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TMI Blog2021 (10) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) has grievously erred in confirming the disallowance of Rs. 4,50,000/- on account of salary expenses. 4. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the disallowance made u/s.40(a)(ia) of the Act of Rs. 82,200/- on account of advertisement expenses, Rs. 92,800/- on account of embroidery expenses and Rs. 78,595/- on account of fashion show expenses. The appellant craves leave to add, alter, amend any ground of appeal. 3. The 1st issue raised by the assessee in ground No. 1 and 2 is interconnected and therefore we have clubbed both of them together. The assessee assailed that the learned CIT (A) erred in not admitting the additional evidences filed under rule 46A of Income Tax Rule with respect to travelling expenses of Rs. 11,11,349/- and therefore disallowed the same. 4. The facts in brief are that the assessee in the present case is an individual and claimed to be engaged in the business of ladies designer dresses, ethnic wear etc. the assessee in the year under consideration has claimed the travelling expenses of Rs. 11,11,349/- in his profit and loss account. The assessee in support of travelling expenses has filed bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO for fresh adjudication as per the provisions of law. 9. On the other hand the learned DR contended that the assessee cannot take the benefit provided under rule 46A of Income Tax Rules as a matter of right. There were various opportunities granted by the AO during the assessment proceedings but the assessee failed to avail the same. The learned DR vehemently supported the order of the authorities below. 10. We have heard the rival contentions of both the parties and perused the materials available on record. Under the provisions of Rule 46A, there are certain circumstances under which the assessee can file the additional evidences. As such, the onus lies upon the assessee to justify based on the documentary evidence that his case falls under the circumstances specified under Rule 46A of Income Tax Rule. However, from the preceding discussion, the assessee has not brought any cogent reason with the documentary evidence justifying that he was prevented by sufficient cause to file the additional evidences before the AO during the assessment proceedings. It was only contended by the assessee that the accountant who was looking after the income tax proceedings was not competen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Auditor in his Audit Report has also recorded the aforesaid facts. 12.1 In view of the above defects the AO was of the opinion that it was not possible to verify the genuineness of salary expenses. On question by the AO, the assessee agreed for the disallowance of salary expenses in part. Accordingly the AO made disallowance of Rs. 4,50,000/- and added to the total income of the assessee. 13. Aggrieved assessee preferred an appeal to the Ld. CIT(A), who confirmed the order of the AO by observing as under: 6.2 I have considered the facts of the case and (he submissions made by the appellant. The appellant has not given any justification regarding why salary expenses of Rs. 4,50,000/- disallowed by the AO out of the total salary expenses claimed should be allowed now. He has reiterated that many employees had left the job and were not available, and that the signatures were also not available. Under the circumstances, I see no reason to interfere with the decision of the AO and the disallowance of Rs. 4,50,000/- is confirmed. In view of this, ground of appeal I No 2 is dismissed. 14. Being aggrieved by the of the order of Ld. CIT(A), the assessee is in appeal before us. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses shown by the assessee in the year under consideration have increased in comparison to the immediate preceding assessment year. However, the salary expenses have increased more in proportion to the increase in the value of the sales i.e. 24.92% of sales in immediate preceding year to 26.2% in current year. Thus, a cumulative reading of all these facts create a doubt on the genuineness of the expenses shown by the assessee. The learned AR at the time of hearing has not brought anything on record suggesting that the impugned salary expenses were genuine which were based on the documentary evidence. Thus, in the given facts and circumstances, we do not find any reason to interfere in the finding of the authorities below. Hence, we uphold the order of the learned CIT (A). Thus the ground of appeal of the assessee is dismissed. 18. The issue raised by the assessee in ground no. 4 is that the Ld. CIT(A) erred in confirming the disallowance of Rs. 2,53,595/- on account of non-deduction of Tax u/s 40(a)(ia) of the Act. 19. The AO during the assessment proceedings found that the assessee has claimed certain expenses without deducting the TDS under the relevant section of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case relates to the disallowance of the expenses on account of non-deduction of TDS under the provisions of section 40(a)(ia) of the Act. However, the learned AR at the time of hearing before us has submitted that the payees have already included the amount received from the assessee in their financial statements and paid the due taxes thereon. This fact can be verified by the AO from the respective parties. Accordingly, there cannot be any disallowance by virtue of the 2nd proviso to section 40(a)(ia) of the Act. For this purpose, the ld. AR requested that the matter can be referred back to the AO for the necessary verification. 24.1 Undoubtedly, the primary onus lies upon the assessee to deduct the TDS under chapter XVIII-B of the Act. In case, the assessee fails to deduct the TDS, then the assessee is not eligible for deduction of the corresponding expenditure. 24.2 However, the lawmakers have given relief to certain assessee by inserting the 2nd proviso to section 40(a)(ia) of the Act which reads as under: Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s specified under the provisions of law i.e. furnishing the certificate of the CA. 24.8 Now at the time of hearing before us, the learned AR has also not furnished any certificate in form 26A prescribed by CBDT. Now the issue arises, can the matter be set aside to the file of the AO for collecting the necessary evidences from the respective payees to ensure that such payees have paid the taxes on the amount received from the assessee? 24.9 In this regard we note that it is the duty of assessee to deduct appropriate tax from the amount paid/payable to any party i.e. payee if such amount falls under the purview of the provision of chapter XVII (B) of the Act i.e. deduction at source. Further the provision of section 40(a)(ia) of the Act provides that if assessee failed to deduct or failed to deduct appropriate tax on amount paid on which it was liable to deduct tax then such amount will not be allowed as business expenses. However the legislator provided relaxation to the assessee by inserting the 2nd proviso to section 40(a)(ia) on account of failure to deduct the tax if it fulfills the condition prescribed under proviso to section 201(1) of the Act i.e. furnishing a certificate f ..... 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