Case Number: ITA 500/DEL/2021
Appellant: Chandigarh Freight Carrier, Meerut
Respondent: Pr. CIT, Ghaziabad
Assessment Year: 2015-16
Order Type: Final Tribunal Order
Date of Order: April 28, 2023
Date of Pronouncement: April 28, 2023
Case Filed on: May 5, 2021
This appeal by the assessee, Chandigarh Freight Carrier, is preferred against the order of the Pr. Commissioner of Income Tax (Pr. CIT), Ghaziabad, dated March 25, 2021, framed under Section 263 of the Income Tax Act, 1961, pertaining to the assessment year 2015-16.
The primary grievance of the assessee is that the Pr. CIT exercised revisionary powers under Section 263 unjustly and arbitrarily, setting aside the assessment order passed under Section 143(3) on August 25, 2017.
1. Appellant’s Grounds of Appeal:
The representatives of both sides were heard at length, and the case records were carefully perused. The assessee, a transport company operator, filed its return of income for the year under consideration on September 26, 2015, declaring an income of Rs. 82,980/-. The return was selected for scrutiny assessment, and the return income was assessed at Rs. 1,32,980/- vide order dated August 25, 2017.
Assuming jurisdiction under Section 263, the Pr. CIT issued a show cause notice to the assessee. The notice indicated that the assessment order was erroneous and prejudicial to the interests of revenue as the assessee had not deducted TDS under Section 194C on transportation charges amounting to Rs. 3,84,37,105/-. The Pr. CIT held that 30% of this amount should have been disallowed and added to the total income of the assessee firm.
The assessee explained that they had obtained PAN from the parties to whom the freight payments were made, thereby complying with the provisions of Section 194C(6). The Pr. CIT was not convinced and believed that since the assessee had not furnished the declarations as per Section 194C(7), the AO should have invoked the provisions of Section 40(a)(ia) and made appropriate disallowances.
The Tribunal found that during the scrutiny assessment proceedings, the AO had specifically enquired about TDS on freight payments. The assessee had replied, stating that the required declarations and PAN numbers had been obtained from the parties. The Tribunal held that obtaining the PAN numbers complied with Section 194C(6), and the AO had made specific enquiries and took a plausible view.
The Tribunal also noted that the provisions requiring the declaration were amended with effect from June 1, 2015, and therefore not applicable for the year under consideration. The Tribunal found that the assessee had complied with the primary obligation of obtaining the PAN of the payees, and the non-compliance in furnishing the prescribed information to the Revenue authorities did not justify the disallowance.
The Tribunal set aside the order of the Pr. CIT dated June 25, 2021, and restored the assessment order dated August 25, 2017. The appeal of the assessee was allowed.
Final Judgment:
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open court on April 28, 2023.
Signed by:
Shri Anubhav Sharma, Judicial Member
Shri N.K. Billaiya, Accountant Member
Dated: April 28, 2023
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