TMI Blog2016 (6) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 2,04,89,380/-. The case of the assessee was selected for scrutiny under CASS and accordingly first notice under section 143(2) of the Income Tax Act, 1961 (in short the Act ) was issued to the assessee on 20.08.2010. During the course of scrutiny assessment proceedings, the Assessing Officer inter-alia made disallowance under section 40(a)(ia) of the Act for non-deduction of tax/short deduction of tax at source on the payments made to various parties aggregate to ₹ 31,44,113/-. The Assessing Officer had made disallowance of ₹ 9,60,138/- on account of short deduction of tax at source on the payments made to M/s Mangalmurti Roadlines. Aggrieved by the assessment order dated 12.12.2011, the assessee preferred an appeal before the CIT(A). 3. The CIT(A) vide impugned order partly accepted the appeal of the assessee and deleted the addition under section 40(a)(ia) of the Act to the extent of ₹ 93,000/- thereby confirming the disallowance to the tune of ₹ 20,90,575/-. In respect of short deduction of tax on the payments made to Mangalmurti Roadlines, the CIT(A) remitted the matter back to the file of the Assessing Officer for verification of the TDS a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 2009-10 respectively, decided on 16.12.2015. The ld. AR further submitted in respect of short deduction of tax that no disallowance can be made on the short deduction of tax as the provisions of section 40(a)(ia) apply only in case of non-deduction of tax on the payments made. In support of his submissions, the ld. AR placed reliance on the decision of Cochin Bench of the Tribunal in the case of Apollo Tyres Ltd. vs. DCIT reported as (2013) 155 TTJ 470 (Coch.) and the decision of Delhi Bench of the Tribunal in the case of ACIT vs. Pankaj Bhargava reported as (2013) 36 CCH 343 (Del.-Trib.). 6. On the other hand, Shri S. K. Jadhav representing the Department vehemently supported the findings of the CIT(A) on issue. The ld. DR contended that since the assessee has failed to deduct tax at source on the payments made to the respective parties, the Assessing Officer has rightly invoked the provisions of section 40(a)(ia) of the Act and has rightly made the disallowance on such payments. In respect of payments made to Mangalmurti Roadlines, the assessee has deducted tax at source at ₹ 10,570/- instead of deducting ₹ 20,517/-. It is not the case where short fall in TD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee in default under the first proviso to section 201(1) of the Act. The stand of the assessee is that the said proviso should be understood as retrospective in nature as it has been introduced to eliminate unintended consequences which may cause undue hardships to the tax payers. It was pointed out that in similar circumstances, the Pune Bench of the Tribunal in the case of ITO vs. M/s Gaurimal Mahajan Sons vide ITA No.1852/PN/2012 dated 06.01.2014 following the decision of the Cochin Bench of the Tribunal in the case of Antony D. Mundackal vs. ACIT vide ITA No.38/Coch/2013 dated 29.11 .2013 has restored the matter back to the file of the Assessing Officer. In the precedent dated 06.01.2014 (supra), the Tribunal noted that such a plea was raised for the first time before the Tribunal and the correctness or otherwise of the contentions raised was not examined by the lower authorities. Therefore, the Tribunal restored the matter back to the file of the Assessing Officer for examination afresh, following the decision of the Cochin Bench of the Tribunal in the case of Antony D. Mundackal (supra) in a similar circum stance. The Ld. Representative submitted that the matter be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mangalmurti Roadlines. The assessee was required to deduct tax at source on payments under the provisions of section 194C of the Act. Ostensibly, the assessee deducted tax of ₹ 10,570/- on the aforesaid payments instead of ₹ 21,507/-. Admittedly, there was short deduction of tax by the assessee on the aforesaid payments. The Assessing Officer made disallowance of the entire amount. In first appeal, the CIT(A) granted partial relief to the assessee. The contention of the ld. AR is that no disallowance is to be made on the payments where there is short deduction of tax. Reliance has been placed on the decision rendered in the case of Apollo Tyres Ltd. vs. DCIT (supra). The Cochin Bench of the Tribunal while dealing with the similar issue has held as under :- 8. We have considered the rival submissions on either side and also perused the material available on record. We have also carefully gone through the provisions of section 40(a)(ia) of the Act, which reads as follows: (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub- section (3) of section 200.) Section 201(1A) enables the assessing officer to levy interest in case the tax was not deducted either wholly or partly or after deduction it was not paid as required under the Act. In fact, the provisions of section 201(1A) was amended by Finance Act, 2001 with retrospective effect from 01-04-1962 after the judgment of the Andhra Pradesh High Court in P.V. Rajagopal (supra) 10. As rightly pointed out by the ld.senior counsel for the assessee in section 201(1A) the legislature intended to levy interest even in case of short deduction of tax. In other words, if any part of the tax which required to be deducted was found to be not deducted then interest u/s 201(1A) can be levied in respect of that part of the amount which was not deducted. Whereas the language of section 40(a)(ia) does not say that even for short deduction disallowance has to be made proportionately. Therefore, the legislature has clearly envisaged in section 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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