2022 (7) TMI 219 - AT - Income Tax

Disallowance u/s 40(a)(ia) - amount of TDS not paid to govt. - HELD THAT - As per assessee that the amount has been added back in the subsequent year and further the explanation given that the amount was not paid during the year but only a book entry was made, however, since there was a dispute, hence, the TDS was not deducted and subsequently, the entry was reversed. It has been claimed that the TDS was duly deducted on the remaining amount of Rs.50,000/- and the same was duly paid to the Government account. We are of the view that the facts need to be verified by the Assessing Officer - the contention of the assessee is found correct then no disallowance to be made by the Assessing Officer on this issue. Computation of amount of tax refund - As per the assessee, the self-assessment tax was paid at Rs.24,41,680/- as against Rs.18,68,745/- calculated by the Assessing Officer. This issue is also restored to the file of the Assessing Officer for verification of the fact and to issue refund to the assessee if found so due as per the contention of the assessee.

Issues:
1. Dispute over assessment of total income
2. Disallowance under section 40(a)(ia) of the Income Tax Act
3. Addition of income in subsequent financial years
4. Disputed labour charges and tax implications
5. Incorrect tax calculation for refund
6. TDS deduction and payment verification

Analysis:

Issue 1 - Dispute over assessment of total income:
The appellant contested the assessment of total income by the Commissioner of Income Tax (Appeals) (CIT(A)). The grounds of appeal included discrepancies in the assessed income compared to the actual income reported by the appellant. The appellant argued that the CIT(A) erred in upholding the assessment on a higher total income. The appellant highlighted specific discrepancies and disputed the assessment.

Issue 2 - Disallowance under section 40(a)(ia) of the Income Tax Act:
The appellant challenged the disallowance of Rs.24,02,058 under section 40(a)(ia) of the Income Tax Act for non-deduction of Tax at source (TDS). The appellant explained that a portion of the amount had been reversed and added back in the subsequent assessment year due to an ongoing dispute with the party involved. The appellant also clarified the deduction and payment of TDS on the remaining amount. The Tribunal noted the arguments presented by both parties and directed the Assessing Officer to verify the facts before making a final decision on the disallowance.

Issue 3 - Addition of income in subsequent financial years:
The appellant raised concerns about the addition of income in one financial year and its impact on the subsequent financial year. The appellant argued that the same income was being taxed twice in consecutive financial years, which violated the principle of not taxing the same income twice unless expressly provided in the statute. The Tribunal acknowledged this concern and directed further examination by the Assessing Officer.

Issue 4 - Disputed labour charges and tax implications:
The appellant disputed the treatment of labour charges booked in the name of a contractor, highlighting that the charges were disputed, not accepted, and subsequently reversed in the following financial year. The appellant emphasized that tax had been duly paid on the reversed amount in the subsequent year. The Tribunal considered this argument and directed a review by the Assessing Officer.

Issue 5 - Incorrect tax calculation for refund:
The appellant contested the incorrect calculation of the tax refund amount by the Assessing Officer. Discrepancies were noted between the self-assessment tax paid by the appellant and the amount calculated by the Assessing Officer for the refund. The Tribunal directed the Assessing Officer to verify the facts and issue the refund if found due as per the appellant's contentions.

Issue 6 - TDS deduction and payment verification:
Verification of TDS deduction and payment was a key aspect of the appeal. The appellant provided explanations regarding TDS deductions and payments made, emphasizing compliance with tax regulations. The Tribunal instructed the Assessing Officer to verify the TDS deductions and payments to determine the correctness of the disallowance made under section 40(a)(ia) of the Income Tax Act.

In conclusion, the Tribunal allowed the appeal for statistical purposes and directed the Assessing Officer to conduct further verification on various disputed issues raised by the appellant. The judgment highlighted the importance of thorough examination and verification of facts before making tax assessments and disallowances.

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