YASHWANT DADASAHEB BANDIGARE,,KOLHAPUR vs. PRINCIPAL COMMISISONER OF INCOME-TAX : 2,,

आदेश आदेश / ORDER आदेश आदेश

PER D. KARUNAKARA RAO, AM :

This appeal is filed by the assessee against the revision order of Pr.CIT-2, Kolhapur, dated 27-11-2015 u/s.263 of the Act for the Assessment Year 2011-12. The claim on account of Transportation expenses of Rs.61,18,650/- is the issue under the revision order of the Pr.CIT.

amounting to Rs.61,18,650/-. On finding that the said claim is not

fully supported by documentary evidences and they are only supported

by self-made vouchers, on agreed basis, a round-sum of Rs.3 lakhs was

disallowed by the AO on adhoc basis on that account u/s.37(1) of the

Act. Accordingly, the assessed income was determined at

Rs.11,47,430/- vide his assessment order dated 03-01-2013.

failed to call for the details of these transport expenses, details of the

names of the payees, their PAN numbers and compliance to the

provisions of section 194C(6) of the Act etc., the Pr.CIT held that the

said order passed by the AO on 03-01-2013 is erroneous and

prejudicial to the interest of the Revenue. Accordingly, in accordance

with the provisions of section 263 of the Act, a show cause notice was

issued as well as the repeated opportunities were granted to the

assessee. Eventually, the Pr.CIT held that the AO did not properly

verified the claims, applied his mind and has failed to examine the facts

from the angle as to whether there is any violation to the provisions of

section 194C of the Act. The Pr.CIT set-aside the regular assessment

order of the AO and directed him to call for relevant details and examine them before making denovo assessment after granting reasonable

opportunity of being granted to the assessee.

of erroneous assessment of law relating to the provisions of section

194C(6) and 194C(7) of the Act. He also relied on the Supreme Court

judgment in the case of Malabar Industrial Company Ltd. Vs. CIT 243

ITR 83 (SC) and Delhi High Court judgment in the case of Gee Vee

Enterprises Vs. Addl.CIT 99 ITR 375 apart from many others. Para

No.8 along with its sub-paragraphs contains the detailed discussion

supporting his view for holding the order of the AO as erroneous and

prejudicial to the interest of the Revenue. Aggrieved with the same, the

assessee is in appeal before us.

submitted that the assessee made payments amounting to

Rs.61,18,650/- to the transporters on account of transport charges.

Referring to the requirement of furnishing of the PAN details as

specified u/s.194C(6) of the Act by the payees relating to the said

transport charges, Ld. Counsel for the assessee submitted that he has

obtained the PAN numbers of the payees, which run into around 360

transporters, and stated that assessee has complied with the provisions

of sub-section (6) of section 194C of the Act. In this regard, Ld. Counsel

for the assessee filed a chart containing the names of the payees giving

Truck Numbers and amount of cash paid by the assessee. Ld. Counsel

submitted that the PAN details are not fully furnished to the assessee.

To the extent they are available, the same are gathered and are in the

possession of the assessee. In other words, assessee failed to ensure

the furnishing of PAN numbers by the payees and also furnishing of the

same to the Department as per the law. Further, mentioning about the

assessee’s failure to furnish the PAN details of the payees to the

competent authority, Ld. Counsel for the assessee submitted that in the

absence of prescribed form as required u/s.194C (6) of the Act, assessee

cannot be asked to do the impossible and therefore, this is the reason

for failure to furnish the PAN details to the income-tax authorities in

compliance with the provisions of section 194C(7) of the Act. Further,

he mentioned that the AO has already passed fresh assessment order

giving effect to the revision order of the Pr.CIT disallowing entire claim

of transportation charges. Ld. Counsel for the assessee submitted that

the revision order passed by the Pr.CIT is not correct and unsustainable

in law. Referring to the absence of erroneous assumption of fact or law,

Ld. Counsel relied on the judgment of Supreme Court in the case of

Malabar Industrial Company Ltd. (supra) apart from many others.

order of the Pr.CIT and stated that the AO is not aware of the fact about

the requirement of the assessee to furnish the PAN particulars of the

payees to the Revenue. Further, the AO’s failure to make proper

enquiries into the claim of transportation charges is obvious from the

way the assessment is made by the AO by merely resorting to an adhoc

addition of Rs.3 lakhs. Further, he submitted that this is the case

where AO has not applied his mind to the facts of the case as well as

not complied with the legal requirement etc. He justified the revision

order of the Pr.CIT dated 27-11-2015 in its entirety.

the Pr.CIT. We have to examine whether the order passed by the AO

originally constitutes an erroneous order in so far as it is prejudicial to

the interest of the Revenue or otherwise. On hearing both the parties

and on perusal of the orders of the AO and the Pr.CIT, we find the

regular assessment order has a reference to the solitary issue of

transportation charges. Contents of Para No.4.2 are relevant as the

same is an operational para disallowing Rs.3 lakhs after conducting a

test-check of the evidences. In other words, it is a case where AO has

not gone into the details, scrutinized the account thoroughly after

proper examination of the evidences in full. Making an assessment by

relying on the principle of test-checking, in our view, is not a

sustainable proposition of the AO. Therefore, in our view, the procedure

adopted by the AO falls short of the requirement of making of an

assessment under the statute.

Regarding the erroneous assumption of law qua the verification

by the AO, we find the provisions of sub-section (6) and (7) of section

194C of the Act have not been examined by the AO while making the

assessment u/s.143(3) of the Act. On observing the particulars

furnished by the Ld. Counsel for the assessee before us regarding the

PAN particulars, it is evident that the PAN particulars were not fully

furnished to the assessee by the payees and there is no examination

whatsoever regarding the requirement of making TDS as per the

provisions of sub-section (6) of section 194C of the Act. It is an

admitted fact that provisions of sub-section (7) of section 194C of the

Act deals with furnishing of PAN particulars to the income-tax

authorities and the same were not complied with by the assessee.

In our view, the reason given by the Ld. Counsel for the assessee

about the absence of any proforma is not sustainable. Therefore, we

are of the opinion that the finding of Pr.CIT given in Para No.8.2

onwards is fair and reasonable and it does not call for any interference.

Accordingly, the grounds raised by the assessee are dismissed.

Order pronounced in the open court on this 09th day of March, 2018.

Sd/- Sd/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) �याियक �याियक सद�य �याियक �याियक सद�य सद�य /JUDICIAL MEMBER लेखा सद�य लेखा लेखा सद�य लेखा सद�य सद�य / ACCOUNTANT MEMBER सद�य

पुणे Pune; �दनांक Dated : 09th March, 2018 सतीश

आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत

अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. 3. The CIT-2, Kolhapur िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B Bench” Pune; 4. गाड� फाईल / Guard file. 5.

आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार

स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune