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TMI Blog2016 (4) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AO of adding commission of Rs. 9,08,111/- u/s 40(a)(ia). 2. On the facts and circumstances of the case and in law, the Ld. CIT-(A) has erred in confirming action of Ld AO of disallowing purchases of Rs. 4,23,875/- treating them as bogus. 2. The facts in brief are that the assessee filed its return of income on 27.09.2010 declaring an income of Rs. 2,13,43,318/-.The assessee was engaged in the business of manufacturing bulk drugs. The case of the assessee was selected for scrutiny and statutory notices were issued u/s 143(2) and 142(1) of the Act and duly served upon the assessee. The AO framed the assessment u/s 143(3) vide order dated 06.03.2013 at Rs. 2,26,75,300/-by making two additions first Rs. 9,08,111/- on account of non de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion and perused the materials on records. We find that the assessee failed to deduct TDS from Rs. 9,08,111/- paid to four parties as stated in para 4 of the assessment order and the AO disallowed the same u/s 40(a)(ia) of the Act. The assessee had satisfied the conditions as imposed by the 1st proviso to section 201(1) of the Act which reads as under:- " [Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is issue to the file of the Id. Assessing Officer to examine the factual matrix and then decide in accordance with law. The assessee be given opportunity of being heard. Even otherwise, insertion of second proviso to section 40(a)(ia) with effect from 01/04/2003 is declaratory and curative in nature with retrospective effect from 01/04/2005, inserted by Finance (No.2) Act 2004, thus, the Assessing Officer is directed to examine the claim of the assessee whether the said amount has been included as income of the payee. Thus, this ground is allowed for statistical purposes." We therefore respectfully following the decisions of the Delhi High Court and of the coordinate bench in assessee's own case, set aside the issue to the file of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght and other records and mere payment by cheque was not sufficient proof .Moreover the said company was not a regular supplier to the assessee 4.2. The Ld.AR for the assessee submitted that the whole addition was based upon the suspicion and conjectures on the basis of information by the VAT department , Govt of Maharashtra. The counsel submitted that the payment was made by cheque which was acknowledged by the supplier, the materials was received which was duly reflected in the stock register, delivery challan, bank statement , copy of ledger account, summary of LDO purchased and consumed during the year and comparative analysis for various years for consumption which were filed as page no. 11 to 35 of the paper book. It was submitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase without carrying any further verification especially when he accepted the submission of the assessee M/S Vinav Trading Co and rejecting the plea for the other without bringing on records any other independent evidence such as specific confirmation from M/S Mahalaxmi and cross examination by the assessee. In our opinion the assessee had explained the purchase made from Mahalaxmi Corporation with all the supporting records which proved that the assessee had received the materials as evidenced by the delivery challan and other records. In view of the above facts, the additions of Rs. 4,23,875/- and AO is directed accordingly. 5. In the result, the assessee's appeal is allowed. Order pronounced in the open court on 26th February, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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