2020 (8) TMI 596 - AT - Income Tax

Appeals allowed, CIT(A) order set aside, matter remanded for fresh consideration, assessee granted new opportunity. Fair hearing ensured.

The Tribunal allowed the appeals for statistical purposes, setting aside the CIT(A) order and remanding the matter to the AO for fresh consideration, ... Disallowance u/s 40(a)(ia) - non-deduction of tax at source on the remuneration paid to artists - assessee had contended that the language Sec.40(a) (ia) refers to TDS on amounts 'payable' and amounts paid - main reason for confirming the disallowance is this that the assessee has not produced a CA certificate in which it is certified by the CA that the deductee has filed the return of income, after including the amount received from the assessee and paid taxes - HELD THAT:- Referring to main argument of assessee that the assessee was earlier not properly guided by the earlier counsel and after the assessee approached the present counsel, proper advise was given by the present counsel but because of ongoing Covid pandemic, the required documents, CA certificates etc. could not be brought on record and therefore, this is the request of the learned AR of the assessee that under these facts and in the interest of justice, the assessee should be provided one more opportunitywe set aside the order of CIT(A) and restore the matter back to the file of AO in both years with the direction that the assessee should bring on record the required evidences including the CA certificate for both years and the AO should consider those documents - Appeals of the assessee are allowed for statistical purposes. Issues Involved:1. Maintainability of the CIT(A) order.2. Applicability of Section 40(a)(ia) of the Income Tax Act.3. Principle of natural justice in disallowance.4. Relevance of judgments cited by the appellant.5. Confirmation of disallowances and interest under Section 234(B) and 234(C).Detailed Analysis:1. Maintainability of the CIT(A) Order:The assessee challenged the maintainability of the CIT(A) order dated 20/11/2018 for AY 2005-06 and 2006-07. The Tribunal noted that the CIT(A) had previously remanded the issue to the AO for fresh consideration in light of the decision in Anand Markala’s case. The Tribunal found that the CIT(A) had not erred in maintaining the order as the remand was necessary for a fair decision.2. Applicability of Section 40(a)(ia) of the Income Tax Act:The assessee argued that Section 40(a)(ia) was inserted in 2014 and thus not applicable to their case. The Tribunal noted that the CIT(A) had disallowed the claims due to non-deduction of TDS on payments to artists, which were made during AY 2003-04 and 2004-05. The CIT(A) emphasized that the provision aimed to ensure tax collection at the time of payment. The Tribunal upheld the CIT(A)'s interpretation, noting that the provision was mandatory and applied irrespective of the accounting system followed by the taxpayer.3. Principle of Natural Justice in Disallowance:The assessee contended that the disallowance violated the principles of natural justice. The CIT(A) had noted that the assessee failed to produce necessary evidence, including a CA certificate, to support their claim. The Tribunal acknowledged the assessee’s argument that they were not properly advised by their previous counsel and that the COVID-19 pandemic hindered the collection of required documents. Given these circumstances, the Tribunal decided to provide the assessee with another opportunity to present the necessary evidence.4. Relevance of Judgments Cited by the Appellant:The assessee argued that the judgments they relied upon were applicable to their case, whereas the CIT(A) relied on different judgments. The CIT(A) had considered the Supreme Court's decision in Hindustan Coca Cola Beverage (P.) Ltd. Vs CIT and the Constitutional Bench's judgment in Vatika Township (P) Ltd., which laid down principles concerning retrospectivity. The Tribunal found that the CIT(A) had correctly interpreted these judgments and their applicability to the case.5. Confirmation of Disallowances and Interest under Section 234(B) and 234(C):The assessee challenged the confirmation of disallowances and interest under Section 234(B) and 234(C) as excessive and arbitrary. The CIT(A) had confirmed the disallowances based on the tax audit report and the failure to produce the required CA certificate. The Tribunal, considering the current pandemic situation and the need for justice, decided to set aside the CIT(A)'s order and remand the matter to the AO. The AO was directed to reconsider the case if the assessee provided the necessary documents and CA certificates.Conclusion:The Tribunal allowed the appeals for statistical purposes, setting aside the CIT(A) order and remanding the matter to the AO for fresh consideration, allowing the assessee another opportunity to present the required evidence. The AO was instructed to pass a new order based on the additional evidence, ensuring a fair hearing for the assessee.