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2015 (8) TMI 918 - AT - Income TaxAddition of amount paid/payable to the vendor i.e. Star India Private Limited ('Star India') u/s 68 - Star India did not respond to the notice issued by the learned AO under section 133(6) - Held that:- Disallowance has been made and upheld by the authorities below merely on the basis that the Star India Pvt. Ltd. did not bother to respond the notices issued under sec. 133(6) of the Act by the Assessing Officer to them. The authorities below have not bothered to examine the veracity of the documents filed by the assessee in support of the genuineness of the claimed payment made to Star India Pvt. Ltd. It is a well established position of law that genuineness of the claim cannot be denied merely because the party to whom payment claimed to have been made is not responding the notice issued by the Assessing Officer especially when the assessee claimant had filed sufficient documents in support of the claimed payment. There may be several reasons for a party for non-appearance or non-compliance before the Assessing Officer, for which the assessee cannot be penalized. Though we are aware that it is second round of the appeal before the ITAT, still to meet the end of justice the only option left with us is to set aside the matter to the file of the Assessing Officer to examine the veracity of the documents filed by the assessee in support of the genuineness of the claimed payment of ₹ 4,55,41,557 to Star India Pvt. Ltd. after affording opportunity of being heard to the assessee and decide the issue afresh. It is ordered accordingly. - Decided in favour of assessee for statistical purpose. Non deduction of tax at source under section 40(a)(ia) - no bills or vouchers were filed by the Appellant to substantiate payments made to Star India - Held that:- Direction to the Assessing Officer by the Learned CIT(Appeals) to disallow payments made by the assessee under sec. 40(a)(ia) of the Act was a question of taxability of income from a new source of income which has not been considered by the Assessing Officer, hence it was exceeding of jurisdiction by the CIT(Appeals) in a set aside matter by the ITAT in the present case. The decisions relied upon by the CIT(DR) having distinguishable facts are not relevant as main thrust of the Learned CIT(DR) in his contentions is that the Learned CIT(Appeals) has coterminus powers as of the Assessing Officer, hence, he is empowered to do what an Assessing Officer can do for the assessment and the directed disallowance has bearing on the question of pass-through costs. It is, however, not in dispute that the directed disallowance was new source of income, which was not the subject matter of setting aside order by the ITAT, in compliance of which assessment under sec. 254 read with section 143(3) was framed. We thus decide the issue in favour of the assessee with finding that while directing the Assessing Officer to disallow payments made by the assessee under sec. 40(a)(ia) of the Act, the Learned CIT(Appeals) has exceeded her jurisdiction on an issue which was never raised by the Assessing Officer or remained the subject matter of the setting aside order of the ITAT. Similarly, the Learned CIT(Appeals) has also exceeded her jurisdiction by directing the Assessing Officer to initiate penalty proceedings under sec. 201(1) of the Act - Decided in favour of assessee.
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