TaxTMI 
TaxTMI 
2023 (12) TMI 586
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....xpenses. 2) The learned assessing officer has conducted a detailed inquiry for TDS compliance with respect to freight expenses incurred by the assessee. He demanded the details regarding payments to contractors in excess of Rs.10,000/- at one time and above Rs.50,000 in aggregate in the prescribed format vide his notice dated 16-12-2020 u/s 142(1) and notice dated 10-02-2021 and these notices were duly replied by the assessee which is on record of the Department. The learned PCIT was also given the said records again while revisionary actions are taken by the PCIT. 3) The PCIT has also been furnished with the list of transporters where no TDS is deductible in cases of those transporter wherein a specified declaration given by the said transporter along with his PAN. These details were also furnished to the assessing officer. This fact has not taken into consideration while passing order u/s 263. 4) The PCIT has erred in passing order u/s 263 even though no error is committed by the Assessing Officer in accepting the submission of TDS compliance by the assessee during scrutiny assessment proceedings. TDS compliance were supported by receipt issued by CPC. ....
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....s huge increase of the expenses in comparison to previous year (Rs.6,13,22,970/- for AY 2018-19 against Rs.4,23,79,817/- for AY 2017-18), even though there is slight increase of turnover, for assessment year 2018-19, against turnover of Rs.27,23,62,638/- for A.Y. 2017-18. As per Annexure B available in ITBA, the assessee has debited TDS on the payments to the tune of Rs.3,49,49,390/- only made on account of contract payments. On perusal of submission available in ITBA, it was noticed by the ld PCIT that the assessee has not deducted TDS on expenditure to the tune of Rs.2,35,66,362/- made on account of contract payments in the following cases, which is in contravention to the provisions of Section 40(a)(ia) of the Act and section 194C of the Act. So, 30% of the expenditure worked out to Rs.70,69,910/- (30% of Rs.2,35,66,362/-) was required to be disallowed. As per ld PCIT, the details of the payment made to various entries where TDS on expenditure is not made, are as under: Sr.No. Name PAN Amount (in Rs) 1 Adarsh Roadlines APTPK6179A 300035 2 Anil B Kushwaha ACPPK1232K 249000 3 Babulal M Bishnoi AQFPB7084A 251150 4 Bhagwant Singh....
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....hed its reply on 06.12.2022. In the reply, the assessee has contended that during the assessment proceedings, it has furnished detailed submission with respect to the TDS inquiries made by the assessing officer along with necessary documentary evidences and the assessing officer has not committed any error in not considering the said freight expenses Rs.2,35,66,362/- for disallowance, as per the provisions of Section 194C r.ws. 40(a)(ia) of the Act. The assessee has requested to drop the proceedings, initiated u/s 263 of the Act contending that the assessment order passed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act dated 24.03.2021 is neither erroneous nor it is prejudicial to the interest of Revenue. 8. However, ld PCIT rejected the contention of the assessee and held that assessee has failed to deduct TDS on the expenditure to the tune of Rs.2,35,66,362/- (contract payments) and the same is in contravention to the provisions of Sec.40(a)(ia) of the Income Tax Act. So, 30% of the above expenditure worked out to Rs.70,69,010/- (30% of Rs.2,35,66,382/-) was required to be disallowed and added to the total income of the assessee, which the Assessing Officer failed to do so. Acc....
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....PCIT under section 263 of the Act may be quashed. 11. On the other hand, Ld. CIT-DR for the Revenue relied on the findings of Ld. PCIT and stated that assessee has not submitted Form No.- 15-J, relating to TDS. Therefore, Assessing Officer has not examined this issue properly. In case the assessee would have submitted Form No.15J then there would be no requirement to deduct the TDS. Since the assessing officer has not examined Form No.15-J, hence, the order passed by the assessing officer is erroneous therefore order passed by Ld.PCIT may be upheld. 12. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. At the outset, Learned Counsel for the assessee, argued before us that in order to verify the TDS details, the Assessing Officer has issued notice u/s142(1) of the Act, wherein the Assessing Officer has raised the issue regarding submission of TDS details. The query raised by the Assessing Officer in notice u/s 142(1) of the Act is re-produced (to the extent relevant for our analysis) : "9. Regarding large payments made to contractors u/s 194C of Income-tax Act during....
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....ired formalities such as Form No.15-J etc. were done by the assessee-company. Besides, as per assessee, the payment made to these parties are below the required threshold limit, hence no TDS required to be deducted. The Assessing Officer has conducted inquiry, as per his way and satisfied himself with the compliance of tax deducted at source, whereas the learned PCIT differed the way in which the inquiry conducted by the Assessing Officer, though nothing has been done by assessing officer which is unsustainable in law. Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to interest of the revenue, for an example, when an Income-Tax Officer adopted one of the courses permissible in law i.e random sample checking of voluminous record and it has resulted in loss of revenue, or where two views are possible and the Income-Tax Officer has taken one view with which the Commissioner does not agree it cannot be treated an erroneous order prejudicial to the interest of the revenue. Unless the views taken by the Income-Tax Officer is unsustainable in law. 16. Let us take the guidance of judicial precedents laid down by the Hon'ble Apex C....
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....t in accordance with the provisions of section 263 of the Act, the direction so given by ld PCIT to the assessing officer is reproduced below: "Accordingly, the assessment order passed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act dated 24.03.2021, in the instant case was set aside by ld PCIT with a direction to the Assessing Officer to pass fresh assessment order after taking into consideration the issues as may have been already considered together with the issue discussed hereinabove also" 18. This direction covers entire assessment order, that is, the entire assessment order has to be examined and Assessing Officer has to pass fresh assessment order after taking into consideration the issues as may have been already considered by AO together with the issue discussed by the ld PCIT in his order, which is not acceptable. 19. The Learned Counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opin....