TMI Blog2016 (5) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... is something which require deep analysis. As mentioned by the Ld. AR it could be for a reason that Shri. Shravan Nayak was not readily having money with him for giving the loans. In any case what we find is that the AO had not examined Shri. Shravan Nayak nor Shri. Praveen Bhaskar Shetty. Though we cannot say that assessee had discharged its full onus with regard to the credits, it is a matter of fact that it had filed copies of bank accounts of Shri. Praveen Bhaskar Shetty and also affidavits of Shri. Praveen Bhaskar Shetty as well as Shri. Shravan Nayak. In such circumstances, we are of the opinion that the matter equires a fresh look by the AO. We set aside the orders of the lower authorities and remit the addition in so far as it relates to credit of ₹ 2 lakhs on 25.07.2008 and credit of ₹ 3 lakhs on 26.07.2008 and credit of ₹ 12 lakhs on 27.09.2008 back to the file of AO for consideration afresh in accordance with law Disallowance of interest - Held that:- Despite opportunities given by the AO and CIT (A) assessee was unable to show the business purpose of loans. Even before us Ld. AR was not able to produce any records which would show that the loans wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DT, DCIT had no power to assess the assessee who fell within the exclusive jurisdiction of ITO, Ward -1, Udupi. Further as per the Ld. DR, CIT (A) had erroneously rejected this contention, taking a view that assessee ought have raised it before the AO within thirty days of notice u/s.143(2) of the Act. Again, as per the Ld. AR, CIT (A) took an erroneous view that it could not raise such objection before the latter. Submission of the Ld. AR was that CIT (A) fell in error in relying on Section 124(3) of the Act which, as per the Ld. AR, applied only to territorial jurisdiction and not with regard to other jurisdictions mentioned in Section 120(3) of the Act. Relying on the decision of a coordinate bench of this Tribunal in the case of Ziaulla Sheriff [(2009) 316 ITR (AT) 92], Ld. AR submitted that such a ground could be raised for the first time before the appellate authorities. Further according to him, in the said decision, this Tribunal had held that jurisdiction of a higher officer did not extent automatically to the jurisdiction of a lower officer. According to him, CIT (A) fell in error in not properly appreciating Instruction No.1/2011 (supra). Ld. AR further submitted that su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07. It is not disputed that DCIT, Circle I, Udupi Range, who had finally done assessment on the assessee was having territorial jurisdiction over Udupi and assessee was a resident of Udupi. So the question before us, is whether the above Instruction can be deemed to preclude the DCIT from making an assessment of an assessee whose declared income was less than ₹ 15 lakhs. Above Instruction No.1/2011 has been issued u/s.119 of the Act. Section 119 of the Act, is reproduced here under : (1) The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: Provided that no such orders, instructions or directions shall be issued--(a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner ; or(b) so as to interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate functions. (2) Without pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the above section, namely Orders, Instructions or Directions. The grammatical conjunction used between the terms is or . Said instructions has been issued by the Board when references were received from large number of tax payers especially from mofussil areas for assigning cases to Assessing Officers located at areas far from them causing hardship to them. There also exists a subsequent Instruction No.6/2011 (F. No.187/12/2010 ITA I), dt.08.04.2011, which reconsidered the Instruction No.1/2011, dt.31.01.2011. In the latter Instruction, it was stated that if the application of limits mentioned in the former one led to substantially uneven distribution of work load between DCs and ITOs, then Chief Commissioners and / Joint Commissioner, could adjust the limits by a sum of ₹ 5 lakhs to ensure equitable distribution of work load and avoid uneven distribution. Reading these two Instructions together and considering the subsequent clarificatory letter F. No.187/12/2010-ITA-1, DT.05.09.2012, , the rational conclusion that can be drawn, in our opinion, was that these were all issued for administrative convenience of the Revenue. There is a distinction between an Order iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... azette, specify. (3) No person shall be entitled to call in question the jurisdiction of an Assessing officer-- (a) where he has made a return under sub-section (1) of section 115WD or under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or sub-section (2) of section 115WE or sub-section (2) of section 143 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing officer, whichever is earlier. (4) Subject to the provisions of sub-section (3), where an assessee calls in question the jurisdiction of an Assessing Officer, then the Assessing officer shall, if not satisfied with the correctness of the claim, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO u/s.68 of the Act. 12. Facts apropos are that assessee had during the relevant previous year in its books of account showed loans totalling to ₹ 17,83,100/- from one Shri. Shravan Naik, who was the brother of one of the partners of the assessee firm, namely, Shri. Sweekar Nayak. Entries in respect of these loans read as under : 30.04.2008 By cash 50,000 11.07.2008 -do- 33,100 25.07.2008 -do- 2,00,000 26.07.2008 Credited to Bank A/c HDFC CA 77 3,00,000 27.09.2008 Credited to Corporation Bank CC A/c 080001 12,00,000 Total Rs.17,83,100 Assessee was required to establish the genuineness of the credits. Explanation of the assessee was that Shri. Shravan Nayak who had given the loan was an NRI working in Standard Chartered Bank in Bahrain as telephone / telex operator. However assessee it seems could not produce any evidence to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2008 was reflected in the said account placed at paper book page.34, as cash withdrawal, which in turn was used by him for giving money to the assessee. Similarly, according to him, on 26.07.2008, there was an RTGS transfer of ₹ 3 lakhs from the account of Shri. Praveen Bhaskar Shetty to the assessee. Last sum of ₹ 12 lakhs was also reflected in the bank statement of Shri. Praveen Bhaskar Shetty on 27.09.2008. As per the Ld. AR, the sum received by Shri. Praveen Bhaskar Shetty, from Shri. Shravan Nayak, was ₹ 12,00,019/-. Ld. AR pointed out that credit of ₹ 12,00,000/- appeared in the account of the assessee on 27.09.2008 itself when the cheque was presented. This was since assessee resorted to discounting of the said cheque. Without verification of any of these assertions of the assessee, as per the ld. AR, addition was made. Reliance was placed by the Ld. AR on the decision of Hon ble jurisdictional High Court in the case of Tam Tam Pedda Guruva Reddy v. CIT (291 ITR 44) and of Gauhati High Court in the case of Nemichand Kothari v. CIT (264 ITR 254). 15. Per contra, Ld. DR submitted that assessee all along was saying that the money was coming from S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee immediately on receipt of the cheque. There is indeed a cheque discounting charge of ₹ 4,882/- on the very same day appearing in the bank account of the assessee. Affidavit of Shri. Praveen Bhaskar Shetty, say that each one of these amounts were given by him on behalf of Shri. Shravan Nayak. Assessee has also filed affidavit of Shri. Shravan Nayak which say that he had requested Shri. Praveen Bhaskar Shetty to give the above money to the assessee on his behalf. But as mentioned by the Ld. DR why the assessee opted for a circuitous route for getting money from Shri. Shravan Nayak who was brother of one of the partners of the assessee, is something which require deep analysis. As mentioned by the Ld. AR it could be for a reason that Shri. Shravan Nayak was not readily having money with him for giving the loans. In any case what we find is that the AO had not examined Shri. Shravan Nayak nor Shri. Praveen Bhaskar Shetty. Though we cannot say that assessee had discharged its full onus with regard to the credits, it is a matter of fact that it had filed copies of bank accounts of Shri. Praveen Bhaskar Shetty and also affidavits of Shri. Praveen Bhaskar Shetty as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of tax at source, relying on Section 40(a)(ia) of the Act. 20. Assessee s appeal before the CIT (A) did not meet with any success. 21. Now before us, Ld. AR submitted that ₹ 2,60,000/- was paid during the relevant previous year by virtue of Special Bench of the Tribunal in the case of Merilyn Shipping and Transports v. Addl. CIT [(2012) 16 ITR (Trib) 1], disallowance could not be made of paid amounts. Vis-a-vis the balance according to Ld. AR, there was a deduction of tax by the assessee albeit at a lower rate. Relying on the judgment of Hon ble Kolkata High Court in the case of CIT v. S. K. Tekriwal (361 ITR 432). Ld. AR submitted that Section 40(a)(ia) would not be attracted for short deduction of tax. 22. Per contra, Ld. DR supported the orders of authorities below. 23. We have perused the orders and heard the rival contentions. In so far as ₹ 2,60,000/- is concerned, it is not disputed that the amounts were paid during the relevant previous year, but without effecting any deduction of tax at source. No doubt the Special Bench in the case of Merilyn Shipping Transports (supra), had held that disallowance u/s.40(a)(ia) could not be made on amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 40(a)(ia) of the Act. We are of the view that the conditions laid down under section 40(a)(ia) of the Act for making addition is that tax is deductible at source and such tax has not been deducted. If both the conditions are satisfied then such payment can be disallowed under section 40(a)(ia) of the Act but where tax is deducted by the assessee, even under bona fide wrong impression, under wrong provisions of TDS, the provisions of section 40(a)(ia) of the Act cannot be invoked. Here, in the present case before us, the assessee has deducted tax under section 194C(2) of the Act and not under section 194-I of the Act and there is no allegation that this TDS is not deposited with the Government account. We are of the view that the provisions of section 40(a)(ia) of the Act has two limbs one is where, inter alia, the assessee has to deduct tax and the second where after deducting tax, inter alia, the assessee has to pay into the Government account. There is nothing in the said section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction. With regard to the shortfall, it cannot be assumed that there is a default as the deduction is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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