2016 (4) TMI 751

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....e Ld. CIT-(A) has erred in confirming action of Ld. AO of adding commission of Rs. 9,08,111/- u/s 40(a)(ia). 2. On the facts and circumstances of the case and in law, the Ld. CIT-(A) has erred in confirming action of Ld AO of disallowing purchases of Rs. 4,23,875/- treating them as bogus. 2. The facts in brief are that the assessee filed its return of income on 27.09.2010 declaring an income of Rs. 2,13,43,318/-.The assessee was engaged in the business of manufacturing bulk drugs. The case of the assessee was selected for scrutiny and statutory notices were issued u/s 143(2) and 142(1) of the Act and duly served upon the assessee. The AO framed the assessment u/s 143(3) vide order dated 06.03.2013 at Rs. 2,26,75,300/-by making t....

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.... of authorities below. 3.2. We have heard the rival submission and perused the materials on records. We find that the assessee failed to deduct TDS from Rs. 9,08,111/- paid to four parties as stated in para 4 of the assessment order and the AO disallowed the same u/s 40(a)(ia) of the Act. The assessee had satisfied the conditions as imposed by the 1st proviso to section 201(1) of the Act which reads as under:- " [Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of s....

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....on (1) of section 201 certifying furnishing of return of income and payment of tax, etc. we remand this issue to the file of the Id. Assessing Officer to examine the factual matrix and then decide in accordance with law. The assessee be given opportunity of being heard. Even otherwise, insertion of second proviso to section 40(a)(ia) with effect from 01/04/2003 is declaratory and curative in nature with retrospective effect from 01/04/2005, inserted by Finance (No.2) Act 2004, thus, the Assessing Officer is directed to examine the claim of the assessee whether the said amount has been included as income of the payee. Thus, this ground is allowed for statistical purposes." We therefore respectfully following the decisions of the Delhi Hig....

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....observing that assessee could not prove the supply of materials , lorry receipt to prove the payment of freight and other records and mere payment by cheque was not sufficient proof .Moreover the said company was not a regular supplier to the assessee 4.2. The Ld.AR for the assessee submitted that the whole addition was based upon the suspicion and conjectures on the basis of information by the VAT department , Govt of Maharashtra. The counsel submitted that the payment was made by cheque which was acknowledged by the supplier, the materials was received which was duly reflected in the stock register, delivery challan, bank statement , copy of ledger account, summary of LDO purchased and consumed during the year and comparative analysis ....