SHANKAR KASHINATH KADAM,,SANGLI vs. INCOME TAX OFFICER,, SANGLI

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

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

The CIT(A) has upheld the said addition and hence, the assessee is in appeal against the same.

The learned Authorized 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 available 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 2010-11, 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.

The learned Departmental Representative for the Revenue referred to the provisions 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 original assessment proceedings, the assessee had failed to furnish any PAN numbers of the said transporters.

The learned Authorized Representative for the assessee in rejoinder pointed out that the condition of furnishing of declaration was inserted by Finance 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.

We have heard the 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 handicapped in forwarding the information collected by it in respect 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 transporters. The list of transport charges paid person-wise and their PAN numbers had

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. After 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 made 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 need 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 fact, 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, assessee’s contention that in the impugned assessment 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.”

The said proposition of Hyderabad Bench of Tribunal has been applied by 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-à-vis provisions of section 194C of the Act and consequently, no disallowance is warranted under section 40(a)(ia) of the Act. Accordingly, we delete disallowance of ₹ 2.29 crores made in the hands of assessee under

In the result, appeal of assessee is partly allowed.