Surat Ahmedabad Transport Pvt.Ltd., Surat V. The Income tax Officer,Ward-4(3), Surat

ITA 2015/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6513 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 22-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI RAJ KUMAR
• Keywords: Non-deduction of tax; Procedural lapse
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : AH MEDABAD ( BEFORE HONBLE SHRI T.K.SHARMA, J.M. & HONBLE SHRI A.N.PAHUJA, A.M.) I.T.A.NO. 2015/AHD./2009 : ASSESSMENT YEAR 200 6-07 SURAT AHMEDABAD TRANSPORT PVT. LTD., SURAT VS- I.T.O., WARD-4(3), SURAT (PAN : AADCS 3054Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARDIK VORA, A.R. RESPONDENT BY: SHRI JAI RAJ KUMAR, SR. D.R. O R D E R PER SHRI T.K.SHARMA, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. CIT(A)-III, SURAT DATED 26.05.2009 CONFIRMING THE ACTION OF THE ASSES SING OFFICER IN DISALLOWING THE EXPENDITURE OF RS.47,81,300/- BY INVOKING PROVISION S OF SECTION 40(A)(IA) OF THE I.T. ACT, 1961 FOR THE ASSESSMENT YEAR 2006-2007. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY ENGAGED IN THE BUSINESS OF TRANSPORTATION AND CARRIER SERVICE. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING TOTAL INCOME O F RS.11,96,070/-. THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 30.12.2008 B Y INVOKING THE PROVISIONS CONTAINED IN SECTION 40(A)(IA) OF THE I.T. ACT, 196 1. FOR MAKING THE ADDITION OF RS.47,81,300/-, IN THE ASSESSMENT ORDER, THE AO OBS ERVED THAT THE ASSESSEE HAS NOT DEDUCTED AT SOURCE ON THE PAYMENT TO SUB-CONTRACTOR UNDER SECTION 194C OF THE ACT. 3. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF RS.47,81,300/- MADE UNDER SECTION 40(A)(IA) FOR THE DETAILED REASONS GIVEN AT PAGE 4, WHICH READS AS UNDER: I HAVE CAREFULLY GONE THROUGH THE CONTENTION OF APP ELLANT AS WELL AS THAT OF THE AO. AFTER GOING THROUGH THE SAME, I AM UNABLE TO AG REE WITH THE APPELLANTS 2 ITA NO.2015/AHD./2009 CONTENTION THAT PROCEDURAL LAPSE IN BELATED FILING OF DECLARATION FORM DOES NOT ENTAIL DISALLOWANCE U/S 40(A)(IA) OF THE ACT ON THE GROUND THAT WORD 'SHALL' IS USED IN THE PROVISOS TO SUB-SECTION (3) OF SECTION 194C. IT IS CLEAR ON PERUSAL OF PROVISIONS OF SECTION 194C(3) READ TOGETHER WITH TH E PROVISOS THAT NO TDS SHALL BE MADE ONLY IF THE SUB-CONTRACTOR FURNISHES THE DE CLARATION TO THE APPELLANT WITHIN THE PRESCRIBED TIME LIMIT AND APPELLANT SHAL L FURNISH FORM NO. 15J TO THE INCOME TAX AUTHORITY WITHIN THE PRESCRIBED TIME LIM IT WHICH IS 30 TH JUNE. IN THE INSTANT CASE, THE APPELLANT HAS FILED FORM 15J ON 2 8/12/2006 AND THUS, THE SAME IS FILED BELATEDLY. THE PROVISIONS OF SECTION 194C( 3) READ TOGETHER WITH THE PROVISOS ARE OF MANDATORY NATURE. THE CONTENTION OF APPELLANT THAT SUB- CONTRACTORS ARC KNOWN TO ASSESSEE & THEREFORE IT IS WITHIN THE KNOWLEDGE OF APPELLANT THAT THEY DO NOT OWN MORE THAN 2 CARRIAGE CANNOT BE THE GROUND FOR BY-PASSING THE PROCEDURAL PROVISIONS OF SECTION I94 C(3) OF THE ACT. THE PROVISIONS CANNOT BE INTERPRETED TO BE DIRECTORY IN NATURE OTHERWISE THE ENTIRE PURPOSE OF OBTAINING THE DECLARATION AND FILING THE DETAILS IN PRESCRIBED FORM WILL BECOME FUTILE & THE SAME IS NOT THE LEGISLATIV E INTENT. ON THE CONTRARY, THE WORD 'SHALL' USED IN THE ABOVE PROVISIONS CLEARLY S PECIFIES THAT TDS IS NOT TO BE MADE ONLY IF CONDITIONS LAID DOWN IN THE PROVISO S TO SECTION I94C(3) ARE SATISFIED. AS SUCH THE PROVISIONS ARE REQUIRED TO B E INTERPRETED VERY STRICTLY OTHERWISE THERE WILL BE NO EFFECTIVE MECHANISM TO C HECK REVENUE LOSS ARISING ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE IN CASES WHERE CONDITIONS LAID DOWN IN ABOVE PROVISIONS ARE NOT SATISFIED. HENCE THE EX PENDITURE IS CLEARLY LIABLE FOR DISALLOWANCE U/S 40(A)(IA) OF THE ACT AS APPELLANT HAS FAILED TO COMPLY WITH THE PROVISIONS OF SECTION I94C(3) READ TOGETHER WITH TH E PROVISOS. HENCE, THE ACTION OF ASSESSING OFFICER IN MAKING THE DISALLOWA NCE IS HEREBY CONFIRMED. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, SHRI HARDIK VO RA APPEARED ON BEHALF OF THE ASSESSEE AND POINTED OUT THAT THE CONTROVERSY INVOL VED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF ITAT, D BENCH, AHMEDAB AD IN THE CASE OF ACIT-VS- M/S. SHREE PRAMUKH TRANSPORT CO. IN ITA NO.1717/AHD ./2010 WHEREIN IT WAS HELD THAT NON-SUBMISSION OF DECLARATION IN THE PRESCRIBE D FORM WITHIN THE PRESCRIBED TIME IS PROCEDURAL IRREGULARITY AND SINCE THE FORM NO.15-I WAS FILED WITH DELAY IN THE OFFICE OF THE COMMISSIONER, NO DISALLOWANCE UNDER SECTION 40( A)(IA) CAN BE MADE. THE COUNSEL OF THE ASSESSEE POINTED OUT THAT THE FACTS OF THE A SSESSEES CASE ARE IDENTICAL WITH THAT ONE BEFORE THE ITAT D BENCH, AHMEDABAD IN THE CAS E OF M/S. SHREE PRAMUKH TRANSPORT CO. ( SUPRA ). HE ACCORDINGLY POINTED OUT THAT FOLLOWING THE DE CISION OF THE 3 ITA NO.2015/AHD./2009 ITAT IN THE CASE OF SHREE PRAMUKH TRANSPORT CO. ( SUPRA ), THE DISALLOWANCE OF RS.47,81,300/- BY INVOKING THE PROVISIONS CONTAINED IN SECTION 40(A)(IA) BE DELETED. 6. SHRI JAI RAJ KUMAR, SR.D.R., APPEARING ON BEHALF OF THE REVENUE, COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD . COUNSEL OF THE ASSESSEE. THE LD. D.R. POINTED OUT THAT THE PROVISIONS REGARDING FILI NG OF FORM NO.15-I WITH THE COMMISSIONER WITHIN THE PRESCRIBED TIME IS MANDATOR Y AND NOT MERE PROCEDURAL IRREGULARITY. THEREFORE, THE VIEW TAKEN BY THE LD. CIT(A) BE UPHELD. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS DULY FILED THE FORM NO.15-I BELATEDLY ON 18.12.2006. BEFORE THE LD. CIT (A), THE ASSESSEE CONTENDED THAT THIS IS ONLY A PROCEDURAL LAPSE AND THERE IS NO ACT UAL LIABILITY FOR TAX DEDUCTION. ON IDENTICAL FACTS, THE ITAT D BENCH, AHMEDABAD IN T HE CASE OF M/S. SHREE PRAMUKH TRANSPORT CO. ( SUPRA ) DELETED THE DISALLOWANCE OF RS.48,29,076/- MADE B Y THE AO UNDER SECTION 40(A)(IA) OF THE I.T. ACT. THE RELEVA NT DISCUSSION IS CONTAINED IN PARA 5 OF THE TRIBUNALS ORDER, WHICH READS AS UNDER: 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE MATTER. THE LEARN ED DR SUBMITTED THAT RULE 29 D OF THE IT RULES IS PROCEDURAL IN NATURE. THE SUBM ISSION OF THE LEARNED DR ITSELF SHOWS THAT SINCE THE COMPLIANCE OF THE RULE WAS PROCEDURAL ONLY, THEREFORE, WHEN THE ASSESSEE OBTAINED REQUISITE DEC LARATION AND FILED THE SAME WITH DELAY WITH THE OFFICE OF THE COMMISSIONER AND ALSO FILED THE SAME BEFORE THE AO AT THE ASSESSMENT STAGE, WOULD PROVE THAT TH E ADDITION IS CLEARLY UNJUSTIFIED IN THE MATTER. ACCORDING TO SECTION 194 (C)(3) OF THE IT ACT , THE ASSESSEE COMPLIED WITH THE SECOND PROVISO BY OBTAIN ING 'DECLARATION IN THE PRESCRIBED FORM. THEREFORE, THERE WAS NO LIABILITY FOR DEDUCTION OF TAX AT SOURCE. THE GENUINENESS OF THE CERTIFICATE IS NOT D OUBTED BY THE AUTHORITIES BELOW. THEREFORE, THE ASSESSEE HAS SUBSTANTIALLY CO MPLIED WITH THE PROVISIONS OF LAW. IN CASE OF PROCEDURAL IRREGULARITIES, THE A SSESSEE CANNOT BE PUT TO UNNECESSARY HARDSHIP IN THE MATTER AND THAT TOO WHE N CERTAIN EXEMPTION HAS BEEN GIVEN TO THE ASSESSEE IN SECTION PROVISO TO SE CTION 194 (C) (3) OF THE IT ACT . SINCE, THERE IS SUFFICIENT COMPLIANCE OF THE PROVIS IONS OF LAW, THEREFORE, THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. WE, THEREFO RE, DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF TH E LEARNED CIT(A). WE CONFIRM HIS FINDINGS AND DISMISS THE APPEAL OF THE REVENUE. 4 ITA NO.2015/AHD./2009 7.1 AS THE FACTS OF THE ASSESSEES CASE ARE IDENTIC AL WITH THAT OF THE DECISION OF THE ITAT, A BENCH, AHMEDABAD IN THE CASE OF M/S. SHRE E PRAMUKH TRANSPORT CO. ( SUPRA ), WE, FOLLOWING THE DECISION OF THE COORDINATE BEN CH IN THAT CASE, DELETE THE DISALLOWANCE OF RS. 47,81,300/- MADE BY THE AO BY I NVOKING THE PROVISIONS CONTAINED IN SECTION 40(A)(IA) OF THE I.T. ACT. RESULTANTLY, THE GROUND TAKEN BY THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 27.05.2011 SD/- SD/- (A.N.PAHUJA) (T.K.SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27/05/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT 3) CIT(A) CONCERNED 4) CIT CONCERNED 5) D.R., ITAT, AHMEDABAD TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S.