2022 (1) TMI 41 - AT - Income Tax

Revision u/s 263 by CIT - applicability of TDS in case of payments of Lorry, charges people different lorry owners - rectification proceedings u/s 154 - HELD THAT - We note that the Ld.AO made enquiries and accepted the documents filed during the course of scrutiny assessment. The reply dated 23/05/2016 filed by assessee pleased reveals that assessee was called upon to file the payment details and applicability of TDS provisions on such payments made. We find that assessee filed ledger accounts of the lorry owners to whom payments were made along with their PAN numbers and the amount paid. On careful perusal of the amendment carried out from time to time, we note that from 1.10.2009 up to 31.5.2015, TDS was not be deducted from the payments made to the goods transport contractor, if PAN is furnished to the person paying or crediting such sum. It is pertinent to note that the statute does not provide any restriction on the number of goods carriages to be owned by the payee and also there is no condition that the payee should be individual . Before us the year under consideration is assessment year 2014-15, hence the provision as amended by Finance (No.2) Act, 2009 shall apply. Hence position explained hereinabove shall apply. The payer is required to obtain Permanent Account Number only from the payee for paying the charges without deduction of TDS. In the present facts of the case the assessee being an individual had furnished copies of RC card extract of the vehicles owned by such lorry owners and affidavit from all the deductee s mentioning that the total income did not exceed the limit on which TDS is to be deducted for the year under consideration before the Ld.AO. AR had submitted that the errors pointed in the PAN extracted in the notice u/s 263, is mere typing mistake and that the assessee had submitted that the photocopy of the PAN before the Ld.AO as well as Ld.Pr.CIT. Thus by furnishing the PAN details, assessee met with the requirement of the law, in so far as the during assessment. In our view it is a possible view taken by the Ld.AO which cannot be found fault with. The proceedings under section 154 are deemed to be dropped can be founded with the above amendments. The action of Ld.AO cannot be termed as lack of enquiry in the present facts of the case. Thus we quash the impugned order passed under section 263 of the Act. - Decided in favour of assessee.

Issues Involved:
1. Validity of the notice issued under section 263 of the Income Tax Act.
2. Justification for invoking jurisdiction under section 263.
3. Assessment of whether the original assessment order was erroneous and prejudicial to the interests of the revenue.
4. Adequacy of the Assessing Officer’s (AO) enquiries during the assessment proceedings.
5. Compliance with the provisions of section 194C(6) and (7) regarding non-deduction of TDS.
6. Validity of PAN numbers provided by the assessee.
7. Consideration of the assessee's compliance with the requirement of obtaining PAN at the time of payment.
8. Examination of whether the trucks were owned by benami holders.
9. Applicability of judicial precedents relied upon by the assessee.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 263:
The assessee challenged the notice issued under section 263, arguing it was "bad in law." The Tribunal examined whether the notice was legally valid and found that the Principal Commissioner of Income Tax (Pr.CIT) had followed due process in issuing the notice.

2. Justification for Invoking Jurisdiction Under Section 263:
The Pr.CIT invoked section 263, asserting that the original assessment order was "erroneous and prejudicial to the interest of the revenue." The Tribunal scrutinized whether this invocation was justified. The Pr.CIT argued that the AO had not sufficiently verified the PAN numbers and the applicability of TDS provisions under section 194C.

3. Assessment of Whether the Original Assessment Order Was Erroneous and Prejudicial to the Interests of the Revenue:
The Tribunal evaluated if the original assessment order was indeed erroneous and prejudicial. The Pr.CIT contended that the AO failed to verify the PAN numbers, some of which were generated after the financial year in question, thus invalidating the exemption claimed under section 194C(6). The Tribunal found that the AO had made sufficient enquiries and accepted the documents filed during the scrutiny assessment.

4. Adequacy of the Assessing Officer’s (AO) Enquiries During the Assessment Proceedings:
The Tribunal noted that the AO had made specific enquiries regarding the applicability of TDS on payments made to lorry owners. The AO had obtained PAN numbers and other relevant documents during the assessment proceedings. The Tribunal concluded that the AO had conducted adequate enquiries and that the assessment order was neither erroneous nor prejudicial to the revenue.

5. Compliance with the Provisions of Section 194C(6) and (7) Regarding Non-Deduction of TDS:
The Tribunal examined whether the assessee complied with section 194C(6) and (7), which exempts TDS if the transporter furnishes their PAN. The Tribunal found that the assessee had provided PAN numbers and other required documents, thus complying with the provisions.

6. Validity of PAN Numbers Provided by the Assessee:
The Pr.CIT argued that some PAN numbers were invalid or generated after the financial year, making the exemption under section 194C(6) inapplicable. The Tribunal found that the errors in PAN numbers were typographical and that the assessee had furnished valid PAN details, meeting the legal requirements.

7. Consideration of the Assessee's Compliance with the Requirement of Obtaining PAN at the Time of Payment:
The Pr.CIT contended that the PAN numbers should have been obtained at the time of payment. The Tribunal held that the statute did not specify this requirement and that the assessee had met the legal obligation by providing PAN details during the assessment.

8. Examination of Whether the Trucks Were Owned by Benami Holders:
The Pr.CIT raised concerns that the trucks might be owned by benami holders, given the financial status of the lorry owners. The Tribunal found no evidence to support this claim and noted that the AO had accepted the documents provided, including affidavits from the lorry owners.

9. Applicability of Judicial Precedents Relied Upon by the Assessee:
The assessee cited various judicial precedents to support their case. The Tribunal found that the facts of the cited cases were distinguishable but agreed with the principle that an assessment order should not be revised under section 263 if the AO had conducted adequate enquiries.

Conclusion:
The Tribunal concluded that the AO had conducted sufficient enquiries and that the original assessment order was neither erroneous nor prejudicial to the revenue. The Tribunal quashed the order passed under section 263 and allowed the appeal filed by the assessee. The grounds raised by the assessee were accepted, and the appeal was allowed in favor of the assessee. The order was pronounced in the open court on 29th December 2021.

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