M/S DANISH PVT. LTD., JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR

ITA 623/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8798 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 08-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MEENA CIT DHK
• Keywords: Opportunity of being heard; Additional evidence; Reasonable cause; Non compliance; TDS; Set aside
• Section: 273B; 40(a)(ia); 194C; 27; 10; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B, JAIPUR JH JES'K LH- 'KEKZ] YS[KK LNL; ,O A H JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C. SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA-@ ITA NO. 623/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2014-15. M/S. DANISH PVT. LTD., F-680, SITAPURA INDUSTRIAL AREA, JAIPUR. CUKE VS. THE ACIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCD 0834 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ROHAN SOGANI (CA) & SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI K.C. MEENA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04.07.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 10/07/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 16.03.2018 OF LD. CIT (A)-2, JAIPUR FOR THE ASSESSMENT YEAR 2014- 15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. A O BY DISALLOWING SUM OF RS. 27,65,853/- U/S 40(A)(IA) OF INCOME TAX ACT, 1961, ON ACCOUNT OF ALLEGED NON-DEDUCTION OF T DS ON PAYMENTS MADE TO CENTRAL POWER RESEARCH INSTITUTE, AS TESTING FEE. THE ACTION OF LD. CIT (A) IS ILLEGAL, UNJUSTIF IED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE SAID DISALLOWANCE OF RS. 27,65,853. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. A O BY DISALLOWING SUM OF RS. 2,23,929/- U/S 40(A)(IA) OF INCOME TAX ACT, 1961, ON ACCOUNT OF ALLEGED NON-DEDUCTION OF T DS ON 2 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. INTEREST PAYMENTS. THE ACTION OF LD. CIT (A) IS IL LEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE SAID DISALLOW ANCE OF RS. 2,23,929/-. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. A O BY MAKING AN ADDITION OF RS. 3,48,496/- ON ACCOUNT OF ALLEGED DIFFERENCE BETWEEN RECEIPTS AS REFLECTED IN 26AS AND RECEIPTS DISCLOSED IN STATEMENT OF PROFIT & LOSS. THE ACTION OF LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS. 3,48,496/-. 4. THE ASSESSEE COMPANY CRAVES ITS RIGHTS TO ADD, A MEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. GROUND NO. 1 IS REGARDING DISALLOWANCE OF TESTING F EE PAID TO CENTRAL POWER RESEARCH INSTITUTE UNDER SECTION 40(A)(IA) OF THE IT ACT FOR WANT OF TDS. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF TRANSFORMERS, PANELS AND OTHER ELECTRICAL ITEMS AND EXECUTION OF TURNKEY POWER PROJECTS. THE ASSESSEE FILED ITS RETURN OF INCOME F OR THE YEAR UNDER CONSIDERATION ON 30TH SEPTEMBER, 2014 DECLARING TOTAL INCOME OF RS. 2,31,05,850/-. DURING THE SCRUTINY ASSESSMENT, THE AO NOTED THAT THE ASSESSEE HAS MADE PAYMENT OF RS. 27,65,853/- TO CENTRAL POWER RESEARCH INSTITUTE (CP RI) AS TESTING FEE ON WHICH TDS WAS REQUIRED TO BE MADE UNDER SECTION 194C OF THE I T ACT. HOWEVER, THE ASSESSEE HAS NOT DEDUCTED TDS IN RESPECT OF THE SAID PAYMENT . ACCORDINGLY, AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE SAM E WAS DISALLOWED. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 3 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE TESTING FEES RECEIVED BY THE CENTRAL POWER RESEARCH INSTITUTE WE RE PART OF THE INCOME OF THE SAID INSTITUTE AND, THEREFORE, IN VIEW OF THE SECOND PRO VISO TO SECTION 40(A)(IA), THE RECIPIENT HAVE ALREADY CONSIDERED THE AMOUNT FOR CO MPUTING THE INCOME AND HAS FURNISHED ITS RETURN OF INCOME UNDER SECTION 139 OF THE ACT. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS OBTAINED CONFIRMATI ON FROM CENTRAL POWER RESEARCH INSTITUTE DATED 07.11.2018 IN THIS RESPECT FOR WHIC H THE ASSESSEE IS SEEKING THE LEAVE OF THE TRIBUNAL TO FILE THE SAME AS ADDITIONAL EVID ENCE. THE LD. A/R OF THE ASSESSEE HAS ALSO FILED AN APPLICATION UNDER RULE 29 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963 FOR ADMISSION OF ADDITIONAL EVIDENCE. HE HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. TEXT HU NDRED INDIA (P) LTD, 239 CTR (DEL.) 263. HENCE, THE LD. A/R HAS SUBMITTED THAT I N VIEW OF THE CONFIRMATION ISSUED BY THE CENTRAL POWER RESEARCH INSTITUTE, NO DISALLO WANCE IS CALLED FOR UNDER SECTION 40(A)(IA) IN RESPECT OF THE PAYMENT MADE BY THE ASS ESSEE. THUS HE HAS PLEADED THAT THE CASE MAY BE SET ASIDE TO THE FILE OF THE A O FOR LIMITED PURPOSE OF VERIFICATION OF THIS FACTUAL POSITION THAT THE AMOUNT PAID BY TH E ASSESSEE WAS CONSIDERED AND INCLUDED IN THE INCOME OF CENTRAL POWER RESEARCH IN STITUTE. 4. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT DESPITE SUFFICIENT OPPORTU NITY GIVEN BY THE AO AS WELL AS BY THE LD. CIT (A), THE ASSESSEE DID NOT FURNISH AN Y SUCH EVIDENCE TO SHOW THAT THE AMOUNT PAID BY THE ASSESSEE TO CENTRAL POWER RESEAR CH INSTITUTE WAS CONSIDERED AS PART OF THE INCOME. FURTHER, THE ASSESSEE DID NOT R AISE SUCH AN ISSUE BEFORE THE AUTHORITIES BELOW. 4 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. SINCE THE ASSESSEE HAS NOW FILED A CERTIFIC ATE ISSUED BY THE CENTRAL POWER RESEARCH INSTITUTE WHEREIN IT HAS BEEN CONFIRMED TH AT THE SAID INSTITUTE IS APPROVED UNDER SECTION 35 OF THE IT ACT READ WITH RULE 5C AN D 5D OF THE INCOME TAX RULES, 1962 IN THE CATEGORY OF SCIENTIFIC RESEARCH ASSOCIA TION AND THEREBY EXEMPTION UNDER SECTION 10(21) OF THE IT ACT IS ENJOYED BY THE INST ITUTE, WE HAVE CONFIRMED THE BILLS AGAINST WHICH THE ASSESSEE MADE THE PAYMENTS. THUS AS PER THE SAID CERTIFICATE, THE INCOME IN THE HANDS OF CENTRAL POWER RESEARCH I NSTITUTE IS NOT AT ALL CHARGEABLE TO TAX AND, THEREFORE, THERE WAS NO REQUIREMENT FOR DEDUCTING TAX AT SOURCE WHEN THE SAID INCOME WAS EXEMPT IN THE HANDS OF THE RECI PIENT. HOWEVER, SINCE THE CERTIFICATE DATED 07.11.2018 WAS NOT FILED BEFORE T HE AUTHORITIES BELOW AND IT WAS NOT SUBJECTED TO VERIFICATION, THEREFORE, IN THE FA CTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE ADMIT THE SAID C ERTIFICATE AS AN ADDITIONAL EVIDENCE AND SET ASIDE THE ISSUE TO THE RECORD OF THE AO TO VERIFY THE FACTUAL POSITION AS POINTED OUT IN THE SAID CERTIFICATE AND DECIDE THE SAME AFRESH AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO. 2 IS REGARDING DISALLOWANCE OF INTEREST PAYMENT OF RS. 2,23,929/- UNDER SECTION 40(A)(IA) FOR WANT OF TDS. 6. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY MADE PAYMENT OF INTEREST OF RS. 2,23,929/- TO VARIOUS PERSONS WITHO UT DEDUCTION OF TDS. THE DETAILS OF THE PAYMENT OF INTEREST ARE AS UNDER :- 5 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. NAME OF THE PARTY INTEREST (IN RS.) PHOOLA DEVI 1,93,929 LILA DEVI DUSAD 20,000 SANJAY CHOUDHARY HUF 10,000 TOTAL : 2,23,929 THE AO PROPOSED TO DISALLOW THE SAME BY INVOKING TH E PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE ASSESSEE OBJECTED TO THE DISALLOWANCE ON TWO COUNTS. FIRSTLY, THE INTEREST WAS PAID AND NOT PAYABLE AS O N 31 ST MARCH, 2014 AND SECONDLY, THE ASSESSEE OBTAINED FORM NO. 15G FROM THE RECIPIE NTS OF THE INTEREST. THE AO DID NOT ACCEPT BOTH THESE CONTENTIONS. AS FAR AS THE FI RST CONTENTION THAT THE INTEREST WAS ALREADY PAID AND NOT PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, THE ISSUE IS A LREADY SETTLED BY THE HONBLE SUPREME COURT AGAINST THE ASSESSEE. THEREFORE, THI S ISSUE IS NOT RAISED BEFORE US. AS REGARDS THE FORM NO. 15G OBTAINED BY THE ASSESSE E, THE AO REJECTED THE SAID CONTENTION ON THE GROUND THAT THE ASSESSEE HAS NOT SUBMITTED THESE FORMS BEFORE THE LD. CIT EXEMPTIONS WITHIN THE PERIOD OF LIMITAT ION AS PRESCRIBED UNDER SECTION 197A(IA). CONSEQUENTLY THE AO MADE DISALLOWANCE OF THE SAID AMOUNT UNDER SECTION 40(A)(IA) OF THE ACT. THE ASSESSEE CHALLEN GED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 7. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT WHEN THE ASSESSEE HAS ALREADY OBTAINED FORM NO. 15G FROM THE RECIPIEN TS AND PRODUCED BEFORE THE AO, THEN NO DISALLOWANCE IS CALLED FOR UNDER SECTION 40 (A)(IA) OF THE ACT. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF MUMBAI BENCHES OF THE TRIBUNAL IN CASE OF KARWAT STEEL TRADERS VS. ITO, 145 ITD 370 A ND SUBMITTED THAT THE TRIBUNAL 6 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. HAS HELD THAT FOR THE PURPOSE OF DEDUCTING THE TAX AT SOURCE UNDER SECTION 194A, IF THE ASSESSEE HAS OBTAINED THE FORM NO. 15G/15H, THE N AS PER THE PROVISIONS OF SECTION 197A(1A), NO DISALLOWANCE IS CALLED FOR UND ER SECTION 40(A)(IA). THE DEFAULT FOR NOT FURNISHING OF DECLARATION TO THE CIT AS PRE SCRIBED WILL ATTRACT THE PROVISIONS OF SECTION 272A(2)(F) OF THE ACT. THUS THE LD. A/R HA S SUBMITTED THAT ONCE THE ASSESSEE HAS OBTAINED DECLARATION IN FORM NO. 15G, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TDS AND CONSEQUENTLY NO DISALLOWANCE UNDER SECTION 40(A)(IA) IS CALLED FOR. 8. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THE PROVISIONS OF SECTION 197A(1A) HAS TO BE READ IN WHOLE TO UNDERSTAND THE SCHEME OF THE SAID PROVISION AND THEREFORE OBTAINING THE DECLARATION IN FORM NO. 15G/15H WILL NOT SERVE THE PURPOSE AND OBJECTS OF THE SAID PROVISION UNTIL AND UNLESS THE SAID DECLARATION IS SUBMITTED TO THE CONCERNED CIT SO THAT THE INCOME I N THE HANDS OF THE RECIPIENT SHALL NOT ESCAPE FROM TAX. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. SO FAR AS THE OBLIGATION OF THE ASSESSEE T O DEDUCT TAX OR TO TAKE THE DECLARATION FROM THE RECIPIENT UNDER SECTION 197A(1 A) IS CONCERNED, THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF KARWAT STEEL TRADERS VS. ITO (SUPRA) HAS CONSIDERED THE SAME IN PARA 4.1 TO 4.3 AS UNDER :- 4.1 AS CAN BE SEEN FROM ABOVE PROVISION, THE AMOUNT CAN NOT BE ALLOWED AS DEDUCTION ONLY IN THE EVENT WHEN TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER-XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCT ION HAS NOT BEEN PAID. IN THIS CASE, THE ASSESSEE WAS TO DEDUCT TAX UNDER PROVISIO NS OF SECTION 194A. SECTION 194A IS FURTHER QUALIFIED BY THE PROVISIONS OF SECTION 1 97A(1A) WHEREIN IF A PERSON 7 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. FURNISHES A DECLARATION IN WRITING IN PRESCRIBED FO RM AND VERIFIED IN THE PRESCRIBED MANNER TO THE EFFECT THAT TAX ON HIS ESTIMATED TOTA L INCOME IS TO BE INCLUDED IN COMPUTING HIS TOTAL INCOME WILL BE NIL, THERE IS NO NEED TO DEDUCT TAX THE ASSESSEE HAS RECEIVED SUCH FORMS AS PRESCRIBED FROM THOSE PE RSONS TO WHOM INTEREST WAS PAID/BEING PAID AND ACCORDINGLY NO DEDUCTION OF TAX WAS TO BE MADE IN SUCH CASES. THE DEFAULT FOR NONFURNISHING OF THE DECLARATIONS T O THE CIT AS PRESCRIBED MAY RESULT IN INVOKING PENALTY PROVISIONS U/S. 272A(2)(F), FOR WHICH SEPARATE PROVISION/ PROCEDURE WAS PRESCRIBED UNDER THE ACT. HOWEVER, ON CE FORM 15G/FORM 15H WAS RECEIVED BY THE PERSON RESPONSIBLE FOR DEDUCTING TA X, THERE IS NO LIABILITY TO DEDUCT TAX. ONCE THERE IS NO LIABILITY TO DEDUCT TAX, IT C AN NOT BE CONSIDERED THAT TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AS PRESCR IBED U/S. 40(A)(IA). THE PROVISIONS OF SECTION 40(A)(IA) CAN ONLY BE INVOKED IN A CASE WHERE TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTI ON HAS NOT BEEN PAID. NO SUCH DEFAULT OCCURRED IN THIS CASE. ACCORDINGLY, WE ARE OF THE OPINION THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE TO THE FACTS O F THE CASE. BOTH THE ASSESSING OFFICER AND CIT(A) ERRED IN CONSIDERING THAT NON-FI LING OF FORM 15H INVITES DISALLOWANCE U/S. 40(A)(IA). 4.2 SIMILAR ISSUE WAS CONSIDERED BY THE CO-ORDINATE BENCH IN THE CASE OF VIPIN P. MEHTA VS. INCOME TAX OFFICER (2011) 11 TAXMANN.COM 342(MUM) WHERE IN IT WAS HELD:. SECTION 194A, READ WITH SECTIONS 197A AND 40(A)(IA ), OF THE INCOME TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE - INTEREST ) OTHE R THAN INTEREST ON SECURITIES - ASSESSMENT YEAR 2006-07 - ASSESSEE WAS CARRYING ON BUSINESS OF MANUFACTURE AND PRINTING OF PACKAGING MATERIALS - H E MADE PAYMENT OF INTEREST TO 34 PARTIES IN EXCESS OF RS. 5000 WITHOU T DEDUCTING TAX AT SOURCE - IN RESPONSE TO SHOW CAUSE NOTICE, ASSESSEE SUBMITTE D THAT ALL PAYEES TO WHOM INTEREST WAS PAID, HAD FURNISHED DECLARATIONS IN FORM NO. 15H/15G, AS THE CASE MAY BE, BEFORE DATE ON WHICH TAX OUGHT TO HAVE BEEN DEDUCTED AND, THEREFORE, ASSESSEE WAS NOT LIABLE TO DEDUCT T AX - ASSESSEE ALSO SUBMITTED THAT BY OVERSIGHT HE DID NOT SUBMIT COPIE S OF DECLARATIONS IN FORM NO. 15G/15H TO OFFICE OF COMMISSIONER (TDS) -ASSESS ING OFFICER TOOK A VIEW THAT IT WAS ONLY WHEN HE PROPOSED DISALLOWANCE OF I NTEREST BY INVOKING SECTION 40(A)(IA) THEN ASSESSEE FILED DECLARATIONS CLAIMED TO HAVE BEEN SUBMITTED TO HIM BY PAYEES OF INTEREST, IN OFFICE O F COMMISSIONER (TDS) AS REQUIRED BY SUB-SECTION (2) OF SECTION 197A - ACCOR DINGLY, ASSESSING OFFICER INVOKED SECTION 40(A)(IA) AND DISALLOWED INTEREST P AYMENTS - COMMISSIONER (APPEALS) CONFIRMED DISALLOWANCE MADE BY ASSESSING OFFICER - ON INSTANT APPEAL, IT WAS SEEN THAT APART FROM AFORESAID INFER ENCE, THERE WAS NO OTHER EVIDENCE IN POSSESSION OF REVENUE AUTHORITIES TO HO LD THAT DECLARATIONS WERE NOT SUBMITTED BY PAYEES OF INTEREST TO ASSESSEE AT TIME WHEN PAYMENTS 8 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. WERE MADE - MOREOVER, ASSESSING OFFICER HAD NOT REC ORDED ANY STATEMENTS FROM PAYEES OF INTEREST TO EFFECT THAT THEY DID NOT FILE ANY DECLARATIONS WITH ASSESSEE AT APPROPRIATE TIME OR TO EFFECT THAT THEY FILED DECLARATIONS ONLY AT REQUEST OF ASSESSEE - WHETHER IN ABSENCE OF ANY DIR ECT EVIDENCE PRODUCED BY REVENUE AUTHORITIES, ASSESSEES CLAIM THAT HE HA D DECLARATIONS OF PAYEES IN PRESCRIBED FORM BEFORE HIM AT TIME WHEN INTEREST WAS PAID, AND, THUS, HE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE UNDER SECTIO N 194A, WAS TO BE ACCEPTED - HELD, YES- WHETHER, CONSEQUENTLY, IMPUGN ED DISALLOWANCE MADE BY AUTHORITIES BELOW WAS TO BE DELETED - HELD, YES. IN THE INSTANT CASE, THE CLAIM OF THE ASSESSEE WAS THAT AT THE TIME OF PAYING THE INTEREST TO THE 34 PERSONS MENTIONED IN THE ASS ESSMENT ORDER, HE HAD BEFORE HIM THE APPROPRIATE DECLARATIONS IN THE PRES CRIBED FORM FROM THE PAYEES STATING THAT NO TAX WAS PAYABLE BY THEM IN R ESPECT OF THEIR TOTAL INCOME AND THEREFORE, TAX NEED NOT BE DEDUCTED FROM INTEREST UNDER SECTION 194A, AND IN THE LIGHT OF THESE DECLARATIONS HE HAD NO OPTION BUT TO MAKE THE PAYMENT OF INTEREST WITHOUT ANY FAX DEDUCTION. IF THE CLAIM WAS TRUE THEN THE CONTENTION MUST BE ACCEPTED BECAUSE UNDER SUB-SECTION (IA) OF SECTION 197A, IF SUCH A DECLARATION IS FILED BY THE PAYEE OF INTEREST, NO DEDUCTION OF TAX BE MADE BY THE ASSESSEE. THE REVEN UE AUTHORITIES HAD DOUBTED THE ASSESSEES VERSION BECAUSE ACCORDING TO THEM IT WAS ONLY WHEN THE ASSESSING OFFICER PROPOSED THE DISALLOWANCE OF THE INTEREST BY INVOKING THE SECTION 40(A )(IA) IN THE COURSE OF THE ASSESSM ENT PROCEEDINGS THAT THE ASSESSEE FILED THE DECLARATIONS CLAIMED TO HAVE BEE N SUBMITTED TO HIM BY THE PAYEES OF THE INTEREST, IN THE OFFICE OF THE CO MMISSIONER (TDS) AS REQUIRED BY SUB-SECTION (2) OF SECTION 197A. APART FROM THIS INFERENCE, THERE WAS NO OTHER EVIDENCE IN THEIR POSSESSION TO HOLD T HAT THE DECLARATIONS WERE NOT SUBMITTED BY THE PAYEES OF THE INTEREST TO THE ASSESSEE AT THE TIME WHEN THE PAYMENTS WERE MADE. WITHOUT DISPROVING THE ASSESSEES CLAIM ON THE BASIS OF OTHER EVIDENCE, EXCEPT BY WAY OF INFER ENCE, IT WOULD NOT BE FAIR OR PROPER TO DISCARD THE CLAIM. THE ASSESSING OFFIC ER HAD NOT RECORDED ANY STATEMENTS FROM THE PAYEES OF THE INTEREST TO THE E FFECT THAT THEY DID NOT FILE ANY DECLARATIONS WITH THE ASSESSEE AT THE APPR OPRIATE TIME OR TO THE EFFECT THAT THEY FILED THE DECLARATIONS ONLY AT THE REQUEST OF THE ASSESSEE IN SEPTEMBER/OCTOBER, 2008. IN THE ABSENCE OF ANY SUCH DIRECT EVIDENCE, THE ASSESSEES CLAIM COULD NOT BE REJECTED. THE ASSESSI NG OFFICER HAD STATED IN THE ASSESSMENT ORDER THAT HE FOUND THAT SOME OF THE LOAN CREDITORS WERE HAVING TAXABLE INCOME BUT STILL THE ASSESSEE HAD SU BMITTED DECLARATIONS FROM THEM IN FORM NO. 15G. UNLESS IT WAS PROVED THA T THESE FORMS WERE NOT IN FACT SUBMITTED BY THE LOAN CREDITORS, THE ASSESS EE COULD NOT BE BLAMED BECAUSE AT THE TIME OF PAYING THE INTEREST TO THE L OAN CREDITORS, HE HAD TO PERFORCE RELY UPON THE DECLARATIONS FILED BY THE LO AN CREDITORS AND HE WAS NOT EXPECTED TO EMBARK UPON AN ENQUIRY AS TO WHETHE R THE LOAN CREDITORS REALLY AND IN TRUTH HAD NO TAXABLE INCOME ON WHICH TAX WAS PAYABLE. THAT WOULD BE PUTTING AN IMPOSSIBLE BURDEN ON THE ASSESS EE. THAT APART SECTION (1A) OF SECTION 197A MERELY REQUIRES A DECLARATION TO BE FILED BY THE PAYEE OF THE INTEREST AND ONCE IT IS FILED THE PAYEE OF T HE INTEREST HAS NO CHOICE EXCEPT TO DESIST FROM DEDUCTING TAX FROM THE INTERE ST. THE SUB-SECTION USES THE WORD SHALL WHICH LEAVES NO CHOICE TO THE ASSESS EE IN THE MATTER. THE SUB-SECTION DOES NOT IMPOSE ANY OBLIGATION ON THE P AYER TO FIND OUT THE 9 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. TRUTH OF THE DECLARATIONS FILED BY THE PAYEE. EVEN IF THE ASSESSEE HAD DELAYED THE FILING OF THE DECLARATIONS WITH THE OFFICE OF T HE COMMISSIONER /CHIEF COMMISSIONER (TDS) WITHIN THE TIME-LIMIT SPECIFIED IN SUB-SECTION (2) OF SECTION 197A, THAT WAS A DISTINCT OMISSION OR DEFAU LT FOR WHICH A PENALTY IS PRESCRIBED SECTION 273B PROVIDES THAT NO PENALTY SH ALL BE IMPOSED UNDER ANY OF THE CLAUSES OF SUB-SECTION (2) OF SECTION 27 2A FOR THE DELAY, IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAME. FURTHER, UNDER SUB-SECTION (4) OF SECTION 272A, NO PENALTY C AN BE IMPOSED UNLESS THE ASSESSEE IS GIVEN AN OPPORTUNITY OF BEING HEARD. AL L THESE PROVISIONS INDICATE THAT THE FAILURE ON THE PART OF THE ASSESSEE, WHO W AS THE PAYER OF THE INTEREST, TO FILE THE DECLARATIONS GIVEN TO HIM BY THE PAYEES OF THE INTEREST, WITHIN THE TIME-LIMIT SPECIFIED IN SUB-SECTION (2) TO SECTION 197A WAS DISTINCT AND SEPARATE AND MERELY BECAUSE THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO SUBMIT THE DECLARATIONS TO THE INCOME-T AX DEPARTMENT WITHIN THE TIME-LIMIT, IT COULD NOT BE SAID THAT THE ASSES SEE DID NOT HAVE DECLARATIONS WITH HIM AT THE TIME WHEN HE PAID THE INTEREST TO THE PAYEES. THAT WOULD BE A SEPARATE MATTER AND SEPARATE PROOF AND EVIDENCE WAS REQUIRED TO SHOW THAT EVEN WHEN THE ASSESSEE PAID T HE INTEREST, HE DID NOT HAVE THE DECLARATIONS FROM THE PAYEES WITH HIM AND THEREFORE HE OUGHT TO HAVE DEDUCTED THE TAX FROM THE PAYMENT. NO SUCH EVI DENCE OR PROOF HAD BEEN BROUGHT ON RECORD BY THE DEPARTMENT. [PARA 7] FOR THE AFORESAID REASONS, THE ASSESSEES CLAIM WAS TO BE ACCEPTED THAT SINCE HE HAD THE DECLARATIONS OF THE PAYEES IN THE PRESCRIBED FORM BEFORE HIM AT THE TIME WHEN THE INTEREST WAS PAID, HE WAS NOT LIABLE TO DEDUCT TAX THERE FROM UNDER SECTION 194A. IF HE WAS NOT LIABLE TO DEDUCT TAX, SECTION 40(A)(IA) WAS NOT ATTRACTED. THERE WAS NO OTHER GRO UND TAKEN BY THE INCOME- TAX AUTHORITIES TO DISALLOW THE INTEREST. THEREFORE , THE ASSESSEES APPEAL WAS TO BE ALLOWED AND THE DISALLOWANCE OF INTEREST WAS TO BE DELETED. (PARA 8]. 4.3 SIMILAR FINDING WAS ALSO HELD IN OTHER CASES RE LIED UPON BY THE ASSESSEE, WHICH WE DO NOT INTEND TO EXTRACT HERE. SUFFICE TO SAY THAT ON THE FACTS OF THE CASE, THERE IS NO NEED TO DEDUCT TAX AT SOURCE IN THE ABOVE 17 CASES AND THUS, THERE IS NO DEFAULT COMMITTED BY THE ASSESSEE. ACCORDINGLY, DISALLOWANC E UNDER SECTION 40(A)(IA) DOES NOT ARISE. NON FILING OR DELAYED FILING OF SUCH FOR MS CAN NOT RESULT IN DISALLOWANCE U/S 40(A)(IA). THE GROUNDS RAISED BY ASSESSEE ARE ALLOW ED. AO IS DIRECTED TO MODIFY THE ORDER ACCORDINGLY. A SIMILAR VIEW HAS BEEN TAKEN BY THIS TRIBUNAL IN A SERIES OF DECISIONS. WE NEED NOT TO MULTIPLY THE PRECEDENTS ON THIS ISSUE. THEREFORE , ONCE THE ASSESSEE HAS OBTAINED THE DECLARATION IN FORM NO. 15G/15H AND PRODUCED BE FORE THE AO THEN NO DISALLOWANCE CAN BE MADE UNDER SECTION 40(A)(IA) OF THE ACT. SO FAR AS THE 10 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. SUBMISSION OF THESE DECLARATIONS BEFORE THE CONCERN ED CIT, WE MAY POINT OUT THAT THE OBJECT AND PURPOSE OF THE SAID REQUIREMENT TO S UBMIT THESE DECLARATIONS IS TO ENSURE THAT THE INCOME IN THE HANDS OF THE RECIPIEN T SHALL NOT ESCAPE TAX. ACCORDINGLY, THE SAID NON COMPLIANCE ON THE PART OF THE ASSESSEE FOR NOT SUBMITTING THE DECLARATIONS TO THE CONCERNED CIT WILL NOT AFFE CT THE REQUIREMENT OF OBTAINING THE DECLARATIONS SO FAR AS THE DEDUCTION OF TAX AT SOURCE IS CONCERNED. HOWEVER, SINCE THESE DECLARATIONS WERE NEVER SUBMITTED TO TH E AUTHORITIES AND REMAINED UNVERIFIED, THEREFORE, THE LIMITED POINT WHICH WAS REQUIRED TO BE CONSIDERED BY THE AO IN THE ASSESSMENT PROCEEDINGS IS TO VERIFY THE C ORRECTNESS OF THE DECLARATIONS AS OBTAINED BY THE ASSESSEE. HENCE, IN VIEW OF THE EA RLIER DECISIONS OF THIS TRIBUNAL, WE HOLD THAT ONCE THE ASSESSEE HAS OBTAINED THE DEC LARATIONS IN FORM NO. 15G FROM THE RECIPIENTS OF THE INTEREST, THEN NO DISALLOWANC E IS CALLED FOR UNDER SECTION 40(A)(IA) OF THE ACT. HOWEVER, SINCE THESE DECLARA TIONS WERE NOT VERIFIED BY THE AO, THEREFORE, FOR THIS LIMITED PURPOSE WE SET ASIDE TH E ISSUE TO THE RECORD OF THE AO TO VERIFY THE CORRECTNESS AND GENUINENESS OF THE DECLA RATION. GROUND NO. 3 IS REGARDING AN ADDITION OF RS. 3,48,4 96/- ON ACCOUNT OF DIFFERENCE BETWEEN RECEIPTS AS REFLECTED IN 26AS AND THE RECEIPTS SHOWN IN THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE. 10. THE AO NOTED THAT AS PER FORM 26AS THE ASSESSEE HAS RECEIVED THE PAYMENTS ON WHICH TDS WAS DEDUCTED. HOWEVER, THE ASSESSEE HA S NOT DISCLOSED THE RECEIPTS TO THE EXTENT OF RS. 3,48,496/- FROM POWER ENGINEER ING (INDIA) PVT. LTD., JAIPUR VIDHYUT VITRAN NIGAM LTD., JAIPUR VIDHYUT VITRAN NI GAM LTD. ACCOUNTS OFFICER, JAIPUR CITY AND RAJASTHAN RAJYA VIDHYUT PRASARAN NIGAM LTD . AND, THEREFORE, THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISC LOSED RECEIPTS. THE ASSESSEE 11 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) AND CONTENDED THAT THESE RECEIPTS AS NOT APPEARING IN FORM 26AS WERE NEVER R ECEIVED BY THE ASSESSEE NOR DUE TO THE ASSESSEE BUT DUE TO SOME MISTAKE ON THE PART OF THE OTHER PARTIES, THESE WERE WRONGLY CREDITED IN THE PAN OF THE ASSESSEE. T HUS THE TDS WAS WRONGLY CREDITED IN THE PAN OF THE ASSESSEE WHEREAS THE ASS ESSEE HAS NOT CLAIMED THE CREDIT OF THE SAID TDS. THE LD. CIT (A) HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE AO. 11. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBM ITTED THAT THE ASSESSEE COMPANY IS ONLY ENGAGED IN SUPPLYING ITS PRODUCTS T O SUCH ENTITIES AND NO SERVICES DURING THE YEAR UNDER CONSIDERATION WERE PROVIDED T O THESE ENTITIES. THEREFORE, THERE WAS NO SUCH AMOUNT RECEIVED BY THE ASSESSEE O N ACCOUNT OF ANY SERVICES RENDERED TO THESE ENTITIES. IT IS CERTAINLY A MISTA KE ON THE PART OF THESE ENTITIES TO DEPOSIT THE TDS IN THE ACCOUNT OF THE ASSESSEE. TH US THE LD. A/R HAS REITERATED ITS CONTENTION AS RAISED BEFORE THE AUTHORITIES BELOW. 12. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ONCE THE TDS WAS CREDITED IN THE PAN OF THE ASSESSEE AND AS PER FROM 26AS THIS AMOUNT OF RS. 3,48,496/- IS A PPEARING AS RECEIVED BY THE ASSESSEE, THEN THE AO HAS RIGHTLY ADDED THE SAID AM OUNT AS UNDISCLOSED RECEIPT. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE AO NOTED THAT AN AMOUNT OF RS. 3,48,496 /- IS APPEARING IN FORM 26AS WHICH WAS NOT SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. THE DETAILS OF THESE AMOUNTS ARE AS UNDER :- 12 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. S.NO. NAME OF THE PARTY AS PER BOOKS AS PER 26AS AMOUNT TDS AMOUNT TDS 1. POWER ENGINEERING (INDIA) PVT. LTD. - - 30,520 3,052 2. JAIPUR VIDHYUT VITRAN NIGAM LTD. - - 55,150 5,515 3. JAIPUR VIDHYUT VITRAN NIGAM LTD. ACCOUNTS OFFICER JAIPUR CITY - - 55,276 5,528 4. RAJASTHAN RAJYA VIDHYUT PRASARAN NIGAM LTD. - - 2,07,550 20,755 TOTAL - - 3,48,496 34,850 THUS SOME TDS WERE CREDITED IN THE PAN OF THE ASSES SEE WHICH ARE REFLECTED IN FORM 26AS IN RESPECT OF VARIOUS PAYMENTS STATED TO BE MADE BY THESE FOUR ENTITIES. SINCE THE ASSESSEE HAS DENIED ANY SUCH PAYMENT EITH ER RECEIVED OR ACCRUED TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THERE FORE, WITHOUT VERIFICATION OF THIS FACT WHETHER THIS AMOUNT CREDITED IN THE PAN OF THE ASSESSEE IS ACTUALLY THE PAYMENT MADE BY THESE COMPANIES TO THE ASSESSEE OR THESE WE RE MISTAKENLY CREDITED TO THE PAN OF THE ASSESSEE, THE AO HAS TURNED DOWN THE EXP LANATION OF THE ASSESSEE AND MADE THE ADDITION BASED ON THE DETAILS AVAILABLE IN FORM 26AS. THUS IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSID ERED OPINION THAT ONCE THE ASSESSEE HAS DENIED TO HAVE RECEIVED ANY SUCH AMOUN T FROM THESE ENTITIES OR ANY SUCH AMOUNT ACCRUED TO THE ASSESSEE FROM THESE ENTI TIES, THE AO OUGHT TO HAVE VERIFIED THIS FACT FROM THE ENTITIES BY CALLING THE INFORMATION FROM THESE COMPANIES. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ISSUE TO THE RECORD OF THE AO FOR PROPER VERIFICATION AND EXAMIN ATION OF THE FACT BY CALLING THE RELEVANT INFORMATION FROM THESE FOUR ENTITIES AND T HEN ASCERTAIN THE FACT WHETHER 13 ITA NO. 623/JP/2018 M/S. DANISH PVT. LTD., JAIPUR. THESE AMOUNTS WERE ACTUALLY PAID TO THE ASSESSEE OR ACCRUED TO THE ASSESSEE OR THERE WAS ANY MISTAKE IN CREDITING THE PAN OF THE A SSESSEE. AFTER VERIFICATION OF THIS FACT, THIS ISSUE MAY BE DECIDED AFRESH AFTER GIVING A PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 10/07/20 19. SD/- SD/- ( JES'K LH- 'KEKZ ) ( FOT; IKY JKWO (RAMESH C. SHARMA ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 10/07/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. DANISH PVT. LTD., JAIPUR. 2. THE RESPONDENT THE ACIT CIRCLE-6 JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 623/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR