2018 (1) TMI 1041 - AT - Income Tax

Tribunal upholds CIT(A)'s decision on expense additions, cites Rule 46A for admissibility

DCIT, Circle 1 (1), Gurgaon Versus Sh. Deepak Bansal

The Tribunal upheld the CIT(A)'s decision to delete additions totaling Rs. 1,39,77,399 under various expense heads made by the AO, as the additional ... Non deduction of tds - invoking provisions of Section 40(a)(ia) - additions made under the heads wages and salary, site preparation, shuttering material, machinery maintenance, sanitary and plumbing material, cartage inwards, freight cartage and transport expenses - CIT-A allowed the claim - Held that: -CIT(A) has rightly deleted the addition in dispute, because the details given by the assessee in the voluminous paper book along with other evidence make it crystal clear that in most of the cases, TDS Provisions were not applicable. Therefore, we do not find any infirmity in the well reasoned order passed by the Ld. CIT(A) on the issue in dispute and hence, we uphold the finding of the ld. CIT(A) on this issue and accordingly, reject the grounds raised by the Revenue. Issues Involved:1. Deletion of additions under various expense heads without establishing the genuineness of additional evidence.2. Admissibility of additional evidence under Rule 46A of the Income Tax Rules, 1962.Issue-wise Detailed Analysis:1. Deletion of Additions under Various Expense Heads:The Revenue challenged the deletion of additions totaling Rs. 1,39,77,399 under the heads of wages and salary, site preparation, shuttering material, machinery maintenance, sanitary and plumbing material, cartage inwards, freight cartage, and transport expenses by the CIT(A). The AO had made these additions due to the assessee's failure to provide details during the assessment, leading to the disallowance under Section 40(a)(ia) of the Income Tax Act, 1961, for non-deduction of TDS.During the appellate proceedings, the assessee submitted additional evidence claiming that they were not given a proper opportunity to present these documents during the assessment. The CIT(A) admitted the additional evidence and found that the expenses were genuine and not subject to TDS provisions. The Tribunal upheld the CIT(A)'s findings, noting that the assessee provided comprehensive details and evidence during the appellate proceedings, which demonstrated that TDS provisions were not applicable in most cases. Thus, the Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's appeal.2. Admissibility of Additional Evidence under Rule 46A:The Revenue argued that the CIT(A) erred in admitting additional evidence without proper justification under Rule 46A of the Income Tax Rules, 1962. Rule 46A outlines specific conditions under which additional evidence can be admitted, such as when the AO refuses to admit evidence, the appellant is prevented by sufficient cause from producing evidence, or the AO makes an order without giving sufficient opportunity to the appellant.The Tribunal observed that the assessee claimed they were not given an adjournment by the AO to submit the required evidence, which needed to be procured from a remote district. The CIT(A) found merit in this claim and admitted the additional evidence. The Tribunal referred to the precedent set by the Bombay High Court in Prabhavati S. Shah vs. CIT, which held that the restrictions under Rule 46A do not affect the powers of the Appellate Assistant Commissioner under Section 250 of the Income Tax Act. The Tribunal agreed with the CIT(A) that the additional evidence was rightly admitted, as it was crucial for determining the genuineness of the expenses and the applicability of TDS provisions.Conclusion:The Tribunal upheld the CIT(A)'s decision to delete the additions made by the AO, as the additional evidence provided by the assessee during the appellate proceedings substantiated that the expenses were genuine and not subject to TDS provisions. The Tribunal also supported the CIT(A)'s decision to admit the additional evidence under Rule 46A, given the circumstances and the precedent set by higher courts. Consequently, the Revenue's appeal was dismissed.