2015 (9) TMI 1049 - HC - Income Tax

Disallowance under section 40(a)(ia) - non deduction of TDS - ITAT confirming the order of CIT(A) restricting the part disallowance - Held that - Tribunal has proceeded on the basis that the total disallowance was ₹ 61,32,54,820/-. It thereafter states that out of this amount, the Assessing Officer himself admitted the claim of the assessee to the extent of ₹ 30,71,97,689/-. This itself is factually erroneous because paragraph 7 of the first appellate authority s order states that in the report dated 13.11.2013, what is stated by the Assessing Officer was that, out of the total disallowance of ₹ 61,32,54,820/-, only an amount of ₹ 30,71,97,689/- is sustainable, as the assessee could satisfactorily explain with evidence the balance amount. This does not mean that by making such observation, the Assessing Officer had admitted the claim of the assessee to the extent as mentioned by the Tribunal. Thereafter, the Tribunal, without any explanation, proceeded to hold that the dispute was only with regard to ₹ 28,28,38,187/-. Even if the last two figures are added, the total amount would not be the amount of total disallowance as mentioned by the Tribunal. This itself shows that there is error in the figures shown. Secondly, the Tribunal says that it is an admitted fact that the assessee has filed form 15-I to the extent of ₹ 27,67,63,963/- and it is on that basis, the Tribunal confirmed the finding of the first appellate authority sustaining the disallowance of ₹ 60,74,224/-. Thus we are inclined to think that there are factual mistakes committed by the Tribunal, requiring re-examination of the issues raised by the Revenue in its appeal. For that reason, we set aside the order and remit the matter back to the Tribunal with direction to dispose of the same afresh with notice and after hearing both sides. - Decided in favour of revenue for statistical purposes.

Summary

Issues:
Challenge to order passed by Income Tax Appellate Tribunal regarding disallowance under section 40(a)(ia) of the Income Tax Act for the year 2007-08.

Detailed Analysis:

Issue 1: Disallowance under section 40(a)(ia) of the Income Tax Act
The Assessing Officer disallowed a certain amount under section 40(a)(ia) of the Income Tax Act for the year 2007-08. The first appellate authority partially allowed the appeal, holding that the assessee could furnish 15-I forms for a portion of the amount. The Tribunal, in its order, considered the submissions and evidence on record. It noted that the assessee had filed form 15-I for a significant amount, indicating that tax deduction was not required. The Tribunal emphasized that the onus is on the revenue to prove the tax liability for the remaining amount. It further clarified that failure to deduct tax would attract disallowance under section 40(a)(ia) of the Act. The Tribunal dismissed the Revenue's appeal and confirmed the lower authority's decision to restrict the disallowance to a specific amount.

Issue 2: Challenge to Tribunal's Decision
The Revenue challenged the Tribunal's decision, questioning whether the Tribunal was correct in confirming the Commissioner of Income Tax (Appeals)'s decision to delete the disallowance except for a specific amount. The High Court examined the Tribunal's order and found factual errors in the figures presented. The Court noted discrepancies in the amounts mentioned by the Tribunal and the actual figures from the remand report. Due to these errors, the Court decided to set aside the Tribunal's order and remit the matter back for a fresh disposal with proper notice and hearing for both sides. The Court emphasized the need for a re-examination of the issues raised by the Revenue in its appeal.

In conclusion, the High Court set aside the Tribunal's order and directed a fresh disposal of the matter, highlighting the importance of accurate factual analysis and proper examination of the issues raised by the parties involved.