Loading judgment…
Facts
The assessee filed an appeal against an order that arose from an assessment order, which was passed after a revision order. The initial assessment accepted the returned income. Subsequently, a revision was ordered due to the assessment being erroneous and prejudicial to revenue. The revised assessment disallowed expenses for non-deduction of TDS.
Held
The Tribunal condoned the delay in filing the appeal, finding sufficient cause due to the assessee's mother's illness. The Tribunal noted a significant mistake in the AO's 100% disallowance of expenses under Section 40(a)(ia) as the amended provision for the relevant AY prescribed only a 30% disallowance. The matter was remanded to the AO for fresh adjudication.
Key Issues
Whether the delay in filing the appeal is condonable, and if the AO's disallowance under Section 40(a)(ia) for non-deduction of TDS is justified considering the amended provisions.
Sections Cited
143(3), 263, 40(a)(ia), 201(1), 201(1A), 139, 253(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: MS. SUCHITRA R. KAMBLE & SHRI B.M. BIYANI
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first-appeal dated 28.06.2024 passed by learned Commissioner of Income-Tax (Appeals)-National Faceless Appeal Centre, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 30.04.2021 passed by learned National e-Assessment Centre, Delhi [“AO”] u/s 143(3) r.w.s. 263 of Income-tax Act, 1961 [“the Act”] for Assessment- Year [“AY”] 2015-16, the assessee has filed this appeal on the grounds mentioned in Appeal Memo (Form No. 36).
The registry has informed that the present appeal is delayed by 287 days and therefore time-barred. Ld. AR for assessee submitted that the assessee has filed an application for condonation of delay supported by an affidavit on stamp. On perusal of the application/affidavit, we observe that the assessee has stated that his mother was diagnosed with a serious disease of cancer which requires hospitalization, treatment and care; hence there occurred delay. The assessee has also placed on record the medical reports of Kokilaben Dhirubai Hospital, Indore. Ld. AR very humbly submitted that there is no lethargy, negligence, mala fide intention or ulterior motive of assessee in making delay and the assessee does not stand to derive any benefit because of delay. He further submitted that the sole reason of delay is the illness of assessee’s mother. He submitted that there is “sufficient cause” for delay and hence the delay should be condoned. Ld. DR for Revenue left the matter to the wisdom of Bench without raising any objection. We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a “sufficient cause” for delay in filing present appeal. We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a “sufficient cause” for not presenting appeal within prescribed time. It is also a settled position by Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of substantial justice
Page 2 of 6 must be preferred by adopting a justice-oriented approach. Thus, taking into account the facts of case, the provision of section 253(5) and the decision of Hon’ble Supreme Court, we take a judicious view, condone delay, admit appeal and proceed with hearing.
The background facts leading to present appeal are such that the assessee-individual filed his return of AY 2015-16 declaring a total income of Rs. 10,60,670/- which was assessed by AO through assessment-order dated 11.12.2017 u/s 143(3) accepting the returned income. Subsequently, the PCIT, Ujjain examined the record of assessment proceeding and found that the assessment-order passed by AO was erroneous-cum-prejudicial to the interest of revenue. Accordingly, the Ld. PCIT passed revision-order dated 23.03.2020 setting aside the assessment-order and directing the AO to reframe assessment after examining the issued identified by him.
Pursuant to such revision-order, the AO passed new assessment-order dated 30.04.2021 wherein he made a disallowance of Rs. 43,63,324/- u/s 40(a)(ia) on account of payment of expenses without deducting tax at source (TDS) and thereby assessed total income at Rs. 54,23,990/-. Aggrieved, the assessee carried matter in first-appeal but did not get any relief. Still aggrieved, the assessee has come in next appeal before us.
Ld. AR for assessee made a straightforward submission. He invited our attention to following Provisos to section 201(1)/201(1A) of Income-tax Act, 1961 and Rule 31ACB of Income-tax Rules, 1962, prescribing as under:
1st proviso to Section 201(1): “Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a payee or on the sum credited to the account of a payee shall not be deemed to be an assessee in default in respect of such tax if such payee— (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed:
Rule 31ACB: This Rule prescribes Form No. 26A for the purpose of 1st Proviso to section 201(1).
1st proviso to Section 201(1A): “Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a payee or on the sum credited to the account of a payee but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such payee:”
Then, Ld. AR submitted that the assessee is willing to file the Form No. 26A and avail benefit of aforesaid 1st Proviso to section 201(1) r.w.s. 1st Proviso to section 201(1A). He prayed that the assessee has already collected Form No. 26A from some of the payees and making hard efforts to collect forms from remaining payees [Ld. AR pointed out that the payees are Non-
Page 4 of 6 Banking Finance Companies]. Therefore, the present matter ought to be remanded to AO.
Ld. AR further pointed out that there is one significant mistake in the order of AO. He submitted that the AO has made 100% disallowance of payment made by assessee without TDS whereas the section 40(a)(ia) had already been amended w.e.f. AY 2015-16 (with which we are concerned in present appeal) and the amended provision prescribes only 30% disallowance instead of 100% disallowance. Therefore also, the order passed by AO requires a fresh adjudication.
Ld. DR for revenue fairly agreed to the prayer of Ld. AR. He, however, requested that the assessee be directed to represent its case fully before AO without seeking unnecessary adjournments.
In view of above submissions of parties, we remand this matter back to the file of AO who shall consider the claim of assessee and decide matter afresh. The assessee is also directed to make full representation before AO without seeking unnecessary adjournments.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced by putting up on notice board as per Rule 34 of ITAT Rules, 1963 on 22/12/2025