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Facts
The assessee filed a return declaring a loss, which was processed to show a substantial income. The CPC disallowed expenditure under Section 40(a)(i)(ib) for non-deduction of TDS. The assessee contended it was a clerical error and should be under Section 40(a)(ia), and that they had filed Form 26A and other required documents, though with some discrepancies and not always online.
Held
The Tribunal noted that while the assessee had issues with online filing and some discrepancies in documents, they subsequently provided rectified forms and annexures. Considering the interest of justice, the Tribunal decided to remit the issue back to the AO for fresh consideration, allowing the assessee to produce supporting documents.
Key Issues
Whether the disallowance under Section 40(a)(ia) was justified despite procedural lapses in online filing of Form 26A and related documents, and whether the assessee should be given an opportunity to present additional evidence.
Sections Cited
143(1), 40(a)(i)(ib), 40(a)(ia), 201(1), 31ACB, 11/2016
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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the Ld.Addl/JCIT(A)-3, Chennai dated 07/03/2025 in respect of the A.Y. 2023- 24.
The brief facts of the case are that the assessee filed their return of income on 31/10/2023. Thereafter, filed a revised return of income on 29/12/2023 and declared a loss of Rs. 211,32,58,126/-. Along with the said return, the assessee also filed the tax audit report in form 3CA and
In the said intimation, the CPC had disallowed an expenditure u/s. 40(a)(i)(ib). The CPC had disallowed the said expenditure for the reason that the assessee had not deducted the tax at source while making the payments towards the interest to various parties. The assessee also furnished the form 26A. The assessee therefore submitted that the disallowance in spite of the form 26A provided by the parties is not correct. As against the said disallowance, the assessee filed an appeal before the Ld.CIT(A) and contended that the assessee is in possession of form 26A as required under the first proviso to sub-section(1) of section 201 of the Act. At the time of hearing, the assessee also submitted that there was an inadvertent error while filing the form 3CD in which the provision has been wrongly mentioned as 40(a)(i)(ib) instead of 40(a)(ia) of the Act. The Ld.CIT(A) had also considered the disallowance u/s. 40(a)(ia) of the Act. The Ld.CIT(A) had observed that the form 26A was submitted manually and not filed through online as required by the Notification No. 11/2016 in F.No. DGIT(S)/CPC(TDS)/Notification / 2016-17 dated 02/12/2016 in which it was mandated that from A.Y. 2017-18, form 26A ought to have filed through online. The assessee submitted that the said form 26A was filed on 04/03/2025 and also produced the acknowledgement receipt to the effect that the form 26A was filed through online. The Ld.CIT(A) thereafter observed that in form 26A, annexure –A has not been filed and therefore concluded that the assessee had not complied with Rule 31ACB r.w. Notification No. 11/2016. Finally, the Ld.CIT(A) had confirmed the disallowance made u/s. 40(a)(ia) of the Act on the ground that the assessee had not furnished the required certificate in form 26A through online. The Ld.CIT(A) further observed that the assessee had not furnished the relevant annexure – A to form 26A through online. The Ld.CIT(A) also pointed out some discrepancies in the amounts to the form 26A and the report in form 3CD and therefore confirmed the disallowance made by the CPC. Insofar as
As against the said order, the present appeal has been filed by the assessee before this Tribunal.
At the time of hearing, the Ld.AR submitted that the disallowance of expenditure u/s. 40(a)(ia) of the Act is not correct. The Ld.AR further submitted that there was an error in form 3CD in which a higher figure of interest payable as against the correct amount recorded in the books of accounts, was also not considered by the Ld.CIT(A). Further, the Ld.AR submitted that the non-deduction of TDS on the fees for professional services, payment to Director, commission and brokerage is unwarranted since the assessee had himself suomoto disallowed 30% of the said expenditure while computing the income. The Ld.AR also filed a paper book enclosing the various notices issued by the Ld.CIT(A) and the responses submitted by the assessee and also enclosed the copies of the return of income filed by the payees and also the copy of the form 26A and other details called for by the Ld.CIT(A) in support of their case. The Ld.AR also filed an application under Rule 10 of the Tribunal Rules, 1963 in which the assessee had furnished the form 26A along with the relevant annexure – A which were e-filed and also a rectified form 3CD rectifying the defects pointed out by the authorities and prayed that the said additional evidences may also be considered while deciding the appeal on merits. The assessee had further submitted that the additional documents could not be uploaded due to shear inadvertence before the Ld.CIT(A) and prayed that the said additional documents may be admitted, in the interest of justice.
The Ld.DR submitted that the assessee had not availed the opportunities before the AO as well as before the Ld.CIT(A) and therefore prayed that no lenience should be shown on the assessee and prayed to dismiss the appeal.
In the present appeal, the case of the department is that the assessee had not furnished the form 26A in full form through online and also there were some discrepancies in form 3CA and 3CD and therefore the authorities below had rejected the claim made by the assessee and held that the assessee had not proved its case beyond doubt. We have considered the documents enclosed in the paper book in which the assessee had furnished the details of all the queries raised by the Ld.CIT(A) but the Ld.CIT(A) had not accepted the case of the assessee for the reason that the assessee had not uploaded the form 26A through online. The Ld.CIT(A) further observed that even the form 26A certificates are not in complete form and the annexure – A were not forming part of the said form 26A. The Ld.CIT(A) further held that there were some mismatch to the amounts mentioned in form 3CA and 3CD and the books of accounts and therefore not accepted the case of the assessee.
Before us, the assessee had filed an application under Rule 10 of the Tribunal Rules, 1963 and furnished the complete set of form 26A along with the annexures which were already uploaded on 03/03/2025 and 04/03/2025. In the said application, the assessee also submitted that the rectified form 3CA and 3CD dated 31/05/2025 is also enclosed to show that the claim made by the assessee is in order. From the set of facts as stated above, the disallowance was made u/s. 40(a)(ia) of the Act since the assessee had not uploaded the form 26A through online and even subsequently uploaded form 26A does not contain the annexure – A and the form 3CA and 3CD also contains some mistakes. Therefore the genuineness of the claim made by the assessee is not in doubt since manually filed form 26A and the e-filed form 26A would establishes the fact that the assessee had obtained the said certificates in form 26A from the payees for not deducting the TDS while making the interest payments. Now, the assessee had also furnished before us the annexure – A of form 26A received from the 3CA and 3CD dated 31/05/2025. Since the said additional documents filed are not a new document, but it is only the documents substituted for the earlier ones and also the form 3CA and 3CD of the rectified audit report duly certified by the auditors, we are inclined to accept the said additional documents filed by the assessee.
The said documents filed before us by way of additional documents were not furnished before the lower authorities and therefore they have no opportunity to examine the said documents and arrived a conclusion whether the assessee is eligible for deduction or not. In such circumstances, in the interest of justice, we are remitting this issue to the file of the AO for denovo consideration and the assessee is also permitted to satisfy the AO by producing the documents in support of their claim that the disallowance made by the CPC is not in order. We also direct the AO to grant an opportunity of being heard to the assessee before completing the assessment proceedings.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 10th November, 2025.