M/S. VALDEL INFRA INDIA PRIVATE LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 7(1)(2), BANGALORE

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ITA 1313/BANG/2019Status: DisposedITAT Bangalore06 March 2020AY 2015-166 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted the additional evidence rejected by the CIT(Appeals) and set aside the CIT(Appeals)'s order. The issue was restored to the CIT(Appeals) for fresh adjudication after considering the additional evidence.

What were the facts?

The assessee, engaged in real estate and construction, debited Rs. 4,71,00,000 as warm shell charges. The Assessing Officer disallowed Rs. 1,41,30,000 for non-deduction of TDS under Section 194C, invoking Section 40(a)(ia). The CIT(Appeals) confirmed this disallowance and rejected additional evidence.

What were the issues?

Whether the CIT(Appeals) erred in confirming the disallowance for non-deduction of TDS and rejecting additional evidence. The applicability of TDS provisions to payments made to sister concerns for business expediency was also a key consideration.

Which sections of the Income-tax Act were involved?

Section 194C,Section 40(a)(ia),Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES “ A ” BENCH: BANGALORE

Before: SHRI A.K. GARODIA & SHRI PAVAN KUMAR GADALE

For Appellant: Shri Narendra Sharma, Advocate
For Respondent: Shri A. Ramesh Kumar, JCIT (D.R)
Hearing: 02.03.2020Pronounced: 06.03.2020

O R D E R

PER SHRI PAVAN KUMAR GADALE, JM :

1.

The assessee has filed an appeal against the order of Commissioner of Income Tax (Appeals)-7, Bangalore passed under Section 143(3) and 250 of the Income Tax Act, 1961 ('the Act').

2.

The assessee has raised the following grounds of appeal :

3. The Brief facts of the case are that the assessee company is engaged in the business of real estate, construction and infrastructure activities and filed the Return of Income on 30.10.2015 with total income of Rs.63,03,047/-. Subsequently, the case was selected for scrutiny under CASS and Notice under Section 143(2) and 142(1) were issued. In compliance, the learned Authorized Representative appeared from time to time and filed the relevant details.The Assessing Officer on perusal of the Profit and Loss Account found that the amount of Rs.4,71,00,000 was debited to Profit and Loss Account as warm shell charges and details were called for. The Assessing Officer on perusal of details, find that the payments were made to contractors without deduction of TDS as per provisions of Section 194C of the Act. Hence disallowed the expenses for non-deduction of TDS under provisions of Section 40a (ia) of the Act of Rs.1,41,30,000/- and Assessed total income of Rs.2,04,36,047/- and passed order under Section 143(3) of the Act Dt.1.12.2017. Aggrieved by the order, the assessee has filed an appeal with the CIT(Appeals).The CIT(Appeals) in the course of hearing proceedings considered the submissions of the assessee in respect of deduction of tax under Section 194C of the Act. Whereas the assessee has filed additional evidence, which could not be filed before the Assessing Officer and the reasons were explained. But Appellate authority was not convinced with the explanations and dealt at Para 4.1 and 4.2 of the order and confirmed the disallowance under Section 40a(ia) of the Act and also rejected the additional evidence filed in the course of appellate proceedings and dismissed the assessee appeal. Aggrieved by the order of CIT(Appeals), the assessee has filed an appeal before the Tribunal.

4. At the time of hearing, the learned Authorized Representative submitted that the CIT (Appeals) has erred in confirming the action of the Assessing Officer and further rejected the additional evidences which are vital for the decision making in respect of payments made to contractors and on applicability of provisions of Section 194C of the Act, and prayed that the additional evidence be admitted and provide an opportunity to substantiate the case and allow the appeal. Contra, the learned Departmental Representative supported the orders of CIT(Appeals).

5.

We heard the rival contentions and perused the material on record. The learned Authorized Representative emphasized on admission of additional evidence filed, which was rejected by the CIT(Appeals) as the same was not filed before the assessing authority in the assessment proceedings, and these evidences are in respect of contracts entered with the sister concerns for the works executed with business participation and on commercial expediency and TDS provisions are not applicable. We considering the submissions of theLdAr and principles of natural justice are of the opinion that the assessee should not be deprived right of substantiating the disallowances made by the Assessing Officer with vital evidences available. Accordingly, we admit the additional evidences filed by the assessee and set aside the order of CIT(Appeals) and restore the entire disputed issue to the file of the CIT(Appeals) to consider the additional evidences filed and adjudicate a fresh and pass a speaking order. Further, the assessee should be provided adequate opportunity of hearing and shall co-operate in submitting the information for early disposal of appeal and allow the grounds of appeal of assessee for statistical purposes.

6.

In the result, the assessee's appeal is allowed for statistical purposes.

Pronounced in the open court on the date mentioned on the caption page.

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