YASHODHAN ASSOCIATES, Pune V. Deputy Commissioner of Income Tax, Circle-2, Pune, Pune

ITA 132/PUN/2023

AI Insights

The case involves Yashodhan Associates appealing against the order of the National Faceless Appeal Centre (CIT(A)/NFAC), which upheld the intimation order passed by the AO regarding disallowance of expenses due to non-deduction of TDS on interest expenses. The AO had disallowed a sum of \\u20b970,78,214 under section 40(a)(ia) of the Act, citing non-compliance with TDS deduction requirements. The CIT(A) dismissed the appeal, emphasizing the appellant's failure to meet statutory requirements under section 40(a)(ia) and related rules. The ITAT found that the non-compliance was a curable defect and not a ground for permanent disallowance, thus remanding the matter back to the AO for re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136280 (ITAT-PUNE)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-04-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 01-02-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 40(a)(ia); 201(1); 143(1); 250; 201

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “बी” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE “B” BENCH, PUNE BEFORE HON’BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No. 132/PUN/2023 निर्धारण वर्ा / Assessment Year : 2019-20 Yashodhan Associates, 1204/14, Off Ghole Rd., Shivajinagar - 411004 PAN: AAAFY5240N . . . . . . . अपऩलधथी / Appellant बनाम / V/s Asstt. Director of Income Tax CPC, Bengaluru. . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : Shri Sharad Vaze Revenue by : Shri M. G. Jasnani सपिवधई की तधरऩख / Date of conclusive Hearing : 03/04/2023 घोर्णध की तधरऩख / Date of Pronouncement : 03/04/2023 आदेश / ORDER PER G. D. PADMAHSHALI, AM; This appeal of the assessee for the assessment year [for short “AY”] 2019-20 is assailed against the first appellate order of National Faceless Appeal Centre, Delhi [for short “CIT(A) /NFAC”] dt. 20/12/2022 passed u/s 250 of the Income-tax Act,1961 [for short “the Act”], which upheld the order of intimation dt. 29/09/2020 passed u/s 143(1) by the ADIT-CPC, Bengaluru [for short “AO”]. Yashodhan Associates ITA No.132/PUN/2023 AY:2019-20 ITAT-Pune Page 2 of 4 2. We have heard the rival contentions of both the parties; and subject to the provisions of rule 18 of ITAT Rules, 1963 perused the material placed on record. We note that, the appellant had filed its return of income on 30/06/2020 disclosing a total income of ₹13,64,523/- which was e-processed u/s 143(1)(a) of the Act by disallowing a sum of ₹70,78,214/- u/s 40(a)(ia) on account of non- deduction of TDS on interest expenses of ₹2,35,94,046/- paid/credited to Yashodhan Development Corporation. Admittedly, the effective failure of the appellant firm to file Form 26A electronically combined with failure of an accountant to file Annexure-A thereto electronically has resulted into impugned disallowance u/s 40(a)(ia). 3. We also note that, in an appeal before first appellate authority, the assessee submitted scan copy of aforestated documents demonstrating the compliance of rule 31ACB of IT Rules, 1962 which did not inspire the Ld. CIT(A) to outdo its mother body notification No 11/2016 dt. 02/12/2016, consequently the Ld. CIT(A) dismissed the appeal of the appellant with the following observation; Yashodhan Associates ITA No.132/PUN/2023 AY:2019-20 ITAT-Pune Page 3 of 4 “5.4 It is thus evident that the appellant has failed to satisfy the statutory requirement as envisaged in section 40(a)(ia) and first proviso to section 201 of the Act read with Rule 31ACB. The CBDT has prescribed Form No. 26A for CA certificate to be obtained and to be furnished online by the payer evidencing compliance by payee. From the above discussion, it transpires that the assessee can be granted immunity from disallowance of expenses on account of non/short deduction of Taxes provided that the assessee furnishes the certificate in the prescribed form and following the prescribed procedure. Thus, the onus is upon the assessee, which it has failed to comply with all the condition of first proviso to section 201(1) of the Act. 5.5 As per the above discussion the statutory requirement in the case has not been satisfied and thus the appellant is not eligible for the relaxation as provided under the first proviso to section 201 of the Act. The action of the AO is, therefore confirmed. The Ground of appeal No. 1 is thus dismissed.” 4. Albeit the department did not dispute the contents of documents placed at page 35 to 37 of paper book, it ostensibly transpires that, Form 26A & Annexure-A thereto gloomily failed to showcase due compliance of first proviso to section 201 r.w.r. 31ACB of IT Rules, 1962. 5. Having said so, in our considered view however, the fiduciary liability thrusted upon assessee u/c XVII of the Act is aimed to check on probable tax evasion by the recipient payee as an anti-evasion mechanism and certainly not meant for taxing doubly in the hands of payer too. Yashodhan Associates ITA No.132/PUN/2023 AY:2019-20 ITAT-Pune Page 4 of 4 6. In the light of aforesaid discussion, we hold such non- compliance or failure to file requisite forms electronically is a curable defect or failure, hence such can never saddle the assessee with permanent disallowance by closing the doors of compliance forever. For the reason we restore the matter back to Ld. AO to reconsider and decide the issue a fresh in terms of section 40(a)(ia) r.w.s first proviso to section 201 of the Act r.w.r 31ACB of IT Rules, 1962 after according an opportunity to appellant for electronic submission of Form 26A and Annexure-A thereto by the same accountant who has issued the certificate in terms of CBDT Notification (supra). Thus we order accordingly. 7. Resultantly, the appeal of the assessee ALLOWED FOR STATISTCIAL PURPOSE in aforestated terms. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Monday 03rd day of April, 2023. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 17 th day of April, 2023. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1.अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT -1,Pune 4. The CIT(A)-NFAC, Delhi (India) 5. DR, ITAT, Pune Bench ‘B’, 6. ग र्डफ़ इल / Guard File. Ashwini आिेश नुस र / By Order वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्य य दिकरण, पुणे / ITAT, Pune.