9911796707
TMI Blog2013 (11) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... material found for the years under consideration, but was made by extrapolating the findings of the subsequent years, which is nothing but a mere guess work on the basis of suspicion and thereby the AO acted without satisfying the pre-requisite conditions. Before making disallowance under section 40(a)(ia) of the Act, the pre-requisite conditions are that the AO should bring material on record to show that the assessee was liable to deduct tax in respect of the expenditure specified in that section, the assessee actually defaulted in deducting TDS or defaulted in making payment of TDS after deduction, and the assessee claimed deduction in respect of such expenditure - In the instant case, the AO failed to discharge the burden which was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation with regards to the TDS on freight payment made as requested vide notices issued under section 142(1) of the Act on 15.7.2011 and 24.10.2011. Therefore, the AO has proceeded to estimate the disallowance and made disallowance of 0.50% of the total freight payments made by the assessee-company invoking the provision of section 40(a)(ia) of the Act in both the years under appeals. 4. In appeal before the learned CIT(A), the assessee argued that the AO has estimated the amount of disallowance under section 40(a)(ia) of the Act by applying the findings of TDS defaults in subsequent years as no material was found during search indicating any TDS default. It was submitted that the AO cannot presume that the material similar to material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. 6. After considering rival submissions and perusing the material available on record, we find that during the course of search on the analysis of server data of the assessee, it was observed that the assessee has made payment for freight charges without deducting the TDS, and therefore, disallowance was made under section 40(a)(ia) in the assessment years 2007-08 to 2010-11. The AO extrapolated the data for these assessment years estimating the disallowance in the present current years 2005-06 and 2006-2007 at the rate of 0.50% of the total freight payments made by the assessee during these years, and thereby made disallowance of Rs.11,83,268/- in A.Y.2005-2006 and Rs. 16,93,385/- for A.Y.2006-07. 7. On appeal, the learned CIT(A) d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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