Assessee acquired the transporter’s PAN; therefore, Section 194C TDS is not applicable

Fact and issue of the case

This appeal by the assessee is preferred against the order of the Pr. Commissioner of Income Tax, Ghaziabad dated 25.03.2021 framed u/s 263 of the Act pertaining to assessment year 2015-16

The grievance of the assessee read as under :

That each ground of appeal is without prejudice to each other

On the facts and circumstances of the case and in law, the Ld. PCIT has erred in exercising the revisionary powers by passing the order u/s 263 of the Income Tax Act, 1961 setting aside the order passed u/s 143(3) dated 25.08.2017. The action of the Ld. PCIT is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the revision order of Ld. PCIT passed u/s 263

On the facts and in the circumstances of the case and in law, Ld. Principal Commissioner of Income Tax (PCIT) erred in passing order u/s 263 of the Income Tax Act, 1961 (the Act), when the assessment for the impugned assessment year had already been concluded by Assessing officer (AO), u/s 143(3) of the Act, after seeking explanations and making all the enquiries necessary for the completion of assessment. Appellant prays order so passed u/s 263 may please be held as bad in law

On the facts and in the circumstances of the case and in law, Ld. Principal Commissioner of Income Tax (PCIT) erred in passing order u/s 263 of the Income Tax Act, 1961 (the Act), on wrong PAN (PAN mentioned in 263 order is AAHFC1874F). Correct PAN is AAHFC1874H. Appellant prays order so passed u/s 263 may please be held as bad in law

That the learned Principal Commissioner of Income-tax (PCIT) erred in law and on facts in issuing the 263 proceedings show cause notice dated 01.02.2021 on the ground that the appellant did not produce the declaration u/s 194(C)(6) from the Truck operators even though the provisions of the Act does not require the appellant to get such declaration for the period prior to 01.06.205 as amended in Finance Act, 2015. Relief may please be granted by quashing the revision order of Id. PCIT passed u/s 263

On the facts and in the circumstances of the case and in law, Ld. Principal Commissioner of Income Tax (PCIT) erred in passing order u/s 263 of the Income Tax Act, 1961 (the Act), in making the disallowance of Rs.1,15,31,132.00 u/s. 40(a)(ia) of the Act even though the appellant is not required to deduct tax at source, as the provisions of section 194C(6) exempts the payer from deducting tax at source if PAN of the payee is provided. Appellant prays order so passed u/s 263 may please be held as bad in law

That the learned PCIT erred in law and on facts in not appreciating the fact that the PAN of the payees were submitted during the assessment proceedings And 263 proceedings and therefore, complied with the provisions of section 194C(6) and 194C(7). And therefore, disallowance cannot be made on procedural lapse. Appellant prays order so passed u/s 263 may please be held as bad in law

That the Learned PCIT failed to consider the observation of the Hon’ble ITAT in the case of ACIT, Circle-I vs Mr. Mohammed Suhail in ITA no: 1536/Hyd/2014, wherein it has been categorically observed by the Hon’ble ITAT “that the provisions of section 194C(6) are independent of section 194C(7), and just because there is violation of provisions of section 194C(7), disallowance under section 40(a)(ia) does not arise if the assessee complies with the provisions of section 194C(6)

Relief may please be granted by quashing the revision order of ld. PCIT passed u/s 263

The appellant craves leave to add, alter, amend or delete any other grounds on or before hearing of the appeal

Observation of the court

From the above, we gathered 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. In the case of Sunbeam Auto Ltd. [2011] 332 ITR 167 Hon’ble Delhi High Court has held as under

therefore one has to see from the record whether was application of mind before allowing the expenditure in question as revenue expenditure. If there was an enquiry, even inadequate that would not by itself give occasion to the CIT to pass order u/s 263, merely because he has different opinion in the matter. It is only in cases of lack of enquiry that such a course of action would be open. [paras 12 to 15]. in sum and substance the accounting practice of the assessee is questioned… It is clear that view taken by the AO. was one of the possible views and therefore, the assessment order passed by the A.O could not be held to be prejudicial to the Revenue. Thus from whatever angle the matter is to be looked into, the conclusion could be that the order of the Tribunal does not call for any interference [paras 16,18 & 21]…. the AO having made enquiries, elicited replies and thereafter allowed the expenditure…. it cannot be said that it is a case of lack of enquiry

The second allegation of PCIT is that assessee has not furnished the requisite declaration. We do not find any 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. In our considered view 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 facts of the case in totality in the light of the decision of the Hon’ble Delhi High Court in the case of Sunbeam Auto Ltd. (supra), we set aside the order of the PCIT dated 25.06.2021 and restore that of the AO dated 25.08.2017

In the result, appeal of the assessee is accordingly allowed

The order is pronounced in the open court on 28.04.2023