2011 (8) TMI 632 - AT - Income Tax

TDS - payment to truck owners without tax deduction - receipt of form 15I - Held That - Assessee has obtained Form 15-I and filed during the course of assessment proceedings but only failed to file before the concerned Assessing Officer. As the issue is covered in favour of assessee by the decision of ITAT, in the case of Shri Vipin P. Mehta 2011 (5) TMI 503 - ITAT MUMBAI . Payment to driver / agent in cash exceeding 20,000 - Held That - Cash payments in a day during one occasion did not exceed the prescribed limit of ₹ 20,000/- although such payment in a day in aggregate exceeds ₹ 20,000/-, provision of section 40A(3) of the Act is not attracted for A/Y 06-07.

Summary

Issues:
1. Addition under section 40(a)(ia) for non-filing of Form No. 15J
2. Disallowance under section 40A(3) for cash payments exceeding Rs.20,000 in a day

Issue 1: Addition under section 40(a)(ia) for non-filing of Form No. 15J

The first issue revolves around the addition made by the Assessing Officer under section 40(a)(ia) of the Income Tax Act for non-filing of Form No. 15J despite the claim of the assessee that Form 15-I was received from vehicle owners for non-deduction of tax. The CIT(A) deleted the addition, emphasizing that Form 15-I does not become invalid for not filing Form 15-J with the jurisdictional CIT. The CIT(A) found the addition unjustified as the Assessing Officer failed to point out any defect in the Form 15-I during remand proceedings. The Tribunal referred to a similar case from Mumbai where it was held that the payer is not liable to deduct tax if the payee furnishes a declaration stating no tax liability. As the assessee had obtained Form 15-I but failed to file it before the Assessing Officer, the Tribunal confirmed the CIT(A)'s decision, dismissing the revenue's appeal.

Issue 2: Disallowance under section 40A(3) for cash payments exceeding Rs.20,000 in a day

The second issue concerns the disallowance made by the Assessing Officer under section 40A(3) for cash payments exceeding Rs.20,000 in a day to drivers/sub-contractors, who were considered agents of the assessee. The CIT(A) overturned the disallowance, noting that for Assessment Year 2006-07, single cash payments exceeding Rs.20,000 in a day were the criteria for disallowance, not the aggregate of cash payments. The Assessing Officer, in a remand report, acknowledged that payments to agents exceeding Rs.20,000 in cash were permissible under Rule 6DD(1) of the Income Tax Rules. Since there was no instance of a single payment exceeding Rs.20,000 in a day, the Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal.

In conclusion, the Tribunal upheld the CIT(A)'s decisions in both issues, dismissing the revenue's appeal in its entirety.