Shankar Kashinath Kadam, Sangli V. Income tax Officer, Sangli

ITA 448/PUN/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9172 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 06-03-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 22-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion; Ignorance of law
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 448 /P U N/20 17 / ASSESSMENT YEAR : 20 1 0 - 1 1 SHRI SHANKAR KASHINATH KADAM, HINGAGAON ROAD, KAVTHEMAHANKAL, DIST. SANGLI - 416405 . / APPELLANT PAN: A UMPK8234G VS. THE INCOME TAX OFFICER , WARD 2(3), SANGLI . / RESPONDENT / APPELLANT BY : SHRI M.K. KULKARNI / RESPONDENT BY : SHRI ACHAL SHARMA, ADDL.CIT / DATE OF HEARING : 0 6 . 0 3 .201 8 / DATE OF PRONOUNCEMENT: 23 . 0 3 .201 8 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) - 1, KOLHAPUR , DATED 23.12.2016 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 19 61 (IN SHORT THE ACT) . 2. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT GROUNDS OF APPEAL NO.1 TO 3, 6 TO 8 AGAINST REOPENING OF ITA NO. 448 /P U N/20 17 SHANKAR K. KADAM 2 ASSESSMENT ARE NOT PRESSED AND HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. HE FUR THER POINTED OUT THAT THE ISSUE RAISED IN GROUNDS OF APPEAL NO.4, 5 AND 9 IS AGAINST THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF TRANSPORT CHARGES. THE SAID GROUNDS OF APPEAL READ AS UNDER: - 4 ) ON ONE F ACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CTT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ORDER OF THE A.O. AND CONFIRMING THE DISALLOWANCE MADE BY THE A. O . OF RS.2 , 29 , 56 , 838/ - RESULTING INTO ADDITION TO TOTAL INCOME RETURNED INVOKING THE PROVISIONS OF S. 194C(7) WHICH WER E MADE APPLICABLE FOR THE FIRST TIME IN THE YEAR UNDER APPEAL . IT IS PERTINENT TO NOTE THAT WHEN PROVISIONS OF 2ND PROVISO TO S. 40(A)(IA) ARE APPLICABLE THEN THERE CANNOT BE ANY ESCAPEMENT OF INCOME SO AS TO ATTRACT THE PROVISIONS OF S.147 R.W.S. 148 OF T HE ACT. THEN RE - OPENING OF THE ASSESSMENT U/S 147 AND AS CONFIRMED BY LD. CIT(A) IS BAD IN LAW AND WITHOUT JURISDICTIONAL. THE ORDER OF THE LD. CIT(A) BE SET ASIDE. 5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IT IS TO BE HELD THAT PROVISIONS OF S. 194C(7) ARE PROCEDURAL IN NATURE. THE ACTION OF THE A. O . WAS UPHELD BY LD. CIT(A) WHEN REJECTING THE CLAIM OF T HE ASSESSEE THAT SINCE IT WAS THE FIRST YEAR OF THE INTRODUCTION OF S. 194C(7) HE WAS NOT AWARE OF IT AND OBSERVING THAT 'IGNORANCE OF LAW IS NOT AN EXCUSE'. BUT IT IS EQUALLY TRUE THAT 'EVERYBODY IS NOT EXPECTED TO KNOW THE LAW'. THE LD. CIT(A) WAS EXPECTED TO APPLY THIS BROAD PRINCIPLE OF LAW AND SHOULD NOT HAVE UPHELD THE ORDER OF THE A. O . ON THIS COUNT. THE ORDER OF THE LD.CIT(A) BE SET A SIDE. 9) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS NOT JUSTIFIED IN MAKING DISALLOWANCE OF RS.2,29 , 56,838/ - UNDER S. 40(A)(IA) BEING TRANSPORT CHARGES PAID U/S 194C(7) OF THE ACT ON MERE CHANGE OF OPINION. THE ADDITION MADE BY THE A. O . AND CONFIRMED BY LD. CIT(A) IS INVALID AND WITHOUT JURISDICTION. IT BE QUASHED. 3. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FILED RETURN OF INCOME DECLARING TOTAL INCOME OF 8,97,450/ - . THE ASSESSMENT IN THE CASE OF ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AT 11,88,620/ - . THEREAFTER, ASSESSMENT WAS REOPENED UNDER SECTION 147/148 OF THE ACT. IN THE RE - ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD RECEIVED TRANSPORTATION CHARGES OF 4, 00,72,889/ - AND HAD DEBITED 3,91,67,733/ - AS TRANSPORTATION CHARGES PAID. THE ASSESSEE WAS ASKED TO ITA NO. 448 /P U N/20 17 SHANKAR K. KADAM 3 PRODUCE THE DETAILS OF TRANSPORT CHARGES PAID. THE ASSESSING OFFICER NOTED THAT THERE WAS DIFFERENCE IN THE DETAILS FURNISHED BY THE ASSESSEE OF TRANSP ORT CHARGES PAID BY 13,46,112/ - . THE ASSESSEE EXPLAINED THAT IN ADDITION TO TRANSPORT CHARGES OF 3,78,20,661/ - , THE ASSESSEE HAD ALSO PAID DIESEL EXPENSES ON BEHALF OF TRANSPORT OPERATORS AT 27,16,509/ - , TOTALING 4,05,37,170/ - . THE ASSESSING OFF ICER ALSO NOTED THAT OUT OF TRANSPORTATION CHARGES OF 3.91 CRORES, SUM OF 1.08 CRORES WAS PAID EITHER BY DEDUCTING THE TAX AT SOURCE OR TO THE PERSONS BELOW THE THRESHOLD LIMIT FOR TDS. HOWEVER, PAYMENT OF 2.69 CRORES WAS MADE TO VARIOUS PARTIES WIT HOUT DEDUCTING TAX AT SOURCE. THE ASSESSING OFFICER OBSERVED THAT AS PER SECTION 194C(1) OF THE ACT AND PROVISO THEREUNDER, THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE OR ELSE HE WAS REQUIRED TO OBTAIN PAN OF SUCH PERSONS AS PER SECTION 194C(6) OF T HE ACT AND TO FURNISH TO THE PRESCRIBED INCOME - TAX AUTHORITY OR THE PERSON AUTHORIZED BY IT, SUCH PARTICULARS, IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED, AS PER SECTION 194C(7) OF THE ACT. THE ASSESSEE WAS SHOW CAUSED IN THIS REGARD. IT WAS EXPLAINED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT ASSESSMENT YEAR 2010 - 11 WAS THE FIRST YEAR OF INSERTION OF SECTION 194C(7) OF THE ACT AND SINCE HE WAS AN UNEDUCATED PERSON, HE COULD NOT COMPLY WITH THE SAME AND HENCE, NO DISALLOWAN CE SHOULD BE MADE. THE ASSESSING OFFICER NOTED THAT THOUGH SECTION 194C(6) & 194C(7) OF THE ACT WERE INSERTED VIDE FINANCE ACT, 2009, THERE EXISTED SIMILAR PROVISION HAVING SIMILAR EFFECT IN EARLIER ACT OF 2008 AS WELL I.E. SECTION 194C(3) OF THE ACT. TH E ASSESSEE WAS THUS, HELD TO HAVE VIOLATED PROVISIONS OF SECTION 194C(7) OF THE ACT AND WAS HELD LIABLE FOR DISALLOWANCE OF TRANSPORTATION CHARGES. HOWEVER, THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE COULD NOT HELD TO HAVE DEFAULTED IN PAYMENT OF 40,26,407/ - AND HENCE, THE SAME WAS EXCLUDED AND ITA NO. 448 /P U N/20 17 SHANKAR K. KADAM 4 THE BALANCE SUM OF 2,29,56,838/ - WAS DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. 4. THE CIT(A) HAS UPHELD THE SAID ADDITION AND HENCE, THE ASSESSEE IS IN APPEAL AGAINST THE SAME. 5. THE LEARNED AUTH ORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT AS PER SECTION 194C(6) OF THE ACT, THE ASSESSEE WAS TO COLLECT PAN OF THE PERSONS TO WHOM TRANSPORTATION CHARGES HAD TO BE PAID AND THE ASSESSEE HAS DULY RECEIVED THE SAME. THE SAID INFORMATION WAS A VAILABLE WITH THE ASSESSEE, COPY OF WHICH IS FILED BEFORE US. HE FURTHER POINTED OUT THAT THE PROVISIONS OF SECTION 194C(7) OF THE ACT WERE NOT OPERATIVE IN ASSESSMENT YEAR 2010 - 11 AND IN THE ABSENCE OF THE SAME, THERE WAS NO MANNER IN WHICH THE ASSESSEE COULD FURNISH THE INFORMATION COLLECTED TO ANY INCOME - TAX AUTHORITY. HE FURTHER SUBMITTED THAT THE ISSUE STANDS COVERED BY THE DECISION OF HYDERABAD BENCH OF TRIBUNAL IN ACIT VS. MR. MOHAMMED SUHAIL IN ITA NO.1536/HYD/2014, RELATING TO ASSESSMENT YEAR 201 0 - 11, ORDER DATED 13.02.2015 AND KOLKATA BENCH OF TRIBUNAL IN SOMA RANI GHOSH VS. DCIT IN ITA NO.1420/KOL/2015, RELATING TO ASSESSMENT YEAR 2012 - 13, ORDER DATED 09.09.2016. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE REFERRED TO THE PROVISI ONS OF SECTION 194C(6) OF THE ACT AND POINTED OUT THAT THERE WERE TWO REQUIREMENTS TO BE FULFILLED I.E. RECEIPTS DECLARATION FROM THE TRANSPORTERS AND ALSO PAN NUMBERS. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT DURING ORIGIN AL ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FAILED TO FURNISH ANY PAN NUMBERS OF THE SAID TRANSPORTERS. ITA NO. 448 /P U N/20 17 SHANKAR K. KADAM 5 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REJOINDER POINTED OUT THAT THE CONDITION OF FURNISHING OF DECLARATION WAS INSERTED BY FINA NCE ACT, 2015 W.E.F. 01.06.2015 AND PRIOR TO THAT, THERE WAS ONLY THE REQUIREMENT OF FURNISHING OF PAN NUMBERS. IN THE ABSENCE OF AUTHORITY AND MANNER NOTIFIED UNDER SECTION 194C(7) OF THE ACT, THE ASSESSEE COULD NOT BE HELD AT FAULT. 8. WE HAVE HEARD TH E RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS IN RESPECT OF PROVISIONS OF SECTION 194C(6) AND 194C(7) OF THE ACT. UNDER THE PROVISIONS OF SECTION 194C OF THE ACT, THE ASSESSEE WAS MADE LIABLE TO DEDUCT TAX ON PAYMENTS MADE TO TRANSPORTERS. HOWEVER, UNDER SECTION 194C(6) OF THE ACT, EXEMPTION WAS PROVIDED IN CASE THE ASSESSEE OBTAINS PAN NUMBERS OF THE SAID TRANSPORTERS. FURTHER, UNDER SECTION 194C(7) OF THE ACT, THE SAID PAN NUMBERS COLLECTED BY THE ASSESSEE WERE TO BE FURNISHED TO PRESCRIBED INCOME - TAX AUTHORITY OR ANY PERSON AUTHORIZED BY IT ; SUCH PARTICULARS HAD TO BE SUBMITTED IN SUCH FORM WITHIN SUCH TIME AS MAY BE PRESCRIBED. HOWEVER, THE BOARD IN THIS REGARD GAVE NOTIFICATION ON 15.10.2010 . PRIOR TO THAT, THERE WAS NO SUCH NOTIFICATION WHICH PROVIDED THE INFORMATION TO BE PROVIDED IN THE FORM AS PRESCRIBED AND BEFORE THE AUTHORITY AS NOTIFIED. IN THE ABSENCE OF SAME, THE ASSESSEE WAS HANDICAP PED IN FORWARDING THE INFORMATION COLLECTED BY IT IN RESPEC T OF TRANSPORTERS TO THE PRESCRIBED AUTHORITY WITHIN PRESCRIBED PERIOD. IN THE ABSENCE OF SAME, THE ASSESSEE CANNOT BE HELD LIABLE AND EXEMPTION PROVIDED IN SECTION 194C(6) OF THE ACT IS AVAILABLE TO THE ASSESSEE SINCE IT HAD COLLECTED PAN NUMBERS OF TRAN SPORTERS. THE LIST OF TRANSPORT CHARGES PAID PERSON - WISE AND THEIR PAN NUMBERS HAD ITA NO. 448 /P U N/20 17 SHANKAR K. KADAM 6 BEEN FURNISHED ON RECORD. IN VIEW THEREOF, WE HOLD THAT THE ASSESSEE CANNOT BE HELD TO BE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE UNDER SECTION 194C OF THE ACT AND C ONSEQUENTLY, THERE IS NO MERIT IN MAKING ANY DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. 9. WE FIND THAT HYDERABAD BENCH OF TRIBUNAL IN ACIT VS. MR. MOHAMMED SUHAIL (SUPRA) ON IDENTICAL FACTS FOR ASSESSMENT YEAR 2010 - 11 HAD HELD AS UNDER: - 4. AFTE R 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 WERE MAD E 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 NO NEE D 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 PRESCRIBED 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 FA CT, 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, ASSESSEES CONTENTION THAT IN THE IMPUGNED ASSES SMENT 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 SECTION 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. 10. THE SAID PROPOSITION OF HYDERABAD BENCH OF TRIBUNAL HAS BEEN APPLIED B Y KOLKATA BENCH OF TRIBUNAL IN SOMA RANI GHOSH VS. DCIT (SUPRA) AND SIMILAR PROPOSITION HAS BEEN HELD. IN VIEW THEREOF, WE HOLD THAT THE ASSESSEE IS NOT IN DEFAULT VIS - - VIS PROVISIONS OF SECTION 194C OF THE ACT AND CONSEQUENTLY, NO DISALLOWANCE IS WARRAN TED UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, WE DELETE DISALLOWANCE OF 2.29 CRORES MADE IN THE HANDS OF ASSESSEE UNDER ITA NO. 448 /P U N/20 17 SHANKAR K. KADAM 7 SECTION 40(A)(IA) OF THE ACT BEING TRANSPORT CHARGES PAID. THE GROUNDS OF APPEAL NO.4, 5 AND 9 RAISED BY THE ASSESSEE ARE THU S, ALLOWED. 11 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 23 RD DAY OF MARCH , 201 8 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 23 RD MARCH , 201 8 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A) - I, KOLHAPUR ; 4. THE PR. C I T - I, KOLHAPUR ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE