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Facts
The assessee, Safe And Sure Marine Services Pvt. Ltd., appealed an order of the CIT(A) related to assessment year 2013-14. The primary issue involved the non-deduction of TDS on director's remuneration and certain capitalized expenses.
Held
The Tribunal held that while the CIT(A) correctly noted that Form 26A was not filed, an opportunity should be granted to the assessee to furnish it. The matter was restored to the Assessing Officer for fresh adjudication.
Key Issues
Whether the assessee can be treated as an assessee in default for non-deduction of TDS when the deductees have paid taxes, and whether capitalized expenses attract TDS provisions.
Sections Cited
201, 194C, 194J, 40A(2)(b), 201(1), 201(1A), 139, 221
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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI ANIKESH BANERJEE
ORDER PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 26.03.2025 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals) – 1, Ahmadabad [in short ‘the Ld. CIT(A)’] in faceless proceedings for assessment year 2013-14, raising following grounds:
Safe And Sure Marine Services Pvt. Ltd Safe And Sure Marine Services Pvt. Ltd 2 ITA No.
1. Non-Deduction of TDS on Director's Remuneration Deduction of TDS on Director's Remuneration - Relief Deduction of TDS on Director's Remuneration Should Be.Granted in View of Proviso to Section 201(1) That Should Be.Granted in View of Proviso to Section 201(1) That Should Be.Granted in View of Proviso to Section 201(1) That the appellant had paid director remuneration of ?27 lakhs the appellant had paid director remuneration of ?27 lakhs the appellant had paid director remuneration of ?27 lakhs and no TDS was deducted. However, the directors have and no TDS was deducted. However, the directors have and no TDS was deducted. However, the directors have included this amou included this amount in their ITs and paid due taxes. The nt in their ITs and paid due taxes. The AO and CIT(A) denied benefit under the 2nd proviso to AO and CIT(A) denied benefit under the 2nd proviso to AO and CIT(A) denied benefit under the 2nd proviso to Section 201(1) solely on technical ground that Form 26A Section 201(1) solely on technical ground that Form 26A Section 201(1) solely on technical ground that Form 26A was not filed. The appellant undertakes to furnish Form was not filed. The appellant undertakes to furnish Form was not filed. The appellant undertakes to furnish Form 26A along with director tax proof before the Hon'ble 26A along with director tax proof before the Hon'b 26A along with director tax proof before the Hon'b Tribunal, and accordingly, the demand under Section 201(I) Tribunal, and accordingly, the demand under Section 201(I) Tribunal, and accordingly, the demand under Section 201(I) should be deleted. 2 Supported by Law: SC in Hindustan should be deleted. 2 Supported by Law: SC in Hindustan should be deleted. 2 Supported by Law: SC in Hindustan Coca Cola Beverage Pvt. Lid. v. CIT (2007) 293 ITR 226 (SC) Coca Cola Beverage Pvt. Lid. v. CIT (2007) 293 ITR 226 (SC) Coca Cola Beverage Pvt. Lid. v. CIT (2007) 293 ITR 226 (SC) - Deductor cannot be treated as assessee Deductor cannot be treated as assessee-in-default if tax default if tax paid by deductee. CB paid by deductee. CBDT Circular No. S/2013 dated DT Circular No. S/2013 dated 08.07.2013 08.07.2013 - Form 26A may be submitted post Form 26A may be submitted post-facto for benefit . benefit .
2. TDS Not Deducted on Capitalized Expenses TDS Not Deducted on Capitalized Expenses- Not Liable That Not Liable That the expenses on which TDS was alleged not deducted were the expenses on which TDS was alleged not deducted were the expenses on which TDS was alleged not deducted were capitalized (not debited to P&L), and no income was capitalized (not debited to P&L), and no income capitalized (not debited to P&L), and no income claimed in that year. It is a settled law that TDS is not claimed in that year. It is a settled law that TDS is not claimed in that year. It is a settled law that TDS is not required WHARE no deduction is claimed. 7 Supported by required WHARE no deduction is claimed. 7 Supported by required WHARE no deduction is claimed. 7 Supported by Law: ITAT Delhi in ACIT v. Venus Projects (2010-TIOL-348- Law: ITAT Delhi in ACIT v. Venus Projects (2010 Law: ITAT Delhi in ACIT v. Venus Projects (2010 ITAT-DEL) DEL) - TDS not required on capitalized expenditure. TDS not required on capitalized expenditure. ITAT Mumbai in Navin Bhar ITAT Mumbai in Navin Bharat Industries Pvt. Ltd. [2020] at Industries Pvt. Ltd. [2020] - TDS on capitalized payments cannot be enforced WHARE TDS on capitalized payments cannot be enforced WHARE TDS on capitalized payments cannot be enforced WHARE not routed through P&L. not routed through P&L.
3. Disallowance Based on Presumptions and Without Cross Disallowance Based on Presumptions and Without Cross Disallowance Based on Presumptions and Without Cross Verification with ITR, Form 26AS, OR Portal That the AO did Verification with ITR, Form 26AS, OR Portal That the AO did Verification with ITR, Form 26AS, OR Portal That the AO did not cross not cross-check Form 26AS, ITs of directors, OR income directors, OR income-tax portal records before raising demand. CIT(A) also failed to portal records before raising demand. CIT(A) also failed to portal records before raising demand. CIT(A) also failed to examine filed audit report available in income tax system examine filed audit report available in income tax system examine filed audit report available in income tax system and made assumptions that are factually incorrect.? and made assumptions that are factually incorrect.? and made assumptions that are factually incorrect.? Supported by Law: ITAT Delhi in ACIT v. Marubeni India Supported by Law: ITAT Delhi in ACIT v. Marubeni India Supported by Law: ITAT Delhi in ACIT v. Marubeni India Pvt. Ltd. [2014] Ltd. [2014]-AO cannot make addition based on AO cannot make addition based on suspicion without independent verification. suspicion without independent verification.
4. The appellant craves leave to add, alter, amend, modify, The appellant craves leave to add, alter, amend, modify, The appellant craves leave to add, alter, amend, modify, substitute OR DLEETE all OR any of the foregoing grounds substitute OR DLEETE all OR any of the foregoing grounds substitute OR DLEETE all OR any of the foregoing grounds of appeal
at the time of hearing OR thereafler, and to file of appeal at the time of hearing OR thereafler, and of appeal at the time of hearing OR thereafler, and such additional written submissions OR evidence as may such additional written submissions OR evidence as may such additional written submissions OR evidence as may be deemed necessary in the interest of be deemed necessary in the interest of justice. Ground 2. At the outset, it is noted that despite service of notice of At the outset, it is noted that despite service of notice of At the outset, it is noted that despite service of notice of hearing through registered post, neither did the assessee appear hearing through registered post, neither did the assessee appear hearing through registered post, neither did the assessee appear nor was any adjournment application filed. The notice was issued ny adjournment application filed. The notice was issued ny adjournment application filed. The notice was issued
Safe And Sure Marine Services Pvt. Ltd Safe And Sure Marine Services Pvt. Ltd 3 24 July 2024 and has not been returned undelivered even after on 24 July 2024 and has not been returned undelivered even after on 24 July 2024 and has not been returned undelivered even after the lapse of more than one month. In terms of section 27 of the the lapse of more than one month. In terms of section 27 of the the lapse of more than one month. In terms of section 27 of the General Clauses Act, 1897, service of notice sent by registered post General Clauses Act, 1897, service of notice sent by registered post General Clauses Act, 1897, service of notice sent by registered post is deemed to have been effected when the letter is properly deemed to have been effected when the letter is properly deemed to have been effected when the letter is properly addressed, prepaid and posted. Accordingly, service of notice upon addressed, prepaid and posted. Accordingly, service of notice upon addressed, prepaid and posted. Accordingly, service of notice upon the assessee is deemed to have been completed. the assessee is deemed to have been completed.
2.1 In these circumstances, and no appearance having been In these circumstances, and no appearance having been In these circumstances, and no appearance having been entered, the Bench formed entered, the Bench formed the view that the assessee is not the view that the assessee is not interested in prosecuting the appeal, and the matter was proceeded interested in prosecuting the appeal, and the matter was proceeded interested in prosecuting the appeal, and the matter was proceeded with ex parte qua the assessee. However, since the assessee qua the assessee. However, since the assessee qua the assessee. However, since the assessee subsequently filed written submissions on the issues raised, the subsequently filed written submissions on the issues raised, the subsequently filed written submissions on the issues raised, the appeal is being adjudicated appeal is being adjudicated ex parte after considering the after considering the arguments of the learned Departmental Representative (DR), the arguments of the learned Departmental Representative (DR), the arguments of the learned Departmental Representative (DR), the written submissions of the assessee, and the material placed on written submissions of the assessee, and the material placed on written submissions of the assessee, and the material placed on record.
Ground No. 1 challenges the finding of the learned CIT(A) on Ground No. 1 challenges the finding of the learned CIT(A) on Ground No. 1 challenges the finding of the learned CIT(A) on the footing that the assessee’s requ assessee’s request for furnishing Form No. 26A, est for furnishing Form No. 26A, demonstrating that the payees had already demonstrating that the payees had already discharged their tax discharged their tax liability, was not considered, thereby erroneously treat was not considered, thereby erroneously treating the was not considered, thereby erroneously treat assessee as an assessee assessee as an assessee-in-default. Ground No. 2 raises default. Ground No. 2 raises a plea that the expenditure in question was capital in nature, and therefore no ure in question was capital in nature, and therefore no ure in question was capital in nature, and therefore no obligation to deduct tax at source arose. Ground Nos. 3 and 4 are obligation to deduct tax at source arose. Ground Nos. 3 and 4 are obligation to deduct tax at source arose. Ground Nos. 3 and 4 are ancillary and relate to the same overarching issue relating to the ancillary and relate to the same overarching issue relating to the ancillary and relate to the same overarching issue relating to the Safe And Sure Marine Services Pvt. Ltd Safe And Sure Marine Services Pvt. Ltd 4 alleged default in non assessee’s alleged default in non-deduction or non- -payment of tax at source.
he Assessing Officer, on examination of the records and the he Assessing Officer, on examination of the records and the he Assessing Officer, on examination of the records and the tax audit report, noted that the assessee had not deducted tax at tax audit report, noted that the assessee had not deducted tax at tax audit report, noted that the assessee had not deducted tax at source on directors’ remuneration aggregating to source on directors’ remuneration aggregating to ₹25,00,000/ 25,00,000/- paid to four persons, all of whom fell within the ambit of section to four persons, all of whom fell within the ambit to four persons, all of whom fell within the ambit 40A(2)(b) of the Act.
4.1 The Assessing Officer further observed that payments to The Assessing Officer further observed that payments to The Assessing Officer further observed that payments to contractors and professionals amounting to contractors and professionals amounting to ₹63,62,006/ 63,62,006/- and ₹2,96,300/- respectively attracted deduction under sections 194C respectively attracted deduction under sections 194C respectively attracted deduction under sections 194C and 194J. The assessee contended that and 194J. The assessee contended that the said expenditure had the said expenditure had been capitalised, and therefore TDS provisions were inapplicable. been capitalised, and therefore TDS provisions were inapplicable. been capitalised, and therefore TDS provisions were inapplicable. The Assessing Officer rejected this contention and held the assessee The Assessing Officer rejected this contention and held the assessee The Assessing Officer rejected this contention and held the assessee liable under sections 201(1) and 201(1A). liable under sections 201(1) and 201(1A).
4.2 It was further noted that although tax had been d It was further noted that although tax had been d It was further noted that although tax had been deducted on certain payments, the same had not been deposited in the certain payments, the same had not been deposited in the certain payments, the same had not been deposited in the Government account, resulting in a further demand of ₹33,61,947/- Government account, resulting in a further demand of Government account, resulting in a further demand of . In aggregate, tax liability of . In aggregate, tax liability of ₹41,05,290/- was raised under was raised under sections 201(1) and 201(1A). sections 201(1) and 201(1A).
On further appeal, 5. On further appeal, Despite issuance of several notices, the ssuance of several notices, the assessee did not file any submissions before the learned CIT(A). assessee did not file any submissions before the learned CIT(A). assessee did not file any submissions before the learned CIT(A).
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Consequently, the appeal was dismissed, and the findings of the Consequently, the appeal was dismissed, and the findings of the Consequently, the appeal was dismissed, and the findings of the Assessing Officer were upheld in the following terms: Assessing Officer were upheld in the following terms: Assessing Officer were upheld in the following terms:
“6.1.1. The available material on record 6.1.1. The available material on record is verified along with is verified along with grounds of appeal s and statement of facts. After considering the grounds of appeals and statement of facts. After considering the grounds of appeals and statement of facts. After considering the material available on record, it is seen that no sufficient material is material available on record, it is seen that no sufficient material is material available on record, it is seen that no sufficient material is available to provide any relief to the appellant. The Appellant has available to provide any relief to the appellant. The Appellant has available to provide any relief to the appellant. The Appellant has raised 4 grounds of appeal. raised 4 grounds of appeal. It is seen that the appellant has not It is seen that the appellant has not deducted tax on remuneration paid to the directors. This fact is deducted tax on remuneration paid to the directors. This fact is deducted tax on remuneration paid to the directors. This fact is confirmed from the audit report. The appellant has claimed that confirmed from the audit report. The appellant has claimed that confirmed from the audit report. The appellant has claimed that the deductees have paid the taxes on this income. For the interest the deductees have paid the taxes on this income. For the interest the deductees have paid the taxes on this income. For the interest part it has relied on part it has relied on decision in case of Sahara India by Hon'ble decision in case of Sahara India by Hon'ble Allahabad High Court. The appellant was specifically requested to Allahabad High Court. The appellant was specifically requested to Allahabad High Court. The appellant was specifically requested to furnish form no 26A to verify the contention that the deductees furnish form no 26A to verify the contention that the deductees furnish form no 26A to verify the contention that the deductees have paid the tax. The question of applicability of decision in case have paid the tax. The question of applicability of decision in case have paid the tax. The question of applicability of decision in case of Sahara Ind of Sahara India does not arise. The case of director is not of loss ia does not arise. The case of director is not of loss being amount paid by deductor relates to remuneration. Therefore, being amount paid by deductor relates to remuneration. Therefore, being amount paid by deductor relates to remuneration. Therefore, AO has correctly raised demand on this issue. The appellant's AO has correctly raised demand on this issue. The appellant's AO has correctly raised demand on this issue. The appellant's claim that expenses relating to demand of Rs.317643/ claim that expenses relating to demand of Rs.317643/ claim that expenses relating to demand of Rs.317643/- were capitalized. I capitalized. In this respect the say was called for from the n this respect the say was called for from the appellant. Even if the expenses are capitalized the TDS requires to appellant. Even if the expenses are capitalized the TDS requires to appellant. Even if the expenses are capitalized the TDS requires to be deducted on this amount. Therefore, AO has raised the demand be deducted on this amount. Therefore, AO has raised the demand be deducted on this amount. Therefore, AO has raised the demand correctly on this issue. It is seen that the appellant has not correctly on this issue. It is seen that the appellant has not correctly on this issue. It is seen that the appellant has not deposited tax deposited tax of Rs.3361947/-. Now the appellant has furnished . Now the appellant has furnished copy of audit report and claimed that there is no need to deduct copy of audit report and claimed that there is no need to deduct copy of audit report and claimed that there is no need to deduct the TDS. In this respect details were called for from the appellant the TDS. In this respect details were called for from the appellant the TDS. In this respect details were called for from the appellant and a certificate from Auditor was also called for. However, the and a certificate from Auditor was also called for. However, the and a certificate from Auditor was also called for. However, the appellant has failed to furnish the information. Therefore, there is has failed to furnish the information. Therefore, there is has failed to furnish the information. Therefore, there is no force in the claim that no TDS is requires to be deducted in this no force in the claim that no TDS is requires to be deducted in this no force in the claim that no TDS is requires to be deducted in this case. Therefore, under such circumstances it is not possible to case. Therefore, under such circumstances it is not possible to case. Therefore, under such circumstances it is not possible to allow any relief to the appellant. Therefore, the relief is gra allow any relief to the appellant. Therefore, the relief is gra allow any relief to the appellant. Therefore, the relief is granted to the appellant and action of AO TDS is confirmed. Ground no 1 the appellant and action of AO TDS is confirmed. Ground no 1 the appellant and action of AO TDS is confirmed. Ground no 1 to 4 is dismissed. dismissed.”
6. We have carefully considered the submissions of the learned We have carefully considered the submissions of the learned We have carefully considered the submissions of the learned DR as well as the written submissions of the assessee. The assessee DR as well as the written submissions of the assessee. The assessee DR as well as the written submissions of the assessee. The assessee has argued that the lower authorities misread the audit report and has argued that the lower authorities misread the audit report and has argued that the lower authorities misread the audit report and failed to consider the second proviso to section 201(1), which grants failed to consider the second proviso to section 201(1), whic failed to consider the second proviso to section 201(1), whic relief where the deductee has furnished a return of income, taken relief where the deductee has furnished a return of income, taken relief where the deductee has furnished a return of income, taken the relevant sum into account, and paid the due tax. It is also the relevant sum into account, and paid the due tax. It is also the relevant sum into account, and paid the due tax. It is also Safe And Sure Marine Services Pvt. Ltd Safe And Sure Marine Services Pvt. Ltd 6 that the order passed by the learned CIT(A) is non- contended that the order passed by the learned CIT(A) is non contended that the order passed by the learned CIT(A) is non speaking and mechanical. speaking and mechanical. He submitted that no such remar He submitted that no such remark or default has been reported in column 18 of tax audit report and the default has been reported in column 18 of tax audit report and the default has been reported in column 18 of tax audit report and the Assessing Officer has miss Assessing Officer has miss-interpreted the audit report resulting interpreted the audit report resulting into perverse conclusion. into perverse conclusion.
6.1 Since the principal contention of the assessee revolves around Since the principal contention of the assessee revolves around Since the principal contention of the assessee revolves around second proviso to section 201(1), it becomes the applicability of the the applicability of the second proviso to section 201(1) necessary to examine the statutory framework. The relevant proviso necessary to examine the statutory framework. The relevant proviso necessary to examine the statutory framework. The relevant proviso (emphasis supplied externally) has been reproduced as under: (emphasis supplied externally) has been reproduced (emphasis supplied externally) has been reproduced
“Consequences of failure to deduct or pay. Consequences of failure to deduct or pay. 11 12 201. 13[(1) Where any person, including the principal officer of a company, [(1) Where any person, including the principal officer of a company, [(1) Where any person, including the principal officer of a company,- (a) who is required to deduct any sum in accordance with the provisions who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (1A) of section 192 section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any does not deduct, or does not pay, or after so deducting fails to pay, the whole or any does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such part of the tax, as required by or under this Act, then, such person, shall, without person, shall, without prejudice to any other consequences which he may incur, be deemed to be an asses- prejudice to any other consequences which he may incur, be deemed to be an asses prejudice to any other consequences which he may incur, be deemed to be an asses see in default in respect of such tax: see in default in respect of such tax: 14[Provided that any person, including the principal officer of a company, that any person, including the principal officer of a company, that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the fails to deduct the whole or any part of the tax in accordance with the fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a provisions of this Chapter on the sum paid to a 15[payee] or on the sum [payee] or on the sum credited to the account of a credited to the account of a 15[payee] shall not be deemed to be an assessee not be deemed to be an assessee in default in respect of such tax if such in default in respect of such tax if such 15[payee]- (i) has furnished his return of income under has furnished his return of income under section 139 section 139; (ii) has taken into account such sum has taken into account such sum for computing income in such for computing income in such return of income; and return of income; and (iii) has paid the tax due on the income declared by him in such has paid the tax due on the income declared by him in such has paid the tax due on the income declared by him in such return of income, return of income, and the person furnishes a certificate to this effect from an accountant in and the person furnishes a certificate to this effect from an accountant in and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed such form as may be prescribed 16:] Provided 17[further] that no penalty shall be charged under ] that no penalty shall be charged under section 221 section 221 from such person, unless the Assessing Officer is satisfied that such person, without 18good and person, unless the Assessing Officer is satisfied that such person, without person, unless the Assessing Officer is satisfied that such person, without sufficient reasons, has failed to deduct and pay such tax.] sufficient reasons, has failed to deduct and pay such tax.]
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19[(1A) Without prejudice to t [(1A) Without prejudice to the provisions of sub-section (1), if any such person section (1), if any such person 18, principal officer or company as is referred to in that sub principal officer or company as is referred to in that sub-section does not deduct the section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or whole or any part of the tax or after deducting fails to pay the tax as requir whole or any part of the tax or after deducting fails to pay the tax as requir under this Act, he or it shall under this Act, he or it shall 18 be liable to pay simple interest,- (i) at one per cent for every month 20 or part of a month on the amount of such tax at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax from the date on which ductible to the date on which such tax is deducted; and is deducted; and (ii) at one and one-half per cent for every month or part of a month on the amount at one and one half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on of such tax from the date on which such tax was deducted to the date on of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, which such tax is and such interest shall be paid before furnishing the statement in accordance with and such interest shall be paid before furnishing the statement in accordance with and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section (3) of section 200:] 21[Provided that in case any person, i that in case any person, including the principal officer of a company fails ncluding the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this to deduct the whole or any part of the tax in accordance with the provisions of this to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a Chapter on the sum paid to a 22[payee] or on the sum credited to the account of a [payee] or on the sum credited to the account of a 22[payee] but is not deemed to be an assessee in default under the first proviso to [payee] but is not deemed to be an assessee in default under the first proviso to [payee] but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which section (1), the interest under clause (i) shall be payable from the date on which section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of ret such tax was deductible to the date of furnishing of return of income by such urn of income by such 22[payee]:] 23[Provided further that where an order is made by the Assessing Officer for the that where an order is made by the Assessing Officer for the that where an order is made by the Assessing Officer for the default under sub-section (1), the interest shall be paid by the person in accordance section (1), the interest shall be paid by the person in accordance section (1), the interest shall be paid by the person in accordance with such order.] (2) Where the tax has not been paid as aforesaid after it is deducted, 24[the amount of (2) Where the tax has not been paid as aforesaid after it is deducted, (2) Where the tax has not been paid as aforesaid after it is deducted, the tax together with the amount of simple interest thereon referred to in sub-section the tax together with the amount of simple interest thereon referred to in sub the tax together with the amount of simple interest thereon referred to in sub (1A)] shall be a charge upon all the assets of the person, or the company, as the case (1A)] shall be a charge upon all the assets of the person, or the company, as the case (1A)] shall be a charge upon all the assets of the person, or the company, as the case may be, referred to in sub may be, referred to in sub-section (1). 25[ 26[(3) No order shall be made under sub [(3) No order shall be made under sub-section (1) deeming a person to be an section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from 27[any assessee in default for failure to deduct the whole or any part of the tax from assessee in default for failure to deduct the whole or any part of the tax from person, at any time after the expiry of six years] from the end of the financial year in person, at any time after the expiry of six years] from the end of the financial year in person, at any time after the expiry of six years] from the end of the financial year in which payment is made or credit is given which payment is made or credit is given 28[or two years from the end of the financial [or two years from the end of the financial year in which the correction stat year in which the correction statement is delivered under the 29[first] proviso to sub [first] proviso to sub- section (3) of section 200 section 200, whichever is later].] (4) The provisions of sub (4) The provisions of sub-clause (ii) of sub-section (3) of section 153 section 153* and of Explanation 1 to section 153 section 153 shall, so far as may, apply to the time limit prescribed in shall, so far as may, apply to the time limit prescribed in sub-section (3).] 30[Explanation.-For the purposes of this section, the expression “accountant” shall For the purposes of this section, the expression “accountant” shall For the purposes of this section, the expression “accountant” shall have the meaning assigned to it in the Explanation to sub have the meaning assigned to it in the Explanation to sub-section (2) of section (2) of section 288.]” (emphasis supplied externally) (emphasis supplied externally) 6.2 A perusal of the proviso makes it abundantly clear that an A perusal of the proviso makes it abundantly clear that an A perusal of the proviso makes it abundantly clear that an assessee who fails to deduct tax at source shall not be deemed to be assessee who fails to deduct tax at source shall not be deemed to be assessee who fails to deduct tax at source shall not be deemed to be an assessee in default an assessee in default provided the payee has:
furnished a return of income under section 139; furnished a return of income under section 139; furnished a return of income under section 139;
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taken the sum in question into ac taken the sum in question into account in computing income; count in computing income; and 3. paid tax due on such income, paid tax due on such income, and 4. the deductor furnishes a the deductor furnishes a certificate in Form No. 26A certificate in Form No. 26A, duly certified by an accountant. certified by an accountant.
6.3 The learned CIT(A) has recorded a categorical finding that The learned CIT(A) has recorded a categorical finding that The learned CIT(A) has recorded a categorical finding that no Form No. 26A was furnished before him. was furnished before him. To this extent, the finding To this extent, the finding is factually correct.
6.4 Before us, however in written submission, the assessee has Before us, however in written submission, the assessee has Before us, however in written submission, the assessee has expressed its willingness to furnish the requisite certificate in expressed its willingness to furnish the requisite certificate in expressed its willingness to furnish the requisite certificate in support of its claim that the deductees have already paid tax and support of its claim that the deductees have already paid tax and support of its claim that the deductees have already paid tax and filed their return of income. Since the assessee seeks to avail a r return of income. Since the assessee seeks to avail a r return of income. Since the assessee seeks to avail a statutory benefit, the denial of an opportunity at this stage would statutory benefit, the denial of an opportunity at this stage would statutory benefit, the denial of an opportunity at this stage would cause serious prejudice. cause serious prejudice.
6.5 In the interests of substantial justice, and having regard to the In the interests of substantial justice, and having regard to the In the interests of substantial justice, and having regard to the mandate of the proviso to section 201 mandate of the proviso to section 201(1), we deem it appropriate to (1), we deem it appropriate to set aside the order of the learned CIT(A) and restore the matter to set aside the order of the learned CIT(A) and restore the matter to set aside the order of the learned CIT(A) and restore the matter to the file of the Assessing Officer for the limited purpose of enabling the file of the Assessing Officer for the limited purpose of enabling the file of the Assessing Officer for the limited purpose of enabling the assessee to furnish Form No. 26A and for fresh adjudication in the assessee to furnish Form No. 26A and for fresh adjudication in the assessee to furnish Form No. 26A and for fresh adjudication in accordance with law. accordance with law.
6.6 Accordingly, Ground No. 1 Ground No. 1 is allowed for statistical purposes. is allowed for statistical purposes. Since the matter has been restored to the Assessing Officer for Since the matter has been restored to the Assessing Officer for Since the matter has been restored to the Assessing Officer for Safe And Sure Marine Services Pvt. Ltd Safe And Sure Marine Services Pvt. Ltd 9 of the assessee’s claim under the second proviso to verification of the assessee’s claim under the second proviso to verification of the assessee’s claim under the second proviso to section 201(1), the remaining grounds have become academic and section 201(1), the remaining grounds have become section 201(1), the remaining grounds have become require no separate adjudication. require no separate adjudication.
In the result, the appeal of the assessee is partly allowed for partly allowed for 7. In the result, the appeal of the assessee is statistical purposes in the terms indicated hereinabove. in the terms indicated hereinabove.
Order pronounced in the open Court on ounced in the open Court on 16/12/2025. /12/2025.