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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER ABY T. VARKEY, JM: These are appeals preferred by the assessee against the order of
the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in
short "the Ld.CIT(A)”), Delhi, both dated 30.10.2023 for the Assessment
Years (hereinafter in short "AY”) 2015-16 & 2016-17.
ITA Nos.1557 & 1558/Chny/2023 (AYs 2015-16 & 2016-17) Mariyappan Dhanalakshmi :: 2 ::
At the outset, the Ld.AR of the assessee submitted that the
Ld.CIT(A) as well as the AO has made additions/disallowances only on the
basis that assessee was not able to file for AY 2015-16 PAN details of the
persons plying lorry; and likewise, for AY 2016-17 for non-filing of PAN &
declaration from the contractors that they do not own more than ‘10’
goods carriers at any time during the previous year. According to the
Ld.AR, the assessee was a wholesale dealer of garlic and had filed return
of income for AY 2015-16 on 27.09.2015 admitting total income of
Rs.13,01,297/-; and for AY 2016-17, return was filed on 17.10.2016
admitting total income of Rs.20,86,870/-. According to the Ld.AR, a
survey u/s.133A of the Income Tax Act, 1961 (hereinafter in short "the
Act”) was conducted in the assessee’s business premise on 07.03.2017
and the survey team took all the books & documents kept in the Office,
because of which, assessee couldn’t produce the aforesaid PAN
details/declaration from the transport-contractors. According to the
Ld.AR, this fact of confiscation of books/documents have been admitted
by the AO in both the Assessment Orders by admitting that “during the
course of survey proceedings certain books of accounts and documents
have been impounded from the premise of the assessee”. According to
the Ld.AR from perusal of assessment order and especially the reasons
recorded for re-opening, it would be discernable that AO alleged
escapement of income for both years for non-deduction of TDS in respect
ITA Nos.1557 & 1558/Chny/2023 (AYs 2015-16 & 2016-17) Mariyappan Dhanalakshmi :: 3 ::
of lorry freight expense of Rs.1,30,50,761/- for AY 2015-16 and
Rs.1,54,53,580/- for AY 2016-17. During the assessment proceedings,
the AO asked the assessee ‘as to why’ TDS was not deducted while
making the payment for lorry transport owners, and the assessee pointed
out that at the time of survey, he had answered to Q.No.15 of the survey
team that “it is stated that TDS was not made for freight expenses
payment for lorry transport owners, since declaration for
deduction/exemption obtained from lorry transport owners”. Therefore,
the AO asked the assessee to file TDS exemption i.e. declaration from the
owners as required u/s.194C(6) of the Act. Pursuant to which assessee
pointed out that assessee has collected those declaration from the lorry
owners as required u/s.194C(6) of the Act, but they all had been
impounded by the Department during the survey carried out on
07.03.2017; and therefore, assessee requested the AO to arrange a copy
of the impounded documents, so that he can place it on record. Pursuant
to the assessee’s request, the AO asked the assessee to take a copy of
the same vide order dated 03.12.2019 and gave assessee two days to
take copies of the documents. But, assessee submitted that time given to
him was too short and he couldn’t take copies of declaration from lorry
owners for these assessment years, which was running more than 10,000
pages and according to Ld AR, it was impossible to take copies of all
declarations. However, according to the AO, the assessee had taken
ITA Nos.1557 & 1558/Chny/2023 (AYs 2015-16 & 2016-17) Mariyappan Dhanalakshmi :: 4 ::
copies of the impounded materials as per their need and since, the
assessee couldn’t place the copies of declaration from lorry owners, the
AO disallowed the expenses claimed by the assessee alleging non-
deduction of TDS to the tune of Rs.39,15,228/-. Thereafter, the AO
proceeded further to another issue, which according to the Ld.AR was not
subject matter of reasons recorded for re-opening of assessment i.e.
about the payment made by the assessee to these lorry transporters
which though was less than Rs.20,000/- per day, however according to
the AO, this was done splitting the payments to avoid deduction of tax at
source; and therefore, he applied sec.40A(3A) of the Act and disallowed
the payments to the tune of Rs.1,06,21,452/-. On appeal, the Ld.CIT(A)
has confirmed the action of the AO for AY 2015-16 for non-filing of PAN
details of the transport contractors and for AY 2016-17 for non-filing of
declaration as well as PAN details as per sec.194C(6) of the Act. Before
us, the assessee has filed a copy of the letter received from Office of the
ACIT, Circle-2(1), Trichy, who has conveyed permission to the assessee
to take photo copies of the impounded documents vide order dated
07.03.2024 and according to the Ld.AR, pursuant to that permission, the
assessee had taken copies of the declaration of transport contractor as
required under sub-section (6) of Sec.194C of the Act along with PAN
details and since, assessee didn’t get proper opportunity before the AO,
during the course of assessment proceedings, pleaded that the case may
ITA Nos.1557 & 1558/Chny/2023 (AYs 2015-16 & 2016-17) Mariyappan Dhanalakshmi :: 5 ::
be restored back to the file of the AO and cited the decision of the Hon’ble
Supreme Court in the case of TIN Box Company v. CIT reported in [2001]
249 ITR 216 (SC), wherein, the Hon’ble Supreme Court has held that if
the assessee didn’t get proper opportunity before the AO, then, the
assessment need to be restored back to the file of the AO for de novo
assessment. It would be gainful to take note of the Hon’ble Supreme
Court order which reads as under:
It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus :
"We will straightaway agree with the assessee's submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard."
That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of selling out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard.
Two questions were placed before the High Court, of which the second question is not pressed.
The first question reads thus:
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee?"
In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the asses-see.
The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated. No order as to costs.
ITA Nos.1557 & 1558/Chny/2023 (AYs 2015-16 & 2016-17) Mariyappan Dhanalakshmi :: 6 ::
We find that the assessee could not file the relevant documents
before the AO because, it was impounded by the survey team on
07.03.2017, which fact has been admitted by the AO in the first part of
the Assessment Order itself; and it is noted the assessee during the
survey had stated that the payments (freight expenses) were made by
the assessee directly to the transport owners. The AO has disallowed the
freight expenses, since, assessee couldn’t file the copies of the declaration
as required u/s.194C(6) of the Act, which as noted had been impounded
by the survey team. This action of the AO cannot be countenanced for
the reasons that relevant documents including the PAN details/declaration
from transport contractors have been admittedly impounded by the
department during survey and is in their possession; and still insisting
assessee to produce the same is arbitrary exercise of power and cannot
be accepted. In any case, it has been brought to our notice that assessee
has been provided with copies of the relevant documents (seized by
survey team), so for ends of the justice and fair play, we set-aside the
impugned order of the Ld.CIT(A) and restore the issue back to the file of
the AO with a direction that de novo assessment on the issue for which
re-opening was resorted be carried out and thereafter, if the law permits
proceed to the other issue (regarding payments made to transport
contractors); and we add that for verification of facts, the AO may use
the service of the verification team of the Department; and the AO to
ITA Nos.1557 & 1558/Chny/2023 (AYs 2015-16 & 2016-17) Mariyappan Dhanalakshmi :: 7 :: pass assessment in accordance to law after hearing the assesee. Assessee is at liberty to file documents as well as raise legal issues in accordance to law and the AO is directed to frame assessment after hearing the assessee.
In the result, both appeals filed by the assessee are allowed for statistical purposes.
Order pronounced on the 25th day of June, 2024, in Chennai.
Sd/- Sd/- (एस. आर. रघुनाथा) (एबी टी. वक�) (S.R.RAGHUNATHA) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER
चे�ई/Chennai, �दनांक/Dated: 25th June, 2024. TLN, Sr.PS आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF