POUN POULTRY FARM, PALANI V. ACIT, CIRCLE-1, DINDIGUL

ITA 448/CHNY/2022

AI Insights

The case involves Poun Poultry Farm, which appealed against the order of the PCIT, Madurai, setting aside their assessment for the year 2017-18. The original assessment had added an income of \\u20b930,000 to the assessee's declared income after a security check under CASS. The PCIT later found that the assessee had not properly deducted TDS on several large payments, which should have been disallowed under section 40(a)(ia) of the Income Tax Act. The Tribunal dismissed the assessee's appeal, agreeing with the PCIT that the original assessment was flawed due to inadequate examination of TDS deductions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135122 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-05-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 29-05-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Assessment record; TDS; Set aside
• Section: 263; 143(3); 142(1); 40(a)(ia); 194C; 194A

Judgement Text

आयकर अपीलीय अिधकरण, ‘सी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ŵी वी. दुगाŊ राव, Ɋाियक सद˟ एवं ŵी मनोज कु मार अŤवाल, लेखा सद˟ के समƗ । Before Shri V. Durga Rao, Judicial Member & Shri Manoj Kumar Aggarwal, Accountant Member आयकर अपील सं./I.T.A. No.448/Chny/2022 िनधाŊरण वषŊ/Assessment Year: 2017-18 Poun Poultry Farm, 188, Anna Nagar, Palani, Dindigul Dt. - 624 601, Tamil Nadu. [PAN:AADFP6850E] Vs. The Assistant Commissioner of Income Tax, Circle 1, Dindigul. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri T.S. Lakshmi Venkatraman, F.C.A. ŮȑथŎ की ओर से/Respondent by : Shri M. Rajan, CIT सुनवाई की तारीख/ Date of hearing : 02.05.2023 घोषणा की तारीख /Date of Pronouncement : 17.05.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Principal Commissioner of Income Tax, Madurai – 1, Madurai, dated 26.03.2022 relevant to the assessment year 2017-18 passed under section 263 of the Income Tax Act, 1961 [“Act” in short]. 2. The appeal filed by the assessee is delayed by five days in filing the appeal and filed a petition for condonation of delay in the form of an affidavit to which; the ld. DR has not raised any serious objection. I.T.A. No. 448/Chny/22 2 Consequently, since the assessee was prevented by sufficient cause, the delay of five days in filing of the appeal stands condoned and the appeal is admitted for adjudication. 3. The issue involved in this appeal is whether the order passed by the ld. PCIT under section 263 of the Act is correct or not. In this case, the assessee filed its return of income by admitting total income of ₹.14,85,130/-. Subsequently, the case was selected for compete security under CASS and the assessment was completed under section 143(3) of the Act on 30.12.2019 after making an addition of ₹.3,50,000/- and determined the income of the assessee at ₹.18,35,130/-. 4. By exercising the powers conferred under section 263 of the Act, the ld. PCIT made verification of assessment records for the assessment year 2017-18 and noted that the assessee has claimed following expenses in the profit and loss account: Sl. No. Type of expenses Amount 1. Contract Farm Charges 2,30,74,120 2. Freight charges 48,86,698 3. Interest paid to others 20,87,774 4. Interest ICICI bank OD 4,16,568 The above expenses are liable for TDS under section 194C [SL. No. 1&2] and 194A of the Act, [SI. No. 3&4]. On perusal of the records, the ld. PCIT has noted that the assessee has reported in the Form 3CD that tax has I.T.A. No. 448/Chny/22 3 been deducted on the contract payment of ₹.2,30,74,120/- mentioned at SI. No. 1 above. However, the details of TDS made and copies of corresponding payment challans are not available in the records and the assessee has not filed any details of TDS made on the above payments. With regard to rest of the payments mentioned at S.No.2, 3&4 of the above table. The assessee has not filed any details of TDS made on such payments during the course of assessment proceedings. Further examination of records, the ld. PCIT has noted that the Assessing Officer has failed to verify the applicability of section 40(a)(ia) of the Act on the above expenditure claimed. In the absence of evidence for TDS, the Assessing officer ought to have made necessary disallowance on the above payments invoking the provisions of section 40(a)(1a) of the Act while completing the assessment under section 143(3) of the Act dated 30.12.2019 and thus, the ld. PCIT has considered the assessment order as erroneous and prejudicial to the interest of the Revenue. 5. Accordingly, the ld. PCIT issued show cause notice to the assessee on 23.02.2022 under section 263 of the Act. In response to the show- cause notice, the assessee filed its written submissions before the ld. PCIT and submitted that the Assessing Officer has examined all the details and the assessment order was passed by the Assessing Officer I.T.A. No. 448/Chny/22 4 cannot be held as erroneous and prejudicial to the interest of Revenue. However, the ld. PCIT has not accepted the explanation of the assessee and he has noted that the Assessing Officer has not examined the disallowance of TDS, which is erroneous and prejudicial to the interest of Revenue. Thus, the ld. PCIT set aside the assessment order passed under section 143(3) of the Act dated 30.12.2019 and directed the Assessing Officer to pass fresh assessment order in accordance with law after affording opportunity to the assessee. 6. On being aggrieved, the assessee carried the matter in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that with regard to the TDS, the Assessing Officer has asked the explanation of the assessee by issuing notice under section 142(1) of the Act dated 26.07.2019, wherein, he has specifically asked as under: “16. Please furnish the details of TDS deducted for expenses debited to P & L Account: Please furnish details regarding TDS deducted and TD no deducted details and TDS quarterly return copy challan for the payments on which TDS was applicable, in given format: The ld. Counsel for the assessee has submitted that there was a specific question with regard to TDS deduction by the Assessing Officer and therefore, the Assessing Officer has examined the issue. Thus, the assessment order cannot be said that the order is erroneous. I.T.A. No. 448/Chny/22 5 7. On the other hand, the ld. DR has submitted that the Assessing Officer has asked the assessee with regard to the TDS deducted and TDS not deducted. However, no such details were furnished by the assessee during the course of assessment proceedings. 8. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, since the Assessing Officer has not examined the TDS deduction made towards the expenses incurred by the assessee and failed to verify the applicability of section 40(a)(ia) of the Act, the ld. PCIT set aside the assessment order and directed to pass fresh assessment order. During the course of appeal hearing, the Bench has specifically asked the ld. Counsel for the assessee as to whether the assessee has filed the details in response to the questionnaire issued by the Assessing Officer along with the notice issued under section 142(1) of the Act. The ld. Counsel for the assessee fairly submitted that no such details were filed before the Assessing Officer. Having called for the details of TDS deduction from the assessee and without examining the same, the Assessing Officer passed the assessment order. Thus, we find that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue and the ld. PCIT has rightly set aside the assessment order I.T.A. No. 448/Chny/22 6 passed under section 263 of the Act. We find no reason to interfere with the order passed by the ld. PCIT under section 263 of the Act. Hence, the appeal filed by the assessee is dismissed. 9. In the result, the appeal filed by the assessee is dismissed. Order pronounced on 17 th May, 2023 at Chennai. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 17.05.2023 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF.