Shree Ashoke prasad, Kolkata V. DCIT, Circle-49, Kolkata, Kolkata

ITA 611/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4710 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 30-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: S M SURANA
• Keywords: Non-deduction of tax; Competent authority
• Section: 139(5); 194C; 201(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM & SHRI M.BAL AGANESH, AM ] I.T.A NO. 582/KOL/201 7 ASSESSMENT YEAR : 2012-1 3 ACIT, CIRCLE-49(1), KOLKATA -VS- AS HOKE PRASAD. [PAN: AFQPP 6505 C] (APPELLANT) (RESPONDENT) I.T.A NO. 611/KOL/2017 ASSESSMENT YEAR : 2012-1 3 ASHOKE PRASAD -VS- DCIT, CIRCLE-49, KOLKATA [PAN: AFQPP 6505 C] (APPELLANT) (RESPOND ENT) FOR THE DEPARTMENT : SHRI ROBIN CHOWDH URY, ADDL. CIT SR. DR FOR THE ASSESSEE : SHRI S.M. SURAN A, ADVOCATE DATE OF HEARING : 04.10.2018 DATE OF PRONOUNCEMENT : 26.10.2018 ORDER PER M.BALAGANESH, AM 1. THESE APPEALS BY THE REVENUE AS WELL AS ASSESSEE ARISE OUT OF THE COMMON ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-15, KOLKATA [IN SHORT THE LD CIT(A)] IN APPEAL NO. 72/CIT(A)-15/15-16/DCIT, CIR- 49/KOL DATED 23.01.2017 AGAINST THE ORDER PASSED BY THE DCIT, CIRCLE-49, KO LKATA [ IN SHORT THE LD. AO] DATED 20.03.2015 FOR THE ASSESSMENT YEAR 2012-13. BOTH T HESE APPEALS ARE TAKEN TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS.582&611/KOL/2017 ASHOKE PRASAD A.YR. 2012-13 2 2. WE FIND THAT THE GROUNDS 2 & 3 RAISED IN THE ASS ESSEES APPEAL ARE ONLY ON THE GROUND THAT THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT SHOU LD NOT BE MADE AS THE RESPECTIVE PAYEES HAD ALREADY INCLUDED THE SUBJECT MENTIONED R ECEIPTS IN THEIR RETURNS AND PAID TAXES THEREON BEFORE THE DUE DATE OF FILING THE RET URN OF INCOME U/S 139 OF THE ACT. THE ISSUE TO BE DECIDED HERE IS AS TO WHETHER THE SECON D PROVISO TO SECTION 40(A)(IA) INTRODUCED BY THE FINANCE ACT 2012, W.E.F. 1.4.2013 COULD BE CONSIDERED AS RETROSPECTIVE IN OPERATION. WE FIND THAT THIS ISSUE IS ALREADY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF PRINCIPAL CIT VS TIRUPATI CONSTRUCTION GA NO. 214 6 OF 2016 WITH ITAT NO. 287 OF 2016 DATED 23.8.2016. HENCE EVEN ON THIS COUNT, NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT COULD BE MADE IN THE HANDS OF THE ASSESSEE. BU T WE FIND THAT THE LD CITA HAD TAKEN COGNIZANCE OF THIS AMENDMENT TO BE RETROSPECTIVE IN OPERATION BUT HAD ERRONEOUSLY CONCLUDED THAT SINCE THE PAYEES HAD FILED THEIR RET URNS BELATEDLY U/S 139(4) OF THE ACT, THE ASSESSEE PAYER WOULD NOT BE ENTITLED FOR THE RE LIEF AS PER THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. IN THIS REGARD, WE H OLD THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS TO BE READ WITH SECTION 201 (1) OF THE ACT AND ITS SECOND PROVISO THEREON WHEREIN IT JUST STIPULATES RETURN FILED U/ S 139 OF THE ACT WHICH APPARENTLY INCLUDES RETURN FILED U/S 139(4) AND 139(5) OF THE ACT. HENCE WE HOLD THAT NO DISALLOWANCE COULD BE MADE U/S 40(A)(IA) OF THE ACT IN THE HANDS OF THE ASSESSEE PAYER IN THE SUMS OF RS 9,89,969/- AND RS 3,67,537/-. ACCO RDINGLY, THE GROUNDS 2 & 3 RAISED BY THE ASSESSEE ARE ALLOWED. 3. THE REVENUE HAD CONTESTED IN ITS APPEAL VIDE GRO UND NO. 2 HAD ALSO OBJECTED TO THE ACCEPTANCE OF THE LD AO THAT SECOND PROVISO TO SECT ION 40(A)(IA) OF THE ACT IS TO BE CONSTRUED AS RETROSPECTIVE IN OPERATION. WE HOLD T HAT THIS ISSUE IS ALREADY SETTLED IN FAVOUR OF THE ASSESSEE AS STATED SUPRA. HENCE GROU ND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 3 ITA NOS.582&611/KOL/2017 ASHOKE PRASAD A.YR. 2012-13 3 4. WITH REGARD TO DISALLOWANCE OF INTEREST U/S 40(A )(IA) OF THE ACT IN THE SUM OF RS 1,55,134/- IN RESPECT OF INTEREST PAID ON UNSECURE D LOAN TO DILIP PRASAD HUF IS CONCERNED , WE FIND THAT THE LD CITA HAD OBSERVED T HAT THE SAID HUF HAD NOT FILED ITS RETURN OF INCOME AND HENCE THE CONDITION PRESCRIBED U/S 201(1) OF THE ACT IS NOT SATISFIED IN THE INSTANT CASE. WE FIND THAT THE L D AO IN HIS REMAND REPORT HAD CATEGORICALLY STATED THAT THE SAID HUF HAD DULY CON SIDERED THE INTEREST AMOUNTOF RS 1,55,134/- IN ITS ACCOUNTS. MERELY BECAUSE THE CON CERNED HUF HAD NOT FILED ITS RETURN OF INCOME, THE ASSESSEE CANNOT BE FASTENED WITH THE DI SALLOWANCE U/S 40(A)(IA) OF THE ACT. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE PAN OF DILIP PRASAD (HUF) , ADDRESS, ETC HAD BEEN DULY SUBMITTED BY THE ASSESSEE BEFORE THE LD AO. THE LD AO HAD ALSO MADE VERIFICATION WITH THE FILE OF DILIP PRASAD (HUF) AN D HAD ALSO OBTAINED REPLY DIRECTLY FROM THE SAID HUF IN THE MANNER KNOWN TO LAW WHICH FACT IS ALSO RECORDED IN HIS REMAND REPORT. THE PURPOSE OF INTRODUCING THIS SE COND PROVISO TO SECTION 201(1) READ WITH SECTION 40(A)(IA) OF THE ACT IS TO ENABLE THE DEPARTMENT TO TRACK THE PAYEES IN THE EVENT OF PAYER NOT DEDUCTING TAX AT SOURCE ON THE P AYMENTS MADE BY THE PAYERS TO THE PAYEES. THERE MIGHT BE GENUINE REASON FOR THE PAYE E NOT TO FILE ANY RETURN OF INCOME OR IT MAY NOT BE OBLIGATED TO FILE ANY RETURN OF INCOM E UNDER THE ACT IN VIEW OF BASIC EXEMPTION LIMIT PROVIDED IN THE ACT. THESE FACTS A RE TO BE ASCERTAINED ONLY FROM THE SIDE OF THE PAYEE. THE ASSESSEE HEREIN HAD DULY SU BMITTED THE COMPLETE DETAILS OF THE PAYEE WHICH IS ACKNOWLEDGED BY THE LD AO HIMSELF IN THE REMAND REPORT. MOREOVER, THE ASSESSEE HAD DULY OBTAINED FORM NO.15G FROM THE SAID PAYEE WHICH IS EVIDENT FROM THE FACTS PLACED ON RECORD AT PAGE 7 OF THE PAPER B OOK. HENCE WE HOLD THAT THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT AND BE FASTENED WITH THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN THE FACTS OF THE INSTANT CA SE. ACCORDINGLY, THE GROUND NO. 4 RAISED BY THE ASSESSEE IS ALLOWED. 5. WITH REGARD TO THE ACTION OF THE LD CITA GRANTIN G RELIEF TO THE ASSESSEE U/S 40(A)(IA) OF THE ACT IN THE SUM OF RS 1,50,000/- IS CONCERNED, W E FIND THAT THIS REPRESENTS INTEREST 4 ITA NOS.582&611/KOL/2017 ASHOKE PRASAD A.YR. 2012-13 4 PAID TO ZENON INDIA PVT LTD (AAACZ0920B). THE ASSE SSEE HAD SUBMITTED THAT THOUGH NO TAX WAS DEDUCTED AT SOURCE ON THE PAYMENT OF INT EREST TO THE SAID PARTY, THE SAID PARTY HAD DULY INCLUDED THE SUBJECT MENTIONED INTEREST IN ITS RETURNS AND PAID TAXES THEREON, IN SUPPORT OF WHICH, THE ASSESSEE ALSO FURNISHED A CER TIFICATE FROM A CHARTERED ACCOUNTANT IN ACCORDANCE WITH FIRST PROVISO TO SECTION 201(1) OF THE ACT . SINCE THE PAYEE HAD INCLUDED THE RECEIPT IN ITS HANDS AND PAID TAXES TH EREON, NO DISALLOWANCE IS TO BE MADE U/S 40(A)(IA) OF THE ACT AS PER DECISION RENDERED S UPRA. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IN THIS REGARD IS DISMISSED. 6. WITH REGARD TO YET ANOTHER GROUND RAISED BY THE REVENUE AGAINST THE ACTION OF THE LD CITA DELETING THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN THE SUM OF RS 5,80,911/-, WE FIND THAT THE LD DR WAS NOT ABLE TO COMPREHEND HOW THE FIGURE OF RS 5,80,911/- WAS ARRIVED AT BY THE REVENUE WHILE RAISING THE GROUNDS OF APPEAL. WE FIND THAT THE LD CITA HAD CONFIRMED THE DISALLOWANCE IN RESPECT OF INTERE ST PAID ON LOANS FOR NON-DEDUCTION OF TAX AT SOURCE U/S 40(A)(IA) OF THE ACT , EVEN IN SI TUATION WHERE THE PAYEES HAD CONSIDERED THE SUBJECT MENTIONED RECEIPTS IN THEIR RETURNS OF INCOME AND HAD FILED THEIR RETURNS BELATEDLY U/S 139(4) OF THE ACT. WE FIND THAT ASPE CT OF ELIGIBILITY OF RELIEF TO THE ASSESSEE EVEN IN THE EVENT OF BELATED FILING OF RET URN U/S 139(4) OF THE ACT HAD ALREADY BEEN ADDRESSED BY US SUPRA. HENCE THE ENTIRE ASPEC T OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN RESPECT OF INTEREST PAID IS ADDRESSED IN TOT ALITY HEREINABOVE. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE FOR RELIEF GRANTED IN THE SUM OF RS 5,80,911/- IS DISMISSED. HENCE THE GROUND NO. 1 RAISED BY THE REVENUE IS DIS MISSED. 7. THE LAST ISSUE TO BE DECIDED IN THE APPEAL OF TH E REVENUE IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT IN THE SUM OF RS 2,21,40,960/- TOWARDS FREIGHT CHARGES / TRANSPORTAT ION CHARGES, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5 ITA NOS.582&611/KOL/2017 ASHOKE PRASAD A.YR. 2012-13 5 7.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO OBSERVED THAT THE ASSESSEE HAD CLAIMED PAYMENT TOWARDS FREIGHT CHARGES / TRANSPORT ATION CHARGES AND OUT OF WHICH, THE FOLLOWING PAYMENTS WERE MADE WITHOUT DEDUCTION OF T AX AT SOURCE IN VIOLATION OF PROVISIONS OF SECTION 194C OF THE ACT :- SHIVSAKTHI TRANSPORT CO. 19,40,800 BALAJI TRANSPORT CO. 1,58,52,200 RAMESH TRANSPORT CO. 19,76,000 OM SAI CONSTRUCTION 5,26,000 J R DHAWAN 3,00,000 CHOWDHARY EARTH MOVERS PVT LTD 13,00,960 MAYUR ROADLINES 1,50,000 HAZI SAMIULLAH KHAN 95,000 ----------------------- 2,21,40,960/- THE ASSESSEE REPLIED BEFORE THE LD AO THAT IT HAD O BTAINED THE PAN FROM ALL THE TRANSPORTERS AND ACCORDINGLY IT IS NOT OBLIGATED TO DEDUCT TAX AT SOURCE IN TERMS OF SECTION 194C(6) OF THE ACT. IT SUBMITTED THAT EVENT HOUGH THE ASSESSEE HAD NOT SUBMITTED THE PAN TO THE COMPETENT AUTHORITY IN THE PRESCRIBE D FORM AS PER SECTION 194C(7) OF THE ACT, STILL FOR THIS TECHNICAL VENIAL BREACH, THE AS SESSEE SHOULD NOT BE FASTENED WITH A HUGE DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA) OF T HE ACT. IT WAS ALSO POINTED OUT THAT THERE WAS NO REVENUE LOSS TO THE EXCHEQUER DUE TO T HE ACTION OF THE ASSESSEE. THE ASSESSEE HOWEVER FURNISHED THE ENTIRE LIST OF TRANS PORTERS TOGETHER WITH THEIR PAN BEFORE THE LD AO. THE LD AO HOWEVER OBSERVED THAT THE ASS ESSEE HAD NOT COMPLIED WITH THE PROVISIONS OF SECTION 194C(7) OF THE ACT AND HENCE NOT ENTITLED FOR RELIEF U/S 194C(6) OF THE ACT. ACCORDINGLY, HE DISALLOWED THE SUM OF RS 2,21,40,960/- U/S 40(A)(IA) OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE A SSESSEE IN THE ASSESSMENT. 7.2. BEFORE THE LD CITA , THE ASSESSEE REITERATED T HE SUBMISSIONS MADE BEFORE THE LD AO AND PLACED RELIANCE ON FEW DECISIONS OF VARIOUS CO- ORDINATE BENCHES OF TRIBUNALS IN 6 ITA NOS.582&611/KOL/2017 ASHOKE PRASAD A.YR. 2012-13 6 SUPPORT OF ITS CONTENTIONS. THE LD CITA BY PLACING RELIANCE ON THOSE DECISIONS OF TRIBUNALS GRANTED RELIEF TO THE ASSESSEE. AGGRIEVED , THE REVENUE IS IN APPEAL BEFORE US. 7.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FO R THE SAKE OF BREVITY. WE FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS VA LIBHAI KHANBHAI MANKAD IN TAX APPEAL NO. 1182 OF 2011 DATED 1.10.2012 IN THE CONTEXT OF NON-SUBMISSION OF FORM 15J OBTAINED FROM TRANSPORTERS THEREBY VIOLATING RU LE 29D OF THE IT RULES, HAD OBSERVED AS UNDER:- 3. WE HAVE HEARD THE LEARNED COUNSEL FOR THE REVENUE AS WELL AS FOR THE ASSESSEE. SECTION 194C OF THE ACT, AS IS WELL KNOWN, PERTAINS TO PAYM ENTS TO CONTRACTORS. SUB-SECTION (1) OF SECTION 194C, AS IT STOOD AT THE RELEVANT TIME, REQ UIRED THAT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT, CONTRACTOR FOR CARR YING OUT ANY WORK IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND THE SPECIFIED E NTITIES, SHALL CREDIT SPECIFIED SUM AS INCOME TAX ON INCOME COMPRISED THEREIN. LIKEWISE, S UB-SECTION (2) OF SECTION 194C REQUIRED A PERSON RESPONSIBLE FOR PAYING ANY SUM TO RESIDENT-SUB-CONTRACTOR TO DEDUCT TAX AT SOURCE UNDER GIVEN CIRCUMSTANCES. IT IS NOT IN D ISPUTE THAT ORDINARILY THE ASSESSEE WAS REQUIRED TO MAKE SUCH DEDUCTION ON THE PAYMENTS MAD E TO THE SUB-CONTRACTORS, UNLESS HE WAS COVERED UNDER THE EXCLUSION CLAUSE CONTAINED IN SUB-SECTION (3) OF SECTION 194C OF THE ACT. SUCH PROVISION, AS IT STOOD AT THE RELEVANT TI ME, READ AS UNDER:- 'SECTION 194C(3):- NO DEDUCTION SHALL BE MADE UNDER SUB-SECTION (1) OR SUB-SECTION (2) FROM - (I) THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR OR SUB- CONTRACTOR, IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES: PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EXCEEDS FIFTY THOUSAND RUPEES, THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRE D TO IN SUB-SECTION (1) OR, AS THE CASE MAY BE, SUB-SECTION (2) SHALL BE LIABLE TO DED UCT INCOME-TAX UNDER THIS SECTION: PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UNDER SUB- SECTION (2), FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF THE SUB-CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON PRODU CTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM, IN T HE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH TIME AS MA Y BE PRESCRIBED, IF SUCH SUB- CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR: PROVIDED ALSO THAT THE PERSON RESPONSIBLE FOR PAY ING ANY SUM AS AFORESAID TO THE 7 ITA NOS.582&611/KOL/2017 ASHOKE PRASAD A.YR. 2012-13 7 SUB-CONTRACTOR REFERRED TO IN THE SECOND PROVISO SHALL FURNISH TO THE PRESCRIB ED INCOME- TAX AUTHORITY OR THE PERSON AUTHORISED BY IT SUCH P ARTICULARS AS MAY BE PRESCRIBED IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED; OR (II) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JU NE, 1972; OR (III) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JU NE, 1973, IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A CO-OPERATIVE SOCIETY O R IN PURSUANCE OF A CONTRACT BETWEEN SUCH CONTRACTOR AND THE SUB-CONTRACTOR IN R ELATION TO ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) UNDERTA KEN BY THE CONTRACTOR FOR THE CO- OPERATIVE SOCIETY. EXPLANATION - FOR THE PURPOSE OF CLAUSE (I), 'GOODS CARRIAGE' SHALL HAVE THE SAME MEANING AS IN THE EXPLANATION TO SUB-SECTION (7) OF SECTION 44AE.' 4. SECTION 40(A)(IA) OF THE ACT, IN TURN, PROVIDES TH AT CERTAIN AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', NAMELY, PAYMENTS MADE TOWARDS INTEREST , COMMISSION OR BROKERAGE ETC., ON WHICH TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, THE SAME HAS NOT BEEN PAID ON OR BEFORE THE DUE DAT E SPECIFIED IN SUB-SECTION (1) OF SECTION 139 OF THE ACT. SECTION 40(A)(IA) OF THE ACT, INSOF AR AS IT IS RELEVANT FOR OUR PURPOSE, READS AS UNDER:- 'SECTION 40(A)(IA):- ANY INTEREST, COMMISSION OR BR OKERAGE, [RENT, ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RE SIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOR FOR CARRYING OUT ANY WOR K), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDU CTED OR, AFTER DEDUCTION, [HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SU B-SECTION (1) OF SECTION 139 :]' 5. FROM THE ABOVE STATUTORY PROVISIONS, IT CAN BE SEE N THAT UNDER SECTION 40(A)(IA) OF THE ACT, PAYMENTS MADE TOWARDS INTEREST, COMMISSION OR BROKERAGE ETC. WOULD BE EXCLUDED FOR DEDUCTION IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', WHERE THOUGH TAX WAS REQUI RED TO BE DEDUCTED AT SOURCE, IS NOT DEDUCTED OR WHERE AFTER SUCH DEDUCTION, THE SAME HA S NOT BEEN PAID ON OR BEFORE THE DUE DATE. THUS FOR APPLICATION OF SECTION 40(A)(IA) OF THE ACT, THE FOREMOST REQUIREMENT WOULD BE OF TAX DEDUCTION AT SOURCE. 6. SECTION 194C, AS ALREADY NOTICED, MAKES PROVISION WHERE FOR CERTAIN PAYMENTS, LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE ARISES. THEREF ORE, IF THERE IS ANY BREACH OF SUCH REQUIREMENT, QUESTION OF APPLICABILITY OF SECTION 4 0(A)(IA) WOULD ARISE. DESPITE SUCH CIRCUMSTANCES EXISTING, SUB-SECTION (3) MAKES EXCLU SION IN CASES WHERE SUCH LIABILITY WOULD NOT ARISE. WE ARE CONCERNED WITH THE FURTHER PROVISO TO SUB-SECTION (3), WHICH PROVIDES THAT NO DEDUCTION UNDER SUB-SECTION (2) SH ALL BE MADE FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PA ID TO THE SUB-CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOO DS CARRIAGES, ON PRODUCTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDI TING SUCH SUM IN THE PRESCRIBED FORM AND VERIFIED IT IN THE PRESCRIBED MANNER WITHIN THE TIME AS MAY BE PRESCRIBED, IF SUCH SUB- 8 ITA NOS.582&611/KOL/2017 ASHOKE PRASAD A.YR. 2012-13 8 CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR. 7. THE EXCLUSION PROVIDED IN SUB-SECTION (3) OF SECTI ON 194C FROM THE LIABILITY TO DEDUCT TAX AT SOURCE UNDER SUB-SECTION (2) WOULD THUS BE COMPL ETE THE MOMENT THE REQUIREMENTS CONTAINED THEREIN ARE SATISFIED. SUCH REQUIREMENTS, PRINCIPALLY, ARE THAT THE SUB- CONTRACTOR, RECIPIENT OF THE PAYMENT PRODUCES A NEC ESSARY DECLARATION IN THE PRESCRIBED FORMAT AND FURTHER THAT SUCH SUB-CONTRACTOR DOES NO T OWN MORE THAN TWO GOODS CARRIAGES DURING THE ENTIRE PREVIOUS YEAR. THE MOMENT, SUCH R EQUIREMENTS ARE FULFILLED, THE LIABILITY OF THE ASSESSEE TO DEDUCT TAX ON THE PAYMENTS MADE OR TO BE MADE TO SUCH SUB-CONTRACTORS WOULD CEASE. IN FACT HE WOULD HAVE NO AUTHORITY TO MAKE ANY SUCH DEDUCTION. 8. THE LATER PORTION OF SUB-SECTION (3) WHICH FOLLOW THE FURTHER PROVISO IS A REQUIREMENT WHICH WOULD ARISE AT A MUCH LATER POINT OF TIME. SU CH REQUIREMENT IS THAT THE PERSON RESPONSIBLE FOR PAYING SUCH SUM TO THE SUB-CONTRACT OR HAS TO FURNISH SUCH PARTICULARS AS PRESCRIBED. WE MAY NOTICE THAT UNDER RULE 29D OF TH E RULES, SUCH DECLARATION HAS TO BE MADE BY THE END OF JUNE OF THE NEXT ACCOUNTING YEAR IN QUESTION. 9. IN OUR VIEW, THEREFORE, ONCE THE CONDITIONS OF FUR THER PROVISO OF SECTION 194C(3) ARE SATISFIED, THE LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE WOULD CEASE. THE REQUIREMENT OF SUCH PAYEE TO FURNISH DETAILS TO THE INCOME TAX AUT HORITY IN THE PRESCRIBED FORM WITHIN PRESCRIBED TIME WOULD ARISE LATER AND ANY INFRACTIO N IN SUCH A REQUIREMENT WOULD NOT MAKE THE REQUIREMENT OF DEDUCTION AT SOURCE APPLICA BLE UNDER SUB-SECTION (2) OF SECTION 194C OF THE ACT. IN OUR VIEW, THEREFORE, THE TRIBUN AL WAS PERFECTLY JUSTIFIED IN TAKING THE VIEW IN THE IMPUGNED JUDGMENT. IT MAY BE THAT FAILU RE TO COMPLY SUCH REQUIREMENT BY THE PAYEE MAY RESULT INTO SOME OTHER ADVERSE CONSEQUENC ES IF SO PROVIDED UNDER THE ACT. HOWEVER, FULFILLMENT OF SUCH REQUIREMENT CANNOT BE LINKED TO THE DECLARATION OF TAX AT SOURCE. ANY SUCH FAILURE THEREFORE CANNOT BE VISUAL IZED BY ADVERSE CONSEQUENCES PROVIDED UNDER SECTION 40(A)(IA) OF THE ACT. 10. WHEN ON THE BASIS OF THE RECORD IT IS NOT DISPUTED THAT THE REQUIREMENTS OF FURTHER PROVISO WERE FULFILLED, THE ASSESSEE WAS NOT REQUIR ED TO MAKE ANY DEDUCTION AT SOURCE ON THE PAYMENTS MADE TO THE SUB-CONTRACTORS. IF THAT B E OUR CONCLUSION, APPLICATION OF SECTION 40(A)(IA) WOULD NOT ARISE SINCE, AS ALREADY NOTICED , SECTION 40(A)(IA) WOULD APPLY WHEN THERE IS A REQUIREMENT OF DEDUCTION OF TAX AT SOURC E AND SUCH REQUIREMENT IS EITHER NOT FULFILLED OR HAVING DEDUCTED TAX AT SOURCE IS NOT D EPOSITED WITHIN PRESCRIBED TIME. 11. WITH RESPECT TO THE TRIBUNAL'S EARLIER JUDGMENT IN CASE OF SHREE PRAMUKH TRANSPORT CO. LTD. (SUPRA) , NEITHER SIDE COULD THROW ANY LIG HT WHETHER THE REVENUE HAD CARRIED THE SAME IN APPEAL OR NOT. HOWEVER, WE HAVE EXAMINED TH E QUESTION INDEPENDENTLY AND COME TO OUR OWN CONCLUSION RECORDED HEREIN ABOVE. 12. IN THE RESULT, TAX APPEAL IS DISMISSED. 7.3.1. THERE IS NO DISPUTE IN THE INSTANT CASE THAT THE ASSESSEE HAD DULY OBTAINED A DECLARATION FROM THE CONCERNED TRANSPORTERS THAT TH EY OWN LESS THAN 10 VEHICLES ALONG 9 ITA NOS.582&611/KOL/2017 ASHOKE PRASAD A.YR. 2012-13 9 WITH THEIR PAN. HENCE THE ASSESSEE HAD DULY COMPLI ED WITH SECTION 194C(6) OF THE ACT WHICH FORMS UNDER THE EXCLUSION CLAUSE FOR DEDUCTION OF TAX AT SOURCE. THE MOMENT THE SAID DECLARATION IS OBTAINED FROM THE TRANSPORTERS , THE ASSESSEE DOES NOT HAVE ANY OBLIGATION TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO TRANSPORTERS. THE ONLY DEFAULT COMMITTED BY THE ASSESSEE IN THE INSTANT CA SE IS NOT SUBMITTING THE SAID DECLARATION TO THE COMPETENT AUTHORITY AS PER SECTI ON 194C(7) OF THE ACT. THERE IS NO LOSS TO THE EXCHEQUER DUE TO THE ACTION OF THE ASSE SSEE IN THIS REGARD. IN OUR CONSIDERED OPINION, THE PROVISIONS OF SECTION 194C(6) AND 194C (7) OF THE ACT ARE INDEPENDENT OF EACH OTHER. WE ALSO FIND THAT THE ISSUE UNDER DISPU TE IS ALREADY RESOLVED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF KALI KINKAR ROY VS ITO IN ITA NO. 1676/KOL/2016 DATED 31.10.201 7 WHEREIN IT WAS HELD AS UNDER:- 8. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT SINCE ALL THE PAYEES SUBMITTED T HEIR PERMANENT ACCOUNT NUMBERS IN THE ASSESSMENT PROCEEDINGS. THE PROVISION CONTEMPLA TED IN SEC 194C(6) PERMITS NO DEDUCTION OF TDS SHALL BE MADE U/S. 194C(1) IF THE PAYEE FURNISHES PAN TO THE PAYER. WE FIND THAT THE REQUIREMENT OF SECTION 194C(6) OF THE ACT SUBMISSION OF PERMANENT ACCOUNT NUMBER WHICH ENABLE THE PAYER FROM NO DEDUC TION OF TDS. THE FINDING OF THE AO WAS THAT THE PERMANENT ACCOUNT NUMBERS FURNISHED CANNOT BE ACCEPTED AS IT WAS NOT FILED WITH THE APPROPRIATE AUTHORITY AS REQUIRE D U/S. 194C(7) OF THE ACT AND WHETHER SUCH FAILURE ATTRACTS AND INVOKES THE JURISDICTION UNDER SECTION 40(A)(IA) OF THE ACT. AT THIS JUNCTURE, WE MAY REFER THE ORDER OF COORDINATE BENCH OF THIS TRIBUNAL WHICH HELD THAT PROVISIONS OF SECTION 194C(6) AND SECTION 194C(7) ARE INDEPENDENT TO EACH OTHER AND CAN JOIN TOGETHER NOT BE READ TOGETHER TO ATTRA CT THE DISALLOWANCE U/ SECTION 40(A)(IA) OF THE ACT. THE RELEVANT PORTION OF WHICH IS REPRO DUCED HEREUNDER: V) SECTIONS 194C(6) AND SECTION 194C(7) ARE INDEPENDENT OF EACH OTHER, AND CANNOT BE READ TOGETHER TO ATTRACT DISALLOWANCE U/S. 40(A)(IA ) READ WITH SECTION 194C OF THE ACT; AND VI) IF THE ASSESSEE COMPLIES WITH THE PROVISIONS OF SECTION 194C(6) , NO DISALLOWANCE U/S.40(A)(IA) OF THE ACT IS PERMISSIBLE, EVEN THERE IS VIOLATION OF THE PROVISIONS OF SECTION 194C(7) OF THE ACT. 9. IN THE PRESENT ISSUE AS DISCUSSED THE FACT REMAI NS ADMITTED THE PAYEES FURNISHED PANS TO THE ASSESSEE, BUT, THE ASSESSEE COULD NOT F URNISH THE SAME TO THE PRESCRIBED AUTHORITY WITHIN TIME AND WHETHER SUCH FAILURE ATTR ACTS THE ADDITION AND DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT, IN OUR OPINION THERE IS VIOLATION OF SECTION 194C(7) AND DISALLOWANCE UNDER SECTION 40(A)(IA) DOES NOT ARISE AS HELD BY THE 10 ITA NOS.582&611/KOL/2017 ASHOKE PRASAD A.YR. 2012-13 10 COORDINATE BENCH SUPRA, ACCORDINGLY, THE IMPUGNED A DDITION MADE THEREON SHALL GO AND THUS, GROUND NO'S 2 AND 3 RAISED BY THE ASSESSE E ARE ALLOWED. 7.3.2. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIA L PRECEDENTS, WE HOLD THAT THE LD CITA HAD RIGHTLY GRANTED RELIEF TO THE ASSESSEE IN THE I NSTANT CASE. ACCORDINGLY, THE GROUNDS 3 & 4 RAISED BY THE REVENUE ARE DISMISSED. 8. THE GROUND NOS. 1, 5, 6 & 7 RAISED IN ASSESSEE S APPEAL ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 611/KOL/2017 IS ALLOWED AND APPEAL OF THE REVENUE IN ITA NO. 582/KOL/2017 IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 26.10.2018 SD/- SD/- [S.S. GODARA] [ M .BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 26.10.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. I) ACIT, CIRCLE-49(1), KOLKATA, UTTARAPAN SHOPP ING COMPLEX, MANIKTALLA CIVIC CENTRE, ULTADANGA, KOLKATA-700054 (II) DCIT, CIRCLE-49, KOLKATA, 3, GOVT. PLACE, KOLK ATA-700001. 2. ASHOKE PRASAD, C/O AGARWAL KHEMKA & ASSOCIATES, 30, JADUNATH DEY ROAD, (OPP. AIR INDIA OFFICE), KOLKATA-700012. 3..C.I.T(A).- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES