2019 (1) TMI 1822 - AT - Income Tax

Tax Tribunal Upholds Decision on Disallowance Due to Failure to Deduct Tax

The Deputy Commissioner of Income Tax, Pondicherry Versus M/s Enrica Enterprises Pvt. Ltd.

The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) regarding the disallowance of a claim due to failure to deduct tax while ... Non deduction of TDS - CIT-A deleted the disallowance on the ground that the recipient has offered the said amount and also paid taxes - assessee has not filed certificate in Form 26A for the purpose of claiming deduction - HELD THAT:- Admittedly, the recipient has offered the amount received from the assessee and also paid taxes. This fact is not disputed by the Revenue. The only objection of the Ld. D.R. is that Form 26A was not produced. Since the recipient has paid the taxes in respect of the amount received by the assessee, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the disallowance. Hence, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Appeals filed by the Revenue are dismissed. Issues:Appeal against common order of CIT(A) for assessment years 2014-15 and 2015-16 regarding disallowance of claim due to failure to deduct tax while making payment.Analysis:The appeals were filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) for the assessment years 2014-15 and 2015-16. The main issue was the disallowance of the claim due to the failure of the assessee to deduct tax while making payments. The Departmental Representative argued that the Assessing Officer disallowed the claim as the assessee failed to deduct tax, but the CIT(A) deleted the disallowance stating that the recipient had offered the amount and paid taxes. The Departmental Representative contended that as per Section 201(1) of the Act, the assessee needed to file Form 26A for claiming deduction, which was not done. The Tribunal noted that the recipient had indeed paid taxes on the amount received from the assessee, and the only objection was the non-production of Form 26A. The Tribunal agreed with the CIT(A) that since taxes were paid by the recipient, the disallowance was rightly deleted, and there was no reason to interfere with the lower authority's order.The Tribunal, after considering the arguments from both sides, confirmed the decision of the CIT(A) and dismissed the appeals filed by the Revenue. The order was pronounced in court on 9th January 2019 in Chennai.