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Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI
Before: SHRI H.S.SIDHU & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the Revenue in Assessment Year 2009- 10 against the order of the ld CIT(A)-XXVII, New Delhi dated 08.06.2015 wherein a disallowance u/s 40(a)(ia) of the Act of Rs. 11647166/- was deleted. The solitary ground of appeal of the Revenue is as under:- “1. The ld Commissioner of Income Tax (appeals) has erred in law as well as on facts in deleting the addition of Rs. 11647166/- made by the Assessing Officer on account of disallowance u/s 40a(a)(ia) of IT Act.
2. (a) The order of the ld CIT(Appeals) is erroneous and not tenable in law and on facts.”
2. The assessee has also filed a cross objection in CO No. 424/Del/2015 in the same appeal holding that addition of Rs. 11647166/- made by the ld AO on account of non deduction of tax at source u/s 40(a)(ia) of the Act is beyond the scope of jurisdiction u/s 153A of the Income Tax Act, 1961.
3. The brief facts of the case is that a search and seizure operation u/s 132 of the Income Tax Act, 1961 was conducted by the Investigation Wing of the department on 22/03/2012. Consequently, notice u/s 153A of the Act was issued to the assessee on 09.01.2013. The assessee submitted a letter dated 19.03.2013 that original return filed on 30.09.2009 may considered as returned in response to the above notice. The return of income of the assessee was Rs. 35415/- on 30.09.2009. The assessee is a company operating as 100 % export oriented unit engaged in providing remote data entry services to its clients based in USA etc. During the course of assessment proceedings it was noted that the assessee has made a foreign remittance of Rs. 11647166/- to Singtel Communication Ltd and not deducted tax thereon at source. Therefore, the ld AO asked the assessee regarding the same which was replied by the assessee on 21.03.2014 stating that no tax is deductible as income is not chargeable to tax in India in the hands of the recipient. However, the ld AO disallowed the above sum applying the provisions section 40(a)(ia) of the Act. Consequently total income was determined at Rs. 11682581/-. On appeal before the ld CIT(A) the above addition was deleted relying upon the decision of Hon’ble Delhi High Court in the case of CIT Vs. Estel Communications Ltd 217 CTR 102, wherein it has been held that for the payment of provision of bandwidth connectivity charges no tax is required to be deducted u/s 195 of the Act. Therefore, aggrieved by the order of the ld CIT(A) revenue is in appeal before us.
4. The assessee is in appeal before us by way of cross objection stating that the ld AO has framed assessment u/s 153A of the Act and made the above disallowance without their being any incriminating material found during the course of search. As per grounds submitted that the issue is squarely covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in case of CIT Vs. Kabul Chawla 380 ITR 573, wherein it has been held that in completed assessment proceedings no addition can be made without incriminating material pertaining to that assessment order.
5. The ld DR supported the orders of the lower authorities regarding the addition as well as on the merits of the case.
We have carefully considered the rival contentions and noted that impugned assessment before us is Assessment Year 2009-10. The due date for issue of the notice u/s 143(2) of the Act was 30.09.2010. In the present case on reading of the order it is apparent that no regular assessment took place on the return of the assessee. Therefore, on expiry of the time limit for issue of notice u/s 143(2) of the Act the revenue has accepted the return of the assessee for the impugned year as final. In view of this assessment was not pending at the time of search. Page | 2