HORIZON AEROSPACE (INDIA) PRIVATE LIMITED,NEW DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-15, DELHI

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ITA 8997/DEL/2025Status: DisposedITAT Delhi10 August 2026AY 2023-247 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found it fit to give the assessee another opportunity to substantiate its claim by admitting additional evidence. The issues were remanded back to the AO for fresh adjudication after admitting the additional evidence.

What were the facts?

The assessee made purchases exceeding Rs. 50 lakhs from two entities without deducting TDS under Section 194Q. The AO disallowed 30% of these purchases under Section 40(a)(ia), which was upheld by the CIT(A). The assessee argued that no disallowance should be made if the payee has offered the income to tax and that the disallowance should be restricted to the amount exceeding Rs. 50 lakhs.

What were the issues?

Whether disallowance under Section 40(a)(ia) is warranted when the payee has offered income to tax, and whether the disallowance should be on the entire purchase amount or only the excess over Rs. 50 lakhs.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194Q,Section 201(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

For Appellant: Shri Ajay Wadhwa, Adv &, Ms. Chetana Jain, Adv, Shri Ajay Kumar Arora, Sr. DR
Hearing: 01.06.2026Pronounced: 10.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI BENCH ‘A’: NEW DELHI BEFORE SHRI M BALAGANESH, ACCOUNTANT MEMBER AND MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER ITA No.8997/Del/2025 (Assessment Year: 2023-24) Horizon Aerospace (India) Private Deputy Commissioner of Limited. Income Tax, Ground floor, A-85, Central Circle-15, Vs. Road-4, Lane-6, Jhandewalan Extension, South West Mahipalpur, New Delhi New Delhi PAN AABCH6698H (Appellant) : (Respondent) Assessee by : Shri Ajay Wadhwa, Adv & Ms. Chetana Jain, Adv : Shri Ajay Kumar Arora, Sr. DR Respondent by Date of Hearing : 01.06.2026 Date of Pronouncement : 10.08.2026 O R D E R Per Kavitha Rajagopal, JM: This appeal is filed by the assessee, challenging the order of the Learned Commissioner of Income Tax (Appeals) [‘Ld. CIT(A)’ for short], passed u/s 250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2023-24.

2.

The assessee has raised the following grounds of appeal:-

ITA No. 8997/Del/2025 Horizon Aero (India) Pvt. Ltd. Vs. DCIT “1. . That on the facts and circumstances of the case and in law, the order passed by the Commissioner of Income Tax(Appeals) Delhi -26 (hereinafter referred to as "CIT(A)") under Section 250 of the Income Tax Act 1961 ("the Act") for the A.Y. 2023-24 dated 28.11.2025 is illegal, bad in law, and in contravention of the applicable provisions of the income Tax Act, 1961("the Act") and therefore the same deserves to be set aside. 2. That, on the facts and circumstances of the case and in law, the order dated 28.11.2025 passed by the CIT(A) affirming the assessment order dated 06.03.2025 is patently illegal, erroneous and bad in law as it suffers from violation of principle of natural justice. 3. That the Learned CIT(A) has erred in observing that neither any substantive submission has been received online nor the appellant or its authorised representative had appeared', despite detailed written submissions having been filed, thus proceeding on incorrect facts and vitiating the impugned order. 4. That on the facts and in law, CIT(A) has erred in disposing of the appeal in a summary and mechanical manner without properly adjudicating the detailed written submissions, case law and legal contentions placed on record, thereby rendering the appellate order non-speaking and liable to be quashed. 5. That on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in affirming the assessment order dated 06.03.2025 without appreciating the fact that the Ld. AO erred in making a disallowance of Rs. 52,32,579/- under section 40(a)(ia) of the Act i.e. 30% of entire purchases made of Rs. 1,74,41,929/-. 6. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in sustaining the assessment order without appreciating the fact that Ld. AO made a disallowance under Section 40(a)(ia) of the Act on the entire purchases made above 50 Lakhs, instead of restricting it to the amount of purchases on which the tax was required to be deducted under section 194Q, thereby leading to an excessive and unjust addition. 7. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in affirming the order of Ld. AO without appreciating that the assessee is covered under the first proviso to Section 201 of the Act, which states that where the payee has filed its return of income taking into account such sum while computing its income and paid taxes on such income, the payer shall not be deemed to be assessee in default, and therefore, no disallowance under Section 40(a)(ia) should have been made.

ITA No. 8997/Del/2025 Horizon Aero (India) Pvt. Ltd. Vs. DCIT 8. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in affirming the order of Ld. AO without appreciating that the assessee is also covered by the second proviso to Section 40(a)(ia) of the Act, which provides that where the payee has taken the payment into account while computing its taxable income and has duly paid taxes thereon, no disallowance should be made under section 40a(ia) of the Act. 9. That the Ld. CIT(A) has grossly erred in not appreciating the fact that the assessee had duly submitted a request seeking an opportunity to furnish the certificate from the sellers regarding the treatment of the payment in their books of accounts and the corresponding discharge of tax liability thereon. The failure to consider this material request has resulted in an erroneous adjudication, rendering the impugned order liable to be set aside. 10. That the Ld. CIT(A) has erred, on facts and in law, in upholding the assessment order dated 06.03.2025, which was passed in a hurried and arbitrary manner without affording the assessee a reasonable and effective opportunity to furnish the requisite records, including Form 26A, to demonstrate that the proposed disallowance was wholly unwarranted. 11. That the grounds of appeal are independent and without prejudice to one another. 12. The appellant craves leave to add, amend, alter, modify, or withdraw any of the above grounds of appeal before or at the time of hearing of the appeal in the interest of justice.”

3.

Brief facts of the case are that the assessee is a private limited resident company and had filed its return of income for the year under consideration dated 30.10.2023 declaring total income of ₹10,98,67,360/-. The assessee’s case was selected for scrutiny under CASS and notices under Section 143(2) and 142(1) of the Act were duly issued and served upon the assessee. The Ld. AO observed that the assessee company has made purchases above Rs.50 lakhs from various entities for which the assessee was required to furnish party-wise purchases above Rs.50 lakhs and deduction of TDS u/s 194Q of the Act on such purchases. The ld. AO 3

ITA No. 8997/Del/2025 Horizon Aero (India) Pvt. Ltd. Vs. DCIT stated that as the assessee has failed to submit the said details in spite of several opportunities and, as per the details available on record, the assessee company had made purchases above Rs.50 lakhs from the two entities, namely, AG Universal Pvt. Ltd., amounting to Rs.1,16,55,929/- and Castmaster Mobitech India Pvt. Ltd., amounting to Rs.57,86,000/- which aggregates to Rs.1,74,41,929/-, for which TDS u/s 194Q of the Act was not deducted which was also duly reported in the Tax Audit Report as well. The ld. AO made an addition of Rs.52,32,579/- being 30% of the total purchases made above Rs.50 lakhs and added the same to the income of the assessee on account of non-deduction of TDS as per the provisions of Section 40(a)(ia) of the Act and thereby determined the total income at Rs.11,50,99,939/- vide assessment order dated 06.03.2025 passed u/s 143(3) of the Act.

4.

Aggrieved, the assessee filed appeal before the First Appellate Authority, who, vide order dated 25.11.2025, upheld the addition made by the Ld. AO thereby rejecting the assessee’s contention. Aggrieved, the assessee is in appeal before us challenging the order of the Ld.CIT(A).

5.

We have heard the rival submissions and perused the material available on record. It is observed that the assessee’s case was selected for scrutiny for the reason that ‘business purchases made by the assessee and no TDS deducted u/s

ITA No. 8997/Del/2025 Horizon Aero (India) Pvt. Ltd. Vs. DCIT 194Q of the Income-tax Act’, where the Ld. AO observed that the assessee has made purchases exceeding Rs.50 lakhs from the following entities:-

S.No. Name of Entity Amount of purchases (in Rs.) 1. A.G. Universal Pvt. Ltd. 1,16,55,929/- 2. Castmaster Mobitech India Pvt. Ltd. 57,86,000/- Total 1,74,41,929/-

6.

The ld. AO made a disallowance u/s 40(a)(ia) of the Act amounting to Rs.52,32,579/- which was 30% of the total purchases from the two parties aggregating to Rs.1,74,41,929/- which was upheld by the Ld.CIT(A). The ld. AR for the assessee submitted that no disallowance shall be made if the payee has already offered the income to tax u/s 40(a)(ia) of the Act and further submitted that the disallowance u/s 40(a)(ia) of the Act shall be made not on the entire value of purchase, but, has to be restricted to the portion of transaction which exceeds Rs.50 lakhs per vendor. The ld. AR further stated that Section 194Q of the Act warrants only the amount which is in excess of Rs.50 lakhs for which TDS was not deducted. The Ld. AR prayed that the assessee intends to file additional evidences to substantiate its claim under Rule 29 of the IT(AT) Rules, 1963 consisting of the Chartered Accountant’s certificate in Form 26A enclosed as Annexure-A pertaining to: (i) AG Universal Pvt. Ltd.; and (ii) Castmaster Mobitech India Pvt. Ltd., for the purpose of establishing non-default on the part of the assessee u/s

ITA No. 8997/Del/2025 Horizon Aero (India) Pvt. Ltd. Vs. DCIT 201(1) r.w. second proviso to Section 40(a)(ia) of the Act and that the same may be admitted and adjudicated upon.

7.

The ld. DR vehemently opposed to the same stating that the assessee ought to have filed the same before the lower authorities, but, had failed to do so and, hence, objected for admission of additional evidence.

8.

On the above facts of the case, we deem it fit to extend the assessee with one more opportunity to substantiate its claim before the Ld. AO in the interest of justice dispensation. We, therefore, remand all the issues back to the file of the Ld. AO with a direction to admit the additional evidences filed by the assessee and to decide the issue on the merits in accordance with the law. The assessee is directed to strictly comply with the proceedings before the Ld. AO without any undue delay from its side. Hence, the grounds of appeal raised by the assessee are hereby allowed for statistical purpose.

9.

In the result, the appeal filed by the assessee is hereby allowed for statistical purpose.

Order pronounced in the open court on10.08.2026.

Sd/- Sd/- (M. BALAGANESH) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated, 10th August, 2026 6

ITA No. 8997/Del/2025 Horizon Aero (India) Pvt. Ltd. Vs. DCIT dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT, NEW DELHI

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