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2023 (5) TMI 33 - AT - Income TaxRevision u/s 263 - Non deduction of tds u/s 194C on the sums debited to P L account under the head transportation charges - assessee explained that all i.e. required is to obtain PAN from the parties to whom the payments of freight were made and since the assessee had obtained the PAN from the parties, he has complied with the provision of Section 194C (6) - HELD THAT - The payer is required to obtain PAN only from the payee for paying the charges without deduction of tax at source. In the present case, the assessee has obtained the PAN of the payees and has thus complied with the provision of Section 194C(6) of the Act as mentioned above. The AO had made specific enquires and after satisfying himself took a plausible view. Assessee has not furnished the requisite declaration - No force in this contention of the PCIT. Firstly; the provisions have been amended with effect from 01.06.2015 and therefore not applicable for the year under consideration and secondly; the only obligation on the assessee was that to obtain the PAN number of the payees which he has obtained. Merely because there is no compliance on the part of the assessee to furnish the prescribed information to the Revenue authorities the same cannot lead to a conclusion that the assessee has not complied with the first statutory obligation i.e. to obtain PAN of the payees. Considering the case of Sunbeam Auto Ltd. 2009 (9) TMI 633 - DELHI HIGH COURT we set aside the order of the PCIT and restore that of the AO - Decided in favour of assessee.
Issues Involved:
1. Legality of the PCIT's exercise of revisionary powers under Section 263. 2. Validity of the assessment order passed under Section 143(3). 3. Requirement of declaration under Section 194C(6) before 01.06.2015. 4. Disallowance under Section 40(a)(ia) for non-deduction of tax at source. 5. Compliance with Section 194C(6) and 194C(7). Summary: 1. Legality of the PCIT's Exercise of Revisionary Powers under Section 263: The assessee contested that the Principal Commissioner of Income Tax (PCIT) erred in exercising revisionary powers under Section 263, setting aside the assessment order passed under Section 143(3). The Tribunal found that the PCIT assumed jurisdiction based on the ground that the assessee did not deduct tax at source under Section 194C on transportation charges. However, the Tribunal noted that the assessee had obtained PAN from the parties to whom freight payments were made, thus complying with Section 194C(6). The Tribunal concluded that the PCIT's action was unjustified as the Assessing Officer (AO) had made specific inquiries and taken a plausible view. 2. Validity of the Assessment Order Passed under Section 143(3): The Tribunal observed that during the scrutiny assessment proceedings, the AO had specifically inquired about TDS on various payments, including freight. The assessee responded that the required declarations and PAN numbers had been obtained from the parties. The Tribunal held that the AO had made adequate inquiries and allowed the expenditure, thus the assessment order could not be deemed erroneous or prejudicial to the interest of the Revenue. 3. Requirement of Declaration under Section 194C(6) Before 01.06.2015: The Tribunal noted that the provisions of Section 194C(6) were amended with effect from 01.06.2015. For the year under consideration, the only requirement was to obtain the PAN from the payees, which the assessee had complied with. The Tribunal found no merit in the PCIT's contention that the assessee was required to furnish declarations as per the amended provisions. 4. Disallowance under Section 40(a)(ia) for Non-Deduction of Tax at Source: The Tribunal held that since the assessee had obtained PAN from the payees, there was no requirement to deduct tax at source under Section 194C(6). The Tribunal referred to judicial precedents, including the Delhi High Court's decision in the case of Sunbeam Auto Ltd., which stated that if there was an inquiry, even if inadequate, it would not justify the CIT's revisionary action under Section 263. 5. Compliance with Section 194C(6) and 194C(7): The Tribunal concluded that the assessee had complied with Section 194C(6) by obtaining PAN from the payees. The Tribunal rejected the PCIT's argument that non-compliance with Section 194C(7) (furnishing prescribed information to Revenue authorities) led to a conclusion of non-compliance with statutory obligations. The Tribunal emphasized that the primary obligation was to obtain PAN, which the assessee had fulfilled. Conclusion: The Tribunal set aside the order of the PCIT dated 25.06.2021 and restored the assessment order dated 25.08.2017. The appeal of the assessee was allowed.
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