M/S. JENIRICH AGRO PRODUCTS P. LTD., TUTICORIN V. DCIT, CIRCLE -1 , , TUTICORIN

ITA 2631/CHNY/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3082 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 13-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: S SRIDHAR
• Keywords: Competent authority; TDS; Set aside
• Section: 40(a)(ia); 194C; 263; 63; 2

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.2631/CHNY/2019 %% /ASSESSMENT YEAR: 2014-15 M/S. JENIRICHAGRO PRODUCTS P LTD., 139, C.G.E. COLONY, TUTICORIN 628 003. [PAN: AACCJ 4199G] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -1, TUTICORIN. ( /APPELLANT) ( '(* /RESPONDENT) *+ / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE '(*+ /RESPONDENT BY : SHRI S. BHARATH, CIT + /DATE OF HEARING : 31.03.2021 + /DATE OF PRONOUNCEMENT : 14.06.2021 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE PRINCIPLE COMMISSIONER OF INCOME TAX-1, MADURAI, PASSED U/S 2 63 IN C. NO. 401/10/PCIT/MDU-1/2018-19 DATED 28.03.2019 FOR THE ASSESSMENT YEAR 2014- 15. ITA NO.2631/CHNY/2019 :- 2 -: 2. THE ASSESSEE FILED THIS APPEAL 95 DAYS BELATEDL Y AND IT WAS SUBMITTED THAT THE DELAY IN FILING THE APPEAL WAS ON ACCOUNT OF UNDERSTANDING THE COMPLEXITIES IN THE ORDER OF THE PCIT BY THE ASSESS EES CHARTERED ACCOUNTANT AND IT WAS NEITHER WILFUL NOR DELIBERATE BUT DUE TO THE CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE. THEREFORE, IT WAS PLEA DEDTHAT THE DELAY BE CONDONEDIN THE INTERESTS OF JUSTICE AND FOR ADJUDI CATING THE ISSUES ON MERITS . 3. WE HEARD THE RIVAL CONTENTIONS AND CONDONE THE D ELAY. 4. THE PCIT, MADURAI-1 IN HIS ORDER PASSED U/S. 2 63 DATED 28.03.2019 SET ASIDE THE ASSESSMENT ORDER PASSED BY THE AO U/S. 14 3(3) DATED 27.12.2016 IN THE CASE OF M/S. JENIRICHAGRO PRODUCTS P LTD., THE ASSESSEE , FOR THE ASSESSMENT YEAR 2014-15, HOLDING , INTER ALIA, THAT IT IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND DIRECTED THE AO, TO REFRAME THE ASSESSMENT AFTER MAKING ADDITION AS DISCUSSED IN PA RA 5.1 OF HIS ORDER. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED TH IS APPEAL. 5. THE CASE WAS HEARD THROUGH VIDEO CONFERENCING. THE LD. AR SUBMITTED THAT THE PCIT INITIATED PROCEEDINGS U/S. 263, POINT ING OUT VARIOUS ASPECTS. IN RESPONSE, THE ASSESSEE EXPLAINED ALL THE TRANSACTIO NS. THE LD PCIT HAS ACCEPTED THE ASSESSEES EXPLANATIONS AND DROPPED TH EM BUT FOR ONE, WHICH IS IN RESPECT OF TRANSPORT CHARGES CLAIMED AT RS. 1,1 5,51,643/- WITHOUT DEDUCTING TDS. THE ASSESSEE HAS SUBMITTED BEFORE THE LD PCIT THAT FOR THIS AMOUNT IT HAS COMPLIED WITH THE PROVISIONS OF SECTION 194C (6 ) BY OBTAINING PAN FROM ITA NO.2631/CHNY/2019 :- 3 -: THE TRANSPORTERS WHICH HAS BEEN FURNISHED TO THE AO . ON DUE SATISFACTION, THE ASSESSING OFFICER ACCEPTED THE ASSESSEES CLAIM AND COMPLETED THE ASSESSMENT. IN THIS REGARD, THE ASSESSEE RELIED ON BEFORE THE PCIT THAT AS PER THE RECENT CASE LAW IN THE CASE OF ITO VS M/S. SUGA RCHEMIN ITA NO. 2071/MUMBAI/2016 , WHEREIN THE TRIBUNAL HELD THAT SECTION 194C(6) & 194C(7) ARE INDEPENDENT OF EACH OTHER, AND CANNOT BE READ T OGETHER TO ATTRACT THE DISALLOWANCE U/S. 40(A)(IA) R.W.S. 194C OF THE ACT AND IF THE ASSESSEE COMPLIES WITH THE PROVISIONS OF SECTION 194C(6), NO DISALLOW ANCE U/S. 40(A)(IA) OF THE ACT IS PERMISSIBLE, EVEN THERE IS VIOLATION OF THE PROV ISIONS OF SECTION 194C(7) OF THE ACT. IN THE ASSESSEES CASE ALSO , IT HAS COM PLIED WITH THE PROVISIONS OF SECTION 194C(6) BUT NOT COMPLIED WITH THE PROVISION S OF SECTION 194C(7). HENCE, DISALLOWANCE U/S. 40(A)(IA) WILL NOT ATTRACT . HOWEVER, THE LD PCIT WITHOUT APPRECIATING THE FACT THAT THE TWIN CONDITI ONS OF ERROR IN THE ORIGINAL ASSESSMENT ORDER AND PREJUDICE CAUSING TO THE REVEN UE IN PASSING THE SAID ORIGINAL ASSESSMENT ORDER WERE NOT CONCURRENTLY SAT ISFIED, WRONGLY ASSUMED THE JURISDICTION U/S. 263 OF THE ACT AND ALSO PASSE D THE IMPUGNED ORDER. THE LD. PCIT FAILED TO APPRECIATE THAT HAVING NOTICED T HE OBJECTIONS OF THE APPELLANT FOR INVOKING THE POWERS OF REVISION BOTH ON TECHNIC AL GROUNDS AND ON MERITS/FACTS, MECHANICALLY SET ASIDE THE ORIGINAL A SSESSMENT ORDER WITH A DIRECTION TO THE ASSESSING OFFICER TO MAKE ADDITION AS PER PARA 5.1 R.W. PARA 7 OF THE IMPUGNED ORDER WITHOUT CONSIDERING ASSESSEE S OBJECTIONS AND FURTHER WITHOUT CONDUCTING THE REQUISITE ENQUIRY ON THE FAC TS. THEREFORE, THE LD AR SUBMITTED THAT ORDER OF THE LD PCIT WAS ERRONEOUS , UNJUSTIFIED, NOT ITA NO.2631/CHNY/2019 :- 4 -: SUSTAINABLE IN LAW AND HENCE IT SHOULD BE SET ASIDE AS IT IS BAD IN LAW. IN THIS REGARD, THE LD. AR RELIED ON THE DECISIONS IN THE C ASE OF ITO VS SUGARCHEM IN ITA NO. 2071/MUMBAI/2016, WHICH WAS ALSO RELIED ON BEFORE THE PCIT , ACIT VS ARIHANT TRADING CO. BHARATPUR (2019) 104 TAXMANN .COM 336(JAIPUR-TRIB)- 176ITD 307 (JAIPUR-TRIB) DT 19.3.2019, AND FURTHER RELIED ON THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF M/S. AGASTHIYA G RANITE P LTD VS ACIT IN TCA NO. 450 OF 2007 DATED 16.04.2018. PER CONTRA, THE LD. DR SUPPORTED THE ORDER OF THE PCIT. 6. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. THE ONLY ISSUE IN THIS APPEAL IS IN RESPECT OF THE FACT THAT THE ASSESSEE PAID TRANSPORT CHARGES OF RS. 1,15,51,643/- WITHOUT DEDU CTING TAX AT SOURCE AS IT HAS OBTAINED PAN OF THE TRANSPORTERS AND FURNISHED THE SAME TO THE AO FOR ALLOWING ITS CLAIM AND THE AO HAS ACCEPTED SUCH EXP LANATION AND ALLOWED THE CLAIM IN THE ASSESSMENT ORDER. THE PCIT INVOKED THE PROCEEDINGS U/S. 263 FOR THE REASON THAT IT WONT BE SUFFICIENT IF THE A SSESSEE COMPLIES WITH THE PROVISIONS OF SECTION 194C(6) ALONE, UNLESS OTHERWI SE THE ASSESSEE FURNISHED THE DETAILS OF COMPLIANCES MADE U/S 194C(7) BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. THEREFORE, THE PCIT IS OF THE VIEW THAT SINCE THE ASSESSEE HAS NOT FURNISHED THE DETAILS AS STIPULATE D IN SUB SECTION 7 OF SECTION 194C BEFORE THE ASSESSING OFFICER AT THE TIME OF AS SESSMENT, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WITHOUT DISAL LOWING SUCH A CLAIM U/S. 40(A)(IA) IS ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF REVENUE. HOWEVER, ITA NO.2631/CHNY/2019 :- 5 -: BEFORE THE PCIT THE ASSESSEE RELYING ON THE ITAT DECISION IN THE CASE OF ITO VS SUGARCHEM, SUPRA, PLEADED THAT WHEN TWO VIEW S ARE POSSIBLE, THE VIEW TAKEN BY THE AO CANNOT BE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREAFTER, THE LD. PCIT HELD THAT THE PROVISIONS OF SECTION 194C(7) ARE IN CONTINUATION OF 194C(6) AND NON COMP LIANCE TO SECTION 194C(7) DOES NOT SERVE THE INTENDED PURPOSE OF PROVIDING EX EMPTION FROM TDS MERELY ON FURNISHING OF PAN. THE ASSESSEE HAD NOT FURNISH ED THE DETAILS BEFORE THE COMPETENT AUTHORITY AS STIPULATED IN SUB-SECTION (7 ) OF SECTION 194C. BEFORE THE ASSESSING OFFICER ALSO, THE ASSESSEE HAS NOT F URNISHED THE DETAILS FOR HAVING COMPLIED WITH THE PROVISIONS OF SECTION 194C (7). IT SHALL BE SUFFICIENT COMPLIANCE IF THE ASSESSEE FURNISHED THE COPIES OF DECLARATION U/S. 194C(7) BEFORE THE ASSESSING OFFICER SO AS TO AVOID APPLICA BILITY OF SECTION 40(A)(IA) OF THE ACT. ON THIS REASON, HE SET ASIDE THE ASSESSME NT ORDER U/S. 263. IT IS CLEAR FROM THE ABOVE THAT ALTHOUGH THE ASSESSEE H AS BROUGHT TO THE NOTICE OF THE LD. PCIT THAT AS PER THE HONBLE ITAT DECISION ,SUPRA, NO DISALLOWANCE CAN BE MADE U/S. 40(A)(IA) EVEN IF THERE IS A VIOLATION UNDER SECTION 194C(7) OF THE ACT AND WHEN TWO VIEWS ARE POSSIBLE ON THIS ISSUE , PROCEEDINGS U/S. 263 CANNOT BE INITIATED ETC., THE LD PCIT SET ASIDE THE ASSESSMENT ORDER U/S. 263 WITHOUT MEETING THE ASSESSEES OBJECTIONS LEGALLY. BEFORE US, THE ASSESSEE RELIED ON THE ITAT JAIPUR BENCH DECISION IN THE CAS E OF ACIT VS ARIHANT TRADING CO., SUPRA, THE HEAD NOTE OF WHICH IS EXTRA CTED AS UNDER: WHERE ASSESSEE MADE PAYMENTS TO TRANSPORTERS TOWAR DS FREIGHT WITHOUT DEDUCTING TDS ON SUCH PAYMENTS, SINCE ASSES SEE WAS IN RECEIPT OF DETAILS ABOUT PAN OF TRANSPORTERS AT TIME OF PAYMEN T OF FREIGHTS AND, THUS, COMPLIED WITH PROVISIONS OF SECTION 194C(6), NO DIS ALLOWANCE COULD BE MADE U/S. 40(A)(IA). ITA NO.2631/CHNY/2019 :- 6 -: FURTHER THE ASSESSEE RELIED ON THE JURISDICTIONAL H IGH COURT DECISION, SUPRA , AND PLEADED THAT WHEN TWO VIEWS ARE POSSIBLE ON AN ISSUE, IF THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, I T CANNOT BE TREATED THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THUS, IN THIS CASE, THE DECISION OF THE A O HAS BEE N SUBSEQUENTLY UPHELD BY TWO DIFFERENT DECISIONS OF THE HONBLE ITAT, THEREF ORE , THE DECISION TAKEN BY THE ASSESSING OFFICER DOES NOT FALL WITHIN THE SCOP E OF SECTION 263 OF THE ACT AND HENCE ORDER OF THE PCIT IS UNSUSTAINABLE IN LA W. THEREFORE, WE HOLD THAT THE ORDER PASSED U/S. 263 IS NOT SUSTAINABLE IN LAW AND HENCE WE SET ASIDE THE IMPUGNED ORDER AND ALLOW THE ASSESSEES APPEAL. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 14 TH JUNE , 2021 IN CHENNAI. SD/ - ( . ) (DUVVURU RL REDDY) /JUDICIAL MEMBER SD/ - ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 14 TH JUNE, 2021 JPV, SR. PS +'2343 /COPY TO: 1. * /APPELLANT, 2. '(* /RESPONDENT, 3. 5 ( )/CIT(A), 4. 5 /CIT, 5. 3' /DR 6. % /GF