ACIT, CIRCLE-3, SURI, BIRBHUM, BIRBHUM vs. SRI SAROJIT KUMAR DEY, BIRBHUM

order

: September 22, 2017 ORDER

Per P.M. Jagtap, AM

1. On the facts and circumstances of the case, the Ld. CIT (A) was not justified in holding rejection of the assessee’s default in complying the provisions of section 194C(6) & (7).

2. On the facts and in the circumstances of the case the Ld. CIT (A) erred in deleting the addition of Rs. 75,82,759/- and Rs. 38,11,909/-.

3. On the facts and circumstances of the case the Ld. CIT (A) was not correct in law as well as in fact in deleting the addition of Rs. 7,00,000/- taking the plea of section 40(a)(ia) which was quoted by mistake in his order though the AO at the beginning narrated the expenses as per section 192 of the I.T. Act, 1961.

2. The assessee in the present case is an individual who is engaged in the business of running country spirit bottling plant cum warehouse. The return of income for the year under consideration 2 Assessment Year: 2010-11 Shri Sarojit Kr. Dey was filed by him on 11.10.2010 declaring a total income of Rs. 1,65,46,960/-. In the profit and loss account filed along with the said return, the sums of Rs. 1,29,65,314/- and Rs. 96,40,345/- were debited by the assessee on account of inward transport charges and outward transport charges respectively. During the course of assessment proceedings, it was noticed by the AO that the assessee has not deducted tax at source from the payments of inward transport charges and outward transport charges to the extent of Rs. 75,82,759/- and Rs. 38,11,909/-. In this regard, it was submitted by the assessee by relying on section 194C(6) of the Act that the concerned parties having furnished their PAN, there was no obligation to deduct tax at source for the period from 01.10.2009 to 31.03.2010. According to the AO, the assessee however was required to comply with the provisions of section 194C(7) and furnish to prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed in section 194C of the Act. Since the assessee had failed to comply with the provisions of section 194C(7) of the Act, the AO disallowed the inward transport charges and outward transport charges to the extent of Rs. 75,82,759/- and Rs. 38,11,909/- by invoking the provision of section 40(a)(ia). He also made further disallowance of Rs. 7,00,000/- u/s 40(a)(ia) on account of salary paid by him to Shri Asit Baran Dey for the failure of the assessee to deduct tax at source from the payment of the said salary. Accordingly the total income of the assessee was determined by the AO at Rs. 2,87,06,656/-. In the assessment completed the u/s 143(3) vide an order dated 06.03.2013.

3 Assessment Year: 2010-11 Shri Sarojit Kr. Dey 3. Against the order of the AO passed u/s 143(3), an appeal was filed by the assessee before the Ld. CIT (A) and after considering the submission made by the assessee as well as the material available on record, the Ld. CIT (A) deleted the entire disallowance made by the AO u/s 40(a)(ia) for the following reasons given in paragraph no 5 & 6 of his impugned order. “5. The Form as per section 194C(7)has not been prescribed. When is form is not prescribed the assessee is not duty bound to furnish and even if desires to file one, cannot file. Therefore there is no default in complying with provisions of section 194C(7). This being the case the disallowance is not in order. Further, I find that the appellant has filed form 26Q which corresponds to rule 31A and section 200(3). Since there is no default in complying with provisions of section 194C(7). I direct Assessing Officer to delete the addition of Rs. 75,82,759/- and Rs. 38,11,909/-. Grounds 1 to 4, 6 and 7 are allowed.