2015 (9) TMI 1683 - HC - Income Tax

Revision u/s 263 - quantum of short deduction of tax at source was admitted by the assessee and there was no further verification required by the Assessing Officer - HELD THAT - Disallowance under Section 40(a)(ia) of the Act could not be made where there was a short deduction of tax at source and that such claim was made by the assessee in the audit report, which wasaccepted by the Assessing Officer. It also considered that the same was in consonance with the view expressed by the Tribunal earlier and confirmed by the Calcutta High Court in the case of CIT vs- S.K.Tekriwal 2012 (12) TMI 873 - CALCUTTA HIGH - Further, it has been held that since two views were possible to be taken by the Assessing Officer in the case of the assessee, and one of the possible views has been taken, then in such a situation the jurisdiction under Section 263 of the Act could not have been exercised. No infirmity with the order of the Tribunal in allowing the appeal of the assessee

Summary

Issues:
1. Alleged short deduction of TDS by the assessee-respondent
2. Invocation of suo moto revisional power under Section 263 of the Income Tax Act, 1961
3. Tribunal's decision in favor of the assessee
4. Appeal by the revenue challenging the Tribunal's decision
5. Two questions of law raised by the revenue

Analysis:

1. The judgment revolves around the alleged short deduction of TDS by the assessee, which led to the invocation of the suo moto revisional power under Section 263 of the Income Tax Act, 1961. The Commissioner of Income Tax decided against the assessee, prompting an appeal before the Tribunal.

2. The Tribunal's decision in favor of the assessee was primarily based on the admission of the quantum of short deduction of tax at source by the assessee. The Tribunal deemed no further verification necessary by the Assessing Officer and cited the settled legal position that disallowance under Section 40(a)(ia) could not be made in cases of short deduction of tax at source.

3. The Tribunal also considered the previous view expressed by itself and confirmed by the Calcutta High Court in a relevant case. It held that since two views were possible for the Assessing Officer in the case of the assessee, and one view had been taken, the jurisdiction under Section 263 of the Act could not be exercised.

4. The High Court, after hearing both parties, found no fault with the Tribunal's decision and dismissed the appeal by the revenue. It concluded that no substantial questions of law arose for determination, affirming the Tribunal's decision in favor of the assessee.

In summary, the judgment upholds the Tribunal's decision in favor of the assessee, emphasizing the acceptance of short deduction of TDS, settled legal positions, and the availability of multiple views for the Assessing Officer. The High Court found no grounds for interference and dismissed the appeal by the revenue.