2014 (12) TMI 101

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.... 40(a)(ia) of the I.T. Act, 1961 of Rs. 23,00,354/- for default TDS on payments specified u/s 194C, placing reliance on the decision in the case of CIT(TDS), Chandigarh Vs. United Rice Ltd. ITA No. 633 of 2007 when the facts of the case are clearly distinguishable. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the additions made by AO of Rs. 1,11,559/- towards Bogus purchases in contravention of section 102 of Evidence Act." 2. Brief facts of the case are that the assesse is an individual having proprietorship concerns, namely, M/s Abhiraj Sales Corporation, which is engaged in the business of supply of building materials and M/s Sheetal Transportation, which is engaged in the busine....

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....lowance on account of transportation charges of Rs. 23,00,354/- u/s 40(a)(ia). 3. Further while scrutinizing the accounts of M/s. Abhiraj Sales Corporation, the assessing officer had issued notices u/s 133(6) to various parties from whom the assesse had made purchases. In response, certain parties filed their details, however, in respect of purchase amount of Rs. 22,31,182/- from M/s. Gallant Traders Pvt. Ltd., the notice was returned back. The assesse also failed to file any confirmation. Again a notice u/s 133(6) was sent through Income-tax Inspector, who vide letter dated 04.11.2009, submitted the following report:- "In respect of M/s. Gallant Traders Pvt. Ltd 1st Floor, 4th Chawl Cross Lane, Kalbadevi, Mumbai- 400 002 Dt. 04.11.20....

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....assesse was not required to deduct TDS u/s 194C. In support of this proposition, he relied upon the decision of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. United Rice Land Ltd. Reported (2008) 217 CTR (P&H) 332. Thus the disallowance u/s 40(a)(ia) was deleted on the said ground. Regarding addition of Rs. 1,11,559/-, being 5% of the purchases of Rs. 22,31,182/-, the Ld.CIT(A) held that once the notice could not be served or was returned back, the assessing officer should have inquired from the bankers of the assesse as well as of the creditor to ascertain the genuineness of the transaction. Since it is not a case of a loan creditor, but purchases, the assessing officer should have made proper inquiry. Accordingly he deleted t....

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.... pursuance of this request and statutory form, that the assesse has not deducted TDS, hence the assessee cannot be held to be in default for not deducting the TDS. He further submitted that on similar facts and issue, Hon'ble Gujarat High Court in CIT Vs. Valibhai, Khan Bhai Mankad, in (2013) 92 DTR (Guj) 267, held that if the payment of hire charges to subcontractors has been made after obtaining Form No. 15-I then even if, there is delay in filing of Form 15J, there could not be any failure on the part of the assesse for deducting the tax u/s 194C and therefore, disallowance u/s 40(a)(ia) cannot be made. Thus the addition has rightly been deleted by the Ld.CIT(A). Regarding second issue, he strongly relied upon the order of the Ld.CIT(A).....

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....t no deduction under sub-so (2 shall be made from the amount of any sum credited or paid or likely to be credited or paid to the subcontractor during the course of business of plying, hiring or leasing goods carriages, on production of a declaration to the person concerned paying or crediting such sum in the prescribed form and verified in the prescribed manner within the time as may be prescribed, if such sub-contractor is an individual who has not owned more than two goods carriages at any time during the previous year. 7. The exclusion provided in sub-so (3) of s. 194C from the liability to deduct tax at source under sub-so (2) would thus be complete the . moment the requirements contained therein are satisfied. Such requirements. pri....

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....y result into some other adverse consequence- if so provided under the Act. However, \nonfulfillment of such requirement cannot be linked to the declaration (sic deduction) of tax at source. Any such failure therefore cannot be visualized by adverse consequences provided under S. 40(a)(ia) of the Act. 10. When on the basis of the record it is not disputed that. the requirements of further proviso were fulfilled, the' assessee was .not required to make any deduction at source em the payments. made to the sub-contractors. If that be our conclusion. application of s. 40(a)(ia) would not arise since. as already noticed, S. 40(a)(ia) would apply when here . is a. requirement of deduction of tax at source and such requirement is either not....