SUNDARA PANDIAN JAYAVEL,CHENNAI vs. ACIT, NON CORPORATE CIRCLE -4(1), CHENNAI

This appeal by the assessee is directed against the common order passed by the learned Commissioner of Income Tax(Appeals)-5, Chennai, dated 11.05.2017 in 5/2016-17 for the assessment year 2014-15 passed U/s. 250(6) r.w.s. 143(3) of the Act.

The appeal was filed by the assessee with a delay of 192 days. The Ld.AR has submitted a medical certificate before us stating that the assessee was advised bed rest for a period of three months because of his illness. It was therefore submitted that the assessee could not pursue his appeal because he was incapacitate by his illness. Hence it was pleaded that the delay may be condoned in filing the appeal. The Ld. DR strongly objected to the submission of the Ld. AR. However, after hearing both sides, we are of the considered view that the delay of 192 days in filing the appeal is requires to be condoned because of the genuine hardships faced by the assessee due to his illness. Therefore we hereby condone the delay of 192 days in filing the appeal and proceed to hear the appeal on merits.

The assessee has raised five grounds in his appeal however the cruxes of the issues are that the Ld.CIT(A) has erred in confirming the order of the Ld.AO who had disallowed the following expenses:- (i) Container freight expense amounting to Rs.1,99,048/-. (ii) Lab expense amounting to Rs.48,72,806/-. (iii) Labour charges of Rs.5,20,600/-.

The brief facts of the case are that the assessee is an individual filed his return of income for the assessment year 2014- 15 electronically on 30.10.2014 admitting total income of Rs.1,16,95,350/-. The case was selected for scrutiny and notice U/s.143(2) of the Act was issued on 31.08.2015. Finally assessment order was passed U/s.143(3) of the Act on 30.12.2016 wherein the Ld.AO made several additions.

The Ld.AO had disallowed the expenses relating to Container freight expenses, lab expenses and labour charges amounting to Rs.1,99,048/-, Rs.48,72,806/- and Rs.5,20,600/- respectively invoking the provisions of Section 40(a)(ia) of the Act, because the assessee had not deducted tax at source. On appeal, the Ld.CIT(A) confirmed the order of the Ld.AO by agreeing with his view.

At the outset before us the Ld.AR submitted that all the recipients had declared the amount received from the assessee as their income and accordingly had filed return of income by paying the due tax. Hence it was pleaded that additions may not be made in the hands of the assessee because there was no liability on the part of the assessee for deducting tax at source. Hence it was pleaded that the matter may be remitted back to the file of Ld.AO for verifying the same. The Ld.DR could not controvert to the submission of the Ld.AR.

We have heard the rival submissions and carefully perused the materials on record. We find merit in the submission of the Ld.AR. If all the recipients had declared the amount received from the assessee as their income and paid the tax duly then the assessee will not be in default for not deducting tax at source. In such circumstances additions cannot be made in the hands of the assessee invoking the provisions of Section 40(a)(ia) of the Act. It is pertinent to mention that the second proviso to Section 40(a)(ia) of the Act inserted by Finance Act, 2012 has clarified these aspects thereby bringing down the rigor of the provisions of Section 40(a)(ia) of the Act. Therefore considering the prayer of the Ld.AR, we hereby remit the matter back to the file of Ld.AO for verifying whether all the recipients have declared the amount received from the assessee as their income and paid tax duly and if found so grant relief to the assessee by deleting the additions made by invoking the provisions of Section 40(a)(ia) of the Act and if found otherwise pass appropriate order in accordance with merit and law.

In the result appeal of the assessee is allowed for statistical purposes as indicated herein above.