Proprietary Concern not required to obtain Separate PAN: ITAT upholds Deletion of Addition u/s 40(a)(ia) [Read Order]

The Income Tax Appellate Tribunal ( ITAT ) Ahmedabad Bench has held that proprietary concern is not required to obtain a separate Permanent Account Number (PAN) and upholds deletion of addition u/s 40(a)(ia).

The assessee, Shri Vinod Chimanlal Modi, is the proprietor of M/s. Riddhi Infrastructure, which engaged in the transportation business. After completion of the scrutiny assessment, the Assessing Officer noticed that the assesseehad paid freight charges of Rs.12,12,18,192/- to M/s. S. S. Enterprises and no tax was deductedfrom that payment.

Accordingly, AO reopened the assessment and issued a notice under section 148 to the assessee. Since the assessee failed to comply with the notice the AO invoked Section 40(a)(ia) of the Act and disallowed the freight charges. On appeal, CIT(A) deleted the addition made under section 40(a)(ia).Aggrieved by the order of the CIT(A), the Revenue preferred to appeal before the Tribunal.

The Tribunal observed that M/s. S.S. Enterprises was a proprietary concern of M/s. Gunesh India Pvt. Ltd. and, therefore, the proprietary concern of M/s. Gunesh India Pvt. Ltd. is not required to obtain a separate PAN. The relevant documentary evidence to establish that M/s. S.S. Enterprises was a proprietary concern of M/s. Gunesh India Pvt. Ltd. was produced by the assessee. The Assessing Officer was not justified in treating the same as invalid and consequently tomake the disallowance under Section 40(a)(ia) of the Act for the alleged failure of the assessee to deduct tax at source from the payment of freight charges maid to M/s. S.S. Enterprises.

The Coram of Mr. Pramod M. Jagtap, Vice President and Smt.Suchitra R. Kamble, Judicial Member has held that “we find no infirmity in the impugned order of the CIT(A) deleting the disallowance of Rs.12,12,19,192/- made by the Assessing Officer under Section 40(a)(ia) of the Act and upholding the same, we dismiss this appeal filed by the Revenue”.

Mr. Vijaykumar Jaiswal and Mr. M.K. Patel appeared for the revenue and assessee respectively.

To Read the full text of the Order CLICK HERE

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