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Income Tax Appellate Tribunal, BENCH “C”,MUMBAI
Before: SHRI R.C.SHARMA & SHRI PAWAN SINGH
O R D E R
PER PAWAN SINGH, JM:
The present appeal is filed by the assessee against the order of CIT(A)-13, Mumbai, dated 24.02.2014 for Assessment Year (AY) -2007-08 on the following Grounds of appeal:-
1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax Appeals' ('CIT(A)') - 13, Mumbai has erred in holding the Appellant to be an assessee in default' under Section 201(1) of the Act due to non-deduction of taxes at source on the excess year end provision for expenses amounting to Rs. 65,219,460, which was reversed during the next year.
2. On the facts and in the circumstances of the case and in law, the learned CITCA) has erred in holding that the liability in respect to provisions for expenses was very much ascertained and crystallized though not accurate and hence, the Appellant is liable to deduct taxes under Section 201 of the Act.
3 On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in holding the Appellant to be an 'assessee in default' under Section 201(1) of the Act without appreciating the fact that amounts provided for were mere estimates and the respective party accounts were not credited and hence, there did not exist any liability to deduct taxes thereon. 4 On the facts and in the circumstances of the case and in law, the CIT(A) has erred in not appreciating that the aforesaid amount of provision for expenses was disallowed under Section 40(a) of the Act and hence, there could be no liability under Section 201 of the Act 5 On the facts and in the circumstances of the case and in law, the CIT(A) has erred in holding the Appellant to be an 'assessee in default' under Section 201(1) of the Act without appreciating the fact that the aforesaid excess provision was never payable to the parties, and hence, principal liability of paying taxes did not exist at all. 6 On the facts and in the circumstances of the case and in law, the CIT(A) has erred in levying consequential interest under Section 201(1A) of the Act.
All the above grounds of appeal are without prejudice to one another.
The brief facts of the case are that a survey action u/s 133A was conducted at the premises of assessee on 19.02.2008. In pursuance of the survey action, notice u/s 201(1) and 201(1A) of the Act was issued to the assessee for calling the details about the non-deduction of TDS on provisions made during the year ended on 31.03.2007. After considering the details furnished by assessee, the Assessing Officer (AO) observed that during the year under consideration assessee made a provision amounting to Rs. 19,09,24,360/- details of which were furnished. The assessee also contended that out of provisions made for deduction of TDS, the provisions amounting to Rs. 67,52,052/- has been reversed in the subsequent year and accordingly no TDS has been deducted at source on the said amount, the assessee was asked to show cause as to why the said amount should not be considered for determining the liability on TDS u/s 201(1) and interest chargeable u/s 201(1A) of the Act. After considering the contention of assessee, the AO hold that the assessee neither furnished any documentary evidence in support of its explanation toward reversal of such provision nor provided any proof of payment of TDS, therefore, the assessee was liable to deduct TDS on the provisions made of Rs. 6,52,19,460/-, TDS on such amount was worked out to Rs. 31,05,199/- and further interest was calculated on the said amount for 48 months which was calculated at Rs. 16,30,230/-. Aggrieved by the order of AO,
the assessee filed an appeal before the CIT(A) but without any success. Further aggrieved by the order of AO, the assessee filed the present appeal before us.
We have heard the ld Authorized Representative (AR) of the assessee and ld Departmental Representative (DR) for the Revenue and perused the material available on record. AR for assessee argued that during the course of proceedings, the AO called the details of tax deducted and paid in respect of provisions of expenses made during the year. The Assessee made the provisions amounting to Rs. 19,09,24,360/-. In respect of provision of expenses, we wherever tax was deducted. The balance amount of Rs. 6,52,19,460/- being excess provision was reversed in the next year. The AO without appreciating the fact and law in relation to the provisions of Chapter XVII, proceeded to hold that assessee in default for not deducting tax in respect of such provision for expenses reversed. The assessee submitted that since the amount was not payable and consequential reversed in the subsequent year and there was no liability to deduct the tax over the same. AR of the assessee further argued that the AO has erroneously taken the figure of Rs. 6.52 Crore instead of Rs. 5.84 Crore. AR of the assessee further argued that assessee also filing an Application for Admission of Additional Evidence. In support of application for additional evidence, Ld. AR of the assessee submitted that documents filed before the Tribunal at serial no.6 of the PB was not submitted before the lower authorities. At serial no. 6 of the PB, the assessee has filed sample of accounting entries for provisions created and the subsequent reversal entries passed in the books of accounts( per page no. 59 to 66 of PB). AR of the assessee further argued that all these evidence are essential and necessary for effective disposal of the matter. During the assessment proceeding, the assessee was not asked to produce such specific information. And the AO has not conducted sufficient queries before passing the order. Ld. DR for Revenue relied upon the order of authorities below.
We have considered the rival contentions of the parties and perused the material available on record. The assessee has taken a categorical stand before AO and the CIT(A) that assessee had made a provision for expenses amounting to Rs. 19,09,24,360/-. The balance amount of Rs.6,52,19,460/- being excess provision was reversed in the next year. While framing order the AO concluded that no documents were furnished by assessee to support the contention raised before him. The assessee in the application for admission of Additional Evidence is now seeking permission to file the additional evidence consisting of accounting entries for the provision created and subsequent reversal in the next FY in the books of account of the assessee. As these documents were not filed before the authorities below, we admit the additional evidence filed by the assessee before us. Since, this evidence were not filed before the lower authorities and are being filed for the first time before us, we deem it appropriate to restore the case to the file of AO to examine the accounting entries for the provision created by the assessee for the relevant AY and reverse entry in the subsequent year and pass the appropriate order in accordance with law.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on this 12th August, 2016.