TMI Blog2021 (9) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... 73 - CALCUTTA HIGH COURT] had held that the provisions of Section 40(a)(ia) of the Act could not be made applicable for short deduction of tax at source. In the instant case before us, admittedly, the assessee had deducted tax @1% of total payments made to M/s. Revitt Engineering. The case of the revenue seems to be that tax should have been deducted at higher rate u/s.194C for which disallowance u/s.40(a)(ia) of the Act was made - we direct the AO to delete the disallowance u/s.40(a)(ia) of the Act in the facts and circumstances of the instant case. Accordingly, the ground No.2 raised by the assessee is allowed. - ITA No. 6253/Mum/2017 - - - Dated:- 30-8-2021 - SHRI VIKAS AWASTHY, JUDICIAL MEMBER And SHRI M.BALAGANESH, ACCOUNTANT MEMBER Assessee by : Shri Tarun Ghia Revenue by : Ms. Shreekala Pardeshi ORDER PER M. BALAGANESH ( A. M ) : This appeal in ITA No.6253/Mum/2017 for A.Y.2012-13 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-33, Mumbai in appeal No.CIT(A)-33/Rg.21/81/2015-16 dated 06/07/2017 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,47,987/- ₹ 2,49,92,082/- ₹ 1,27,44,095/- 3.2. This addition apparently was made by the ld. AO on the basis of Form 3CD Annexure I Part A of the assessee showing total closing capital of last year i.e. on 31/03/2011 at ₹ 2,49,92,082/-. This figure was compared with the audited financial statement of F.Y.2011-12 of the partners wherein last year column for 31/03/2011 showed cumulative figure of ₹ 1,22,47,987/- thereby resulting in the difference of ₹ 1,27,44,095/- which was sought to be added by the ld. AO. The assessee submitted earlier year s detailed reconciliation statement, bank statement of Chinmay Agriculture and Housing Pvt. Ltd, bank statement of Shri Prasadam Realtors Pvt. Ltd., explaining the difference. 3.3. Before the ld. CIT(A), the assessee raised a preliminary objection that the ld. AO erred in making the addition u/s.69B towards unexplained investment by approaching the entire issue in wrong direction in as much as the addition was made for difference in opening balance of partners capital which are reflected in the liability side of the balance sheet and not asset side. Hence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance. 3.4. It was also submitted before the ld. CIT(A) that the assessee had submitted to ld. AO, the audited balance sheet of Chinmay Agriculture and Housing Pvt. Ltd., and Shri Prasadam Realtors Pvt. Ltd., for F.Y.2011-12 which is showing correct opening balance of ₹ 18,34,296/- and ₹ 1,04,13,691/- respectively totaling to ₹ 1,22,47,987/-. The same is also matching with the opening balance of assessee s firm towards partners capital account as on 01/04/2011 as per the books of accounts of the assessee. The assessee sought to explain the same in the following manner:- A. IN THE BOOKS OF CHINMAY AGRICULTURE HOUSING (ASSESSEE) S. No. Particulars Opening Balance as on 01.04.2011 Closing Balance as on 31/03/2012 1 Shri Prasadam Realtors Pvt. Ltd.,(1st Partners of Assessee) 1,04,13,691.20 Credit Balance 1,13,06,385.54 Credit Balance 2 Chinmay Agriculture Housing Pvt. Ltd. (2nd Partners of Assessee) 19,20,943.70 Credit Balance 19,39,774.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... categorically stated as under:- 1.2. During the course of assessment, Ld. AO observed that the figures of partners' capital balances in the balance sheet of preceding year F. Y. 2011-12 were at a mismatch vis a vis the figures of preceding year mentioned in Annexure I, Part B of the tax audit report of the preceding year. 1.3. The mismatch had arisen due to following reason: For the preceding F. Y. 2010-11 the balance sheet of the assessee was initially completed but then was revised. The mistake happened in preparing the tax audit report. As a tax auditor while writing the figures in the preceding year column, I committed an error by writing figures from the original balance sheet rather than from the revised balance sheet 1.4. Thus, it is only due to my mistake that the mismatch arose and after my rectification of the relevant Annexure, there is now no mismatch. 1.5. During the course of remand from Ld. CIT-A to Id. AO, I had submitted revised Annexure I, Part B of the tax audit report to Ld. AO. However, Ld. AO did not record the same in the remand report nor did he take cognisance of the same. So I mentioned before Ld. CIT-A that revised A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above referred revised Annexure I and the reconciliation statement filed by me should be considered while deciding the appeal. 4. 1 hereby state that whatever I have stated hereinabove is true and correct and if anything turns out to be untrue and incorrect, then I shall be personally liable for the consequences thereof and I will indemnify anyone who may suffer because of my this affidavit 3.7. We find that aforesaid view of the Chartered Accountant confirms the fact that no new evidences were submitted in the said affidavit and also confirm the fact that assessee had sought to rectify its legitimate mistake by providing necessary reconciliation statement and also driving home the point that there is absolutely no discrepancy for the purpose of determination of income of the assessee. We find that reconciliation statement submitted by the assessee before the lower authorities had been conveniently ignored by both the lower authorities, which had prompted the Chartered Accountant to file an affidavit before us. As stated supra, we would like to reiterate that there is absolutely no mistake in the financial statements of the assessee firm. The mistake had crept only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er verification, the ld. AO reported that the argument of the assessee for not deducting tax for ₹ 3,39,000/- by stating that the same is for purchase of sand cannot be accepted, as M/s. Revitt Engineering was not dealer in sand and that the bill is raised by them for the RCC work and sand is not the only material used for this work. The ld. CIT(A) observed that assessee could not explain as to how the TDS will not be deducted on ₹ 3,39,000/- when M/s. Revitt Engineering is not dealer in sand. Accordingly, the ld. CIT(A) made disallowance of ₹ 3,39,000/- u/s.40(a)(ia) of the Act. Ultimately, we find that this disallowance was made for short deduction of tax at source. We find that the Hon ble Calcutta High Court in the case of CIT vs. S.K. Tekriwal reported in 361 ITR 432 had held that the provisions of Section 40(a)(ia) of the Act could not be made applicable for short deduction of tax at source. In the instant case before us, admittedly, the assessee had deducted tax @1% of total payments made to M/s. Revitt Engineering. The case of the revenue seems to be that tax should have been deducted at higher rate u/s.194C of the Act, for which disallowance u/s.40(a)(ia) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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