHECK THE INFORMATION OF PAN SUBMITTED BY CONTRACTORS. FURTHER, THE LD. CIT(A) HAS NOT CALLED FOR REPORT ON THESE DOCUMENTS FROM THE JURISDICTIONAL ASSESSIN G OFFICER. CONSIDERING THE :-5-: I.T.A. NO. 1890/MDS/2016 APPARENT FACTS, WE ARE OF THE OPINION THAT ASSESSIN G OFFICER SHOULD BE PROVIDED AN ADEQUATE OPPORTUNITY TO VERIFY FORM NO. 26Q FILED B EFORE THE CIT(A) WHICH WAS NOT AVAILABLE IN THE ASSESSMENT PROCEEDINGS. THEREFORE FOR LIMITED PURPOSE, WE REMIT THE DISPUTED ISSUE TO THE FILE OF THE ASSESSING OFF ICER TO VERIFY THE CLAIM AS PER THE PROVISIONS OF THE ACT AND PASS THE ORDER ON MERITS. FURTHER, THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING BEFORE PAS SING THE ORDER. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON MONDAY, THE 19 TH DAY OF DECEMBER, 2016 AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER SD/- ( . ) (G. PAVAN KUMAR) ! /JUDICIAL MEMBER /CHENNAI, 2 /DATED: 19 TH DECEMBER, 2016 JPV ( +$45 65 /COPY TO: 1. ' /APPELLANT 2. +,' /RESPONDENT 3. 7 ( )/CIT(A) 4. 7 /CIT 5. 5 +$$ /DR 6. /GF