Section 40(a)(ia) disallowance remanded for fresh verification after assessee is allowed to produce required evidence.

Disallowance under section 40(a)(ia) could not be finally sustained without verification of the statutory evidence, including the accountant's certificate and proof that the deductees had filed returns and paid tax on the receipts. The Tribunal noted that the assessee had earlier only produced confirmation letters and had not placed the full prescribed material on record, but also that the issue depended on factual verification of those supporting documents. It therefore set aside the disallowance and restored the matter to the Assessing Officer for fresh consideration after giving the assessee a reasonable opportunity to produce the required evidence.

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Issues: Whether the disallowance under section 40(a)(ia) for alleged failure to deduct tax at source could be sustained without the assessee producing the required evidences, including the accountant's certificate and proof that the deductees had filed returns and paid tax on the amounts received.

Analysis: The disallowance had been confirmed because the assessee had furnished only confirmation letters from the deductees and had not produced the prescribed accountant's certificate or established that the deductees had reflected the receipts in their returns and paid tax thereon. The Tribunal noted that the matter had earlier been remanded and that, in the prevailing circumstances, the assessee sought one more to place the necessary evidence on record. Since the issue turned on the production and verification of material evidence, the Tribunal found it to afford a further opportunity and direct fresh consideration by the Assessing Officer after examining the documents, including the accountant's certificate, if produced.

Conclusion: The disallowance was set aside and the matter was restored to the Assessing Officer for reconsideration after giving the assessee a reasonable opportunity to produce the required evidence.

Ratio Decidendi: Where the sustainability of a disallowance under section 40(a)(ia) depends on factual verification of statutory conditions and supporting certification, the matter may be remanded for fresh adjudication if the assessee is not found to have had an effective opportunity to place the requisite evidence on record.

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