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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, NEW DELHI
Before: SHRI R. K. PANDA
O R D E R PER R. K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 08.03.2017 of the ld. CIT(A)- 36, New Delhi relating to assessment year 2012-13.
Facts of the case, in brief, are that the assessee is a private limited company engaged in the business of job work and trading. It filed its return of income on 29.09.2012 declaring total income of Rs.50,930/-. During the course of assessment proceedings, the Assessing Officer observed that the assessee has claimed an amount of Rs.49,95,000/- under the head ‘Commission’ against which tax deducted has been claimed at Rs.4,99,500/-. A perusal of the challan for payment of tax deducted at source into government account revealed that an amount of Rs.2,77,000/- has been deposited into government account on 05.07.2014. Since the said deposit was not made within the statutory time period, the Assessing Officer disallowed an amount of Rs.27,70,000/- u/s 40(a)(ia) of the I.T. Act.
3. Before the ld. CIT(A), the assessee submitted that no amount was payable to the assessee. Therefore, in view of the decision of the Special Bench of the Tribunal in the case of Merilyn Shipping & Transports, no addition can be made u/s 40(a)(ia) of the I.T. Act. However, ld. CIT(A) did not agree with the arguments advanced by the assessee and confirmed the addition 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. Whether the Ld. CIT(A) was justified by upholding the order of A.O. u/s 40(a)(ia) on already paid commission Rs.17,50,000/- on which TDS was admittedly was deposited on 05.07.2014.
2. Whether the Ld. CIT(A) was justified by upholding the order of A.O. u/s 40(a)(ia) on commission payable of Rs.10,20,000/- as on 31.03.2012 on which TDS has been deposited on 05.07.2014.
Whether the Ld. CIT(A) was justified by exaggerating the order by way of chargeability of interest u/s 201(1A), whereas there was no case of A.O., suo-moto in a mechanical way manner. That the appellate craves leaves to amend, alter or to raise any other ground at the time of the hearing.”
Ld. counsel for the assessee at the outset submitted that payee has already declared the commission in its return of income and paid the tax thereon.
Referring to the second proviso to section 40(a)(ia) he submitted that the same was inserted by the Finance Act, 2012 with effect from 1st April, 2013. The effect of the said proviso is to introduce a legal fiction where an assessee fails to deduct tax in accordance with the provisions of Chapter XVII B. Where such assessee is deemed not to be an assessee in default in terms of the first proviso to sub-section (1) of section 201 of the I.T. Act, then, in such event, “it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso”. He submitted that the issue stands decided in favour of the assessee by the decision of the Hon’ble Delhi High Court in the case of CIT vs. Ansal Landmark Township (P) Ltd. reported in 61 taxmann.com 45 (Delhi). He accordingly submitted that he has no objection if the matter is restored to file of the Assessing Officer with a direction to give one more opportunity to the assessee to prove that the payee has offered the income to tax and in that case no addition can be made u/s 40(a)(ia).
Ld. DR on the other hand while supporting the order of the ld. CIT(A) fairly submitted that she has no objection if the matter is restored to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate with evidence to the satisfaction of the Assessing Officer that the payee has offered the income to tax and paid the taxes thereon.
I have considered the arguments made by both the sides, perused the orders of the authorities below and the Paper Book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the Assessing Officer made addition of Rs.27,70,000/- u/s 40(a)(ia) on the ground that the assessee has not deposited the TDS of Rs.2,77,000/- before the specified date. I find the above addition has been confirmed by the ld. CIT(A).
It is the submission of the ld. counsel for the assessee that the payee has already declared such income and paid the taxes thereon and, therefore, in view of the decision of the Hon’ble Delhi High Court in the case of CIT vs. Ansal Landmark Township (P) Ltd. (supra) the assessee is deemed not to be an assessee in default. Therefore, in terms of the first proviso to sub-section 1 of section 201 of the I.T. Act, I find merit in the above submission of the ld. counsel for the assessee. However, the onus is on the assessee to prove with sufficient evidence to the satisfaction of the Assessing Officer that the payee has declared such income in its return of income and paid the taxes thereon.
Therefore, considering the totality of the facts of the case and in the interest of justice, I deem it proper to restore the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate with evidence to his satisfaction that the payee has offered the income to tax and paid the due taxes thereon. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on this 07th day of December, 2017.