2022 (8) TMI 862 - HC - Income Tax

TDS u/s 194C - deduct TDS from the payments made to transporters - whether non-filing of the statutory form as required u/s 194C(7) can deny the benefit provided to the assessee u/s 194C(6) upon the assessee filing the PAN number of the transport contractors? - HELD THAT - In the cases of Parameswari Spinning Mills (P.) Ltd. 2019 (9) TMI 775 - MADRAS HIGH COURT and Dilip Kumar 2019 (11) TMI 987 - MADRAS HIGH COURT the matter was remanded to the AO since the statutory form was not considered by the AO - However, on facts in the instant case we find that the said form was available on the file of the AO much before the completion of the assessment and the AO has not rendered any finding as to the correctness of the details furnished by the assessee in the said statutory form and in identical circumstances in the case of Asian Mills (P.) Ltd. 2021 (12) TMI 365 - GUJARAT HIGH COURT the case of the assessee was accepted. Thus, we are of the view that the correctness of the details in the statutory form having not been faulted by the Assessing Officer, the first Appellate Authority as well as the Tribunal were right in granting the relief in favour of the assessee. Learned senior counsel appearing for the respondent/assessee pointed that in column 1(e) of Form 26Q the assessee is required to answer the question Has any statement been filed earlier for this quarter (Yes/No) . Clause 1(f) of the said Form states, if answer of (e) is Yes , then Provisional Receipt No. of original statement . On seeing these questions which are to be answered by the assessee in the statutory Form 26Q, it gives an impression that the assessee is entitled to file more than one statement and probably for that reason a query was made to the assessee if he has filed any statement earlier for the said quarter. In any event, the Assessing Officer having not found fault with the contents of Form 26Q filed by the assessee, on a technical ground the relief cannot be denied to assessee and the Tribunal was right in dismissing the revenue s appeal. Tribunal had noted the decision of the Calcutta Tribunal in the case of Soma Rani Ghosh. It is submitted by the learned standing Counsel for the appellant that as against the said decision the revenue had filed appeal being Principal Commissioner of Income Tax, Kolkata-17, Kolkata vs. Soma Rani Ghosh 2018 (6) TMI 1812 - CALCUTTA HIGH COURT However, it is not disputed that subsequently the appeal was dismissed on the ground of low tax effect. Thus, as on date, the decision of the learned Tribunal in Soma Rani Ghosh remains intact and this decision also would ensure in favour of the respondent/assessee.

Summary

Issues Involved:
1. Interpretation of Section 194C(7) of the Income Tax Act, 1961.
2. Interpretation of Rule 31A of the Income Tax Rules, 1962.
3. Consequences of non-filing or delayed filing of Form 26Q.

Detailed Analysis:

1. Interpretation of Section 194C(7) of the Income Tax Act, 1961:
The primary issue was whether the non-filing of the statutory form under Section 194C(7) could deny the benefit provided under Section 194C(6) when the assessee had filed the PAN number of the transport contractors. The court noted that during the assessment proceedings, Form 26Q was available with the Assessing Officer, although it was filed belatedly. The Tribunal affirmed the view that Section 194C(6) and (7) are independent provisions, and non-compliance with Section 194C(7) does not negate the benefit under Section 194C(6).

2. Interpretation of Rule 31A of the Income Tax Rules, 1962:
The Tribunal and the court referred to several cases, including Commissioner of Income Tax, Madurai vs. Sri Parameswari Spinning Mills (P.) Ltd. and Principal Commissioner of Income-tax-1 vs. Asian Mills (P.) Ltd., to support the interpretation that Rule 31A, which deals with the filing of Form 26Q, is procedural. The court highlighted that non-compliance with this procedural requirement cannot take away the substantive benefit provided under Section 194C(6).

3. Consequences of Non-filing or Delayed Filing of Form 26Q:
The court emphasized that the maximum penalty for non-compliance with Section 194C(7) is a fee of Rs. 200 per day, as per Section 234(E). The court ruled that this procedural lapse does not justify disallowing the freight expenses under Section 40(a)(ia) of the Act. The court cited the decision in Commissioner of Income-tax-I vs. Valibhai Khanbhai Mankad, which held that once the conditions of the proviso to Section 194C(3) are satisfied, the liability to deduct tax at source ceases, and any subsequent procedural non-compliance does not revive this liability.

Conclusion:
The court concluded that the Assessing Officer had not disputed the correctness of the details in Form 26Q, and therefore, the procedural lapse of delayed filing could not be a ground to deny the benefit under Section 194C(6). The appeal by the revenue was dismissed as no substantial question of law arose for consideration. The court upheld the Tribunal's decision, affirming the relief granted to the assessee.