CHANDRAHAS A. SHETTY,MUMBAI vs. ITO TDS 1(2), MUMBAI

The assessee is engaged in the business of transportation by using his own vehicle and also by hiring from outside parties. The assessee had paid lorry hire charges of ` 2.47 crores without deducting tax at source. Hence TDS officer issued show-cause notice to the assessee to explain as to why he should not be treated as assessee in default in terms of section 201(1) of the Act for non-deduction of tax at source on the above said payment. The assessee submitted that the parties to whom the payments were made did not own more than two vehicles and he has collected Form No. 15-I from them. He also submitted that he has furnished Form No. 15-J along with Form15-I to the 2 Shri Chandrahas A. Shetty Income Tax Department. The said explanation was not accepted by the TDS officer and accordingly he raised demand of ` 2.80 lakhs u/s. 201(1) and ` 1.34 lakhs u/s. 201(1A) of the Act. The learned CIT(A) noticed that the assessee has filed Form No. 15-J alongwith 15-I to the ITO(TDS) and not to the Commissioner of Income Tax as required under the provisions of the Act. Since the assessee did not filed Forms to the correct Income Tax authority, the learned CIT(A) took the view that the assessee has committed default in compliance with the provisions of section 194-C of the Act and accordingly he upheld the order passed by the TDS officer. Aggrieved, the assessee has filed this appeal before us.

Learned AR submitted that non-furnishing of TDS forms to the correct Income Tax authority would be a procedural lapse only and the same would not make the assessee as assessee in default. He further submitted that the provisions of section 194-C(6) of the Act would also apply to the assessee and Hon'ble Hyderabad Bench of the Tribunal has held in the case of Associated Roadways P. Ltd. (2013) 25 ITR (Trib) 713 that the provisions of section 194- C(6) shall apply retrospectively. Accordingly he submitted that the assessee cannot be treated as assessee in default and paid for deletion of demand raised on him.

On the contrary, learned Departmental Representative strongly supported the orders passed by the tax authorities.

We heard the parties and perused the record. The undisputed facts remains that the assessee has collected Form 15I as required u/s 194C(3) of the Act and hence the assessee has claimed that he is not required to deduct tax at source. However, the assessee has committed a mistake in furnishing the said forms along with Form No.15J, i.e., he has submitted the forms to the TDS officer instead of the Commissioner of Income tax. The question is whether the above said mistake would render the assessee as an assessee in default. The second proviso to sec. 194C(3) and sec. 194C(3) read as under:-

In the result, the appeal filed by the assessee is allowed.