2015 (10) TMI 1757 - AT - Income Tax

Disallowance u/s 40(a)(ia) - whether TDS disallowance applies only to amounts payable as on 31st March and not to amounts already paid during the year - CIT(A) deleted the disallowance - Held that - The issue of paid or payable as envisaged under section 40(a)(ia) of the Act has been considered by Pune Bench of Tribunal in various decisions and ait has been held that in view of the decisions of various Hon ble High courts on this issue, the provisions of section 40(a)(ia) of the Act are attracted even where the payments in respect of the expenditure claimed is made before the close of year. We find the issue of paid / payable as envisaged under section 40(a)(ia) of the Act has been dealt with by Pune Bench of Tribunal in Sangamner Taluka Sahakari Dudh Utpadak 2015 (3) TMI 265 - ITAT PUNE and Prakriya Sangh Maryadit Vs. TRO (2015 (3) TMI 265 - ITAT PUNE), wherein, the issue was decided against the assessee. Deduction on account of expenditure u/s 194C - plea raised by the assessee that it had made individual payments to the truck owners, which were less than ₹ 20,000/-, even in some cases, whether the payments were more than one, the aggregate of payments during the year did not exceed ₹ 50,000/- - Held that - s. The payments shown against such numbers cannot be allowed as a deduction, where the assessee has failed to furnish the information. Similarly, the verification exercise carried out by the Assessing Officer revealed that the PAN numbers given by the assessee did not match with the PAN numbers available in the computer system and in view of the said discrepancies, onus was upon the assessee to explain the same and to establish its case of having individually paid the amounts to different people of amounts not exceeding ₹ 50,000/- in a year. Where the assessee fails to discharge the onus cast upon him, then no benefit of provisions of the Act can be allowed to the assessee. In the entirety of the above said facts and circumstances, we deem it fit to restore this issue back to the file of Assessing Officer, who shall confront the assessee with the results of verification exercise carried out and as referred in the assessment order and after considering the reply of assessee, to decide the issue as per facts and in accordance with law. We find that though the assessee had received Form No.15I from the transporters for non-deduction of tax at source, but the same were not filed before the Commissioner. Though the requirement of the Act is that the said Form No.15I should be filed before the Commissioner and in such cases, there is no requirement for deduction of tax at source. We hold that even where the assessee has failed to furnish the said Form No.15I before the Commissioner within the stipulated time, no disallowance could be made under section 40(a)(ia) of the Act, in view of the ratio laid down by the Hon ble High Court of Gujarat in CIT Vs. Valibhai Khanbhai Mankad (2012 (12) TMI 413 - GUJARAT HIGH COURT). The assessee claims that it had furnished the said Form No.15I with the Assessing Officer and he has failed to consider the same. We direct the Assessing Officer to verify the assessment records and allow the claim in line with the directions of Hon ble High Court of Gujarat. - Decided in favour of assessee by way of remand. Addition u/s 68 - receipt of gifts - Held that - The concept of receiving gift from wife is acceptable. However, onus is upon the assessee, to establish the identity of the person and also the creditworthiness of the person giving the gift. The first aspect of the issue is that the gift received by any person should be irrevocable. However, in the case of the assessee before us, the said gift if claimed to be received from his wife, has been declared as a liability by the assessee, in case the amount is liable to be paid by the recipient, then it cannot be held to be a gift received by the recipient, since there is no liability in transaction of gift. Secondly, onus is upon the assessee to establish that the person who had given the said gift has the capacity to give the gift. The perusal of return of income filed by the wife of the assessee, reflects that for assessment year 2006-07, net income of the wife of assessee was ₹ 1,20,650/-, for assessment year 2007-08, it was ₹ 1,25,040/-and for assessment year 2008-09, it was ₹ 1,43,350/-. For the instant assessment year i.e. assessment year 2009-10, the total income declared by the wife of assessee was ₹ 1,57,478/- as against receipts from business of ₹ 4,32,680/-. Undoubtedly, wife of the assessee had shown the gift of ₹ 5,00,000/- and debited to her capital account in the balance sheet, but the assessee has failed to explain the source of the said gift. Looking at the income declared by the wife of assessee from year to year, we find no merit in the claim of the assessee and rejecting the same, we uphold the addition of ₹ 5,00,000/- on account of two aspects of the issue as discussed above. - Decided against assessee.

Summary

Issues Involved:
1. Deletion of disallowance under section 40(a)(ia) of the Income Tax Act, 1961.
2. Applicability of TDS provisions under section 194C of the Income Tax Act, 1961.
3. Addition under section 68 of the Income Tax Act, 1961 for unexplained cash credit.

Issue-wise Detailed Analysis:

1. Deletion of Disallowance under Section 40(a)(ia) of the Income Tax Act, 1961:
The Revenue contested the deletion of disallowance made under section 40(a)(ia) by the CIT(A), who held that the provisions were applicable only to amounts payable as on 31st March and not to amounts already paid during the year. The Tribunal referenced its decision in Sangamner Taluka Sahakari Dudh Utpadak and Prakriya Sangh Maryadit Vs. TRO, which stated that section 40(a)(ia) applies irrespective of whether the amount is paid during the year or is payable as on 31st March. Consequently, the Tribunal reversed the CIT(A)'s order and allowed the Revenue's appeal.

2. Applicability of TDS Provisions under Section 194C of the Income Tax Act, 1961:
The assessee argued that many payments made to transport subcontractors did not exceed Rs. 20,000 at one time or Rs. 50,000 in aggregate during the financial year, thus TDS was not required under section 194C. Additionally, the assessee claimed that TDS was not attracted where PAN numbers were furnished under sub-section (6) of section 194C. The Tribunal noted that while the assessee provided a list of truck drivers and payments, the Assessing Officer found discrepancies, such as invalid PAN numbers and incorrect vehicle details. The Tribunal emphasized that the onus was on the assessee to establish its claim comprehensively. The Tribunal directed the Assessing Officer to confront the assessee with the verification results and decide the issue based on facts and law. The Tribunal also addressed the submission of Form No.15I, stating that even if these forms were not filed with the Commissioner, no disallowance under section 40(a)(ia) could be made, following the Gujarat High Court's decision in CIT Vs. Valibhai Khanbhai Mankad.

3. Addition under Section 68 of the Income Tax Act, 1961 for Unexplained Cash Credit:
The assessee claimed a gift of Rs. 5,00,000 from his wife, which was shown as a liability in his accounts. The Assessing Officer and CIT(A) did not accept this contention due to the lack of evidence establishing the correctness and genuineness of the transaction. The Tribunal noted that the gift should be irrevocable and the assessee had to prove the identity and creditworthiness of the donor. The Tribunal found that the wife's income did not support her capacity to give the gift. Consequently, the Tribunal upheld the addition of Rs. 5,00,000 under section 68.

Conclusion:
The Tribunal allowed the Revenue's appeal, reversed the CIT(A)'s order regarding the disallowance under section 40(a)(ia), and upheld the addition under section 68. The cross-objections by the assessee were partly allowed for statistical purposes and partly dismissed.