N. RAMASAMY,TIRUPPUR vs. ITO, TIRUPPUR

Shri S. Sridhar, the Ld. counsel for the assessee submitted ₹32,52,000/- that the Assessing Officer disallowed for non-deduction of tax under Section 40 (a) (ia) of the Income Tax Act, 1961 (in short ‘the Act’). Referring to the assessment order, the Ld. counsel for the assessee submitted that the Assessing Officer found the assessee deducted tax and belatedly paid the same on 09.01.2014 & 10.01.204. Referring to a copy of the certificate issued by Chartered Accountant in Annexure ‘A’, in respect of the recipient, the Ld. counsel submitted that the recipient has already included the amount paid by the assessee in the return of income and paid the tax. Since the recipient has already paid the tax, according to the Ld. counsel for the assessee, there cannot be any disallowance.

We heard Shri V. Nandakumar, the Ld. Departmental Representative also. The Ld. D.R., submitted that whether the recipient has included the amount received from the assessee in his total income has to be verified. Therefore the Ld. D.R., submitted that the issue may be remitted back to the file of the Assessing Officer.

We have considered the rival submissions on both sides and perused the material available on record. Even though, the Assessing Officer observed that the tax deducted by the assessee was belatedly paid to the Government account, the Chartered Accountant of the recipient appears to have given a certificate that the recipient has included the amount in his total income and paid the tax. This Tribunal is of the considered opinion that if the recipient has paid the tax in respect of the payment received from the assessee, then there cannot be any disallowance under Section 40 (a) (ia) of the Act. However, it has to be verified by the Assessing Officer whether the recipient has paid the tax as claimed by the assessee in respect of the amount paid by the assessee. Accordingly the orders of the lower authorities are set aside and the disallowance made by the Assessing Officer to the extent of ₹32,52,000/- is remitted back to the file of the Assessing Officer. The Assessing Officer shall reexamine the matter and found out whether the recipient has paid the tax on the amount paid by the assessee and thereafter decide the matter afresh in accordance with law after giving reasonable opportunity to the assessee.

In the result, the appeal of the assessee is allowed for statistical purposes.