TaxTMI 
TaxTMI 
2022 (8) TMI 862
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....e circumstances of the case, the tribunal has incorrectly interpreted Rule 31A of the Income Tax Rules, 1961 while dealing with the issue as to whether the assessing officer had rightly disallowed the freight expenses on application of the said rule read with section 194C (7) of the said Act ? We have heard Ms. Smita Das De, learned standing Counsel for the appellant/revenue and Mr. J.P. Khaitan, learned Senior Counsel assisted by Mr. Ananda Sen, learned counsel for the respondent/assessee. The question involved in the instant case is whether non-filing of the statutory form as required under Section 194C(7) can deny the benefit provided to the assessee under Section 194C(6) upon the assessee filing the PAN number of the transport contractors. The undisputed fact is that during the course of assessment proceedings Form 26Q in terms of Rule 31A of the Income tax Rules, 1962 was available on the file of the Assessing Officer. The Assessing Officer was of the view that the said statutory form was belatedly filed. It is the submission of the learned Counsel appearing for the respondent/assessee that initially a Form 26Q was filed and subsequently an amended form was filed repo....
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....s relied to state that if the statement is not filed, a fee of Rs.200/- for every day, during which the failure continues, has to be paid by the assessee. Therefore, it is the submission that the non filing of a statement in terms of Sub-Section (7) of Section 194C cannot take away the benefit which will accrue to the assessee under Sub-Section (6) of Section 194. ** ** ** 10. Mr. A.S. Sriraman, learned counsel for the assessee referred to the decision of the ITAT Jaipur in the case of ACIT v. Arihant Trading Co. reported in [176 ITD 397 (Jaipur-Tri.)]. In the said decision it has been held that Section 194C(6) & (7) are independent of each other and cannot read together to attract disallowance under Section 40(a)(ia) read with Section 194C of the Act." 14. Even assuming that the assessee had not furnished the particulars as required under Sub-Section (7) of Section 194C of the Act in the prescribed form, the maximum that could be done is to impose a fine of Rs.200/- for every day of such non compliance. Therefore, this procedural law, as prescribed under Sub-Section (7) of Section 194C of the Act cannot take away the benefit, which will accrue to the ass....
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....r paying such sums referred to in sub-section (1) or, as the case may be, subsection (2) shall be liable to deduct income- tax under this section: Provided further that no deduction shall be made under sub-section (2), from the amount of any sum credited or paid or likely to be credited or paid during the previous year to the account of the sub-contractor 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 and within such 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: Provided also that the person responsible for paying any sum as aforesaid to the sub- contractor referred to in the second proviso shall furnish to the prescribed income-tax authority or the person authorised by it such particulars as may be prescribed in such form and within such time as may be prescribed; or (ii) any sum credited or paid before the 1st day of June, 1972; or (iii) any sum credited or paid befor....
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....d arise. Despite such circumstances existing, sub-section (3) makes exclusion in cases where such liability would not arise. We are concerned with the further proviso to sub-section (3), which provides that no deduction under sub-section (2) shall be made from the amount of any sum credited or paid or likely to be credited or paid to the sub- contractor 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 it in the prescribed manner within the time as may be prescribed, if such subcontractor 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-section (3) of section 194C from the liability to deduct tax at source under sub-section (2) would thus be complete the moment the requirements contained therein are satisfied. Such requirements, principally, are that the sub-contractor, recipient of the payment produces a necessary declaration in the prescribed format and further that such sub-contractor does not own more than two goods carriages during the ent....
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....efit to the assessee, is discussed along with subsection(7) of section 194. The Court held that this benefit comes with the condition of compliance of sub-section (7) of section 194(c). This is a procedure required to be followed. The Court held that non-filing of the statement in terms of sub-section (7) of section 194(C) cannot take away the benefit, which will accrue to the assessee under subsection(6) of section 194. Relevant paragraphs are reproduced as under: "6. We find sub-Section 6 of Section 194C is the provision which grants benefit to the assessee. This benefit comes with the condition of compliance of Sub-Section (7) of Section 194C, which is the procedure to be followed. The question would be as to whether if the procedure under Section 194C(7) has not been adhered to by the assessee would it be fatal and thereby disentitle the assessee to the benefit under sub-Section 6 of Section 194C. 7. It is a submission of Mr.A.S.Sriraman, learned counsel for the appellant/assessee that Section 31A deals with statement of deduction of tax under sub-Section 3 of Section 200 referring to Section 31(A)(4)(vi). It is submitted that the deductor at the time of prepa....
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....ters have been filled-in in the TDS return, wherein their PAN cards also have been duly submitted to the Income-tax authorities, as this is a sufficient compliance of sub-section (7) of section194(c). The Tribunal was absolutely correct in upholding the version of the assessee. It also rightly held that after obtaining the PAN Card from the transporters, assessee is needed to furnish the same in the prescribed form to the prescribed authority within prescribed time. section194(C) (7) is reproduced as under: "(7) The person responsible for paying or crediting any sum to the person referred to in sub-section (6) shall furnish, to the prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed." 11. The Tribunal held that there is no prescribed authority nominated under the provisions of law. Thus, in absence of such prescribed authority, no fault was attributed to the assessee obviously for not filing the details before such authority. The details filed by the respondent assessee along with Form No.26 naturally could be construed as sufficient compliance. No fault can be found with these de....