Lal Chand Manglani, Jaipur V. Income Tax Officer , Ward -3 (3)

ITA 236/JPR/2023

AI Insights

The case involves Lal Chand Manglani, who appealed against the disallowance of interest expenses amounting to Rs. 6,61,058/- by the Income Tax Officer under section 40(a)(ia) of the Income Tax Act, 1961. The disallowance was initially confirmed by the CIT(A) and arose from a revision order under section 263, which found that the assessee failed to deduct TDS on interest payments to Bajaj Finance Ltd. The Tribunal considered the retrospective application of the second proviso to section 40(a)(ia) and section 201(1), which could exempt the assessee from being considered in default if the payee had included the interest in their income and paid the due taxes. The Tribunal directed a re-examination of the matter by the Assessing Officer, focusing on the compliance with procedural requirements and the substantive merits of the case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132263 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-09-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 16-04-2023
• Other Referred Cases: CIT vs. Ansal Land Mark Township (P) Ltd., Rajeev Kumar Agarwal vs. Addl CIT, Columbus Overseas Ltd vs. DCIT, ACIT vs. Shiv Kripa Hotels
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Opportunity of being heard; TDS; Set aside
• Section: 143(3); 40(a)(ia); 201(1); 143(1); 201; 194A; 13

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 236/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2012-13 Lal Chand Manglani D-86, Chandpole, Anaj Mandi, Jaipur cuke Vs. Income Tax Officer Ward 3(3), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACKPM 7630 A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Manish Agarwal (CA) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 01/08/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 30/08/2023 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 15/02/2023 [here in after (NFAC)] for assessment year 2012-13 which in turn arise from the order dated 15.11.2017 passed under section 143(3) r.w.s 263 of the Income Tax Act, by the ITO-3(3), Jaipur. 2. In this appeal, the assessee has raised following grounds: - 2 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO “1. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in confirming disallowance of interest to the tune of Rs.6,61,058/- paid by assessee to Bajaj Finance Ltd. us 40(a)(ia) of the Income Tax Act, arbitrarily. 1.1 That, ld. CIT(A) has further erred in not considering the fact that Id. PCIT in order u/s 263 had issued directions for revision of assessment order for making disallowance u/s 40(a)(ia) primarily for the reason that assessee could not furnish documentary evidences in support of claim that tax was duly paid by payee (Bajaj Finance Ltd.) Appellant prays that during the course of assessment proceedings u/s 143(3) r.ws.263 as well as subsequent appellate proceedings against such order, assessee furnished relevant certificate from CA, certifying that Bajaj Finance Ltd had already paid tax on its income while filing Return of Income (which included interest paid by assessee as well), therefore disallowance so confirmed by ld.CIT(A) deserves to be deleted. 1.2 That, Id.CIT(A) has further erred in confirming disallowance for the year under consideration, by not appreciating the provisions of section 40(a)(ia) and section 201 in the light of legislative intention of such provisions. Appellant prays the disallowance so confirmed by Id. CIT(A) deserves to be deleted. 1.3 That, Id.AO has erred in not considering the submission of the assessee and further by ignoring the settled position of law that insertion of proviso to section 201(1), being of declaratory and curative in nature and is thus applicable retrospectively. 2. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal.” 3. Succinctly, the fact as culled out from the records is that the assessee has filed his return through e-filing of income for assessment year 2012- 13 on 30.09.2012 declaring income of Rs. 6,32,740/-, after claiming deduction under chapter VI-A of the Income Tax Act, 1961 of Rs. 95,370/-, which was processed u/s 143(1) on 17.01.2013. In this case, the scrutiny assessment was completed u/s 143(3) of the IT Act, 1961 on 09.12.2014 at a total income of Rs. 6,72,740/-. Later on, an order u/s 263 of the I.T. Act, 1961 3 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO was passed by the Ld. CIT, Jaipur on 20/02/2017 on the ground that during the year under consideration, the assessee had debited interest payment of Rs. 6,61,058/- in P&L a/c which was paid against loan from non banking finance company viz. Bajaj Auto Finance Ltd. In this case TDS provision under section 40(a) (a) read with section 194A of the income-tax Act, 1961 were applicable as TDS was not deducted/deposited by due date of filing of return i.e 30.09.2012. Therefore, pursuant the order u/s. 263 the ld. AO disallowed the interest expense. 4. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. A propose to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: “4. Decision: I have considered the submission of the appellant, order appealed against and relevant background of the he case. The appellant has challenged the disallowance u/s 40(a)(ia) of Rs.6,61,058/- being interest paid to NBFC M/s. Bajaj Auto Finance Ltd. Various grounds of appeal are decided below. 4.1 Ground Nos.1, 1.1 and 1.2: All these grounds pertain to disallowance of interest expenses u/s.40(a) (ia). The appellant claims that since payee had already made payments of taxes on income, he could not be held in default in view of proviso to section 201(1) brought into the statue by Finance Act 2012 w.e.f. 01.07.2012. Accordingly, it is claimed that second proviso to section 40(a)(ia), inserted by Finance Act 2012 w.e.f. 01.04.2013 is applicable, on the facts of the case. The appellant contends that both the amendments are curative and are applicable retrospectively. 4 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO 4.2 In this case, original assessment order was passed on 09.12.2014. The Pr.CIT- 1, Jaipur set aside the same vide order u/s 263 dated 20.12.2017 on the limited issue of non deduction of tax at source as required under provisions of section 40(a) (ia) r.w.s. 194 of the I.T. Act. As per the facts narrated in order u/s 263, the appellant had debited interest payment of Rs.6,61,058/- in P & L A/c which was paid to M/s. Bajaj Auto Finance Ltd., an NBFC. However, no TDS was made/deposited by due date of filing of return i.e. 30.09.2012. The Pr.CIT further observed that the appellant made TDS at a later date and paid it to government account but it was after the due date of filing of return. The contention of the appellant that the income was offered to tax by the recipient and therefore no disallowance was required was not found tenable by the Pr.CIT as the appellant did not submit any documentary evidence to substantiate this claim. 4.3 In order u/s 143(3) r.w.s. 263 i.e. order appealed against, the A.O. has made the addition of Rs. 6,61,058/- observing as under- “The details filed are placed on record On perusal of details filed, it is noticed that details were almost same as decided by the Ld. CIT-1, Jaipur. As the reply/contentions of the assessee was decided by the Ld CIT at length, I do not find any merit in any of the contentions of the assessee, as the same are devoid of any merit and have no substance which are examined and the case was discussed with him. Accordingly, interest payment of Rs 6,61.058A without deduction of TDS to non banking finance company viz. Bajaj Auto Finance Ltd. was disallowed and added back to the total income of the assessee was under computed." 4.4 Submission of the appellant has been reproduced above. The main contention of the appellant is that M/s. Bajaj Auto Finance Ltd, had already included interest paid by the appellant in its total income and had paid due taxes thereon. It is also contended that he deducted tax and deposited the same on 06.09.2013. Therefore, the appellant could not be held to be in default. It is also the contention of the appellant that this submission was not accepted by the Pr.CIT as there was no documentary evidence to prove that the deductee had indeed offered the interest income for taxation and paid taxes thereon. The appellant contends that certificate issued by CA of M/s. Bajaj Auto Finance Ltd. was furnished before the A.O, during the set aside proceedings. However, the A.O. did not take cognizance of the same. 4.4.1 It is further contended that the appellant cannot be considered as assessee in default in view of the provisions of section 201(1) inserted by Finance Act 2012. The attention is also invited to second proviso to section 40(a) (ia) inserted by Finance Act 5 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO 2012 w.e.f. 01.04.2013 whereby it is provided that an assessee failing to deduct tax shall be deemed to have deducted and paid the tax on the date of furnishing of return of income by the payee referred in first proviso to section 201(1). The appellant has contended that second proviso to section 40(a) (ia) inserted by Finance Act 2012 w.e.f. 01.04.2013 is applicable to his case as it has retrospective effect from 01.04.2005. Reliance is placed on Delhi High Court decision in the case of CIT vs. Ansal Land Mark Township (P) Ltd. 234 Taxman 825, decision of Agra Bench of ITAT in the case of Rajeev Kumar Agarwal vs. Addl CIT 149 ITD 363, decisions of Jaipur ITAT in the cases of Columbus Overseas Ltd vs. DCIT (ITA No.445/Jp/2017) and ACIT vs. Shiv Kripa Hotels (ITA No.673/Jp/2017). 5. Section 40(a) (ia) reads as under- (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor; being resident, for carrying out any work (including supply of labour for carrying out any work), 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: Provided that where in respect of any such sum; tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid." Following proviso was added to section 40(a)(ia) vide Finance Act 2012 w.e.f 01.04.2013. “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 but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso." The first proviso to section 201(1) referred above is also reproduced. "Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of 6 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139, (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed" The first proviso to section 201(1) is inserted by Finance Act 2012 w.e.f. 01.07.2012 provides that a person failing to deduct tax shall not be deemed to be an assessee in default if payee has furnished his return of income, amount received from deductor is considered in computing income and tax due on the same is paid. Another condition is certificate to this effect from an Accountant as prescribed is also to be provided. As far as contention of retrospective effect of second proviso to section 40(a)(ia) is concerned, the jurisdictional tribunal has held the issue in favour of the appellant in Columbus Overseas Ltd. (supra) and Shiv Kripa Hotels (supra) following the decision of the Delhi High Court in the case of Ansal Land Mark Township P. Ltd. As would be noted in later discussion, the retrospectivity and applicability is not material in this case as the return filed by the deductee and TDS made/deposited by appellant took place in A.Y.2014-15. 5.1 As is noted, the appellant has provided the certificate issued by Bajaj Finance Ltd (not M/s. Bajaj Auto Finance Ltd). As per the said certificate issued by M/s. Bajaj Finance Ltd on 14.01.2023, it has e-filed return of income for A.Y.2012-13 on 29.03.2014. Even if it is presumed that first proviso to section 201(1) and second proviso to section 40(a)(ia) are applicable to the appellant, the date on which the appellant shall be deemed to have deducted and paid the tax, shall be 29.03.2014, which is the date of furnishing of return of income by the resident payee referred to in the proviso to section 201(1): Incidentally, the appellant also made TDS and deposited the same on 06.09.2013. This means that default of the appellant continued beyond 30.09.2012, which was the date of filing of return by the appellant. Therefore, proviso 1 to section 40(a)(ia), the appellant will be eligible for deduction of Rs. 6,61,058/- in A.Y.2014-15, i.e. the 7 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO assessment year corresponding to filing of return by the deductee and also the year in which it made TDS and deposited it. The A.O. is directed to verify the TDS payment claimed by the appellant as well as correctness of certificate issued by the deductee company (as name is different in CA certificate) and allow deduction in AY 2014-15, even if either of the two is found correct. Considering the above, the ground nos. 1, 1.1 and 1.2 are partly allowed.” 5. In support of the grounds so raised the ld. AR appearing on behalf of the assessee has placed reliance on the written submission and the same is extracted here in below; “ Kindly refer to captioned appeal fixed for hearing before hon’ble bench. In this regard, under instructions of the assessee, following humble submission is made for your kind and sympathetic consideration: The assesse, an individual, filed its Return of income declaring total income at Rs. 6,32,740/- on 30.09.2012 (APB 1-3). The case was picked up for scrutiny and assessment was completed vide order dated 09.12.2014 passed u/s 143(3) at assessed income of Rs.6,72,740/-. Subsequently, Revision order dated 20.02.2017 was passed in the case of assessee by ld. Pr. Commissioner of Income Tax-1, Jaipur (APB 4-6) on the observation that assessee had not deducted tax at source on payment of interest of Rs.6,61,058/- to M/s Bajaj Finance Ltd. Thereafter, ld. AO passed order u/s 263 r.w.s.143(3) of the Income Tax Act, 1961 whereby disallowance of Rs.6,61,058/- was made by ld.AO u/s 40(a)(ia) of the Income tax Act without properly following the directions given in the order u/s 263. Aggrieved of the addition so made, assesse preferred appeal before ld. CIT(A), which was dismissed against which present appeal has been filed by assessee. With this factual background, ground-wise submission is made as under: Grounds of Appeal No. 1 to 1.3 In these grounds of appeal, the assessee has agitated the disallowance of Rs.6,61,058/- made by ld. AO u/s 40(a)(ia) of the Income Tax act, 1961, which has been confirmed by ld. CIT(A). 8 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO In this regard, it is submitted that provisions of section 40(a)(ia) was made by ld. AO vide order passed u/s 143(3) r.w.s.263, in respect of payment of interest made to Bajaj Finance Ltd. (non-banking finance company). In response to show cause notice issued by ld. PCIT u/s 263, assessee submitted that payments made to Bajaj Finance Ltd. were in the form of EMIs, thus no deduction of tax at source was made. However, subsequently, assessee deducted tax at source and deposited the same on 06.09.2013 (APB 10). Moreover, it was contended that since the recipient M/s Bajaj Finance Ltd. had already included interest paid by assessee in its total income and had paid due taxes thereon, therefore assessee was not in default. However, submission of assessee was not accepted mainly for the reason that assessee has failed to file any documentary evidence in this regard and order was passed u/s 263 with a direction to verify this aspect. During the course of set aside assessment proceedings initiated pursuant to order passed u/s 263, assessee furnished detailed reply before ld.AO explaining the above facts and also furnished a certificate issued by the Chartered Accountant of the company M/s Bajaj Finance Ltd.(APB 7-9) as provided in first proviso to section 201(1) of the Act. Though none of the facts/documentary evidence furnished by assessee was controverted, disallowance was made by simply observing that details filed by assessee were almost same as were filed before ld. PCIT, without considering the merits of the case and without applying her own mind. At this juncture the observations made by ld. PCIT in the order passed u/s 263 are reproduced as under: (APB 5) “6. I have gone through the assessment record and perused the submission made by the assesse. As per the provisions of section 194A, it is liability of the payer to deduct tax on interest paid and deposit the same in the government account on or before due date. But the assessee has paid interest of Rs.6,61,058/- without deduction of TDS to Non banking finance company viz. Bajaj Auto Finance Ltd. Therefore the onus was on the assessee to deduct tax at source and not on the recipient as claimed by the assessee. 7. Further the fact that the assesse subsequently deducted the tax after the prescribed date and paid in the government account proves that assesse was liable to deduct tax at source and to pay it to the government account on or before the due date prescribed. However assesse failed to do so in due time. The contention of the assesse that the income was offered by the recipient and therefore no disallowance is required is also not tenable as assesse failed to submit any documentary evidence to substantiate his claim.” 9 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO With these observations, ld. PCIT has set aside the issue for fresh consideration by further observing as under : “9..........The assessment order is, accordingly, set aside on the limited issue of non deduction of tax at source as required by provisions of section 40(a)(ia) r.w.s.194A of the Income Tax Act. The AO shall give proper opportunity of being heard to the assesse before passing the order on this issue.” During the course of assessment proceedings u/s 143(3) r.w.s.263, assessee furnished certificate from the company M/s Bajaj Finance Ltd., duly verified by their Chartered Accountant, certifying that the company has paid the taxes on the interest paid by the assessee. However, ld.AO without considering such vital evidence, disregarded the same even though ld. PCIT has specifically stated that the AO shall give proper opportunity of being heard to assessee before passing any order on this issue and has never given any direction to simply make the disallowance. These facts were submitted before ld. CIT(A) and it was further submitted that the provisions of section 40(a)(ia) were invoked by ld.AO without treating assessee in default within the meaning of section 201(1). It was submitted before ld. CIT(A) that, as a matter of fact recipient of interest is a NBFC and a public limited company, therefore, it is certainly assessed to tax and had filed its Return of Income for A.Y. 2012-13 wherein interest received from assessee must be included in the gross receipts. Further in support of its claim, assessee had furnished a certificate from CA in respect of M/s Bajaj Finance Ltd. in accordance with proviso to section 201(1) r.w.r. 31ACB, certifying that due taxes in respect of interest income of Rs. 6,61,058/- were duly paid by said NBFC (APB 7-9). Accordingly assessee should not be held in default for the said amount. But the ld. AO disregarded the same, and made the impugned disallowance without controverting the certificate so filed by the assessee. In appeal, ld. CIT(A) though has accepted the contention of the assessee that insertion of second proviso to section 40(a)(ia) with effect from 01.04.2013 is declaratory and curative in nature and it has retrospective effect from 01.04.2005, being date from which sub-clause (ia) of section 40(a) was inserted by Finance (No. 2) Act, 2004, however, has not allowed the deduction by observing as under: “5.1 As is noted, the appellant has provided the certificate issued by Bajaj Finance Ltd (not M/s. Bajaj Auto Finance Ltd). As per the said certificate issued by M/s. Bajaj Finance Ltd on 14.01.2023, it has e-filed return of income for A.Y.2012-13 on 29.03.2014. Even if it is presumed that first proviso to 10 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO section 201(1) and second proviso to section 40(a)(ia) are applicable to the appellant, the date on which the appellant shall be deemed to have deducted and paid the tax, shall be 29.03.2014, which is the date of furnishing of return of income by the resident payee referred to in the proviso to section 201(1). Incidentally, the appellant also made TDS and deposited the same on 06.09.2013. This means that default of the appellant continued beyond 30.09.2012, which was the date of filing of return by the appellant. Therefore, proviso 1 to section 40(a)(ia), the appellant will be eligible for deduction of Rs. 6,61,058/- in A.Y.2014-15, i.e. the assessment year corresponding to filing of return by the deductee and also the year in which it made TDS and deposited it. The A.O. is directed to verify the TDS payment claimed by the appellant as well as correctness of certificate issued by the deductee company (as name is different in CA certificate) and allow deduction in AY 2014-15, even if either of the two is found correct. Considering the above, the ground nos.1, 1.1 and 1.2 are partly allowed. Deduction is held to be allowable in A.Y.2014-15 and not A.Y.2012-13, as claimed by the appellant in these grounds.” Accordingly ld. CIT(A) has allowed the deduction in A.Y. 2014-15 and not in A.Y. 2012- 13, i.e. year under appeal. Observations of ld. CIT(A) in this regard and clarification on the issues raised are summarized as under: 1. Appellant has furnished certificate from Bajaj Finance Ltd. And not Bajaj Auto Finance Ltd.: In this regard, it is submitted that payment of interest was made to Bajaj Finance Ltd. only and due to some typographical mistake in assessment order (where it was mentioned as Bajaj Auto Finance Ltd.), due to which, in written submission also it was erroneously mentioned as Bajaj Auto Finance Ltd. It is submitted that assessee had taken loan from Bajaj Finance Ltd., who has given certificate, which was furnished by assessee, and it is requested that no adverse inference be drawn due to such typographical mistake. 2. As per certificate, Bajaj Finance Ltd. has furnished its Return of Income on 29.3.2014 and assessee has also deposited on 6.9.2013, thus default continued beyond 30.9.2012, viz. the date of filing of Return of Income for appellant: In this regard, it is submitted that, payee Bajaj Finance Ltd. had originally filed Return of Income on 28.9.2012 u/s 139(1), which was eventually revised by them on 29.3.2014. As no specific query was raised by ld. CIT(A) in this regard, this fact could not be clarified during first appeal proceedings. Upon the receipt of the appellate order, assessee approached to the Chartered accountant of the recipient company and had requested them to give a clarifica about the correct date of filing of return by the company. IN response to which a clarification was received through mail, duly verifying this fact, which is reproduced as under for the sake of convenience: In view of the clarification issued from recipient company i.e. Bajaj Finance Ltd., it is submitted that Return of Income was filed by the payee within the due date of filing of Return of Income thus as per second proviso to section 40(a)(ia), assesse Since M.s Bajaj Finance Ltd. had already filed Return of Income before the due date, default did not continue beyond that date and assessee cannot be held in default in accordance with provisions of section 201( deducted and deposited the TDS on or before the due date of Return of Income, thus second proviso to section 40(a)(ia) will apply. Your honours would appreciate that assessee has in fact, suffered cost on account of TDS liability twice once, by making payment of gross amount of installments to Bajaj Finance Ltd. without deducting tax at source and secondly by suo on realizing the mistake alongwith Interest for delayed payment of Rs.14,047/ It is thus submitted that not allowing deduction to assessee would amount to undue hardship to the assessee, which is definitely not the intention of legislature, and it is requested before your honours to allow the interest of Rs. 6,61,058/ assessee.” 11 Lal Chand Manglani vs. ITO d by ld. CIT(A) in this regard, this fact could not be clarified during first appeal proceedings. Upon the receipt of the appellate order, assessee approached to the Chartered accountant of the recipient company and had requested them to give a clarifica about the correct date of filing of return by the company. IN response to which a clarification was received through mail, duly verifying this fact, which is reproduced as under for the sake of convenience: In view of the clarification issued from the office of the Chartered Accountant of the recipient company i.e. Bajaj Finance Ltd., it is submitted that Return of Income was filed by the payee within the due date of filing of Return of Income thus as per second proviso to section 40(a)(ia), assessee should be treated as assessee in default. Since M.s Bajaj Finance Ltd. had already filed Return of Income before the due date, default did not continue beyond that date and assessee cannot be held in default in accordance with provisions of section 201(1) and assessee will be deemed to have deducted and deposited the TDS on or before the due date of Return of Income, thus second proviso to section 40(a)(ia) will apply. Your honours would appreciate that assessee has in fact, suffered cost on account of DS liability twice once, by making payment of gross amount of installments to Bajaj Finance Ltd. without deducting tax at source and secondly by suo-moto depositing TDS on realizing the mistake alongwith Interest for delayed payment of Rs.14,047/ thus submitted that not allowing deduction to assessee would amount to undue hardship to the assessee, which is definitely not the intention of legislature, and it is requested before your honours to allow the interest of Rs. 6,61,058/ ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO d by ld. CIT(A) in this regard, this fact could not be clarified Upon the receipt of the appellate order, assessee approached to the Chartered accountant of the recipient company and had requested them to give a clarification about the correct date of filing of return by the company. IN response to which a clarification was received through mail, duly verifying this fact, which is reproduced as the office of the Chartered Accountant of the recipient company i.e. Bajaj Finance Ltd., it is submitted that Return of Income was filed by the payee within the due date of filing of Return of Income thus as per second e should be treated as assessee in default. Since M.s Bajaj Finance Ltd. had already filed Return of Income before the due date, default did not continue beyond that date and assessee cannot be held in default in 1) and assessee will be deemed to have deducted and deposited the TDS on or before the due date of Return of Income, thus Your honours would appreciate that assessee has in fact, suffered cost on account of DS liability twice once, by making payment of gross amount of installments to Bajaj moto depositing TDS on realizing the mistake alongwith Interest for delayed payment of Rs.14,047/-. thus submitted that not allowing deduction to assessee would amount to undue hardship to the assessee, which is definitely not the intention of legislature, and it is requested before your honours to allow the interest of Rs. 6,61,058/- as claimed by 12 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO 6. The ld. AR of the assessee in addition to the above written submissions submitted that though the form 26A is not in complete but he has in the interest of justice prayed before the Bench that the assessee may be given a chance before the ld. AO to submit the correct fact with the full part of the form 26A wherein he will be able to prove that assessee cannot be treated as assessee in default. Therefore, there is a merit based on the form no 26A and addition made by the ld. AO u/s 40(a)(ia) of the Act is required to be decided based on the evidence which is already submitted in part. Based on these submissions and oral arguments placed before the Bench. He prayed for the justice. 7. Per contra, the ld. DR in all fairness did not object to the alternative arguments of the ld. AR to set aside the issue to the file of the ld. AO even he has cited para 5.1 at page 10 of ld. CIT(A) wherein the ld. CIT(A) also directed the ld AO to verify the TDS payment claimed by the assessee as well as correctness of certificate issued by the deductee company and therefore, he has consented that this matter to be adjudicated on its merit by the ld. AO. 13 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO 8. We have heard the rival contentions and perused the material placed on record. The bench noted that the ld. CIT(A) has stated that “As per certificate issued by M/s. Bajaj Finance Ltd. Even if it is presumed that first proviso to section 201(1) and second proviso to section 40(a)(ia) are applicable to the assessee, the date on which the appellant shall be deemed to have deducted and paid the tax, shall be 29.03.2014, which is the date of furnishing of return of income by the resident payee referred to in the proviso to section 201(1). Incidentally, the assessee also made TDS and deposited the same on 06.09.2013. This means that default of the assessee continued beyond 30.09.2012, which was the date of filing of return by the assessee. Therefore, proviso 1 to section 40(a)(ia), the appellant will be eligible for deduction of Rs. 6,61,058/- in A.Y 2014-15, i.e. the assessment year corresponding to filing of return by the deductee and also the year in which it made TDS and deposited it. The AO is directed to verify the TDS payment claimed by the appellant as well as correctness of certificate issued by the deductee company (as name is different in CA certificate) and allow deduction in AY 2014-15, even if either of the two is found correct. 14 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO 8.1 Thus, the ld. CIT(A) has not finally decided the issue that whether the claim is allowable in the year under consideration or in A. Y. 2014-15. The ld. AR of the assessee based on the provision of law and the form no. 26A placed on record certifying that the income is considered by the payee and there is no loss to the revenue and based on that form 26A the deduction should be allowed in the year under consideration. We have gone through the rule 31ACB and form no. 26A. If the assessee submit and appropriate form certifying that the payee has considered the income that has been claimed by the assessee as deduction the assessee cannot be considered the assessee in default. Since the assessee has already submitted the Annexure A for the year under consideration i.e. April 2011 to March 2012 which relates to the year under consideration but the form is not complete and therefore, the assessee is directed to give the complete form no. 26A to ld. AO who will verify the amount of deduction claimed and the amount reflected in the Form no. 26A and will consider the claim of the assessee accordingly. Based on the fact as argued by the parties we feel it in the interest of the justice to set aside the issue to the file of the AO to verify the documents in support of the claim. The assessee is also directed to co- operate with the ld. AO in deciding the issue on merits and without sufficient reason, not to take further adjournments. Before parting, we may make it 15 ITA No. 236/JP/2023 Lal Chand Manglani vs. ITO clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having a reflection or expression on merits of the dispute, which shall be adjudicated by the learned assessing officer independently in accordance with the law. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 30/08/2023. Sd/- Sd/- ¼ lanhi xkslkbZ ½ ¼ jkBkSM deys’k t;arHkkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 30/08/2023 *Ganesh Kumar, PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Amit Colonizers Limited, Jaipur 2. izR;FkhZ@ The Respondent- ACIT, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 253/JP/2023) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar