ADDL. CIT, NEW DELHI vs. M/S. UNITECH MACHINES LTD., GURGAON

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ITA 102/DEL/2017Status: DisposedITAT Delhi10 March 2021AY 2008-094 pages
AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) deleted the demand, holding that the assessee was not liable for TDS on cash salary as no incriminating documents proving actual cash payment were found, and the AO's calculation was based on estimation. The Tribunal upheld this decision.

What were the facts?

During a search, the revenue found documents suggesting cash salary payments not recorded in books. The Assessing Officer (AO) treated the assessee as being in default for not deducting TDS on these payments.

What were the issues?

Whether the assessee is liable for TDS on alleged cash salary payments when the AO's assessment is based on estimation and not concrete proof of payment.

Which sections of the Income-tax Act were involved?

Section 201,Section 201(1A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

Before: Sh. Bhavnesh SainiDr. B. R. R. Kumar

Hearing: 10.03.2021Pronounced: 10.03.2021

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the revenue against the order of the ld. CIT(A)-41, New Delhi dated 24.10.2016.

2.

Following grounds have been raised by the revenue:

1. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in holding that the assessee was not liable to deduct tax at source from the unaccounted salary (in cash) paid to various persons particularly when the seized documents marked as page no. 12 of Annexure A-6 (page no.20 and 21 of the Hon'ble ITSC's order) and page no.89 of Annexure A-17 (page no.1 of the Assessing Officer's order) showed cash payment of salary ?

1.1 Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in 2 Unitech Machines Ltd. holding that the assessee was not liable to deduct tax at source from the unaccounted salary (in cash) paid to various persons particularly when it cannot be ruled out that such unaccounted salary is not embedded in unaccounted expenses claimed against the income of Rs.106.92 Lakhs offered by the assesse in its settlement application filed u/s 245D(1) of the Income Tax Act ?

1.2 Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in holding that the assessee was not liable to deduct tax at source from the unaccounted salary (in cash) paid to various persons particularly when the income on this score offered during tine search proceedings had never been retracted ?

1.3 Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in holding that the assessee was not liable to deduct tax at source from the unaccounted salary (in cash) paid to various persons particularly when the income is settled after considering all issues relating to incomings and outgoings of money in entirety by the Hon'ble Income Tax Settlement Commission and consequentially not making any addition for outgoing (unaccounted salary) if incoming preceding to such outgoing is more?

1.4 Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in holding that the assessee was not liable to deduct tax at source from the unaccounted salary (in cash) paid to various persons particularly when the entire issues decided by the Hon'ble Income Tax Settlement Commission were not considered in the impugned order in entirety before deleting the demand raised u/s 201 r.w.s. 201(1A) of the I.T. Act?”

3 Unitech Machines Ltd.

3.

Brief facts of the case as per the order of the ld. CIT (A) are that a search and seizure action was conducted at the business premises of the assessee company on 18.02.2013. During the course of the search incriminating documents were found and seized, which inter alia, showed evidence of payment of salary in cash by the assessee' company to some employees, which were not recorded in the regular books. The evidence found during the course of search pertained to the period of five months from September 2012 to January 2013 in F.Y. 2012- 2013. Based on such evidence, the A.O. proceeded to pass order u/s 201(1)/201(1A) for other years including the year under reference. Based on the cash salary component found in the seized papers, such undisclosed salary was estimated for the year under reference. The A.O. held the assessee company to be an assessee-in-default in respect of payment of such cash salary and computed tax and interest liability u/s 201(1)/201(1A).

4.

The assessee has contended that no cash salary was paid for the relevant period and no incriminating documents have been found during the search in relation to the same.

5.

The assessee company had filed an application before the Hon’ble Income Tax Settlement Commission and order u/s 245D(4) has been passed by the Hon’ble Principal Bench on 22.08.2016. The Hon’ble ITSC, in Para 4.6.3 of its order has held that no extrapolation would be justified since no evidence of cash salary was found for earlier years.

6.

The ld. CIT (A), following the decision of the Hon’ble ITSC Principal Bench, was of the considered view that the assessee

4 Unitech Machines Ltd. cannot be held as assessee-in-default for non deduction of tax for cash salary payment in the relevant year, particularly, when no incriminating document has been found in the course of search to prove that any cash component has been paid and the salary amount has been calculated purely by estimation and hence, the demand raised u/s 201(1)/201(1A) by the A.O. was deleted.

7.

We have perused the material available on record.

8.

The order u/s 201(1) was merely based on estimation, hence we find no reason to interfere with the order of the ld. CIT (A) as no cash payment proved to have been made by the assessee.

9.

As a result, the appeal of the revenue is dismissed. Order Pronounced in the Open Court on 10/03/2021.

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