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Facts
The assessee claimed TDS credit for Rs. 96,578/- under section 194H and Rs. 1,37,256/- under section 194Q. The issue was whether commission income should be considered as turnover for the purpose of Section 44AB, differentiating between kachhaarhatia and paccaarhatia. The assessee failed to provide evidence to support their claim of being a kachhaarhatia.
Held
The tribunal held that the appellant failed to establish that they acted solely as a 'kachhaarhatia'. The difference between declared turnover in GST and ITR further indicated incorrect declaration. Consequently, only full credit of TDS u/s 194H was allowed.
Key Issues
Whether the appellant qualifies as a 'kachhaarhatia' for turnover calculation purposes and if the full TDS claim under section 194Q is admissible given discrepancies in turnover declaration.
Sections Cited
194H, 194Q, 143(1), 250, 44AB
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 806/JPR/2025
fu/kZkj.k o"kZ@Assessment Year : 2022-23 Niranjan Lal Cuke The ITO, Vs. 61, New Anaj Mandi, Kishangarh Ward-1(1), Bass, Alwar. Alwar. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABTPL2085Q vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : None jktLo dh vksj ls@Revenue by: Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@Date of Hearing : 25 /08/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 26/08/2025 vkns'k@ORDER PER: Narinder Kumar, Judicial Member, Present appeal came to be presented on 19.05.2025, challenging order dated 20.03.2025, passed by Learned CIT(A), u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), whereby the appeal filed by the assessee, challenging intimation u/s 143(1) of the Act issued by Centralized Processing Centre (CPC), has been partly allowed, by observing in the manner as under:-
Niranjan Lal, Alwar. “5.5 I have considered the submission made by the appellant and also gone through the maternal placed on record. On perusal of the same, it is evident that during the year, the appellant had claimed TDS under section 194H and 1940. With regard to TDS u/s 194H, total credits for the year was Rs.19,31,507/- and TDS was Rs. 96,578/-, however, the appellant had declared the commission income as Rs.20,73,161/- which is more than the amount reflecting in the Form 26AS of the appellant. Therefore, the appellant cannot be deprived of the TDS amount of Rs.96,578/-claimed u/s 194H and full credit of TDS of Rs 96,578/- is allowed. 5.6 Further, with regard to TDS claim of Rs. 1,37,256/-u/s 1940, the appellant had stated that the sales effected on behalf of the principals are not to be considered as sales of the appellant and only gross commission should be included in the turnover for the year under consideration. He has taken refuge in the CBDT circular no. 452, dated 17.3.1986, for the sake of brevity relevant portion of the circular is placed as under: “4. Board are advised that so far as kachhaarhatias are concerned, the turnover does not include the sales effected on behalf of the principals and only the gross commission has to be considered for the purpose of Section 44AB. But the position is different with regard to paccaarhatia. A paccaarhatia is not, in the proper sense of the word, an agent or even del credre agent. The relation between him and hisconstituent is substantially that between the two principals. On the basis of various Court pronouncements, following principles of distinction can be laid down between a kachhaarhatia and a paccaarhatia (1) A kachhaarhatia acts only as an agent of his constituent and never acts as a principal A paccaarhatia, on the other hand, is entitled to substitute his own goods towards the contract made for the constituent and buy the constituent's goods on his personal account and thus he acts as a principal as regards his constituent (2) A kachhaarhatia brings a privity of contract between his constituent and the third party so that each becomes liable to the other. The paccaarhatia, on the other hand, makes himself liable upon the contract not only to the third party but also to his constituent. (3) Though the kachhaarhatia does not communicate the name of his constituent to the third party, he does communicate the name of the third party to the constituent In other words he is an agent for an unnamed principal. The paccaarhatia, on the other hand, does not inform his constituent as to the third party with whom he has entered into a contract on his behalf (4) The remuneration of kachhaarhatia consists solely of commission and he is not interested in the profits and losses made by his constituent as is not the case with the paccaarhatia Niranjan Lal, Alwar. (5) The kacchaarhatia, unlike the paccaarhatia does not have any dominion over the goods (6) The kacchaarhatia has no personal interest of his own when he enters into a transaction and his interest is limited to the commission agent's charges and certain out of pocket expenses whereas a paccaarhatia has a personal interest of his own when he enters into a transaction. (7) In the event of any loss, the kachhaarhatia is entitled to be indemnified by his principal as is not the case with paccaarhatia.
5. The above distinction between a kachhaarhatia and paccaarhatia may also be relevant for determining the applicability of Section 44ABin cases of other type of agents in the case of agents whose position is similar to that of kachhaarhatia, the turnover is only the commission and does not include the sales on behalf of the principals. In the case of agents of the type of paccaarahtia, on the other hand, the total sales/turnover of the business should be taken into consideration for determining the applicability of the provisions of Section 44AB of the Income- tax Act." On considered of the above circular relied upon by the appellant and submissions of learned counsel for the appellant. The basic controversy involved is to ascertain whether the appellant benefit mentioned in the above mentioned circular. 5.7 Further, to substantiate his claim, the appellant has failed to furnish any license that he is only a commission agent in any Agriculture Market Committee with regard to him being a "Kachaarathia' issued by market Committee. Further he has also not furnished any purchase sale bill mentioning that any third party is involved or name of purchaser is any third party and not the appellant, which can establish that he has not acted as a principal but just as an agent. Thus during appellate proceedings, he has failed to establish through his submissions that he was working as a 'Kachaarathia' and hence his claim that only his gross commission should be added in the turnover cannot be accepted. 5.8 On the contrary, the turnover declared in his form-26AS points to the fact that bills were made in his name means the amount is to be shown as a part of his turnover during the relevant year and thus CPC has correctly reversed the TDS as the corresponding turnover was not fully declared in ITR. Further, it is also pertinent to mention here that there is a difference between the turnover declared in GST return and ITR filed by the appellant during the year which means that the appellant has not correctly declared the turnover in his ITR for the year. 5.9 Therefore, the Jurisdictional Assessing officer is directed to allow only the full credit of TDS with respect of TDS u/s 194H.
In result, the appeal is partly allowed.”
Niranjan Lal, Alwar.
It may be mentioned here that none has appeared on behalf of the assessee-appellant despite Court notice. On going through the record, we find that the assessee has submitted before this Appellate Tribunal on 19.07.2025 an application seeking permission to lead additional evidence.
By way of additional evidence, the assessee intends to place on record following documents:- ”(i) Licence no. 400 dated 29.05.2007 issued by Secretary, Agricultural produce Marketing Committee, Kharthal. (ii) Copies of some of the invoices and corresponding ‘Vikray Parchies”
We find that since this additional evidence is relevant for adjudication of the issues involved, and the matter needs to be adjudicated by the Assessing Officer afresh.
Ld. DR for the department has no objection to the remitting of the matter to the Assessing Officer for verification of said evidence and decision afresh.
6. No doubt, the above said documents are relevant for adjudication of the issues involved, it was for the assessee to produce the same before the Assessing Officer and also before Learned CIT(A).