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TMI Blog2018 (8) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals were taken up together and are being disposed off by way of this consolidated order. First we take up the appeals pertaining to the assessment year 2010-11 i.e. ITA 1007/Ind/2016. 2. The assessee has raised following grounds of appeal: 1. The assessment order is invalid, barred by limitation, illegal, bad in law, void-ab-initio and therefore liable to be quashed. 2. The Ld. CIT(A) erred in sustaining the assessment order which is invalid, barred by limitation, illegal, bad in law, void-ab-initio and therefore liable to be quashed. 3. The Ld. CIT(A) erred in making enhancement income of ₹ 10,00,000/- on account of investment in building by not allowing deduction u/s 80IB(11C) on said amount offered in survey. 4. The Ld. CIT(A) erred in making enhancement income of ₹ 15,01,852/- in excess cash by not allowing deduction u/s 80IB(11C) on said amount offered in survey. 5. The Ld. CIT(A) erred in confirming in addition of ₹ 1,52,588/- for non deduction of TDS on securities charges. 6. The Ld. CIT(A) erred in confirming in addition of ₹ 55,000/- for non deduction of TDS on AMC charges paid to Siemen Ltd. 7. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an opportunity of being heard shall be provided before enhancement of assessment. Also, under Explanation to section 251, it has been clarified that in disposing of an appeal, the CIT(A) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant. There is no doubt that the CIT(A) can enhance the assessment . It is undisputed that within the four corners of the sources processed by the AO, the CIT(A) can enhance the assessment. This power must, at least, fall within the words enhance the assessment , if they are not to be rendered wholly nugatory. 2. The power of enhancement has been a matter of judicial consideration. It has been settled by the various courts that the powers of enhancement are wide, but they are not unfettered. Ld CIT(A) can do enhancement of assessment . So he can do enhancement only on points which were subject matter of assessment. 3. The appellant relies on the following cases: a. CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC ) , wherein it was held that It was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t matter of appeal before him nor was the issue considered by the Assessing Officer by framing an assessment order. Instead the Assessing Officer termed the same as commission on the sale of land. Thus, order of the Commissioner (Appeals) could not be sustained. The Commissioner (Appeals) cannot touch upon an issue which does not arise from the order of assessment and was outside the scope of the order of assessment. In the present case, the issue regarding deduction u/s. 80IB(11C) was not before the ld CIT(A) nor did it arise out of the order of assessment. The only addition which was challenged before the ld CIT(A) was disallowance u/s. 40(a)(ia). The appellant therefore claims that the ld CIT(A) exceeded his jurisdiction in making an enhancement in the given case. The addition is therefore unjustified and uncalled for. II. Deduction u/s. 80IB(11C) on surrender during survey u/s. 133A A survey u/s. 133A was conducted at the business premises of the assessee firm. The surrender during survey was on account of unaccounted cash and investment in building. The very important fact as quoted by ld Assessing Officer is as under (at pg. 2 para 2): ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,49,949 2. As per the provisions of Section 40(a)(ia), the amount from which tax is bound to be deducted and not deducted from payment of chargeable income to a resident are not allowed as deduction. Thus, the ld Assessing Officer referring to the above provisions disallowed the total amount of ₹ 3,49,949/- 3. The appellant submitted that its income is eligible for deduction u/s 80IB(11C), so any disallowance u/s 40(a)(ia) which will be added as eligible income of the assessee; on which assessee would get deduction u/s 80IB(11C). 4. The ld CIT(A), confirmed the disallowance. SUBMISSIONS The submissions of the appellant are two fold: I. In any case, deduction is admissible for disallowance u/s. 40(a)(ia) II. Disallowance u/s. 40(a)(ia) is not called for. I. Chapter VI-A is admissible on the profit so enhanced by the disallowance In any case, and without prejudice, if the profit is enhanced u/s. 40(a)(ia), the effect of same would be that the eligible income from Business or Profession shall be enhanced from the hospital business. The same would qualify for deduction u/s. 80IB(11C). 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso The above proviso is also applicable in our case as the PAN numbers of the parties are provided on PB 13-14: a. Hoswin Incinerator Pvt ltd PAN AACCH1534K b. Siemens Ltd PAN AAACS0764L Disallowance in our case, would be triggered, only when the deductees failed to pay their taxes directly to the government. The department ought to have verified that the deductees had paid the tax directly or not. The same is supported by : a. Ansal Land Mark Township (P.) Ltd 377 ITR 635 Second Proviso to section 40(a)(ia) is declaratory and curative and it has retrospective effect from 1-4-2005. Thus it is applicable for our appeal which is for A.Y. 2010-11. b . Malwa Education [ITA No. 917/ IND/ 2016 Order dt. 10.01.2018] Following the judgment of Delhi High Court in Ansal Land Mark (supra), the matter was remanded to the ld Assessing Officer to examine whether the deductee has paid the taxes directly or not. Thus, in light of the above submissions, it is prayed that the addition on account of Sec 40(a)(ia) amounting to ₹ 3,49,949/- may kindly be deleted or in alternate the matter may be remanded back to ld Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the hospital. The assessee has not placed any second material suggesting that the amount pertained to the receipts from hospital. Therefore, we do not see any reason to interfere into the decision of the Ld. CIT(A). Further, the contention that the Ld. CIT(A) was not empowered for enhancement as this was not subject matter of the assessment. This averment of the assessee is contrary to the record. The assessee itself had claimed deduction on this amount u/s 80IB(11C) of the Act. Therefore, the contention is devoid of any merit, hence rejected. Ground Nos.3 4 of the assessee are dismissed. 8. Ground Nos.5 to 7 relates to the addition made by invoking provisions of section 40(a)(ia) of the Act for nondeduction of TDS on security charges. Ld. Counsel for the assessee reiterated the submissions made in the written submissions. 9. Ld. D.R. opposed these submissions. 10. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The submission of the assessee is that these amounts have been duly declared by the payee. We find merit in the contention of the assessee that the disallowance cannot be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comply with a notice under section 22(4)/23(2) of the Indian Income Tax Act, 1922 or under section 142(1)/143(2) of the Income Tax Act, 1961 No.____ __ Have concealed the particulars of your income or __________furnished inaccurate particulars of such income. You are hereby requested to appear before me at 11.00A.M. on 08.07.2016 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorised representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271. Yours faithfully, Sd/- ( H.P. Meena) * Delete inappropriate words and Paragraphs Commissioner of Income Tax (Appeals) 15. Ld. Counsel for the assessee has relied upon the judgement of the Hon'ble Karnataka High Court rendered in the case of CIT Vs. Manjunath Cotton Mills 359 ITR 565 and also the judgement of the Hon'ble Supreme Court in the case of CIT Vs., Reliance Paper Products 322 ITR 158. From the above notice issued by Ld. CIT(A), ..... X X X X Extracts X X X X X X X X Extracts X X X X
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