Case Law Details
Chandigarh Freight Carrier Vs PCIT (ITAT Delhi)
A bare perusal of the notice shows that the PCIT assumed jurisdiction on the ground that the assessee has not deducted tax at source u/s 194C of the Act on the sums debited to P & L account under the head transportation charges.
The assessee explained that all i.e. required is to obtain PAN from the parties to whom the payments of freight were made and since the assessee had obtained the PAN from the parties, he has complied with the provision of Section 194C (6) of the Act. The PCIT was not convinced with the contention of the assessee and was of the firm belief that since the assessee has not furnished the declaration as per the provision of Section 194C (7) of the Act, the AO should have invoked the provision of Section 40(a)(ia) of the Act and should have made the appropriate disallowances.
As pert section 194C(6) payer is required to obtain PAN only from the payee for paying the charges without deduction of tax at source. In the present case, the assessee has obtained the PAN of the payees and has thus complied with the provision of Section 194C(6) of the Act as mentioned above. The AO had made specific enquires and after satisfying himself took a plausible view. In the case of Sunbeam Auto Ltd. [2011] 332 ITR 167 Hon’ble Delhi High Court has held as under:
“….therefore one has to see from the record whether was application of mind before allowing the expenditure in question as revenue expenditure. If there was an enquiry, even inadequate that would not by itself give occasion to the CIT to pass order u/s 263, merely because he has different opinion in the matter. It is only in cases of lack of enquiry that such a course of action would be open. [paras 12 to 15]. in sum and substance the accounting practice of the assessee is questioned… It is clear that view taken by the AO. was one of the possible views and therefore, the assessment order passed by the A.O could not be held to be prejudicial to the Revenue. Thus from whatever angle the matter is to be looked into, the conclusion could be that the order of the Tribunal does not call for any interference [paras 16,18 & 21]…. the AO having made enquiries, elicited replies and thereafter allowed the expenditure…. it cannot be said that it is a case of lack of enquiry.”
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