SANDEEP KUMAR DHAMEJANI, RAIPUR,RAIPUR vs. ACIT, CIRCLE-1(1), RAIPUR, RAIPUR

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ITA 381/RPR/2026Status: DisposedITAT Raipur29 May 2026AY 2015-1610 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the payee had offered the sum to tax, the assessee was not deemed to be an assessee in default. Therefore, the disallowance under Section 40(a)(ia) was not justified.

What were the facts?

The assessee's business income was assessed at a higher amount due to disallowances under Section 40(a)(ia). The assessee had taken a loan and paid EMIs, but claimed that the payee had offered the interest component to tax, thus fulfilling the conditions of the proviso to Section 40(a)(ia).

What were the issues?

Whether the disallowance under Section 40(a)(ia) is sustainable when the payee has offered the income to tax, thereby fulfilling the conditions of the proviso to Section 201(1)?

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY

For Appellant: Shri Veekaas S Sharma, CA
For Respondent: Shri CH. Rajeswara Reddy, Sr. DR
Hearing: 29.05.2026Pronounced: 29.05.2026

आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 03.03.2026 for the assessment year 2015-16 as per the grounds of appeal on record.

2.

The brief facts in this case are that the assessee is an individual deriving income from the business of manufacturing and trading of rice and its by-products under the proprietorship concern namely M/s. Hariom Industries. The books of accounts of the assessee were duly audited u/s. 44AB of the Income Tax Act, 1961 (for short ‘the Act’). The return of income was filed by the assessee declaring total income at Rs.21,15,970/-. Assessment was completed u/s. 143(3) of the Act at assessed income of Rs.31,39,728/- after making various disallowances /addition u/s.40(a)(ia) of the Act.

3.

At the time of hearing, the Ld. Counsel for the assessee referring to Section 40(a)(ia) of the Act and its “2nd proviso” a/w. “1st proviso” to Sub- section (1) of Section 201 of the Act submitted that the assessee had taken loan from M/s. Cholamandalam Investment & Finance Company Ltd. and that he was paying EMI which comprised of the principal as well as the interest components on such loan. That as per Form 26A a/w. the

3 Shri Sandeep Kumar Dhamejani Vs. ACIT-1(1), Raipur (C.G.) ITA No.381/RPR/2026

Annexure which the assessee had submitted before the Department showing that the payee i.e. M/s. Cholamandalam Investment & Finance Company Ltd. had taken into account the amount of Rs.10,30,230/- i.e. the amount paid by the assessee to said M/s. Cholamandalam Investment & Finance Company Ltd. and the said payee had offered for taxation also the said amount of Rs.10,30,230/- in its return of income filed. The said fact is certified by the Chartered Accountant of the said M/s. Cholamandalam Investment & Finance Company Ltd. The Ld. Counsel had submitted that the assessee is not an assessee in default in terms with ‘1st proviso’ to Section 201(1) and therefore, as per “2nd proviso” to Section 40(a)(ia), it shall be deemed that the assessee has deducted and paid the tax on such sum and on the date of furnishing return of income by the payee i.e. M/s. Cholamandalam Investment & Finance Company Ltd. as referred in ‘1st proviso’ to Section 201(1) of the Act. The Form 26A a/w. Annexure is at Page No.148 to 150 of the paper book are extracted as follows:

4 Shri Sandeep Kumar Dhamejani Vs. ACIT-1(1), Raipur (C.G.) ITA No.381/RPR/2026

5 Shri Sandeep Kumar Dhamejani Vs. ACIT-1(1), Raipur (C.G.) ITA No.381/RPR/2026

6 Shri Sandeep Kumar Dhamejani Vs. ACIT-1(1), Raipur (C.G.) ITA No.381/RPR/2026

7 Shri Sandeep Kumar Dhamejani Vs. ACIT-1(1), Raipur (C.G.) ITA No.381/RPR/2026

4.

The relevant provisions of Section 40(a)(ia) a/w. “2nd proviso” is extracted as follows:

“40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",— (a) in the case of any assessee— *** *** *** *** (ia) thirty per cent of any sum payable to a resident, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139 : Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, thirty per cent of such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid : Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the payee referred to in the said proviso.”

5.

That Further, Section 201 a/w. “1st Proviso” is extracted as follows:

“201. (1) Where any person, including the principal officer of a company,— (a) 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, being an employer, 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 person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax:

8 Shri Sandeep Kumar Dhamejani Vs. ACIT-1(1), Raipur (C.G.) ITA No.381/RPR/2026

Provided 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 provisions of this Chapter on the sum paid to a 84[payee] or on the sum credited to the account of a 84[payee] shall not be deemed to be an assessee in default in respect of such tax if such 84[payee]— (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed:”

6.

That on reading of the aforesaid provisions, there is specific legal implications which mandates therein and which also describes the facts that the tax liability has to be imposed only when the assessee is an “assessee in default”. The Revenue should not be deprived of the legitimate taxes from the assessee. That in a given transaction, if the payer of certain amount fails to deduct taxes in accordance with the provisions of the Act but such amount as received by the payee and has been considered and offered to tax in the return of income filed by such payee, in such scenario, the payer of the amount will not be an “assessee in default” since the legitimate taxes due to the Department has been paid by the payee in its return of income and as per ‘2nd proviso’ to Section 40(a)(ia), it shall be deemed that the assessee had deducted and paid tax on such sums. Revering to the facts of the present case as per Form 26A and its annexure, the CA of the payee certifies that the amount of

9 Shri Sandeep Kumar Dhamejani Vs. ACIT-1(1), Raipur (C.G.) ITA No.381/RPR/2026

Rs.10,30,230/- has been included in the return of income filed by such payee and has been offered to tax. This fact is undisputed as the relevant documents Form 26A and its annexure were already filed before the A.O. Since compliances has been made by the payee as per ‘1st proviso” to Section 201(1) of the Act, hence the assessee shall not be deemed to be an assessee in default in respect of such taxes and as per ‘2nd proviso’ to Section 40(a)(ia) of the Act it shall be deemed that the assessee has deducted and paid taxes on such sums.

7.

Considering the facts and circumstances and the relevant provisions of the Act, it is held that the assessee herein is not an assessee deemed to be an “assessee in default”. The A.O is directed to delete the additions from the hands of the assessee while providing appeal effect of this order.

8.

In the result, appeal of the assessee is allowed.

Order pronounced in open court on 29th day of May, 2026.

Sd/- (PARTHA SARATHI CHAUDHURY) �या�यक सद�य/JUDICIAL MEMBER रायपुर / Raipur; �दनांक / Dated : 29th May, 2026. SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1.

10 Shri Sandeep Kumar Dhamejani Vs. ACIT-1(1), Raipur (C.G.) ITA No.381/RPR/2026

��यथ� / The Respondent. 2. 3. The Pr. CIT-1, Raipur (C.G.) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, रायपुर / DR, ITAT, “SMC” Bench, Raipur. गाड� फ़ाइल / Guard File. 5. Samiran Bera, आदेशानुसार / BY ORDER, Sr. PS, ITAT, // True Copy // Raipur Senior Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur Digitally signed by Samiran Bera, Sr. PS, ITAT, Raipur Date: 2026.05.29 17:44:13 +05'30'

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