Tribunal allows assessee's appeal, deleting disallowance under IT Act. Interest issue deemed consequential.

The Tribunal allowed the assessee's appeal, deleting the disallowance under section 40(a)(ia) of the IT Act as the tax deducted at source was deposited before the due date of filing the return. The issue of charging interest under section 234B was deemed consequential. The deletion of addition on account of in-genuine and unexplained credits was upheld, with the Tribunal finding the AO's basis for treating the liabilities as bogus unfounded. The appeal filed by the assessee was allowed, and the Revenue's appeal was dismissed.

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Issues Involved:
1. Disallowance u/s 40(a)(ia) of the IT Act.
2. Charging of interest u/s 234B.
3. Deletion of addition on account of in-genuine and unexplained credits.

Summary:

Issue 1: Disallowance u/s 40(a)(ia) of the IT Act
The assessee contested the disallowance of Rs. 1,74,44,764/- u/s 40(a)(ia) of the IT Act. The AO noted that tax deducted at source (TDS) from expenses totaling Rs. 1,77,32,164/- was paid into the Government account on 30.5.2006, beyond the due date. The assessee argued that the provisions of sec.40(a)(ia) were not applicable as TDS was deposited either before 31.3.2006 or in the next financial year. The CIT(A) upheld the AO's decision. However, the Tribunal found that the assessee's case was covered by various decisions, including H.S. Mohindra Traders vs. ITO (2010) 132 TTJ (Del) 701, which stated that if TDS is deposited before the due date of filing the return, no disallowance can be made u/s 40(a)(ia). The Tribunal thus deleted the addition.

Issue 2: Charging of interest u/s 234B
The assessee's ground regarding the charging of interest u/s 234B was deemed consequential and required no adjudication.

Issue 3: Deletion of addition on account of in-genuine and unexplained credits
The Revenue appealed against the deletion of Rs. 1,07,27,834/- made by the AO on account of in-genuine and unexplained credits. The AO had issued notices u/s 133(6) to some creditors, which were returned unserved. The AO treated the credits as unverifiable and added the amount to the income. The CIT(A) deleted the addition, noting that payments were made by account-payee cheques and the creditors' existence was proven. The Tribunal upheld the CIT(A)'s decision, stating that the AO's basis for treating the liabilities as bogus was not well-founded and that no attempt was made to prove the cessation of liabilities u/s 41(1).

Conclusion:
The appeal filed by the assessee was allowed, and the appeal filed by the Revenue was dismissed. The order was pronounced in open Court on 29.12.2011.

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