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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
Per Shri D.S.Sunder Singh, Accountant Member :
This appeal is filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-1, Visakhapatnam in I.T.A.No.148/2012-13/ITO,W-2(1),Vsp/2019-20 dated 13.05.2019 and Cross Objections are filed by the assessee in support of the order of the Ld.CIT(A) for the Assessment Year (A.Y.) 2007-08. 2. In this case, tax effect is less than Rs. 50 lakhs, however, the department has taken exceptional ground stating that the order of the Ld.CIT(A) has direct impact on the issue of law with regard to section 40(a)(ia) r.w.s.194I of the Income Tax Act, 1961 (in short ‘Act’). The assessee filed it’s return of income declaring total income of Rs.1,03,570/- apart from agricultural income of Rs.55,000/-. The case was taken up for scrutiny and assessment was completed u/s 143(3) by an order dated 21.12.2009 on total income of Rs.2,96,648/-. In the assessment order, the Assessing Officer(AO) made the addition of Rs.93,078/- in respect of unexplained cash credits in the bank accounts and Rs.1,00,000/- on account of less drawings. Subsequently, the AO found that the assessee paid the rents to four persons but no tax was deducted as required u/s 3 I.T.A. No.499/Viz/2019 and CO No.137/Viz/2019, A.Y.2007-08 Shri P.V.V.Rama Krishna Reddy, Secunderabad 194A of the Act, therefore the AO passed rectification order u/s 154 making the addition of Rs.10,75,000/- u/s 40(a)(ia) of the act by an order dated 08.08.2012. 3. Against which the assessee filed appeal before the Ld.CIT(A) and the Ld.CIT(A) cancelled the order u/s 154 stating that the issue involved in the rectification proceedings was a new issue which has no bearing on the assessment order, hence rectification is not permissible. For the sake of clarity and convenience, we extract relevant part of the order of the Ld.CIT(A) which reads as under : “I have carefully considered the issue I have examined the original order passed u/s.143(3) as well as the order u/s.154 which is challenged before me. The Assessing Officer sought to have modified the order u/s.143(3) while passing rectification order u/s154 with reference to non deduction of TOS on rental income. The Assessing Officer has made two additions namely unexplained cash credit and addition on drawings .There is no issue regarding TDS in the assessment order u/s.143(3). In the rectification order u/s.154, the Assessing Officer resorted to tax the appellant u/s,40(a)(ia) which is not emanating from original assessment order. Thus, the issue the Assessing Officer wanted to settle u/s.154 is a new issue having no connection with the original assessment order. Accordingly, the order u/s.154 is held as not valid and hence cancelled.”
Against which the revenue filed appeal before this Tribunal.
We have heard both the parties and perused the material placed on record and also gone through the orders of lower authorities. As observed by the Ld.CIT(A) the issue of non deduction of tax at source on payment of rent is altogether a new issue and has no bearing on the assessment order.
4 I.T.A. No.499/Viz/2019 and CO No.137/Viz/2019, A.Y.2007-08 Shri P.V.V.Rama Krishna Reddy, Secunderabad There is no whisper with regard to non deduction of tax at source on rent payments in the assessment order dated 21.12.2009. The payment of rent, and deduction of tax at source required to be examined in detail and finding has to be given in the assessment order whether the payment attracts TDS or not and then only the provisions of section 40(a)(ia) can be invoked for the purpose of disallowance. In the instant case there is no such discussion or the finding in the assessment order. Since there is no issue emanating from the assessment order with regard to TDS and the consequent disallowance u/s 40(a)(ia) of the act, there is no case for rectification u/s 154 and adjustments made u/s 154 are unsustainable. The AO is not permitted to take debatable issues u/s 154. In any case, there is no mistake apparent from the record which required to be addressed u/s 154. Hence, we hold that the addition made by the AO u/s 40(a)(ia) is beyond the scope of section 154. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.
The assessee filed the cross objections supporting the order of the Ld.CIT(A). Since the cross objections are supportive in nature and the appeal of the revenue is dismissed, cross objections become infructuous, hence, dismissed.
5 I.T.A. No.499/Viz/2019 and CO No.137/Viz/2019, A.Y.2007-08 Shri P.V.V.Rama Krishna Reddy, Secunderabad
In the result, appeal of the revenue as well as the cross objections of the assessee are dismissed.
Order pronounced in the open court on 15th November, 2019. (िी.दुगाा राि) (धड.एस. सुन्दर धसंह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER नवशधखधपटणम /Visakhapatnam नििधंक /Dated : 15.11.2019 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. रधजस्व/The Revenue - Income Tax Officer, Ward-2(1), Visakhapatnam 2. निर्धाऩरती/ The Assessee – Shri P.V.V.Ramakrishna Reddy, F.No.201, SM Residency, 9-1-75/1/3, Royal Enclave, Hasmathpet, Secunderabad
The Commissioner of Income Tax-1, Visakhapatnam
The Commissioner of Income Tax (Appeals)-1, Visakhapatnam 5. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, तिशाखािटणम/DR, ITAT, Visakhapatnam 6.गार्ड फ़ाईि / Guard file
आदेशािुसार / BY ORDER //// Sr. Private Secretary ITAT, Visakhapatnam