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Income Tax Appellate Tribunal, DELHI BENCH “G”, NEW DELHI
Before: SH. R. K. PANDA & SMT. BEENA A. PILLAI
Department by : Smt. Bedomani Choudhary, Sr.DR Assessee by : Sh. Shant Kapoor, Adv. Date of hearing : 12.04.2017 Date of pronouncement : 05.05.2017 O R D E R PER BEENA A. PILLAI, J.M : 1. The present appeal and cross objection filed by revenue as well as assessee arises out of order dated 11.03.2011 passed by Ld. CIT (A)-XXIII, New Delhi for assessment year 2007-08 on following grounds of appeal:
1. On the facts and on the circumstances of the case the Ld. CIT(A) has erred in deleting the disallowance of Rs. 1,68,41,038/- made by A.O u/s 40(a)(ai) of the I. T. Act on account of hire charges paid by the assessee.
2. The appellant craves leave to add, alter or amend any of the grounds of appeal
before or during the course of the hearing of the appeal. CO No. 247/del/2011
1. That in view of the facts and circumstances of the case, the CIT (A) has erred on facts and in law in restricting the relief to Rs. 5,00,000/-only against the addition of Rs. 10,00,000/- made by the Ld. AO against the alleged surrender of Rs 10 lakhs.
2. That the Ld. CIT(A) has erred on facts and in law in not appreciating the fact that the addition on account of alleged surrender income is not corroborated by any evidence or material on record and hence this addition is illegal and bad in law.
3. That in view of the facts and circumstances of the case and in law, both the AO and CIT(A) have erred in observing that the assessee made a surrender of Rs 10 lakhs . The statement given by the assessee has been wrongly interpreted and the facts and legal position have not been considered judiciously.
Brief facts of case are as under: Assessee had filed its return of income on 31.10.2007 declaring a total income of Rs.24,23,871/-. The case was selected for scrutiny and notice under section 143(2) of the Act was issued alongwith questionnaire. In response to these notices representative of assessee appeared and filed written replies from time to time. The books of accounts and other relevant documentary evidences were produced.
Ld. AO observed that assessee is engaged in business of taxi hiring an travel service under name and style of M/s Peterson travel services. 4. During the year under consideration Ld. AO observed that assessee was asked to explain party wise hire charges addition, TDS deposited against those hire charges. Accordingly, assessee vide letter dated 17.11.2009, filed details of hire charges. Assessee could file TDS challans against an amount of hire charges amounting to Rs. 1,68,831/- as observed by assessing officer, however, Ld. AO found that assessee could not furnish entire details of TDS deducted, since accountant with assessee was unaware of tax provisions. Ld. AO, therefore, made addition of Rs.1,68,41,038/- approximately. 5. Aggrieved by addition made assessee preferred an appeal before Ld. CIT(A), who deleted addition as according to him there was no contravention of provisions of section 40(a)(ia) of the Act. 6. Aggrieved by order of Ld. CIT(A), revenue is in appeal before us now. 7. Ld. DR submitted that TDS deducted by assessee against the head, “charges paid to different parties” has not been disclosed in the balance sheet, as same was not deposited by assessee before 31.03.2007. He emphasized that assessee had not filed TDS return for relevant period and accordingly addition was justified.
On the contrary Ld. AR submitted that assessee had deducted TDS and credited same to TDS payable account of respective party. He submitted that TDS payable entries were reversed as deductee refused to bear TDS cost. As assessee borne the entire TDS payment from his own pocket to make TDS compliance, same was not appearing on balance sheet. He further submitted that, this any ways was not relevant for availability of expenditure incurred during normal course of business. Ld. AR further submitted that disallowance of expenses is not dependent on fact, whether TDS return has been filed or not. He submitted that section 40(a)(ia) requires that to claim an allowance of expenses, TDS should have been deposited before due date of filing of return, which has been complied with by assessee. Ld. AR thus submitted that addition deserves to be deleted as there is no default on the part of assessee.
We have perused submissions advanced by both sides in the light of record placed before.
It has not been disputed by authorities below that assessee has not deducted TDS against hire charges paid to different parties. Assessee had filed details of TDS challan as additional evidence before Ld. CIT(A) which was sent to the assessing officer for examining. Ld. AO in his report dated 27.01.2010 admits that assessee had deducted TDS within stipulated period as required under section 194 of the Act.
But alleges that assessee was duty bound to disclose this liability in the balance sheet. Ld. AO thus came to conclusion that assessee has not deposited the same before 31.03.2007. On further perusal from paper book it is observed that assessee has deposited an amount of Rs.1,68,831/-, by way of four TDS challan, well before due date of deposit of ITR return.
On perusal of order passed by Ld. CIT(A) it is observed addition has been deleted on the reasoning as under: “9. I have considered the basis of addition made by the Assessing Officer and submissions of the appellant on the issue during the appellate proceedings. It is a matter of record that Authorized Representative of the assessee changed number of times during the assessment proceedings and therefore, the compliance to Assessing Officer's queries with regard to proof of deduction of TDS could not be filed. The assessee was prevented by reasonable cause to submit the evidence called for during the assessment proceedings and the evidence sought to be submitted during appellate proceedings only pertains to deposit of TDS within the stipulated period of time, therefore, the same is admitted. The Assessing Officer's objection that no TDS liability had been shown in Balance sheet, has been met by the Authorized Representative's rejoinder on this issue, wherein it has been submitted that the appellant had to bear the TDS payment from his own pocket to make TDS compliance in this regard and the issue whether the TDS payable was reflected in' the Balance sheet, is not the relevant factor in determining the allowance of expenditure. Another issue raised by the Assessing' Officer in the remand report was that no TDS return had been filed till
date. Here again, it is important to bear in mind that non-filing of TDS return is not legal basis for making disallowance under section 40(a)(ia). The only issue is that whether the TDS was deducted and paid on the said payments, the evidence submitted by the Authorized Representative in this regard clearly shows that the-right amount of TDS has been deducted and paid as evidenced by TDS cha'lans to the tune of Rs. 1,68,8317-. This fact has been incorporated in the audit report by the auditor, at column 27(b), as it has been recorded in the audit report that compliance to provisions of deduction of tax at source has been made. Therefore, it becomes abundantly clear that assessee has deposited the TDS due on payment of hire charges made to different parties within the stipulated period of time and therefore, there is no contravention of provisions of section 40(a)(ia). As such, addition made by the Assessing Officer to the tune of Rs.1,68,41,038/- is deleted.”
In totality of facts before us and reasoning given by Ld. CIT(A) we agree with him that assessee has not contravened provisions of section 40(a)(ia) of the Act. Accordingly, we dismiss ground raised
by revenue. CO No. 247/del/2011
13. Assessee has raised this cross objection against disallowance affirmed by Ld. CIT(A) to an extent of Rs. 5 lakhs.
14. It is observed that assessee had agreed before assessing officer regarding payment of additional tax by way of self assessment tax for year under consideration to avoid unnecessary litigation and to cover any discrepancy during survey proceedings.
Under such circumstances we do not find it necessary to adjudicate this ground as assessee has not retracted above position before authorities below any time. In lieu of above, we dismiss cross objection filed by assessee. In the result appeal as well as cross objection filed by revenue and assessee respectively stands dismissed. Order pronounced in the open court on 5th May, 2017.