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TMI Blog2017 (5) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... of income and paid the tax on the same. The assessee is at liberty to submit certificate in Form No.26. - Decided in favour of assessee for statistical purposes. Disallowance of Car running & maintenance expenses, Office telephone and traveling expenses and mess expenses - Held that:- CIT(A) after considering the preceding years gross receipt and expenditure held that adhoc disallowances is not warranted for the relevant assessment year. The gross profit of the current assessment year is more than the G.P. of the previous assessment year. The book result of the assessee was accepted and no specific defects were pointed out. The gross receipt for the current assessment year had increased to ₹ 14.86 crores from ₹ 12.26 crores i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case, the CIT (A) has erred in deleting the disallowance amounting to ₹ 50,000/- made by the A.O. out of mess expenses which were not supported by proper vouchers ? 3. We shall adjudicate the issues ground wise as under: Ground No.1 4 Ground No.1 is directed against the disallowance of ₹ 33,35,974/- by invoking the provisions of section 40(a)(ia) of the Act. The Assessing Officer while completing the assessment under section 143(3) of the Act, disallowed a sum of ₹ 33,35,974/- by invoking the provisions of section 40(a)(ia) of the Act in respect of finance charges paid to Non-banking financial companies. 4.1 Aggrieved, the assessee preferred an appeal before the first appellate authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at where an assessee fails to deduct tax but he is not deemed to be an assessee in default under the first proviso to sec. 201 (1) then, it shall be deemed that the assessee has deducted and paid the tax on the date of furnishing return of income by the resident payee. 4.3.2 In the following cases, it has been held that the provisos so inserted are retrospective:- i) Gujarat Pipavav Port Ltd. (2014) 149 ITD 23 (Rajkot) - held that first proviso inserted in sec. 201(1) w.e.f. 01.07.2012 is applicable retrospectively. ii) Rajeev Kumar Agarwal vs Addl. CIT (2014) 149 ITD 363 (Agra), Brijgopal Madhusudan Bhattad vs. ITO (2015) 155 ITD 90 (Nag.) and CIT vs Ansal Land Mark Township (P) Ltd. (2015) 377 ITR 635 (Del.) - it was held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not adverted to the Explanation to Section 191 nor had applied their mind as to whether the assessee has also failed to pay such tax directly. Thus, to declare a deductor, who failed to deduct the tax at source as an assessee in default, condition precedent is that assessee has also failed to pay tax directly. The fact that assessee has failed to pay tax directly is thus, foundational and jurisdictional fact and only after finding that assessee has failed to pay tax directly, deductor can be deemed to be an assessee in default in respect of such tax.. 7. It is thus argued that the onus is on the revenue to demonstrate that the taxes have not been recovered from the person who had the primarily liability to pay tax, and it is only w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 4.3.6 In view of the order of the Tribunal, the Assessing Officer is directed to verify the above mentioned facts of inclusion of interest income in the return of income filed by payee NBFC s. It is ordered accordingly. Thus, this ground of appeal of the assessee is allowed for statistical purposes. Grounds No. 2 and 3 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l possible leakages of Revenue. 5.1 The Assessing Officer while making the adhoc disallowance of ₹ 50,000/- being mess expenses had given the following findings: Further, on perusal of Trading and Profit Loss Account, it was found that the assessee has debited expenses on account of ₹ 21,49,054/-. On verification of these expenses, it was found that expenses are not completely verifiable on account of the fact that some of the expenses were made in cash. Most of the vouchers are self drawn and not supported by bills etc. Vouchers are also not properly maintained. Some of the vouchers were also not made available for verification. In view of these facts, a lumpsum amount of ₹ 50,000/- is being disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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