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TMI Blog2016 (5) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... of income for AY 2012-23 on 31/03/2013 declaring total income of Rs. 14,00,570. In an order of assessment passed u/s.143(3) of the Act, dated 29/01/2015, the AO determined the total income of the assessee at Rs. 2,17,39,410. The Ld. AO made the following additions in the said assessment order : On account of disallowance u/s 40(a)(ia) of the Act Rs.1,99,30,315 On account of interest u/s 244A of the Act Rs. 4,08,524 Total Rs.2,03,38,389 4. As already stated the assessee is in the business of executing civil contracts. As a contractor it debited an amount of Rs. 1,99,84,060/-under the head 'cost of execution ' and deducted the TDS as per the following details :- TABLE-1: Details of payment of execution charges w/o TDS SI. no. Name of the payees Amount paid (Rs) TDS (Rs) 1 Ananda Sankar Sahoo 18,80,188 18,803 2 Chitaranjan Dwirbedy 2,75,835 2,759 3 Prasanta Kumar Sahoo 5,73,796 5,738 4 Kanchan Bala Biswal 5,57,705 5,577 5 Maheswar Parida 31,08,762 31,088 6 Manmath Kumar Bhutia 48,92,262 48,924 7 Sushant Kumar Behara 9,11,590 9,116 8 Babuli Behera 12,13,786 12,138 9 Dilip Kumar Patra 56,800 568 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows :- Parties who gave 26A form (Available as on date) 9. It was submitted that out of 18 parties the assessee collected form 26A from 6 parties where the payment was Rs. 1,14,92,300 and the balance 12 parties where the payment was Rs. 84,38,015 the form 26A could not be collected. This is because the other parties did not cooperate with the assessee and hence the copies of form 26A could not be collected from them. It was also contended that the assessee did not have powers to force the other parties to submit Form 26A and therefore due to lack of statutory powers the assessee could not collect the same. 10. It was argued that the Assessing Officer and first appellate authorities are vested with statutory powers u/s 133(6) or 131 and or other provisions and they could have made inquires with the parties or their respective Assessing Officer. In this regard it was submitted that all the relevant details of the payees were furnished and are available on record with their PAN and AO details. 11. It was pointed out that ITAT, Kolkata in the case of Ramakrishna Vedanta Math v. Income-tax Officer, Ward 59 (1), Kolkata, [2012] 24 taxmann.com 29 (Kol.) has taken a view that once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt of the judgment of Hon 'ble Allahabad High Court in Jagran Prakashan Ltd.'s case (supra) and in the absence of anything contrary thereto from Hon'ble jurisdictional High Court, there is a paradigm shift in the manner in which recovery provisions under section 201 (1) can be invoked. As observed by Their Lordships, the provisions of Section 201(1) cannot be invoked and the "tax deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly". Once this finding about the non payment of taxes by the recipient is held to a condition precedent to invoking Section 201(1), the onus is on the Assessing Officer to demonstrate that the condition is satisfied. No doubt the assessee has to submit all such information about the recipient as he is obliged to maintain under the law, once this information is submitted it is for the Assessing Officer to ascertain whether or not the taxes have been paid by the recipient of income. This approach, in our humble understanding, is in consonance with the law laid down by Hon 'ble Allahabad High Court. 9. It is important to bear in mind that the lapse on account of non dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and dispose of the matter by way of a speaking order. We direct so." 12. It was submitted that the above decision ITAT Kolkata in the above mentioned case will also apply for the purposes of Section 40(a)(ia) of the Act. Further reliance was also placed on the decision of the ITAT Kolkata in the case of Vas Electronics Vs. ACIT, ITAT Kolkata in I.T.A No. 662/Kol/2013 dated 24-11-2015 wherein it was held as follows: "3. Briefly stated facts are that assessee has claimed labour charges at Rs. 55, 440/-, carriage inward charges amounting to Rs. 62,07,498/- and hire charges amounting to Rs. 29, 12, 123/- in the P&L Account, but no TDS was deducted u/s. 194C of the Act. Ld. Counsel for the assessee before us now clearly admitted that the assessee has not deducted TDS u/s. 194C but he is obliged to deduct TDS u/s. 194C of the act. The AO applied the provisions of section 40(a)(ia) of the Act on the above three payments and made disallowance. Aggrieved, assessee preferred appeal before CIT(A) , who also confirmed the action of AO. Aggrieved, now assessee is in second appeal before us. 4. At the outset, Ld. Counsel for the assessee fairly conceded the grounds but requested only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has held that the second proviso to Sec.40(a)(ia) of the Act will apply in the present case and that applicability of the second proviso to Sec.40(a)(ia) of the Act which was introduced by the Finance Act, 2012 w.e.f. 1.4.2013 was retrospective in operation and was to apply w.e.f. 1-4-2005, being the date from which sub-clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. The Hon'ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (I) Pvt.Ltd., in ITA No.160/2015 judgment dated 26.8.2015 has taken the view that the insertion of the second proviso to Sec.40(a)(ia) of the Act is retrospective and will apply from 1.4.2005. Once it is held that the Assessee is entitled to the benefit of 2nd proviso to Sec.40(a)(ia) of the Act, the CIT(A) ought to have directed the AO to verify whether the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same. To the extent the recipients from the Assessee have so included the sum in their returns of income and filed the same, no disallowance u/s.40(a)(ia) of the Act ought to have been sustained by the CIT(A). The CIT(A) ought to have als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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