TMI Blog2014 (8) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the transport operators subsequently who had given the wrong PAN Numbers originally - from the details furnished by the assessee, Shri Balbir Farman Singh, PAN Number given originally as well in the rectified statement was wrong and therefore the amount paid to Shri Balbir Farman Singh has to be disallowed u/s.40(a)(ia) for not giving the correct PAN Number - the disallowance made at ₹ 28,05,995/- is restricted to ₹ 82,170 – Decided partly in favour of Assessee. Transport charges paid by assessee to his relatives disallowed u/s 40A(2)(b) – Held that:- The assessee has paid transportation charges to outsiders as well as to related persons - assessee has not given any details to justify trip-wise payment paid to the related parties as compared to the outsiders as reasonable - the contention of the assessee that whenever the payments to family members were made at higher rate the destination of the delivery was difficult or at remote places is not borne out from records or with any evidence - invoking the provisions of section 40(A)(2)(b) of the I.T. Act by the AO is justified - the AO has also not brought out any comparative case and the disallowance made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e asked the assessee to explain why provisions of section 40(a)(ia) should not be invoked. It was explained by the assessee that the owners as well as transport operators had submitted their PAN Nos. and therefore as per provisions of section 194C (6) TDS was not required to be made. The assessee filed party-wise list of details of truck owners, addresses, truck nos. PAN Nos. and amounts paid. From the various details furnished by the assessee, the Assessing Officer noted that in a number of cases the PAN Nos. mentioned by the assessee are not correct. He observed that in some cases PAN Nos. had been given without proper verification and in a casual manner by offering either wrong PAN Nos. or wrong name. 2.3 The Assessing Officer, therefore, gave an opportunity to the assessee. The list furnished by the assessee has been reproduced at pages 4 to 6 of the assessment order. Assessee was asked to explain the above anomoly noticed. It was replied that in some cases by mistake wrong PAN are typed. In some cases, the vehicle was transferred to other person who operates the vehicle but his name in the RC record was not immediately changed and such transport operator has furnished his P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er cases and as per section 206AA(6) where the PAN Nos. is incorrect, it is deemed that PAN has not been furnished. He, therefore, held that in the case of wrong PAN Nos. the assessee is deemed to have not submitted Form No.15 to the CIT and therefore, he violated the provisions of section 194C of the I.T. Act. 3.2 Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 4. The Ld. Counsel for the assessee reiterated the same arguments as made before the Assessing Officer and the CIT(A). He submitted that subsequent to noticing the incorrect PAN Nos., the assessee filed the details of correct PAN Nos. of all the recipients before the Assessing Officer. Although the Assessing Officer accepted the PAN Nos. in respect of persons where wrong spelling of PAN mentioned due to clerical mistakes, change in name due to marriage and wrong spelling of name is mentioned due to clerical mistakes, he, however, did not accept the rectified PAN Nos. given in case of 16 persons out of the 17 persons mentioned in the list at Page 12 of the assessment order. He submitted that the assessee has given incorrect PAN Number in the rectified statement only in the case of Shri Balb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the PAN nor the name was included in the list submitted. 6.1 It is the submission of the Ld. Counsel for the assessee that only in one case, i.e. Shri Balbir Farman Singh, the PAN Number was wrongly given initially as well as in the rectified statement and therefore only to this extent the disallowance can be made u/s.40(a)(ia). However, in all other cases the Assessing Officer has not pointed out any mistake in the PAN Numbers, therefore, he cannot have two sets of standards. 6.2 After going through the details furnished by the assessee, we find the action of the Assessing Officer is not justified. When he has accepted the rectified PAN Numbers in case of certain persons due to wrong spelling of names mentioned due to clerical mistakes, wrong spelling of PAN Numbers or change in name due to marriage, we fail to understand how he can deny the assessee the same benefit where the assessee had rectified the PAN Numbers of the transport operators subsequently who had given the wrong PAN Numbers originally. This approach of the Assessing Officer in our opinion is not correct. However, from the details furnished by the assessee, we find in the case of Shri Balbir Farman Singh, PAN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer held that this is nothing but bifurcation of segregation of income in different hands to avoid proper payment of tax. He further noted that none of the sons of the assessee is filing Income Tax returns as submitted by the assessee. Since the assessee did not furnish any satisfactory explanation the Assessing Officer held that the payments made towards transportation charges to the related parties covered u/s.40A(2)(b) of the Act is more than adequate in as much as unreasonable and in contravention to provisions of section 40A(2)(b) of the I.T. Act. He, therefore, disallowed 15% of such payments made to the aforesaid persons amounting to ₹ 11,32,445/- as excess and unreasonable payment not pertaining to the business expenditure. 8. In appeal the Ld.CIT(A) upheld the action of the Assessing Officer by observing as under : 14. On these facts it is seen that appellant has not furnished details of payments made to family members trip wise and also to outside persons to establish that rates paid to each of these categories are comparable. Appellant has also not furnished at least some sample cases of transport job done by him to establish that whenever the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X
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