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Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue against the order of the ld CIT(A), Meerut dated 18.01.2016 for the Assessment Year 2008-09 wherein he deleted the disallowance of Rs. 84,25,100/– made u/s 40(a) (ia) of the act by the Ld. AO vide order dated 28 /2/2014 u/s 143 (3) read with section 263 of The Income Tax Act 1961. 2. The revenue has raised the following grounds of appeal:- “1. Whether in the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in law and facts in deleting the disallowance of Rs. 8425100/- made by the AO u/s 40(a)(ia) of the IT Act, 1961, ignoring the fact that the assessee never submitted any supportive document to prove that the parties, to whom freight payment was made, were not liable to deduction of TDS.
2. Whether in the facts and circumstances of the case, the order of the learned Commissioner of Income-tax (Appeals) may be set aside and that of the AO be restored.”
3. Assessee is an individual carrying on the business of transportation of material, filed his return of income of Rs. 12,94,580/-and the assessment u/s 143 (3) of the act was passed on 30/11/2010 at Rs. 12, 57, 525/–. Page | 1 The Ld. CIT, Meerut, passed an order u/s 263 of the act on 22/3/2013. Consequent to this the assessment u/s 143 (3) read with section 263 of the act was passed on 28/2/2014. It was found that the assessee has paid freight of Rs. 84,25,100/- to the owner of the hired trucks without deduction of tax at source and assessee was required to file details of all the payments. The assessee filed the details of payment made to different parties with vehicle number but has not produced supporting documents to show that they are having less than 2 trucks. In absence of such supportive documents, the claim of the assessee was not verifiable by the Ld. assessing officer to examine that these payments were made to parties who were not liable for deduction of tax at source. Therefore, the Ld. AO further granted an opportunity to the assessee to produce the books of accounts, bills and vouchers and to show that the freight payment was made to the persons who are not having more than 2 trucks. Assessee also did not produce any certificate to that effect and therefore the Ld. AO made the disallowance of the above sum. Consequently the total income of the assessee was determined at Rs. 1,58,18,470/– against the returned income of Rs. 12,94,580/–.
4. Aggrieved with the order of the Ld. AO the assessee preferred an appeal before the Ld. CIT – A and has taken the additional ground before him that assessee has already filed form No. 15-J which is the only statement that allows the assessee to claim exemption from deduction of tax at source from the owners of the tankers having more than 2 tankers. The Ld. CIT – A also obtained the remand report from the assessing officer and consequent rejoinder of the assessee. He noted on examination of the assessment record that Ld. AO did not verify the facts of the case and also the form No. 15-J which was filed by the assessee with the Department as per the provisions during the original assessment proceedings although the above details were on file. He further noted that note sheet shows that despite the specific direction of the CIT u/s 263, no query regarding deduction of tax was raised on the note sheet. He further noted that in remand report proceedings also the AO was specifically directed to examine the matter with respect to the tax Page | 2 deduction at source provisions and AO could not point out any discrepancies, or did not bother to confront the assessee with the alleged discrepancies and then contested sustenance of the entire amount of disallowance. He further noted that on the production of the registration certificate from the RTO authorities it was found that all the payments were made to the parties who did not have the more than 2 tankers. He further held that during the course of examination of the record, some sample payments were verified and it was found that they are in accordance with the provisions of the law that no tax deduction at source thereon should have been made. He therefore deleted the entire disallowance for non-deduction of tax at source. Aggrieved with the order of the Ld. CIT – A, the Ld. assessing officer has filed this appeal.
The Ld. departmental representative vehemently supported the order of the Ld. AO. He submitted that the assessee should have deducted tax at source on payment made to the transporters which assessee has failed to make or to prove that how the tax at source was not required to be deducted. In view of this he submitted that the Ld. assessing officer has correctly disallowed the above sum. He further stated that the Ld. CIT – A has deleted the disallowance without any reason or giving Ld. AO an opportunity of verification of the details. He further submitted that the assessee has not submitted any detail before the assessing officer and submitted the complete details before the Ld. CIT – A.
Before us the Ld. authorized representative relied upon the order of the Ld. CIT – A and submitted that there is no violation of the provisions of section 194C of the income tax act and hence there cannot be any disallowance u/s 40 (a) (ia) of the act.
We have carefully considered the rival contentions and the orders of the lower authorities. In the present case apparently assessee has paid freight of Rs. 84,25,100/– to the owners of the trucks. The assessee filed the complete details before the Ld. assessing officer with respect to the vehicle number to whom the payments have been made. However, the Ld. AO was of the view that assessee has not submitted the complete details and therefore the disallowance was made. The Ld. CIT – A deleted Page | 3 the disallowance considering the provisions of section 194C of the income tax act with respect to the transport payments. Admittedly, the payment made by the assessee falls under the provisions of section 194C of the income tax act. However, the provisions of section 194C (3) (i) provides 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 production of a declaration to the person concerned paying or crediting such sum, in the prescribed form and verified in the prescribed manner and within such time as may 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. It has also put an additional duty on deductor that the person responsible for paying any sum as aforesaid to the sub-contractor referred to in the second proviso shall furnish to the prescribed income- tax authority or the person authorized by it such particulars as may be prescribed in such form and within such time as may be prescribed. Further rule 29 D of the income tax rules if particulars under the third proviso to clause (i) of sub-section (3) of section 194C to be furnished by a contractor responsible for paying any sum to such sub-contractor shall be in Form No. 15J. Such declaration is required to be furnished before the respective income tax authorities before 30 June following the close of the financial year. In the present case, assessee has furnished the details in form No. 15 J of the income tax rules 1962. The Ld. CIT – A has also verified the same. In the remand report, the Ld. AO could not draw attention of the Ld. CIT – A towards the any violation of the provisions of section 194C read with rule 29D of the income tax rules 1962. Despite the forms filed by the assessee in form No. 15 J of the income tax act the Ld. AO failed to verify them. On specific query, the Ld. departmental representative could not point out any infirmity in the order of the Ld. CIT – A. We have also noted that he has also verified the details furnished by the assessee on sample basis. He found no infirmity on verification of these details with respect to 3 payments. In view of this we do not find Page | 4