TMI Blog2023 (12) TMI 882X X X X Extracts X X X X X X X X Extracts X X X X ..... was deducted at source from the impugned payments but was not deposited on or before the due date of filing of the return but instead of entire disallowance 30% of the total sum should have been disallowed as per the amended provision of section 40 a(ia) - HELD THAT:- It is true that the amendment made by the finance No.2 Act 2014 is effective from 01.04.2015 but we are of the considered view that it has retrospective effect as held by the coordinate Bench in the case of Smt. Kanta Yadav [ 2017 (5) TMI 1565 - ITAT NEW DELHI] modify the orders of the authorities below and direct the Assessing Officer to restrict the addition to 30% of the total addition made on account of deduction of TDS u/s 40(a)(ia). Decided in favour of assesee partly. Ad-hoc disallowance of 20% of expenditure - HELD THAT:- AO himself mentions that the expenses claimed by the assessee were also test checked and while making the addition the AO says that the books of account vouchers were not produced. The logical question arises if the books and vouchers were not produced then from where the AO test checked the expenses. We do not find in the assessment order where the AO asked the assessee to produce book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) was not served, the AO made the addition of Rs. 6110570/-u/s. 41 of the Act. 7. In so far as item No.2 and 4 are concerned where the parties have confirmed the lesser amount the AO made the addition of Rs. 12908555/- u/s. 41 of the Act. 8. Proceeding further the AO found that the assessee has made payment to contractors on which tax has been deducted at source but the same has not been deposited before the due date. Invoking the provisions of section 40a(ia) of the Act the AO made the addition of Rs. 8852509/-. 9. Proceeding still further since the assessee could not produce the books of account and vouchers invoking the provisions of section 145 (3) of the Act the AO disallowed 20% of the expenditure totaling to Rs. 25401898/- and made the addition of Rs. 5080380/-. 10. The additions were challenged before the CIT(A) but without any success. 11. Representatives of both the sides were heard at length. Case records carefully perused and the relevant documentary evidences duly considered in the light of Rule 18 (6) of the ITAT Rules. 12. The trade payables as per the balance sheet at page-16 of the paper book is as under :- Ref. No.5 Trade Payables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation of liability, the Assessing Officer has to establish that there was an existing liability and that there was remission or cessation of such liability in the previous year relevant to the assessment year in which such income is sought to be taxed. 15. A similar view was taken by the Hon ble Punjab and Haryana High Court in the case of Sita Devi Juneja 325 ITR 593 wherein the Hon ble High Court held as under :- In view of these facts, the CIT(A) as well as the ITAT have rightly come to the conclusion that the Assessing Officer has wrongly invoked the Explanation l of section 41(1) of the Act and made the aforesaid addition on the basis of presumption, conjectures and surmises. It has been further found that the Assessing Officer failed to show that in any earlier year, allowance of deduction had been in respect of any trading liability incurred by the assessee. It was also not proved that any benefit was obtained by the assessee concerning such trading liability by way of remission or cessation thereof during the concerned year. Thus, there did not accrue any benefit to the assessee which could be deemed to be the profit or gain of the assessee's business, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jendra Yadav vs. ITO (pages 30-41 of JPB) and Smt. Sonu Khandelwal vs. ITO. In these orders it was held that the disallowance u/s 40(a)(ia) to be restricted to 30% of the addition. In these orders the Tribunal has considered the amended provisions of section 40(a)(ia) of 1.T. Act. In these orders the assessment year's involve was 2007-08 and 2008-09. In the present appeal the assessment year is 2012-13. Therefore facts are identical. In this view of the matter and following the above decisions of Jaipur Bench, we set aside and modify the orders of the authorities below and direct the Assessing Officer to restrict the addition to 30% of the total addition made on account of deduction of TDS u/s 40(a)(ia) of the Act . 22. Similarly in ITA No.1869/M/2014 it has been held as under :- ii) ITA No 1869/M/2014 dated 24.5.2017 AY 2006-07 M/s Asphalt India Corporation vs. DCIT 4. We have heard the rival submissions, perused the material before us. We find that the assessee itself had admitted that taxes were paid in the subsequent AY. In the cases of Rajendra Yadav (supra) and Amruta Quarry Works (supra), the Tribunal had held that amendment to section 40(a)(ia) was retrosp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anda Marbles and M/s. Nidhi Granites as to whether the said parties have deposited the tax or not and further or restrict the addition to 30% of Rs. 7,51,322/-. In our view, it will be tied of justice if the disallowance is only restricted to 30% of Rs. 7,51,322/-. Accordingly, the appeal of the assessee is partly allowed in the above said manner. Further this Tribunal has taken a similar view on this issue by following the above decisions and therefore even if there is divergent view taken by the Hon'ble Kerala High Court the view taken in favour of the assessee by this Tribunal by following the various decisions are to be followed to maintain the rule of consistency. Accordingly, We are of the view the second proviso to section 40(a)(ia) of the Act would be effective retrospective as it was undisputedly inserted to removable the hardship faced by the assesses. Hence, we set aside this issue to the record of the Assessing Officer for limited purpose to verify the fact that the interest income received by these NBFCs have been included in the return of income and offered to tax and then decide this issue in light of above observation. 24. Respectively following the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the levy of penalty. This issue is now been well settled by the Hon ble Jurisdictional High Court of Delhi in the case of Pr. CIT Vs. Sahara India Life Insurance Company Ltd. ITA 475 of 2019, while deciding the identical issue held as under :- 21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of inc me or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA's Emerald Meadows (2016) 73 Taxman.com 241 (Kar) , the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of2016 by order dated 5th August, 2016. 34. Similar view was taken by the Hon ble High Court of Karnataka in the case of SSA Emerald Meadows ITA No. 380 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
