TaxTMI 
TaxTMI 
2018 (1) TMI 1293
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.... the Act. 4. Briefly the facts are, the assessee a company is engaged in the business of builder and developer. For the assessment year under dispute assessee filed its return of income on 30/09/2011 declaring total income of Rs..1,27,39,434/-. During the assessment proceedings, the Assessing Officer noticed that, though, the assessee has paid interest of Rs..49,18,527/- to Non-Banking Financial Companies (NBFC) towards loans availed from them, however, the assessee has not deducted tax at source while making such payment. He therefore, called upon the assessee to explain why the interest paid should not be disallowed under section.40(a)(ia) of the Act. 5. In reply, though, the assessee justified its action in not deducting tax at source ....
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....d Authorized Representative that the second proviso of section 40(a)(ia) will have retrospective operation. The decisions relied upon by the learned Authorized Representative supports this view. However, a careful reading of the second proviso to Section 40(a)(ia) would make it clear that it will apply if the assessee is not deemed to be an assessee in default in terms of first proviso of section 201(1) of the Act. As per the conditions of Section 201(1) of the Act, the onus is on the assessee to demonstrate through documentary evidence that the recipients have offered the amount paid to them, without deducting tax at source, as income in the return of income filed for the relevant assessment year. 11. Since the aforesaid claim of the asse....
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....e income of the assessee. 15. Ld. Commissioner (Appeals) after considering the submissions of the assessee held that the entire purchases cannot be added to the income of the assessee as the consumption of material has not been doubted by the Assessing Officer. He also found that the Assessing Officer has not doubted the sales figure or the work in progress. Therefore, learned Commissioner (Appeals) held, since, only the source of purchases is doubtful the profit element embedded in such purchases can be considered for addition. Accordingly, he quantified the disallowance at 20% of the alleged bogus purchases. 16. The only submission by the learned Authorized Representative before us is, the disallowance of 20% is on a much higher side an....