ACIT 17(2), MUMBAI V. NATHALAL SHIVLAL, MUMBAI

ITA 2143/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0159 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 01-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2143/MUM/2016 ASSESSMENT YEAR: 2011 - 12 ACIT - 17(2) ROOM NO. 134, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. VS. NATHALAL SHIVLAL RAMESH BHAVAN, GR. FLOOR, 89, NAKHODD A STREET, TAMBAKATA (PHYDHONIE), MUMBAI - 400003. PAN NO. AAAFN0757F APPELLANT RESPONDENT REVENUE BY : MR. V. VIDHYADHAR , DR ASSESSEE BY : MR. AKASH KUMAR, AR DATE OF HEARING : 04/12 /2017 DATE OF PRONOUNCEMENT : 26/02/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2011 - 12 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 28 , [IN SHORT CIT(A)] MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS AGAINST THE ORDER OF THE LD. CIT(A) HOLDING THAT THE PROVISIONS OF SECTION 194C(6) ARE INDEPENDENT OF SECTION 194C(7). NATHALA SHIVLAL RAMESH ITA NO. 2143/MUM/2016 2 3 . BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (AO) FOUND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF BOOKS OF A CCOUNTS , THAT THE ASSESSEE HAD PAID RS.45,89,188/ - TO M/S SUSHIL TRANSPORT AGENCY (IN SHORT STA) TOWARDS TRANSPORTATION CHARGES. HOWEVER, THE ASSESSEE HAD NOT MADE TAX DEDUCTION AT SOURCE (TDS) TO STA. IN RESPONSE TO A QUERY RAISED BY THE AO, THE ASSESSE E SUBMITTED THAT THE PAYMENT OF RS.45,89,188/ - TO STA WAS DONE WITHOUT TDS AS THEY WERE HAVING PERMANENT ACCOUNT NUMBER (PAN) AND THE SAME IS COVERED U/S 194C(6) OF THE ACT. THE AO NOTED THAT AS PER PARA 49.3 OF EXPLANATORY CIRCULAR FOR FINANCE (NO.2) AC T, 2009 REGARDING PROVISIONS FOR PAYMENTS AND TAX DEDUCTED AT SOURCE TO TRANSPORTERS, THE ACT HAS BEEN AMENDED TO EXEMPT PAYMENTS TO TRANSPORT OPERATORS (AS DEFINED IN SECTION 44AE) FROM THE PURVIEW OF TDS. HOWEVER, THIS WOULD ONLY APPLY IN CASES WHERE THE OPERATOR FURNISHES HIS PAN TO THE DEDUCTOR. DEDUCTORS WHO MAKE PAYMENTS TO TRANSPORTERS WITHOUT DEDUCTING TDS (AS THEY HAVE QUOTED PAN) WILL BE REQUIRED TO INTIMATE THESE PAN DETAILS TO THE I.T. DEPARTMENT IN THE PRESCRIBED FORMAT. HOWEVER, THE APPLICABIL ITY OF PROVISION OF SECTION 194C(6) FOR NON - DEDUCTION IS NOT COMPLETE WITHOUT THE FULFILMENT OF CONDITIONS LAID DOWN U/S 194C(7) OF THE ACT. HENCE SECTION 194C(7) FURTHER PROVIDES THAT THE PAYER MENTIONED IN SUB - SECTION (6) SHALL FURNISH TO THE PRESCRI BED INCOME TAX AUTHORITY OR THE PERSON AUTHORIZED BY IT SUCH PARTICULARS AS MAY BE PRESCRIBED. AS PER RULE 31A(4)(VI), THE DEDUCTOR AT THE TIME OF PREPARING STATEMENTS OF TAX DEDUCTED SHALL FURNISH PARTICULARS OF AMOUNT PAID OR CREDITED ON WHICH NATHALA SHIVLAL RAMESH ITA NO. 2143/MUM/2016 3 TAX WAS NO T DEDUCTED IN VIEW OF THE COMPLIANCE OF PROVISIONS OF SUB - SECTION (6) OF SECTION 194C BY THE PAYEE. IN VIEW OF THIS, THE AO HELD THAT IT IS VERY CLEAR THAT MERELY COLLECTING THE PAN OF THE TRANSPORTER WILL NOT ABSOLVE THE APPELLANT FROM THE DEFAULT OF NOT DEDUCTING THE TAX. THE AO ACCORDINGLY DISALLOWED THE SUM OF RS.45,89,188/ - AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) FOLLOWED THE ORDER OF THE ITAT, HYDERABAD BENCH IN THE CASE OF ACIT V. MOHAMMED SUHAIL IN ITA NO. 1536/HYD/2014 WHEREIN IT IS HELD THAT THE PROVISIONS OF SECTION 194C(6) ARE INDEPENDENT OF SECTION 194C(7) AND MERE NON - COMPLIANCE TO THE PROCEDURE LAID DOWN IN SECTION 19 4C(7) WOULD NOT TRIGGER A DISALLOWANCE. THUS THE LD. CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO. 5. BEFORE US, THE LD. DR RELIES ON THE ORDER PASSED BY THE AO AND SUBMITS THAT SECTION 194C(7) SPECIFICALLY REFERS TO SECTION 194C(6) FOR THE PURPOSE OF A PPLICABILITY OF THE PROVISIONS WHICH SHOULD BE READ IN CONJUNCTION WITH EACH OTHER. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESSEE SUPPORTS THE ORDER PASSED BY THE LD. CIT(A) AND RELIES ON THE ORDER OF THE TRIBUNAL IN MOHAMMED SUHAIL (SUPRA). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN MOHAMMED SUHAIL (SUPRA) THE TRIBUNAL HELD: NATHALA SHIVLAL RAMESH ITA NO. 2143/MUM/2016 4 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE SUBMISSIONS AND NOTIFICATIONS ISSUED IN THIS REGARD, WE ARE OF THE OPINION THAT THERE IS NO NEED TO DEVIATE FROM THE ORDER OF LD. CIT(A). EVEN THOUGH NEW PROVISIONS WERE INTRODUCED AND ASSESSEES WER E MADE LIABLE TO DEDUCT TAX ON THE PAYMENTS MADE TO TRANSPORTERS, PROVISIONS OF SECTION 194C(6) GIVES EXEMPTION TO THE PERSONS NOT TO DEDUCT THE AMOUNT, IN CASE THEY OBTAIN/FURNISH THE PAN. ASSESSEE HAS COMPLIED WITH THESE PROVISIONS. THEREFORE, THERE IS N O NEED TO DEDUCT ANY TAX AND DISALLOWANCE UNDER SECTION 40(A)(IA) DOES NOT ARISE. EVEN THOUGH IT WAS STATED IN SUB SECTION (7) THAT PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON REFERRED TO IN SUB - SECTION (6) SHALL FURNISH, TO THE PRESCR IBED INCOME TAX AUTHORITY OR THE PERSON AUTHORISED BY IT, SUCH PARTICULARS IN SUCH FORM WITHIN SUCH TIME AS MAY BE PRESCRIBED, THIS PROVISION WAS NOT MADE APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR AS THE RELEVANT NOTIFICATION WAS NOT ISSUED IMMEDIATELY. IN FACT, THE BOARD HAS GIVEN NOTIFICATION ON 15.10.2010, WHICH WAS MADE EFFECTIVE FOR THE FORTHCOMING SECOND QUARTER STATEMENT DUE ON 15TH OCTOBER, 2010. SINCE CBDT ITSELF HAS ISSUED NOTIFICATION IN A LATER YEAR, ASSESSEE'S CONTENTION THAT IN THE IMPUGNED ASSESSMENT YEAR, NO SUCH PRESCRIBED AUTHORITY WAS STATED HAS TO BE ACCEPTED. EVEN OTHERWISE, AS RIGHTLY POINTED OUT BY THE LD. CIT(A) PROVISIONS OF SECTION 194C(6) ARE INDEPENDENT OF SECTION 194C(7). JUST BECAUSE THERE IS VIOLATION OF PROVISIONS OF SECTIO N 194C(7), DISALLOWANCE UNDER SECTION 40(A)(IA) DOES NOT ARISE, IF ASSESSEE COMPLIES WITH THE PROVISIONS OF SECTION 194C(6). IN VIEW OF THIS, WE DO NOT FIND ANY MERIT IN REVENUE APPEAL. 7.1 THE SAME VIEW HAS BEEN TAKEN BY THE ITAT A BENCH KOLKATA IN TH E CASE OF ACIT V. DEEPAK GUPTA (ITA NO. 443/KOL/2014) FOR THE AY 2010 - 11. FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE ORDER OF THE TRIBUNAL AND UPHOLD THE ORDER OF THE LD. CIT(A). NATHALA SHIVLAL RAMESH ITA NO. 2143/MUM/2016 5 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN CO URT ON 26/02/2018. SD/ - SD/ - ( MAHAVIR SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 26/02/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI