In High Court of Judicature at Madras Dated : 16.8.2019 Coram : Honourable Mr.Justice T.S.SIVAGNANAM and Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.589 of 2019 Mr.Dilip Kumar, Prop. Ms.Anmol Transport, Chennai-1. .Appellant Vs Assistant Commissioner of Income Tax, Non Corporate Circle-11, Chennai ...Respondent APPEAL under Section 260A of Income Tax Act, 1961 against order dated 30.6.2017 made in ITA.No.928/Mds/2017 on file of Income Tax Appellate Tribunal, Chennai 'B' Bench for assessment year 2012-13. For Appellant: Mr.A.S.Sriraman For Respondent: Ms.V.Pushpa, SC Judgment was delivered by T.S.Sivagnanam,J We have heard Mr.A.S.Sriraman, learned counsel appearing for appellant assessee and Ms.V.Pushpa, learned Standing Counsel, accepting notice for respondent Revenue. 2. This appeal, filed by assessee under Section 260A of Income 1/11 TCA.No.589 of 2019 Tax Act, 1961 (for short, Act) is directed against order dated 30.6.2017 made in ITA.No.928/Mds/2017 on file of Income Tax Appellate Tribunal, Chennai 'B' Bench (for brevity, Tribunal) for assessment year 2012-13. 3. assessee has filed this appeal by raising following substantial questions of law : i. Whether provisions of Section 37(1) of Act was properly applied in making disallowance of expenses booked for lorry hire, which were incurred in connection with business of goods transporters/carriers and were booked in computing taxable total income on accepted method of accounting namely mercantile/accrued system of accounting consistently followed while recording perverse findings of facts in para 6 of Appellate Tribunal's order dated 30.6.2017 ? ii. Whether Appellate Tribunal is correct in overlooking correct facts namely settlement of accounts of lorry owners in following month namely April 2012 proving perversity in recording findings of facts while sustaining disallowance of claim for deduction of lorry hire charges booked in previous year relating to assessment year under consideration while computing taxable total income ? And 2/11 http://www.judis.nic.in TCA.No.589 of 2019 iii. Whether Appellate Tribunal is correct in overlooking provisions of Section 194C(6) of Act, which exempts payer from making deduction of tax at source pertaining to lorry hire charges upon furnishing/on availability of permanent account numbers of payee, namely lorry owners while sustaining disallowance of claim for deduction of lorry hire charges despite availability of voluminous data including truck numbers and permanent account numbers in relation thereto? 4. assessee is proprietor of organization dealing in goods transport and is acting as carrier. assessee filed return of income for assessment under consideration namely 2012-13 on 30.9.2012 declaring total income of Rs.21,10,190/-. return was processed under Section 143(1) of Act on 06.12.2012. case was selected for scrutiny and notice under Section 143(2) of Act dated 23.9.2013 was issued. During course of scrutiny assessment, Assessing Officer pointed out that assessee had shown as lorry expenses payable amounting to Rs.21,12,000/- as per financial statements submitted. details, which were called for by Assessing Officer, were furnished and copies of ledgers were also produced. Assessing Officer came to conclusion that assessee did not furnish particulars for expenses incurred and hence, sum of Rs.21,12,000/- was added back to returned income by passing assessment order dated 14.3.2015. 3/11 http://www.judis.nic.in TCA.No.589 of 2019 5. As against said assessment order dated 14.3.2015, assessee preferred appeal before Commissioner of Income Tax (Appeals)-13, Chennai [for brevity, CIT(A)]. Along with appeal petition, assessee produced details of freight charges paid by them with names of persons, to whom, amounts were paid, their permanent account numbers (PAN), registration numbers of trucks, etc. CIT(A), on going through documents placed before him, which were, admittedly, not placed before Assessing Officer during scrutiny assessment, thought fit to call for remand report from Assessing Officer. 6. In turn, Assessing Officer submitted remand report along with letter dated 20.2.2017. One of statements made in said remand report was that vouchers produced by assessee showed that all payments were cleared in month April 2014 and ultimately, Assessing Officer opined that vouchers were self made and afterthought. remaining portion of remand report pertains to reasons as to why said sum of Rs.21,12,000/- was added back to returned income during scrutiny assessment. CIT(A) extracted remand report and held that assessee was not able to substantiate claim towards lorry expenses before Appellate Authority despite opportunity and in spite of another opportunity before Assessing Officer at time when remand report was called for. appeal was dismissed by CIT(A) by 4/11 http://www.judis.nic.in TCA.No.589 of 2019 order dated 14.3.2017. 7. Challenging order passed by CIT(A), assessee filed appeal before Tribunal. It was argued before Tribunal that assessee produced PAN particulars of each of lorry owners and that though details were given, Assessing Officer came to erroneous conclusion that those vouchers were self made. Tribunal, taking into consideration findings rendered by Assessing Officer in remand report that amounts were cleared by assessee in April 2014 i.e. nearly after two years after end of relevant previous year and taking note of net profit earned by assessee, disbelieved stand of assessee and dismissed appeal by order dated 30.6.2017. 8. Thereafter, assessee filed miscellaneous application under Section 254(2) of Act by filing MP.No.287/Chny/2017 by pointing out that Assessing Officer, while submitting his remand report, committed factual mistake stating that accounts were settled in April 2014 when fact remains that they settled accounts in April 2012 and that this had triggered wrong decision by Tribunal. However, Tribunal dismissed said miscellaneous application vide order dated 16.2.2018 stating that there was no mistake in order passed by Tribunal and that assessee is seeking to revise order passed by Tribunal. This is how assessee is before us challenging substantive order passed by Tribunal dated 30.6.2017. 5/11 http://www.judis.nic.in TCA.No.589 of 2019 9. Revenue is precluded from canvassing any of grounds, which were dealt with by Assessing Officer in scrutiny assessment dated 14.3.2015. This is so because CIT(A), not being satisfied with additional evidence produced by assessee for first time before him, required them to be examined by Assessing Officer and thought fit to call for remand report. Therefore, what is required to be seen is as to whether Assessing Officer, on such direction issued by CIT(A), conducted thorough exercise to examine documents, which were produced by assessee for first time before CIT(A). 10. Admittedly, assessee did not have any opportunity before Assessing Officer when such remand report was called for. On perusal of remand report furnished by Assessing Officer along with letter dated 20.2.2017, we find that there was no finding rendered by Assessing Officer as to veracity, admissibility and correctness of details produced by assessee before CIT(A), on which, remand report was called for. Therefore, exercise, which should have been adopted by Assessing Officer, is to examine details and if necessary, call for at least few of lorry owners, whose details such as PAN particulars, registration numbers of trucks were furnished and then should have come to conclusion as to whether those documents would substantiate stand taken by assessee. 11. We find that no such exercise was conducted by Assessing 6/11 http://www.judis.nic.in TCA.No.589 of 2019 Officer while matter was sent back to him for considering documents produced by assessee for first time before CIT(A). We also find in remand report, much of which was view of Assessing Officer and scrutiny assessment was incorporated though in different language. Tribunal, though recorded submissions of assessee that they produced details of truck owners by giving their PAN particulars and registration numbers of trucks, etc., when Tribunal dismissed appeal by impugned order, it did not go into said aspect, but was largely guided by month and year, in which, amounts were settled by assessee i.e April 2014. This, according to assessee, is typographical error in remand report and assessee produced records to show that payments were made in April 2012 itself. Though this mistake was pointed out by assessee before Tribunal by filing miscellaneous application, Tribunal was not inclined to exercise its jurisdiction. Thus, taking into consideration above factual position, we are of considered view that Assessing Officer should re-examine correctness of details, produced by assessee in form of freight charges paid by them, before CIT(A), though not in scrutiny assessment. 12. Ms.V.Pushpa, Standing Counsel appearing for Revenue points out that Sub-Section (7) of Section 194C of Act requires that person responsible for paying or crediting any sum to person referred to in Sub- 7/11 http://www.judis.nic.in TCA.No.589 of 2019 Section (6) shall furnish, to prescribed Income Tax Authority or person authorized by it, such particulars, in such form and within such time as may be prescribed, which assessee failed to do. Therefore, unless and until assessee complies with condition stipulated in Sub-Section (7) of Section 194C of Act, assessee will not be entitled to claim deduction under Section 194C(7) of Act. 13. This very issue was considered by us in decision in case of CIT Vs. M/s.Sri Parameswari Spinning Mills Private Limited [TCA.No. 601 of 2018 dated 01.7.2019] and we rejected such contention raised by Revenue in following terms : 6. We find Sub-Section (6) of Section 194C is provision which grants benefit to assessee. This benefit comes with condition of compliance of Sub-Section (7) of Section 194C, which is procedure to be followed. question would be as to whether if procedure under Section 194C(7) has not been adhered to by assessee would it be fatal and thereby disentitle assessee to benefit under sub-Section 6 of Section 194C. 7. It is submission of Mr.A.S.Sriraman, learned counsel for 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 deductor at time of preparing statement of tax, 8/11 http://www.judis.nic.in TCA.No.589 of 2019 deductor shall furnish particulars of amount paid or credited on which tax was not deducted in view of compliance of provision of Sub-Section (6) of Section 194C by payee. Section 234(E) was relied to state that if statement is not filed, fee of Rs.200/-for every day, during which failure continues, has to be paid by assessee. Therefore, it is submission that non filing of statement in terms of Sub-Section (7) of Section 194C cannot take away benefit which will accrue to assessee under Sub-Section (6) of Section 194. 10. Mr.A.S.Sriraman, learned counsel for assessee referred to decision of ITAT Jaipur in case of ACIT Vs. Arihant Trading Co. reported in [176 ITD 397 (Jaipur-Tri)]. In 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 Act. 14. Even assuming that assessee had not furnished particulars as required under Sub-Section (7) of Section 194C of Act in prescribed form, maximum that could be done is to impose 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 Act cannot take away benefit, which will accrue to assessee under Sub-Section 9/11 http://www.judis.nic.in TCA.No.589 of 2019 (7) of Section 194C of Act. For above reasons, we are inclined to remand matter to Assessing Officer for fresh consideration. 15. In result, above tax case appeal is allowed, orders passed by both Tribunal dated 30.6.2017 and 16.2.2018 as well as CIT(A) dated 14.3.2017 are set aside and matter is remanded to Assessing Officer to consider details furnished by assessee for payment of freight charges, issue notice to assessee, afford them opportunity and if deems fit, summon few of transport operators and then, after satisfying himself about veracity, admissibility and correctness of details furnished by assessee, shall redo assessment in accordance with law. In light of remand order passed by us, substantial questions of law are left open. No costs. 16.8.2019 Internet: Yes To Income Tax Appellate Tribunal, Chennai 'B' Bench. RS 10/11 http://www.judis.nic.in TCA.No.589 of 2019 T.S.SIVAGNANAM,J AND V.BHAVANI SUBBAROYAN,J RS TCA.No.589 of 2019 16.8.2019 11/11 Dilip Kumar v. Assistant Commissioner of Income-tax, Non Corporate Circle-11, Chennai