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TMI Blog2012 (6) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... iling return of income u/s 139(1) of the Act, therefore, the impugned disallowance u/s 40(a)(ia) made by the AO is deleted. - ITA No.4176/Mum/2010, ITA No.4984/Mum/2010 - - - Dated:- 27-4-2012 - Dinesh Kumar Agarwal, Rajendra, JJ. For Appellant: Dr K Shivaram For Respondent: Ms Rupinder Brar ORDER Per: Dinesh Kumar Agarwal: These cross-appeals by the assessee and Revenue are directed against the order dated 29.3.2010 passed by the Ld. CIT(A) for the Assessment Year 2006-07. Both these appeals are disposed of by this common order for the sake of convenience. 2. Briefly stated facts of the case are that the assessee an individual is engaged in the business of different kinds of electrical, civil and labour contract. The return was filed declaring total income of Rs.54,30,021/-. However, the assessment was completed after making various disallowances/ additions at an income of Rs.6,52,29,751/-, vide order dated 30.12.2008 passed under section 143(3) of the Income Tax Act, 1961(the Act). On appeal, the Ld. CIT(A) partly allowed the appeal. 3. Being aggrieved by the order of the Ld. CIT(A), the assessee and Revenue both are in appeal before us. ITA No.4176 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions, remand report of the AO and other relevant material upheld the addition made by the AO. 11. At the time of hearing, the Ld. Counsel for the assessee while reiterating the same submissions as submitted before the AO and the Ld. CIT(A) further submits that the assessee did prepare confirmation letters, due to oversight the assessee failed to file the same to the AO. However, the same confirmations letters were filed before the Ld. CIT(A). The Ld. CIT(A) while agreeing that the loans are coming from earlier years observed that there is mismatched in the figures and hence he confirmed the addition made by the AO. He further submits that since the loans are coming from the earlier years, no addition can be made in this year and hence the above addition made by the AO and sustained by the Ld. CIT(A) be deleted. In alternative, he submits that the issue may be restored back to the file of the AO for fresh adjudication. 12. On the other hand, the Ld. DR supports the order of the AO and the Ld.CIT(A). 13. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that there is no dispute that the unsecured loans in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayee bank draft, exceeds twenty thousand rupees, and that the proviso to the said section did not apply to the assessee. He further observed that the AO has made disallowance in a very general nature, no instances of violation of Income Tax Act regarding payment made has been defined. He further observed that since, the appellant has himself stated that the disallowance has been made because all the payment could not be verified and they being on higher side, the Ld. CIT(A) reduced the disallowance to 10% of the payments and accordingly partly allowed the relief. 16. At the time of hearing, the Ld. Counsel for the assessee while reiterating the same submissions as submitted before he AO and the Ld. CIT(A) further submits that no cash payment of more than Rs.20,000/- at a time was made in respect of the expenses pointed out by the AO. He further submits that the assessee has filed complete details of all these expenses. He further submits that in the remand report the AO did not disagree that none of the payments were above Rs.20,000/-. He further submits that since genuineness of payment has not been doubted, no adhoc disallowance can be made and hence the disallowance sustained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re), Rs.1,44,29,588/- and Rs.40,91,094/-. 20. Brief facts of the above issue are that the AO observed that the assessee has claimed expenses on account of Transport octroi Rs.22,16,703/-, Hire charges (machinery) Rs.8,18,656/-, Legal Professional fees Rs.1,21,565/- and labour charges Rs.4,66,15,260/. He further noted that in the audit report it is mentioned that TDS deducted Rs.2,96,316/- paid on 8.6.2006 on rest of the amount since cash is paid various workers labours by the company, it is not possible to verify default on account of u/s 40(a)(ia). According to the AO as per the provisions of section 40(a)(ia) of the Act, the TDS on the expenses up to the month of February of the Financial Year has to be paid any time in the Financial Year up to 31st March. If the same is not paid in the Financial Year or paid in the next financial year, the expenditure cannot be allowed in the previous year for which the expenses are claimed. He further observed that as regard the expenses incurred/provided in the month of March of the financial year, the corresponding TDS can be paid in time before the due date of the filing of the return of income, then the expenses are allowable in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in CIT V/s Virgin Creations in ITAT NO.302 of 2011 GA 3200/2011 judgment dated 23.11.2011 has held that the amendment made u/s 40(a)(ia) requires to be treated with retrospective operation. He also placed on record the copy of the said judgment. He further submits that since there is no contrary decision of any other High Courts including the Hon ble Jurisdictional High Court, therefore, in view of the ratio of the decision in the case of CIT V/s Highway Construction Co.(P.) Ltd. (1996) 217 ITR 234 (Gau) and ACIT V/s Aurangabad Holiday Resorts (P.) Ltd. (2009) 118 ITD 1 (Pune) , the decision of the Hon ble Calcutta High Court is binding on the Tribunal. The reliance was also placed on the decision of the Tribunal in (a) Samanwaya V/s ACIT (2009) 34 SOT 332 (Kol) , (b) in Gautam Khanna V/s ITO in ITA No.1969/Kol/2010 (AY:2006-07) dated 27.1.2012 and (c) ITO V/s Firdous Kalim, in ITA No.1420/Kol/2010 (AY: 2007-08) dated 29.2.2012. He, therefore, submits that the disallowance made by the AO and sustained by the Ld. CIT(A) be deleted. 22. On the other hand, the Ld. DR while relying on the order of the AO submits that since the TDS payment has been made beyond statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has held as under : 19. In view of the above, we hold following the decision of the Hon ble Calcutta High Court that Amendment to the provisions of Sec.40(a)(ia) of the Act, by the Finance Act, 2010 is retrospective from 1.4.2005. Consequently, any payment of tax deducted at source during previous years relevant to and from AY 05-06 can be made to the Government on or before the due date for filing return of income u/s.139(1) of the Act. If payments are made as aforesaid, then no deduction u/s.40(a)(ia) of the Act can be made. Admittedly in the present case the Assessee had deposited the tax deducted at source on or before the due date for filing return of income u/s.139(1) of the Act and therefore the impugned disallowance deserves to be deleted. We order accordingly and allow the appeal by the Assessee. 26. Respectfully following the above decisions, we hold that since the assessee paid the TDS amount of Rs.2,96,316/- on 8.6.2006 before the due date of filing return of income u/s 139(1) of the Act, therefore, the impugned disallowance u/s 40(a)(ia) made by the AO is deleted. The grounds taken by the assessee are, therefore, allowed. 27. Ground No.7 is against the sust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s saving bank account shows credit Rs.56,504/- which was claimed by the assessee as income tax refund. In the absence of any supporting evidence, the AO treated the same as unexplained cash credit and added to the total income of the assessee. On appeal, the Ld. CIT(A) while agreeing with the views of the AO confirmed the addition made by the AO. 37. At the time of hearing, the Ld. Counsel for the assessee submits that since the credit in the bank account represents income-tax refund, therefore, necessary directions may be given to the AO to verify the same from the record and after verification due relief may be given to the assessee which was not objected to by the Ld. DR. 38. That being so and keeping in view the nature of deposit i.e. income tax refund, we consider it fair and reasonable that in the interests of justice the matter should go back to the file of the AO and accordingly, we set aside the orders passed by the Revenue authorities on this account and send back the matter to the file of the AO to consider the same afresh in the light of our observations herein above and according to law after providing reasonable opportunity of being heard to the assessee. The grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) in deleting the addition be upheld. 45. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that in the remand report the AO has observed as under : The AO during the assessment proceedings disallowed the claim made by the assessee since the assessee failed to discharge the onus of proving the credit, the amount of credit appearing in the bank and treated the same within the meaning of section 68 of the Act and added to the total income. The contention of the assessee during the appellant proceedings has stated that he received the gift from his father Mr. S Chellapan Pillai who had sufficient agricultural land at his native place and sufficient agricultural land and in order to give gift to the assessee. The assessee has also submitted the documentary evidence such as copy of gift deed on stamp paper. The same may be treated on merits. 46. In the absence of any contrary material placed on record by the Revenue and keeping in view that the assessee has also received gift from his father through banking channel and has also filed supporting evidence which has not been controverted by the Revenue, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. However, in the present case, the Assessing Officer has not examined whether the debt has, in fact, been written off in the accounts of the assessee. When a bad debt occurs, the bad debt account is debited and the customer's account is credited, thus, closing the account of the customer. In the case of companies, the provision is deducted from sundry debtors." Applying the ratio of the above decision to the facts of the present case, we are of the view that the assessee has rightly written off the amount of Rs.2,77,290/- in its books of account and accordingly we decline to interfere with the order of the ld. CIT(A) in deleting the disallowance of Rs.2,77,290/- made by the AO. The ground taken by the Revenue is, therefore, rejected. 52. Ground No.3 is against the deletion of disallowance u/s 40A(3) Rs.16,61,945/-. 53. In view of our findings recorded in paragraph 18 of this order, wherein we have deleted the disallowance sustained by the Ld. CIT(A) on this account, following the same, the ground taken by the Revenue is, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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