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Facts
The assessee's twin appeals were against the CIT(A)'s orders concerning disallowance of payments to contractors and the addition of unexplained cash credits. The primary issue was the disallowance of Rs. 1,26,89,824/- and Rs. 7,62,000/- under Section 40(a)(ia) for non-deposit of TDS before the due date of filing the return, and the addition of Rs. 24,00,000/- as unexplained cash credit under Section 68.
Held
The Tribunal held that the disallowance under Section 40(a)(ia) is allowable if the tax has been paid in the subsequent year, directing the AO to verify and grant the benefit of the first proviso to Section 40(a)(ia). Regarding the Section 68 addition, the Tribunal found that the assessee failed to establish the genuineness and creditworthiness of the cash credits, rejecting the ground. The penalty under Section 271(1)(c) for the Section 68 addition was deleted as the onus of proving genuineness is subjective and based on the facts of the case.
Key Issues
Whether the disallowance under Section 40(a)(ia) for non-deposit of TDS is allowable if tax is paid in the subsequent year, and whether the cash credits under Section 68 are unexplained and attract penalty under Section 271(1)(c).
Sections Cited
40(a)(ia), 68, 271(1)(c), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. Naveen Chandra
ORDER
Per Satbeer Singh Godara, Judicial Member:
These assessee’s twin appeals & Assessment Year 2012-13 arise against the CIT(A), Muzaffarnagar’s orders dated 29.07.2016 & 26.09.2018 in case Nos. 39/15-16/MZR & 4003-3815-1170-218, in proceedings u/s 143(3) and 271(1)(c) of the Income Tax Act, 1961 (in short “the Act”), respectively.
Heard both the parties at length. Case files perused.
We notice during the course of hearing that the assessee’s “quantum” appeal raises it’s twin substantive ground/grievance seeking to reverse the learned lower authorities respective assessment and lower appellate findings inter alia invoking section 40(a)(ia) disallowance of Rs.1,26,89,824/- and Rs.7,62,000/- on payments made to contractors/sub-contractors and legal and interest charges etc. as well as treating it’s secured loans of Rs.24,00,000/- as unexplained cash credits u/s 68 of the Act; respectively.
Both the parties vehemently reiterate their respective stands against and in support of the impugned disallowance/additions made in the lower proceedings. We find in this factual backdrop that the learned CIT(A)’s detailed discussion in paragraphs 6 to 8 at page 13 to 14 has duly taken note of the fact that although the assessee had deducted TDS but the same could not be deposited on or before the prescribed “due” date of filing section 139(1) return. That being the clinching factual position, we are of the considered view that the assessee’s case is covered u/s 40(a)(ia) 1st proviso stipulating allowability of such an expenditure claim “in computing the income of the previous year in which such tax has been paid”. We thus direct the learned Assessing Officer to consider and grant the benefit of section 40(a)(ia) 1st proviso to the assessee subject to verification of all the necessary relevant
Next comes the latter issue of section 68 unexplained cash credit addition of Rs.24,00,000/- made in the assessee’s hands. Learned counsel could hardly dispute that it had not satisfied the clinching test(s) of genuineness and creditworthiness thereof in both the lower proceedings. His case before us is that the assessee had filed some supportive evidence to this effect. We quote Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC), CIT Vs. Durga Prasad More (1971) 82 ITR 540 and PCIT vs. NRA Iron & Steel Pvt. Ltd. (2019) 412 ITR 161 that mere filing of such documentary evidence does not ipso facto absolve the assessee from proving the genuineness of it’s impugned cash credits. We thus reject it’s instant latter substantive ground in very terms.
This assessee’s “quantum” appeal is partly allowed for statistical purpose.
We now advert to the assessee’ consequential section 271(1)(c) penalty appeal on the foregoing twin issue of section 40(a)(ia) disallowance and section 68 addition of unexplained cash credits. We are of the considered view that once we have restored the above former issue back to the Assessing Officer, the same has no legs to stand at this stage. We thus delete the impugned penalty subject to a rider that the Assessing Officer shall indeed be at liberty to initiate it afresh in consequential proceedings as per law; if necessary.
So far as the correctness of the impugned section 271(1)(c) penalty regarding the assessee’s section 68 unexplained cash credits addition is concerned, the Revenue vehemently argues that this is a clear cut instance of concealment or furnishing of inaccurate particulars of income attracting the penal action as done by both the learned lower authorities.
We find no reason to sustain the impugned penalty qua this latter issue. We make it clear that the onus of proving the genuineness and creditworthiness to be discharged at the assessee’s behest is indeed a highly subjective one which could not be held as attracting section 271(1)(c) penalty in light of CIT vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC). We thus deleted the impugned penalty for this precise reason.
No other ground or argument has been pressed before us.