TMI Blog2017 (1) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... ails 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 issue to the AO 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. To the extent the recipients from the Assessee have so included the sum in their returns of income and filed the same, no disallowance u/s.40(a)(ia) of the Act should be made by the AO. In case the recipient parties are not cooperating in providing details, the AO should be directed to call for the information u/s. 133(6) or 131 of the Act, for verification of the same. - Decided in favour of assessee for statistical purpose - S.A.No. 37/Kol/2016, (A/o I.T.A No.1261/Kol/2016) - - - Dated:- 2-9-2016 - Sri N.V.Vasudevan, JM Shri Waseem Ahmed, AM For The Appellant : Shri Rohit Agarwal, ACA For The Respondent : Shri Rajat Kumar Kureel, JCIT.Sr.DR ORDER Per N.V.Vasudevan, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce. 5. The AO on perusal of the Form No.15G furnished by the Assessee found that the persons furnishing Form No.15G have given the same to the Assessee on 7.4.2010 after the close of the financial year ending as on 31.3.2010. According to the AO in the action point with reference to column No.4 of Form No.15G, it has been mentioned that the declaration must be made by the payee at the time of or before receiving the amount either directly r by credit to his account and not after the amount is received or credited. Since Form No.15G was obtained by the Assessee on or after 31.3.2010, the AO held that the Assessee cannot rely on form No.15G for non deduction of tax at source. The AO accordingly invoked Sec.40(a)(ia) of the Act and disallowed a sum of ₹ 4,87,418/- and added the same to the total income of the Assessee. 6. On appeal by the Assessee, the CIT(A) confirmed the order of the AO observing as follows: I have gone through the assessment order and the submission of the assessee. It is seen from the copy of 15G submitted during the course of appellate proceedings that the date of receipt in the hands of the assessee is nowhere mentioned. The certificate only con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the requirement of the law is that a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil. This is the requirement of the section. The section does not specify as to the point of time at which such declaration is to be given. The requirement of section- 197-A of the Act has been admittedly satisfied in this case. The rule making authority cannot impose a requirement which is not contemplated by the Act. The rule making authority derives its power to frame rules pursuant to the powers conferred under the Act. The Rule making authority cannot impose a condition that is not contemplated by the main provisions or contrary to intention of the Act. We are therefore of the view that the rejection of Form No.15G filed by the Assessee in the present case for the reason that the persons furnishing Form No.15G have given the same to the Assessee after the close of the financial year, cannot be sustained. Consequently, there was no default on the part of the Assessee u/s.194A and consequently the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxes have been paid by the persons in receipt of the amounts from which taxes have not been withheld. It is learned counsel's submission that as a result of Hon 'ble Allahabad High Court's judgment in the case of Jagran Prakashan Ltd's case (supra), this paradigm shift in the interpretation of Section 201 (1) has been brought about. 8. The plea is indeed well taken. 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 assessee in default till it is found that assessee has also failed to pay such tax directly . Once this finding about the non payment of taxes by the recipient is held to a condition precedent to invoking Section 201(1), the onus is on the Assessing Officer to demonstrate that the condition is satisfied. No doubt the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 accordance with the law and in the light of our observations above. While doing so, the Assessing officer will give a due and fair opportunity of hearing to the assessee and dispose of the matter by way of a speaking order. We direct so. 11. The above decision ITAT Kolkata in the above mentioned case will also apply for the purposes of Section 40(a)(ia) of the Act. Further the ITAT Kolkata in the case of Vas Electronics Vs. ACIT, ITAT Kolkata in I.T.A No. 662/Kol/2013 dated 24-11- 2015 has 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. 13. The learned DR relied on the order of the CIT(A) and submitted that the benefit of the 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. 14. 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 retrospective in operation and was to apply w.e.f. 1-4-2005, being the date from which sub-clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. The Hon ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (I) Pvt.Ltd., in ITA No.160/2015 judgment dated 26.8.2015 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 the AO to verify whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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