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2016 (5) TMI 755 - ITAT KOLKATA

2016 (5) TMI 755 - ITAT KOLKATA - TMI - Disallowance u/s 40(a)(ia) - retrospectivity - Held that:- Hon’ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (I) Pvt.Ltd., [2015 (9) TMI 79 - DELHI HIGH COURT ] has taken the view that the insertion of the second proviso to Sec.40(a)(ia) of the Act is retrospective and will apply from 1.4.2005. Once it is held that the Assessee is entitled to the benefit of 2nd proviso to Sec.40(a)(ia) of the Act, the CIT(A) ought to have directed th .....

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ll for the information u/s. 133(6) or 131 of the Act, for verification of the same.

In this regard we also find that the Assessee has furnished all the details of assessment particulars of the recipients of payment from the Assessee. The AO therefore should not have any difficulty in making the required verification. We therefore set aside the order of the CIT(A) to the extent to which he had sustained the order of the AO on the disallowance u/s.40(a)(ia) of the Act and remand the is .....

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the Act, for verification of the same. - Decided in favour of assessee for statistical purpose. - S.A.No.08/Kol/2016, ITA No.1492/Kol/2015 - Dated:- 6-4-2016 - Shri P.M.Jagtap, AM & Sri N.V.Vasudevan, JM For The Appellant : Shri Miraj D.Shah, FCA For The Respondent : Md. Ghyas Uddin, JCIT, Sr.DR ORDER Per N.V.Vasudevan, JM The Assessee has filed the above application for grant of stay of recovery of outstanding demand of a sum of ₹ 54,34,801/- for AY 2012-13. With the consent of the pa .....

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vil contracts. The Assessee filed its return of income for AY 2012-23 on 31/03/2013 declaring total income of ₹ 14,00,570. In an order of assessment passed u/s.143(3) of the Act, dated 29/01/2015, the AO determined the total income of the assessee at ₹ 2,17,39,410. The Ld. AO made the following additions in the said assessment order : On account of disallowance u/s 40(a)(ia) of the Act Rs.1,99,30,315 On account of interest u/s 244A of the Act ₹ 4,08,524 Total Rs.2,03,38,389 4. .....

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Parida 31,08,762 31,088 6 Manmath Kumar Bhutia 48,92,262 48,924 7 Sushant Kumar Behara 9,11,590 9,116 8 Babuli Behera 12,13,786 12,138 9 Dilip Kumar Patra 56,800 568 10 Supreme Industrial 7,65,400 7,654 11 Manoranjan Parida 37,500 375 12 Bijpya Kumar Dehury 10,80,881 10,809 13 Magic Pool 1,90,400 1,904 14 Monalisa Construction 9,30,056 9,301 15 Asha Communication 8,600 86 16 Siba Prasad Satapathy 17,57,486 17,575 17 Prasanta Kumar Pati 16,77,468 16,775 18 Debabrata Dutta 1 1,800 118 Sub-total 1, .....

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he amendments to the provisions of Sec.40(a)(ia) of the Act by the Finance Act, 2012 w.e.f. 1-4-2013, whereby a second proviso was inserted which provided that if the payees have filed their return of income showing the receipts from the Assessee in their return of income than the it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in Sec.40(a)(ia) of the Act. The assessee also made attempt .....

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ot given the form 26A with respect to other parties the disallowance of ₹ 1,99,30,315 was restricted to ₹ 1 ,81 ,96,525. 8. It was pointed out by the learned counsel for the Assessee before us that subsequent to the passing of the appellate order, the assessee collected a few more form 26A from the above parties and the assessee could in total succeed to collect the same from 6 parties to whom payment of ₹ 1,14,92,300. The details of these parties are as follows :- Parties who .....

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submit Form 26A and therefore due to lack of statutory powers the assessee could not collect the same. 10. It was argued that the Assessing Officer and first appellate authorities are vested with statutory powers u/s 133(6) or 131 and or other provisions and they could have made inquires with the parties or their respective Assessing Officer. In this regard it was submitted that all the relevant details of the payees were furnished and are available on record with their PAN and AO details. 11. I .....

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ered factual matrix of the case as also the applicable position. 6. Learned counsel's vehement reliance is on Hon'ble Allahabad High Court's judgment in the case of Jagran Prakashan Ltd. v. Dy.CIT (TDS) [2012] 21 taxmann.com 489 wherein Their Lordships have, inter alia, observed as follows: ........... it is clear that deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly. In the present case, the Income tax authorit .....

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n be deemed to be an assessee in default in respect of such tax ..... 7. It is thus argued that the onus is on the revenue to demonstrate that the taxes have not been recovered from the person who had the primarily liability to pay tax, and it is only when the primary liability is not discharged that vicarious recovery liability can be invoked. Learned counsel contends that once all the details of the persons to whom payments have been made, it is for the Assessing Officer, who has all the power .....

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Learned counsel is quite right in his submission that, as a result of the judgment of Hon 'ble Allahabad High Court in Jagran Prakashan Ltd.'s case (supra) and in the absence of anything contrary thereto from Hon'ble jurisdictional High Court, there is a paradigm shift in the manner in which recovery provisions under section 201 (1) can be invoked. As observed by Their Lordships, the provisions of Section 201(1) cannot be invoked and the "tax deductor cannot be treated an asses .....

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ertain whether or not the taxes have been paid by the recipient of income. This approach, in our humble understanding, is in consonance with the law laid down by Hon 'ble Allahabad High Court. 9. It is important to bear in mind that the lapse on account of non deduction of tax at source is to be visited with three different consequences - penal provisions, interest provisions and recovery provisions. The penal provisions in respect of such a lapse are set out in Section 271 C. So far as pena .....

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seeks to make good any loss to revenue on account of lapse by the assessee tax deductor. However, the question of making good the loss of revenue arises only when there is indeed a loss of revenue and the loss of revenue can be there only when recipient of income has not paid tax. Therefore, recovery provisions under section 201(1) can be invoked only when loss to revenue is established, and that can only be established when it is demonstrated that the recipient of income has not paid due taxes .....

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ly from the recipients of income. It is not the revenue's case before us that, on the facts of this case, such an exercise by the Assessing Officer is not possible. It does put an additional burden on the Assessing Officer before he can invoke Section 201(1) but that's how Hon 'ble High Court has visualized the scheme of Act and that's how, therefore, it meets the end of justice. 10. The matter thus stands restored to the file of the Assessing Officer fro fresh adjudication in ac .....

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AT Kolkata in I.T.A No. 662/Kol/2013 dated 24-11-2015 wherein it was held as follows: 3. Briefly stated facts are that assessee has claimed labour charges at ₹ 55, 440/-, carriage inward charges amounting to ₹ 62,07,498/- and hire charges amounting to ₹ 29, 12, 123/- in the P&L Account, but no TDS was deducted u/s. 194C of the Act. Ld. Counsel for the assessee before us now clearly admitted that the assessee has not deducted TDS u/s. 194C but he is obliged to deduct TDS u/s .....

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Delhi High Court in the case of CIT Vs. Ansal Land Mark Township P. Ltd. (2015) 377 ITR 635 (Del), wherein the AO is directed to verify whether the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same. When this plea of the Ld. Counsel for the assessee was confronted to Ld. Sr. OR, he fairly conceded the position and urged the bench to set aside the matter to the file of the AO 5. We have heard rival submissions and gon .....

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. 133(6) of the Act for verification of the same. Accordingly, this issue is remitted back to the file of AO to decide in terms of the above directions. This issue of assessee's appeal is allowed for statistical purposes. 13. It was therefore submitted that the disallowance u/s.40(a)(ia) of the Act to the extent sustained by the CIT(A) should be set aside and remanded to the AO to verify whether the recipients have included the receipts paid by the assessee in their respective returns of inc .....

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second proviso should not be allowed to the Assessee as the tax deducted at source has not been paid on or before the due date for filing the return of income u/s.139(1) of the Act. 15. We have given a very careful consideration to the rival submissions. The CIT(A) has held that the second proviso to Sec.40(a)(ia) of the Act will apply in the present case and that applicability of the second proviso to Sec.40(a)(ia) of the Act which was introduced by the Finance Act, 2012 w.e.f. 1.4.2013 was re .....

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