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Income Tax Appellate Tribunal, DELHI BENCH “B”, NEW DELHI
Before: SHRI R. K. PANDA & SMT. BEENA A. PILLAI
Assessee by : Shri Somil Agarwal, Adv. Shri Deepesh Garg, Adv. : Shri Vijay Kr. Jiwani, Sr.DR Department by Date of hearing : 01-08-2018 Date of pronouncement : 01-08-2018 O R D E R
PER R. K. PANDA, AM :
This appeal filed by the assessee is directed against the order dated 23.03.2015 of the CIT(A)- 17, New Delhi relating to assessment year 2008-09.
Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of commission and income from other sources. It filed its return of income on 31.03.2009 declaring total income of Rs.58,57,760/-. During the course of assessment proceedings, the Assessing Officer determined the total income of the assessee at Rs.1,95,51,565/- by disallowing an amount of Rs.16,450/- being expenses in relation to which TDS of Rs.329/- remained
31.03.2008 and an amount of Rs.1,36,77,355/- being expenses payable and sundry creditors and sub commission.
In appeal, the ld. CIT(A) noted that there is violation of provisions of section 40(a)(ia) in so far as assessee has not deducted TDS and deposited the same to the credit of the Central Government within the stipulated time. He, therefore, enhanced the income of the assessee by Rs.1,35,00,000/-. He however gave certain relief to the assessee on account of the additions made by the Assessing Officer.
Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds :-
“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in assuming jurisdiction to enhance and has erred in making the aggregate disallowance of Rs.1,35,00,000/- u/s 40(a)(ia) and impugned disallowance has been made by recording incorrect facts and findings and without giving adequate opportunity of hearing and without considering the submissions and evidences filed by the assessee and in violation of principles of natural justice.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in making aggregate disallowance of Rs.1,35,00,000/- 40(a)(ia) of the Act, is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in making the impugned disallowance and passing the impugned order which is contrary to law and facts and without providing adequate opportunity of hearing and without confronting the entire adverse material which was used against the assessee and by recording incorrect facts and findings and in violation of principles of natural justice and the and the same is not sustainable on various legal and factual grounds and which deserves to be quashed.
4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
The ld. counsel for the assessee made two-fold submissions. He submitted that in view of the amendment to the provisions of section 40(a)(ia) which has been held to be retrospective by various decisions, only 30% of the amount on which tax has not been deducted should be disallowed and not the entire amount. He further submitted that the Assessing Officer may be directed to allow such disallowance, which has been made in this year, subject to verification in the subsequent year. He also relied on the following decisions :-
(i) Shri Rajendra Yadav vs. ITO, dt. 29.01.2016. (ii) Smt. Kanta Yadav vs. ITO, ITA No.6312/Del/2016 dt. 12.05.2017. (iii) ACIT vs. Girdhari Lal Bargoti, ITA No.757/JP/2012 dt. 10.04.2015. (iv) Smt. Sonu Khandelwal vs. ITO, ITA No.597/JP/2013 dt. 13.05.2016. (v) Shri Aridaman Singh vs. ITO, ITA No.391/JP/2014 dt. 09.10.2015.
The ld. DR on the other hand strongly relied on the order of the ld. CIT(A) and submitted that since the assessee has violated the provisions of section 40(a)(ia), therefore, 100% disallowance should be made.
After hearing both the sides, we find the only issue to be decided in the grounds of appeal is regarding the restriction of the disallowance to 30% of the addition. We find an identical issue had come up before the Co-ordinate Bench of the Tribunal in the case of Smt. Kanta Yadav vs. ITO. We find the Tribunal in order dated 12.05.2017 for assessment year 2012-13 has decided the identical issue and has observed as under :-
“6. We have considered rival submissions and find that issue is covered in favour of the assessee by order of ITAT Jaipur Bench in the case of Shri Rajendra Yadav vs. ITO and Smt. Sonu Khandelwal vs. ITO. In these orders it was held that the disallowance u/s 40(a)(ia) to be restricted to 30% of the addition. In these orders the Tribunal has considered the amended provisions of section 40(a)(ia) of I.T. Act. In these orders the assessment year’s involve was 2007-08 and 2008-09. In the present appeal the assessment year is 2012-13. Therefore facts are identical. In this view of the matter and following the above decisions of Jaipur Bench, we set aside and modify the orders of the authorities below and direct the Assessing Officer to restrict the addition to 30% of the total addition made on account of deduction of TDS u/s 40(a)(ia) of the Act.”
Respectfully following the decision of the Co-ordinate Bench of the Tribunal, we hold that the disallowance u/s 40(a)(ia) should be restricted to 30% of the total addition on account of non-deduction of TDS. So far as the argument of the ld. counsel for the assessee that direction may be given to the Assessing Officer to allow such disallowance made in this year in the order of the subsequent years, we hold that the assessee may move appropriate application before the Assessing Officer who shall decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly partly allowed.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open Court at the time of hearing itself i.e. on this 01st August, 2018.