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2015 (5) TMI 990 - AT - Income TaxDisallowance of provision of expenses under section 40(a)(ia) - non deduction of tds - Held that - The amendment made to section 40(a)(ia) of the Act vide Finance Act, 2010 which states that the due date of deposit of TDS will be the date of filing of return u/s 139(1) is applicable retrospectively and further that of the Hon ble Calcutta High Court in the case of CIT v. Virgin Creations 2011 (11) TMI 348 - CALCUTTA HIGH COURT wherein it has been held that the amendment to section 40(a)(ia) by the Finance Act, 2010 is to be considered as retrospective in as much as it is only toward mitigating a hardship and, thus, is to be considered as curative in nature. The Ld. A.R. of the assessee has been fair enough to admit that even the Ld. CIT(A) has passed the impugned order without verification of the details submitted by the assessee. Even there is no finding that whether the liability was ascertained for which the provision was made and whether the identity of the prospective payees was established or not. The Ld. A.R. has fairly admitted that the entire issue requires re-examination at the end of the AO. We therefore set aside the impugned findings of the Ld. CIT(A) on this issue and restore the matter to the file of the AO for examination afresh and then to pass a speaking order in accordance with law after duly considering all the relevant contentions of the assessee on this issue. Disallowance on account of AIR mismatch - Held that - In the absence of any material brought by the revenue authorities that the assessee has received amount more than the professional fees which has been declared by him in the P&L account and when the professional income declared by the assessee far exceeds the professional fees shown in the AIR information, then additions solely based on the AIR information are not sustainable. Un-reconciled amount as per the AIR information has held that the addition cannot be made solely on the basis of AIR information, especially, when the assessee denies any such receipt as the burden to prove such receipts is on the AO as the assessee cannot be asked to prove the negative. - Decided in favour of assessee.
Issues:
1. Disallowance of provision of expenses under section 40(a)(ia) for non-deduction of TDS. 2. Disallowance on account of AIR mismatch. Issue 1 - Disallowance of provision of expenses under section 40(a)(ia) for non-deduction of TDS: The Revenue appealed against the CIT(A)'s order deleting the addition made by the AO for non-deduction of TDS under section 40(a)(ia) of the Income Tax Act. The AO disallowed the provision of expenses amounting to Rs. 24,42,25,551 for non-deduction of TDS. The CIT(A) deleted the disallowance without verifying the claim of the assessee. The ITAT found that the AO did not examine item-wise details of the expenditure and set aside the CIT(A)'s decision. The ITAT directed the AO to re-examine the issue considering relevant legal precedents and all contentions of the assessee. Issue 2 - Disallowance on account of AIR mismatch: The AO noted an AIR mismatch of Rs. 2,76,302 in the assessee's income from "Ram Silk," which the assessee denied receiving. The AO issued a notice under section 133(6) to "Ram Silk" but received no reply. The CIT(A) deleted the addition based on the assessee's denial, citing a similar Tribunal decision. The ITAT upheld the CIT(A)'s decision, emphasizing that additions solely based on AIR information are not sustainable if the assessee denies receiving the income. The ITAT relied on legal precedents to support its decision, concluding that the addition based solely on AIR information was not justified. In conclusion, the ITAT partially allowed the Revenue's appeal for statistical purposes, upholding the CIT(A)'s decision on the issue of disallowance on account of AIR mismatch. The ITAT emphasized the importance of verifying claims and following legal precedents in tax matters.
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