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TMI Blog2016 (2) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... hi High Court in the case of CIT vs Ansal Land Mark Township (P) Ltd reported in (2015 (9) TMI 79 - DELHI HIGH COURT). Thus we deem it fit and appropriate, to set aside the issue to the file of the ld.AO to decide the impugned issue u/s. 40(a)(ia) in the light of applicability of second proviso to section 40(a)(ia) as mentioned herein above and in the light of said decision of the Hon’ble Delhi High Court in the case of Ansal Land Mark Township (P) Ltd (supra). X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to the extent of ₹ 2,07,21,971/ - with properly examining the issues himself or directing the AO to examine whether there was any violation of the provisions of sec. 40(a)(ia) or that there was in fact some understatement of the receipts 10. For that alternatively the Ld. C.I.T erred in directing the AO to make addition of the alleged undisclosed receipts in its entirity as the income of the appellant. 11. For that on the facts and circumstances of the case the order of the Ld. CIT be modified and or cancelled and the assessee be given the relief prayed for. 12. For that the assessee craves to add further grounds before or at the time of hearing. " 3. Out of the aforesaid grounds first 2 grounds are on challenging on the validity of proceedings initiated u/s. 263 of the Act. Ground nos.3 to 7 are with regard to disallowances proposed to be made u/s. 40(a)(ia) of the Act in respect of various expenses incurred by the assessee. Ground nos. 8 to 10 are with regard to disallowances/additions proposed to be made towards understatement of receipts in a sum of ₹ 1,20,49,196/-, which was not the subject matter of show-cause notice issued u/s. 263 of the Act by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act shall have to be invoked. He further argued that second proviso to section 40(a)(ia) has been held to be retrospective in operation by the decision of the Hon'ble Delhi High Court in the case of CIT vs Ansal Land Mark Township (P) Ltd reported in (2015) 61 taxmann.com 45/ 377 ITR 635(Del). 6. With regard to the addition as proposed by the ld.CIT u/s. 263 proceedings towards understatement of receipts to the tune of ₹ 1,20,49,196/-, the ld.AR argued that the same was not the subject matter of show cause notice issued u/s. 263 of the Act by the ld.CIT. He also brought to our attention that this issue was raised before the ld.AR by the ld. CIT for the first time during the course of hearing on 14-02-2014 u/s. 263 proceedings. This is clearly mentioned in page 9 at 2nd para of the ld.CIT u/s. 263. He further argued that the same was never intended by the ld.CIT while issuing show cause notice u/s. 263 on 5.7.2012. Accordingly, he prayed that the same cannot be the subject matter of revision proceedings u/s. 263 of the Act. He placed reliance on certain decisions in support of his contentions:- • In the case of Apollo Tyres Ltd Vs. ACIT reported in (1998) 65 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. However, in the said order the CIT mentioned the hire charges as the ground for revising the assessment. This point had not been mentioned as a ground in the show-cause notice. The High Court held that "in as much as the commissioner had not chosen to show these two points as the errors in making the final order and the final order under section 263 refers only to the inference of hire charges being exigible to tax which was not mentioned at all in the show cause, obviously the assessee had no opportunity to meet that point." [Emphasis supplied] 10. The ratio of the decision, clear from the above observations, is that if a ground of revision is not mentioned in the show-cause notice issued under section 263, that ground cannot be made the basis of the order passed under the section, for the simple reason that the assessee would have had no opportunity to meet the point. ..... )" 6. None appeared on behalf of the revenue. It is seen from the order sheet records that the department has been directed on previous occasions to produce the assessment records and records of the ld.CIT. Thus, the case has been adjourned for want of this record on various occasions. Moreo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce proposed to be made u/s 40(a)(ia) of the Act towards various expenses for non-compliance of TDs provisions, the facts as stated hereinabove remain undisputed and hence the same are not reiterated herein for the sake of brevity. We find that if the payees have included the subject mentioned receipts in their books/returns of income, then second proviso to section 40(a)(ia) of the Act should have to be invoked and no disallowance u/s. 40(a)(ia) of the Act could be made. Section 40(a)(ia) of the Act together with second proviso, is reproduced herein below for the sake of clarity:- Section 40: Amounts not deductible 40. Notwithstanding anything to the contrary in sections 30 to [38], the following amounts shall not be deducted in computing the income chargeable under the had "Profits and gains of business or profession"- (a) in the case of any assessee- (i) *** *** *** *** *** Provided that *** *** *** *** (ia) [ thirty per cent of any sum payable to a resident], on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, [has not been paid on or before the due date specified in sub-section (1) of section 139;] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 40(a) was inserted by the Finance (No.2) Act, 2004, even though the Finance Act, 2012 had not specifically stated that proviso is retrospective in nature. The High Court affirmed the ratio laid down by The Agra Tribunal and held that said proviso is declaratory and curative in nature and has retrospective effect from 1st April 2005". 10. In view of the aforesaid decision of Hon'ble Delhi High Court in the case of CIT vs Ansal Land Mark Township (P) Ltd (supra), we deem it fit and appropriate, to set aside the issue to the file of the ld.AO to decide the impugned issue u/s. 40(a)(ia) in the light of applicability of second proviso to section 40(a)(ia) as mentioned herein above and in the light of said decision of the Hon'ble Delhi High Court in the case of Ansal Land Mark Township (P) Ltd (supra). The assessee is at liberty to adduce fresh evidences, if any, to substantiate its contentions. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly, the grounds raised by the assessee in this regard are allowed for statistical purposes. 11. The Ground nos. 11 & 12 raised by the assessee are general in nature and does not require any a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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