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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, VICE- & SHRI ARUN KHODPIA
This appeal by the assessee is arising out of order passed by the CIT(A)-18, Chennai, vide dated 25.03.2022. The assessment was completed by the Assistant Commissioner of Income Tax, Circle-1(2), Chennai, for the relevant assessment year 2008-09 u/s. 153A r.w.s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order dated 31.03.2016 and subsequently, rectification order u/s.154 of the Act was passed on 26.11.2019.
At the outset, it is noted that original grounds raised are running into 10 grounds and many sub-grounds and further there are concise grounds, including additional grounds which are running into many pages and which are argumentative, exhaustive and even case laws are discussed in grounds of appeal, against which the learned counsel for the assessee stated that that he is not pressing. But, he stated that the crux of the issue raised reads as under:- “ Whether, once payee has included receipts in the return of income and pay taxes on such sum on the date of furnishing of return, can the assessee be held as assessee in in-default for non-deduction of TDS for above payments and whether above payments are to be disallowed u/s.40(a)((ia) of the Act, even though the assessee is covered by 2nd proviso to section 40(a)(ia) of the Act.”
The learned counsel for the assessee only argued the above issue and stated that he is ready to file all the details in regard to payments made to parties in regard to claim of expenditure on which TDS not deducted, as per annexure 5 to 3CD report amounting to Rs.65,23,410/- and expenditure on which TDS deducted, but not credited to Government account, as per annexure 5Ato 3CD report amounting to Rs.10,43,624/-.
The learned counsel stated that he has gathered all evidences in the shape of returns of income of the payees, wherein they have included receipts in their respective returns of income.
When this query was put to the learned Sr.DR, he could not controvert above facts that the assessee’s issue is covered by 2nd proviso to section 40(a)(ia) of the Act.
We have heard rival submissions and gone through facts and circumstances of the case. Brief facts are that the original assessment was completed u/s.153A r.w.s 143(3) of the Act dated 31.03.2016. Subsequently, the Assessing Officer issued notice u/s.154 of the Act, as the Assessing Officer failed to disallow certain items of expenditure for non-deduction of TDS, in view of the provisions of section 40(a)(ia) of the Act, though, it was specifically reported in the audit report that TDS was deductible, but was not deducted and was not deposited wherever it was deducted. Thereafter, the Assessing Officer passed rectification order u/s.154 of the Act dated 26.11.2019, whereby the Assessing Officer has disallowed the following:-
Total income as per order 1,52,92,655 dt.31.03.2016 Add: Expenditure on which TDS not Rs.65,23,410 deducted,(as per annexure 5 to 3CD report) Add: Expenditure on which TDS deducted, Rs.10,43,624/-. but not credited to Government account,(as per annexure 5A to 3CD report ) Total amount disallowed u/s.40(a)(ia) 75,67,034 Revised total income 2,28,59,689 Revised Demand 92,55,920
The CIT(A) also confirmed action of the Assessing Officer and even before the CIT(A) , the assessee contended retrospective applicability to 2nd proviso to section 40(a)(ia) of the Act and relied on the following case laws in support of his claim:- i) CIT Vs. Ansal Land Mark Township P.Ltd. (2015) 377 ITR 635 (Del) ii) PCIT Vs Perfect Circle India Pvt. Ltd. (2019) 13 ITR-OL 78 (Bom) iii) CIT vs. S.M. Anand (2020) 422 ITR 209 (Karn)
We noted that the assessee’s only contention now before us is that in view of the 2nd proviso to section 40(a)(ia) of the Act, the assesse should not be held as assessee in default for non-deduction of TDS, as the assessee has collected all the details in prescribed form u/s.201(Form No.26A) that the payees have included the above in their returns of income and paid taxes on such income. Hence, as requested by him, we restore this matter back to the file of the Assessing Officer and direct him to allow claim of the assessee, wherever the assessee has produced evidences that the payees have included receipts in their income, which is claimed by the assessee as expenditure and not deducted TDS, and allow claim of the assessee to that extent. This issue is fully covered by the above said decisions of High Courts and this is consistent view of all the High Courts and Tribunals in India.
The assessee has to file relevant details before the Assessing Officer and the Assessing Officer, after verification of the same, allow claim of the assessee. In term of the above, this appeal of the assessee is remitted back to the file of the Assessing Officer.
In the result, appeal of the assessee is allowed for statistical purposes.