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2011 (12) TMI 389 - AT - Income TaxDisallowance - Principles of natural justice - TDS u/s 194C - Cessation of liability - It is pertinent to mention that in this ward, several surveys were conducted in F.Y. 2006-07 and in almost every case, the modus operandi of the transporters is that on one hand they show the balance of creditors as outstanding in Balance Sheet and on the other hand they pay off the persons in cash out side the books - It was argued by the Ld. Counsel for the assessee that most of the payments have since been made to the creditors and all the creditors are old creditors and no benefits in respect of such creditor has been obtained by the assessee during the year - In the present case, the AO has not brought on record that the assessee has obtained any benefit with respect to such trading liability and therefore, such remission or cessation of the liability by the AO cannot be subject matter u/s. 41(1) of the Act, though the Ld. Counsel for the assessee had argued that the payments have been made to most of the creditors in the following years - Decided in favor of the assessee. Regarding disallowance u/s. 40(a)(ia) - The facts make it abundantly clear that the assessee ought to have deducted tax and deposited the same within the prescribed time limit - The arguments made by the Ld. Counsel for the assessee appears to be convincing in view of the amendment made in the Income Tax Act w.e.f. 1-10-2004 and none of the authorities below have examined the case in view of the said amendment - Decided in favor of the assessee by way of remand to AO
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