ITAT allows appeal, deletes additions under sec 40(a)(ia) for non-TDS, emphasizes forms' non-filing not disallowance.

The ITAT, Cuttack allowed the assessee's appeal, setting aside the CIT(A)'s order and deleting the additions made under section 40(a)(ia) for non-deduction of TDS. The Tribunal held that the failure to file certain forms did not justify disallowance if payees' income tax returns reflected the amounts received and declarations stated no tax deduction. The Tribunal emphasized that non-filing of forms might lead to penalties but not disallowance of expenditure under the Income Tax Act.

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Issues:
- Appeal against order of CIT(A)-2, Bhubaneswar for assessment year 2014-15.
- Disallowance under section 40(a)(ia) for non-deduction of TDS.

Analysis:
1. Appeal against CIT(A) Order:
The appeal was filed by the assessee against the order of the CIT(A)-2, Bhubaneswar for the assessment year 2014-15. The assessee raised grounds challenging the additions made by the lower forums, arguing that they were not justified under the circumstances. Specifically, the assessee contested the addition of two amounts under section 40(a)(ia) of the Income Tax Act, 1961, for non-deduction of TDS.

2. Disallowance under Section 40(a)(ia):
The Assessing Officer had made additions of two amounts - one for common area maintenance and the other for rent paid - as the assessee failed to deduct TDS under sections 194C and 194-I. On appeal before the CIT(A), the assessee provided Form 26A and income tax returns of the recipients, showing that the recipients had included the amounts in their income tax returns. However, the CIT(A) did not accept this explanation, citing non-filing of forms with the Director General of Income Tax (Systems) as the reason for disallowance.

3. Tribunal's Decision:
The ITAT, Cuttack referred to a precedent set by the Mumbai Bench of the Tribunal in a similar case. The Tribunal held that if the assessee received declarations from payees stating no tax was to be deducted, and if the payees' income tax returns reflected the amounts received, then non-filing of certain forms did not warrant disallowance under section 40(a)(ia). The Tribunal found that the assessee had submitted necessary documents before the CIT(A), and the failure to file forms with the Director General of Income Tax (Systems) did not justify disallowance under section 40(a)(ia).

4. Final Decision:
In conclusion, the ITAT, Cuttack allowed the assessee's appeal, setting aside the CIT(A)'s order and deleting the additions made by the Assessing Officer under section 40(a)(ia). The Tribunal emphasized that while non-filing of forms with the tax authorities might attract penalties, it did not warrant disallowance of expenditure under the Income Tax Act. The decision was pronounced on 23/04/2018.

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