2013 (5) TMI 786 - AT - Income Tax

Reopening of assessment - Held that - The Commissioner of Income-tax (Appeals) had not at all adjudicated the said ground and decided the appeal on merits. Being so, it is proper to remit this reopening issue to the file of the Commissioner of Income-tax (Appeals) after considering the argument advanced by the parties. - Decided in favour of assessee for statistical purposes. Disallowance u/s 40(a)(ia) - the assessee has not obtained form 15-I and also had not filed Form No. 15-J - whether provisions of section 194C(2) are not applicable to the assessee's case as the assessee took the vehicles on hire charges, therefore, the provisions of section 194C(2) do not attract the case of the assessee? - Held that - Explanation III to section 194C being applicable to the assessment year under consideration as the Explanation would be applicable prospectively from July 1, 1995, on which date it was introduced. In the present case, admittedly, the assessee made specific plea before the Revenue authorities that the assessee has collected Form 15-I from the truck operators but he could not produce them before the Assessing Officer, however, the same was produced before the Commissioner of Income-tax. The fact of non-production of Form 15-I cannot be taken as default committed by the assessee and as burdening the assessee with heavy taxable income. Since the assessee produced Form 15-I before the Commissioner of Income-tax and it was duly filled in, therefore, due credit is to be given. For this proposition, reliance is placed on the decision in the case of Shree Choudhary Transport Co. v. ITO 2009 (12) TMI 574 - ITAT JODHPUR . In the case of Valibhai Khanbhai Mankad v. Deputy CIT 2011 (4) TMI 887 - ITAT, AHMEDABAD wherein held that once the assessee has obtained Form No. 15-I from the sub-contractors, he is not liable to deduct TDS on the payment made to sub-contractors and no disallowance can be made under section 40(a)(ia) ; belated furnishing of Form No. 15J to the Commissioner of Income-tax is an act posterior in time to payments made to sub-contractors and, therefore, this cannot by itself undo the eligibility for exemption created in the second proviso to section 194C(3)(i) by virtue of submission of Form 15-I by sub-contractors. Accordingly, we are of the opinion that due credit be given to the claim of the assessee in terms of Forms 15-I and 15J filed by the assessee. The provisions of section 194C(6) is applicable to the assessee's case and this section has to be considered retrospectively in view of the judgment of CIT v. Alom Extrusions Ltd. 2009 (11) TMI 27 - SUPREME COURT . This ground of the appeal is allowed. - Decided in favour of assessee.

Summary

Issues Involved:
1. Reopening of assessment under section 147 read with section 148 of the Income-tax Act, 1961.
2. Confirmation of disallowance of Rs. 3,94,28,546 due to non-compliance with Form 15-I and Form 15-J requirements under section 40(a)(ia) of the Income-tax Act.

Issue-wise Detailed Analysis:

1. Reopening of Assessment under Section 147/148:

The assessee challenged the reopening of the assessment under section 147 read with section 148 of the Income-tax Act, 1961. The assessee argued that the reopening was based on the opinion of the internal audit party on a point of law, which does not constitute "information" for the purpose of section 147(b) as per the decision in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 (SC). The assessee also contended that the Commissioner of Income-tax (Appeals) failed to adjudicate this ground, implying a dismissal based on the judgments in CIT v. Steel Cast Corporation [1977] 107 ITR 683 (Guj) and Addl. CIT v. Chekka Ayyanna [1977] 106 ITR 313 (AP).

The Departmental representative argued that the assessment was reopened due to an audit objection, relying on the judgments in CIT v. P.V.S. Beedies P. Ltd. [1999] 237 ITR 13 (SC) and CIT v. First Leasing Company of India Ltd. [2000] 241 ITR 248 (Mad).

The Tribunal noted that the reopening issue was not adjudicated by the Commissioner of Income-tax (Appeals) and remitted the issue back to the Commissioner for consideration. This ground was allowed for statistical purposes.

2. Confirmation of Disallowance of Rs. 3,94,28,546:

The assessee argued that the provisions of section 194C(2) were not applicable as the assessee hired trucks without manpower, relying on CIT v. Pompuhar Shipping Corporation Ltd. [2006] 282 ITR 3 (Mad). The assessee also contended that the amendment to section 194C(6) by the Finance (No. 2) Act, 2009, should be considered retrospective, citing CIT v. Alom Extrusions Ltd. [2009] 319 ITR 306 (SC) and Allied Motors P. Ltd. v. CIT [1997] 224 ITR 677 (SC).

The assessee further argued that non-filing of Form 15-I was a procedural lapse and relied on Valibhai Khanbhai Mankad v. Deputy CIT [2011] 139 TTJ (Ahd) 70, which held that belated furnishing of Form 15J does not affect the exemption under section 194C(3). The assessee also cited the decision in Asst. CIT v. Sri Sai Road Ways in ITA Nos. 819 and 820/Hyd/2010, which supported the view that hiring vehicles without a sub-contract does not attract section 194C(2).

The Departmental representative relied on the orders of the authorities below. The Tribunal reviewed the remand report, which confirmed the genuineness of the transactions and the procedural lapses in filing Form 15-I and Form 15J. The Tribunal held that belated filing of Form 15J should not deny the deduction and that the provisions of section 194C(6) should be applied retrospectively. The Tribunal allowed the assessee's appeal on this ground.

In conclusion, the Tribunal remitted the issue of reopening of assessment to the Commissioner of Income-tax (Appeals) and allowed the appeal regarding the disallowance of Rs. 3,94,28,546, holding that procedural lapses in filing Form 15-I and Form 15J should not deny the deduction.