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2023 (6) TMI 764 - AT - Income TaxRevision u/s 263 - short deduction of TDS - PCIT holding the assessment framed u/s 143(3) as erroneous in so far prejudicial to the interest of the revenue - whether the provision of section 40(a)(ia) of the Act can be invoked in the case of short deduction of TDS - HELD THAT - Question answered in the case of CIT Vs. Prayas Engineering Ltd. 2014 (11) TMI 1086 - GUJARAT HIGH COURT as held there remains no IOTA of doubt that the provisions of section 40(a)(ia) of the Act cannot be invoked in the event of short deduction of TDS. Accordingly, the assessment framed by the AO cannot be held as erroneous in so far prejudicial to the interest of revenue on account of non-deduction of TDS. Also AO has framed the assessment after necessary verification about the payment made to M/s Bansal Cargo Movers which is evident from assessment order itself. Therefore, we are of the view that the assessment order has been framed by the AO after due application of mind. Accordingly, the same cannot be held as erroneous in so far prejudicial to the interest of revenue on account of non-verification. Decided in favour of assessee.
Issues involved:
The judgment deals with the issue of whether the assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act was erroneous and prejudicial to the interest of the revenue due to the short deduction of TDS by the assessee. Comprehensive Details: Issue 1: Assessment Order Erroneous The appeal was filed by the Revenue against the order of the Principal Commissioner of Income Tax-1, Ahmedabad, regarding the assessment order passed under section 263 of the Income Tax Act for the Assessment Year 2018-19. The Revenue contended that the assessment was erroneous as the assessee had deducted TDS at a rate of 1% instead of the required 2% under section 194C of the Act. The Principal Commissioner set aside the assessment order and directed the Assessing Officer to pass a fresh assessment order after due examination of the TDS issue. Issue 2: Legal Interpretation The contention raised was whether the provision of section 40(a)(ia) of the Act could be invoked in the case of short deduction of TDS. Reference was made to a judgment by the Honorable Gujarat High Court in the case of CIT Vs. Prayas Engineering Ltd., where it was held that section 40(a)(ia) cannot be applied in the event of short deduction of TDS. The Tribunal confirmed this view, stating that the assessment order was not erroneous in prejudicing the revenue's interest due to non-deduction of TDS. Conclusion: The Tribunal upheld the assessee's appeal, ruling that the assessment order was not erroneous in prejudicing the revenue's interest. It was noted that the Assessing Officer had verified the payment to M/s Bansal Cargo Movers before framing the assessment order, indicating due diligence. Therefore, the order passed by the Principal Commissioner under section 263 of the Act was deemed unsustainable and quashed. The ground of appeal of the assessee was allowed, resulting in the dismissal of the Revenue's appeal.
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