Appeal allowed, issue remitted for verification. Ad-hoc addition deleted. Natural justice, interest, prepaid taxes not addressed.

The Tribunal allowed the appeal for statistical purposes, remitting the issue of disallowance under Section 40(a)(ia) back to the AO for verification following the precedent set by the Hon'ble Delhi HC. The ad-hoc addition of 5% of delivery charges was deleted as the AO failed to point out specific defects. Other issues regarding violation of natural justice, incorrect interest computation under Section 234B, and credit for prepaid taxes were not specifically addressed in the Tribunal's decision. The order was pronounced on 22/02/2017.

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Issues Involved:
1. Disallowance under Section 40(a)(ia) of the Income Tax Act.
2. Ad-hoc addition of 5% of delivery charges.
3. Violation of principles of natural justice.
4. Incorrect computation of interest under Section 234B.
5. Credit for prepaid taxes.

Issue-wise Detailed Analysis:

1. Disallowance under Section 40(a)(ia) of the Income Tax Act:
The Assessing Officer (AO) disallowed Rs. 5,65,097/- under Section 40(a)(ia) of the Income Tax Act for non-deduction of TDS under Section 194C. The assessee argued that the payments included the supply of material, which should not be subject to TDS. However, no supporting evidence was provided to substantiate this claim. The CIT(A) confirmed the AO’s disallowance, noting the lack of evidence and the assessee's failure to substantiate the claim with documentary evidence. The Tribunal directed the AO to verify whether the recipients had included the receipts in their returns and paid taxes, following the precedent set by the Hon'ble Delhi High Court in CIT Vs. Ansal Land Mark Township P. Ltd. The issue was remitted back to the AO for verification, and the appeal was allowed for statistical purposes.

2. Ad-hoc Addition of 5% of Delivery Charges:
The AO made an ad-hoc disallowance of Rs. 40,060/- (5% of delivery charges) due to improper vouching. The CIT(A) upheld this disallowance, citing the assessee's failure to substantiate the expense claims with proper documentary evidence. The Tribunal found merit in the assessee's argument that the AO made the disallowance without pointing out specific defects or giving the assessee an opportunity to explain. Citing the ITAT Kolkata Bench decision in Amrik Singh, the Tribunal noted that ad-hoc disallowances without specific discrepancies are not permissible. The addition was deleted, and the appeal was allowed.

3. Violation of Principles of Natural Justice:
The assessee contended that the CIT(A) passed the order without considering the written submissions filed on 10/01/2014 and re-submitted on 22/01/2015. The Tribunal did not provide a separate ruling on this issue as it was not pressed during the hearing.

4. Incorrect Computation of Interest under Section 234B:
The assessee argued that the interest computed under Section 234B was overcharged and wrongly calculated. The Tribunal did not provide a separate ruling on this issue as it was not pressed during the hearing.

5. Credit for Prepaid Taxes:
The assessee claimed that the CIT(A) did not grant proper credit for prepaid taxes. The Tribunal did not provide a separate ruling on this issue as it was not pressed during the hearing.

Conclusion:
The Tribunal allowed the appeal for statistical purposes regarding the disallowance under Section 40(a)(ia) and deleted the ad-hoc addition of 5% of delivery charges. Other grounds were not pressed and thus not specifically addressed in the Tribunal's decision. The order was pronounced in the open court on 22/02/2017.

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