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Income Tax Appellate Tribunal, PATNA BENCH
Before: Shri Rajpal Yadav & Dr. Manish Borad
Vs. DC/AC, Circle-3, Darbh …………. Respondent Appearances by: Shri K. K. Choudhry, CA appeared for Appellant Shri Ashwani Kr. Singhal, JCIT appeared for Respondent . Date of hearing : 20.06.2024 Date of pronouncing the order : 09.07.2024 ORDER
Per Manish Borad, Accountant Member:
This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2017-18 is directed against the order passed u/s 250 of the Income Tax Act, 1961 in short the “Act”) by ld. Commissioner of Income-tax (Appeal), Patna-3 [in short Ld. “CIT(A)”] dated 25.01.2023 arising out of the assessment order framed u/s 143(3) of the Act by DC/AC, circle-3, Darbh dated 28.12.2019.
The assessee has raised the following grounds of appeal:
Punam Hisaria “1. Ground I. For that Ld. CIT(A) has wrongly disallowed 30 percent of amount of Freight paid to the transporters who have given declaration for non-deduction of TDS in compliance of Section 194C(6) but failed to file statement in Form 26Q as required U/s 194C(7) of the Income Tax act, 1961.
2. Ground 2. For that CIT(A) could not consider the fact that all freight payments are eligible for non-deduction of TDS as per Sub-section (6) of Section 194C and filing of statement in form No. 26Q as per the requirement of 194C(7) is subsequent to the payment of freight without deduction of TDS.
Ground 3. Ld. CIT did not consider our plea 'that the non-compliance of section 194(C)(7) is technical omission only and if Compliance U/s 194(C)(6) has been done Section 40(a)(ia) should not be invoked for payment without TDS as per several decisions of different ITAT referred during the course of appellate proceedings.
Ground 4. For that during the remand proceedings Ld. A.O. was provided complete books of accounts, Ledger copy of freight copy of declaration of other truck owners whose freights amount to Rs.1,06,74,745/-. Books of accounts have been maintained showing party wise Ledger and all the details asked for during remand proceedings were furnished by our Letter dated 14.06.2022. This fact is apparent from the assessment record itself and verifiable. Ld. A.O. in the first paragraph of Clause -2 (Page-2) of Remand Report has accepted that the assessee has complied 194C(6).
Ground 5. Ld. CIT(A) did not consider the fact that A. O. has mentioned at the end of first Paragraph of Clause -2 the remand report that the assessee was asked to furnish the patty wise payment of freight but the fact is that no such details was asked for in AO's Letter Dated 1.06.2022 vide DIN: ITBA/COM/F/17/2022-23/1043287517(1) which was duly complied on 14.06.2022. This fact was put up before the Ld. CIT(A) and Party wise details was furnished before the Ld. CIT(A) and the same was verified at appellate stage.
6. Ground 6. For that Ld. CIT(A) did not consider the fact that party wise Ledger is maintained in the books of accounts itself and hence there is no question of non-furnishing of party wise details. Party wise details was furnished before the CIT(A) mentioning that it was never asked by the AO at assessment stage or remand stage.
7. Ground 7. For that Ld. CIT (A) has erred in confirming the addition of Rs. 45,000/- by the AO whereas the fact is different from what is stated w. r. t. this addition as during the entire period of demonetization there is SBN deposit on dated 10.11.2016 only. There is no other dates of deposit of SBN during the period of demonetization.
Punam Hisaria 8. Ground 8. For that Ld. C1T(A) did not consider the fact that the figure of Rs. 45000/- taken in the Assessment order is due to wrong attachment of details of some other customer of the bank and not at all related to our case. This fact has been accepted by the Bank by a separate Letter dated 12.12.2022 produced before the CIT(A).
Ground 9. For that A.O was approached for rectification by way of deletion of this item but rectification order was passed without mentioning anything about this item of addition. No any remark was passed on this item of rectification petition.
Ground 10. Any other ground which may arise in the course of hearing with the permission of the chair.”
3. Brief facts of the case are that the assessee is an individual and declared income of Rs. 41,65,800/- in the return for AY 2017-18 filed on 31.10.2017. The case was selected for scrutiny followed by validly serving notice u/s. 143(2) and 142(1) of the Act. Assessee replied to the questionnaire and also furnished tax audit report. Ld. AO completed the assessment making addition of Rs.1,43,67,492/- and assessed the income at Rs.1,85,33,292/-. Aggrieved, assessee preferred appeal before the Ld. CIT(A) and partly succeeded. Now the assessee is in appeal before this Tribunal raising various grounds which are reproduced above.
4. Though the assessee has raised as many as ten grounds of appeal but mainly two issues are involved which are summarized below: i) Challenging the addition u/s. 40(a)(ia) of the Act @ 30% of the amount of freight paid to the transporter for non-deduction of TDS u/s. 194C. ii) Addition of Rs.45,000/- for unexplained cash deposit during demonetization period in Specified Bank Notes (SBN) on 10.11.2016.
5(a). As regards the addition made u/s. 40(a)(ia) of the Act the Ld. Counsel for the assessee submitted that the details were filed before Punam Hisaria the lower authorities and since the payments were made to the truck owners having goods carriage not exceeding ten in number and have furnished the declaration along with the PAN, no TDS was required to deducted as per section 194C(6) of the Act. However, the Ld. CIT(A) has not considered these details and has confirmed the action of the AO. 5(b). As regards the addition of Rs.45,000/- for unexplained SBNs deposit during the demonetization period a certificate has been placed on record issued by Canara Bank stating that the letter issued by their branch dated 05.12.2019 regarding cash deposits on various dates in assessee’s account do not relate to the assessee and wrong information was shared. It is, thus, submitted before us that no addition of Rs.45,000/- is called for.
On the other hand, the Ld. DR vehemently supported the orders of the lower authorities.
We have heard the rival contentions and have carefully perused the documents placed before us. First, we take up ground nos. 1 to 6 which all relate to addition u/s. 40(a)(ia) of the Act at Rs.3,20,24,234/- which is 30% of the alleged freight payment of Rs.1,06,74,745/-. We note that the AO while concluding the assessment proceedings made the addition u/s. 40(a)(ia) of the Act at Rs.71,51,002/- which is 30% of the total freight payment of Rs.2,38,36,675/-. This addition was made for not providing the necessary details. Thereafter, in the proceedings before the Ld. CIT(A) certain details were filed about the payment made to one Mr. Manish Hisariya and Sanjay Hisariya having less than ten trucks and also the freight charge for assessee’s own trucks. Considering these details part relief was granted. However, as regards the freight payment of Rs.1,06,74,745/- details were not furnished. Page 4 of 6 Punam Hisaria 8. Before us, the ld. Counsel for the assessee has referred to the impugned order and also the remand report stating that the assessee has furnished complete details u/s. 194C(6) of the Act and also admitted that the details were not furnished in the prescribed form u/s. 194C(7) of the Act and not furnishing of information u/s. 194C(7) attract penal provisions and that has to be considered separately. So far as the present issue is concerned, the assessee was required to furnish party wise details of freight payment of Rs.1,06,74,745/- along with the declaration that the parties receiving such payment do not have more than ten trucks and they hold PAN. On one hand, the assessee states that it had filed the details but on the other hand, ld. CIT(A) has stated that details have not been filed. Before us also, assessee has not furnished any details. The Ld. Counsel for the assessee has mentioned the ledger account but that will not serve the purpose for getting immunity for not deducting tax at source u/s. 194C(6) of the Act.
9. We, however, considering the prayer of the Ld. Counsel for the assessee remit the matter to the file of the Ld. CIT(A) before whom the assessee shall file party wise details of aforesaid payment of Rs.1,06,74,745/- along with declaration as prescribed in the law and copy of PAN of each of such payee. On examination of such details and after affording reasonable opportunity of being heard to the assessee, Ld. CIT(A) shall decide in accordance with law. Assessee is also directed not to take any adjournment without a just cause. Ground nos. 1 to 6 raised by the assessee are allowed for statistical purposes.
10. As regards ground nos. 7 to 9 the only issue is regarding the addition of Rs. 45,000/- for unexplained deposit during demonetization period on 10.11.2016. However, since the certificate Punam Hisaria of the Canara Bank, Dumra Road, Sitamarhi has been filed stating that the information provided in the branch letter No. STMR/12/1 dated 05.12.2019 is not related to transaction made by M/s. S. H. Food Products (Prop. Poonam Hisaria), we are inclined to delete the impugned addition since the same was based only on the wrong information received from Canara Bank about alleged cash deposit. Ground nos. 7 to 9 of the appeal of the assessee are allowed.