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2019 (3) TMI 533 - AT - Income TaxPenalty u/s.271C - assessee has not deducted tax at source on payment made to M/s Indiabulls Distribution Services Ltd - income recognition - assessee was treated as "assessee-in-default" u/s 201(1) - assessee liability for tax audit u/s 44AB - HELD THAT:- As gone through the profit and loss account of the assessee for the years under consideration we find that no income has been recognized by the assessee from projects. The perusal of the profit and loss account and balance sheet of the assessee goes to prove that the assessee is not liable for tax audit u/s.44AB for the year under consideration. We find that the second proviso to Section 194H stipulates that if the assessee is liable for tax audit in A.Y.2015-16 then, he is bound to deduct tax at source and comply with the provisions of Chapter XVIIB of the Act in respect of transactions carried out by him in A.Y.2016-17. We find that there is no evidence brought on record by both the parties or from the orders of the lower authorities that whether assessee was liable for tax audit in the A.Y.2015-16. For this limited purpose, we deem it fit and appropriate to remand this issue to the file of the AO to verify the same and decide the issue in accordance with second proviso to Section 194H of the Act, after affording reasonable opportunity of being heard to the assessee. The other propositions made by the AR are not required to be adjudicated as it is a simple case of factual verification for the A.Y. 2016-17. The assessee is also at a liberty to raise fresh propositions and adduce fresh evidences in support of her contentions before the AO in the fresh round of proceedings. Accordingly, the grounds raised by the assessee for the Asst Year 2016-17 are allowed for statistical purposes. Since we had given a finding supra that the assessee was not liable for tax audit u/s 44AB of the Act during the F.Y. 2015-16 relevant to Asst Year 2016-17, we hold that as per section 194H of the Act, the assessee is not liable for deducting tax at source in respect of payment of marketing fees / commission to M/s India Bulls Distribution Services in Asst Year 2017-18.
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