LAKSHMANAN,KARTHIK vs. ASSISTANT COMMISSIONER, SALEM

This appeal filed by the assessee is directed against the order dated 20.02.2024 passed by the Addl/JCIT(A)-6, Kolkata for the assessment year 2023-24.

We find that this appeal is filed with a delay of 6 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said affidavit as well as medical reports, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication.

The only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the addition made towards disallowance under section 40(a)(ia) of the Income Tax Act, 1961 [“Act” in short] for non-deduction of taxes on professional/consultancy charges paid to various parties.

Brief facts emanating from record are that the assessee is an individual carrying on the business as Business process Outsourcing and Knowledge Process Outsourcing and filed return of income declaring a total income of ₹.12,70,650/-. The return was processed under section 143(1) of the Act and determined total income of the assessee at ₹.30,62,280/-, inter alia, making disallowance of ₹.17,91,630/- under section 40(a)(ia) of the Act for non-deduction of taxes on ₹.59,72,100/- being professional/consultancy charges paid to various parties as mentioned in the tax audit report. On appeal, the ld. CIT(A) confirmed the addition made by the Assessing Officer by rejecting the submissions of the assessee as well as evidence placed on record. On being aggrieved, the assessee is in appeal before the Tribunal.

The ld. AR Ms. Subhashini Ganapathy, CA submits that the addition made by the Assessing Officer is not maintainable. She drew our attention to the ITRs in respect of deductees, who offered the payment received by them for taxation, thereby, the deductor is not required deduct TDS. She prayed that the Assessing Officer may be directed to verify and delete the addition.

The ld. DR Ms. V. Supraja, Addl. CIT fairly conceded the matter may be remanded to the file of the Assessing Officer for fresh consideration.

Heard both the parties and perused the material available on record. Against the disallowance under section 40(a)(ia) of the Act for non-deduction of TDS, the contention of the assessee is that deductees already accounted the receipts from the assessee in their accounts and offered to tax and thereby, the assessee is not liable to deduct TDS and placed on record copy of the ITRs of the deductees. Since the Assessing Officer has no occasion to verify the above details, we set aside the order of the ld. CIT(A) and remand the matter to the file of the Assessing Officer to verify the accounts of deductees as to whether they offered the receipts from the assessee for taxation or not, if offered, the addition made in the hands of the assessee is not maintainable by affording an opportunity of being heard to the assessee to furnish evidence to substantiate his claim. Thus, the ground raised by the assessee is allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 18th July, 2025 at Chennai.