TaxTMI 
TaxTMI 
2026 (9) TMI 1072
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....the assessee company as assessee-in-default and determining the liability of tax under Section 201(1) and interest under Section 201(1A) of Rs. 31,34,257 on the ground that the assessee company has not deducted tax at source towards the transportation expense under Section 194C inasmuch as the assessee company has obtained a declaration to the effect that those transporters own ten OR less goods carriages and its Permanent Account Number which is in compliance with the provision of sub-Section (6) of Section 194C and therefore there is no liability on the part of the assessee company to deduct tax under Section 194C on such payments. 2. The learned Addl/JCIT(A) has erred in confirming the declaration by DCIT, Circle TDS as assessee in default and determining the liability of tax under Section 201(1) and interest under Section 201(1A) of Rs. 31,34,257 on the ground that the declaration given by the transporters are false declaration inasmuch as the obligation of the assessee company is to obtain the declaration which in compliance with the provision of sub-Section (6) of Section 194C and there cannot be an obligation to verify the correctness OR truthfulness of such declara....
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....sed on the aforesaid findings, the Assessing Officer issued a show-cause notice to the Assessee. In response, the Assessee, inter alia, contended that Section 194C(6) of the Act did not imposes any statutory duty the Assessee-deductor to verify the truthfulness or correctness of a declaration, and that the format of declaration given in Circular No. 19/2015 issued by the CBDT was purely suggestive and was not mandatory. The Assessing Officer rejected these contentions, holding that (a) the Assessee had knowingly accepted declaration/documents which were non-est on account of discrepancies and omissions; (b) declarations obtained did not confirm to the format provided in Circular No. 19/2015 issued by the CBDT; and (c) the Assessee had failed to discharge its primary statutory obligation to carry out necessary verification under Section 194C(6) of the Act. 3.1. The Assessee had also raised alternative plea in term Proviso to Section 201(1) of the Act contending that the payee/deductees had included the transport charges paid in their respective tax returns and had offered the same to tax and therefore, the Assessee should not be treated as Assessee-in-default in respect of the sa....
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....sessee submitted that physical submission of Form 26A constituted sufficient compliance in terms of Proviso to Section 201(1) of the Act as the same proves that the deductees had accounted for the freight payments in their returns and paid taxes thereon. 7. Per contra, the Learned Departmental Representative strongly relied upon the findings contained in the Assessment Order and the order of the Learned CIT(A). 8. We have considered the rival submissions recorded hereinabove and have perused the material on record. 9. The primary contention of the Assessee is that the Assessee/deductor had no obligation to verify the truthfulness of a declaration, and that any declaration accompanied by a PAN satisfied the requirement of Section 194C(6) of the Act. In our view the aforesaid contention of the Assessee is required to be consideration in the light of the prevailing facts in present case. It is admitted position that the Assessee was subjected to spot verification under Section 133A(2A) on 31/01/2023, and it was discovered that substantial payments were made to the transporters without deducting Tax Deduction at Source (TDS) under Section 194C of the Act. During the proceeding....
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....efore the Hon'ble High Court did not relate to declaration issued in terms of Section 194C(6) of the Act and/or content thereof. The reporting obligation contained in Section 194C(7) of the Act is separate and distinct from the eligibility to claim benefit of Section 194C(6) of the Act. The Assessee would contend that in the above judgment, the Hon'ble High Court has held that the Assessee claiming benefit of Section 194C(6) of the Act on the basis of declarations furnished by the transporter is not under obligation to verify the same. Even if the aforesaid contention of the Assessee is accepted, we are of the view that on the basis of the aforesaid judgment it can be contended that the benefit of Section 194C(6) of the Act should be granted even if the declaration is incomplete or laden with discrepancies/errors/omission. In our view such an inference would defeat the very purpose of such declaration. We have already noted hereinabove that in the case before us, the Assessing Officer has, in addition to pointing out failure of the Assessing Officer to carry out verification of declaration, pointed out discrepancies including omission of details such as the freight payment amounts ....
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....ture was to limit the aforesaid benefit to small transport operators. Prior to 01/06/2015, Section 194C(6) of the Act provided that no tax was required to be deducted from payments made to a transport contractor upon the mere furnishing of their PAN. However, to curb misuse where large transport operators claimed blanket TDS exemption, Section 194C(6) of the Act was amended via the Finance Act, 2015 w.e.f. 01/06/2015. The amended Section 194C(6) read as under: "No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with his Permanent Account Number, to the person paying or crediting such sum." (Emphasis Supplied) 15. Section 194C(7) of the Act, therefore, casts a reporting obligation upon the person responsible for making payments without deducting any tax on receiving declarations in terms of Section 194C(6) of the Act. 16. In view of the above we hold that, a dec....