TaxTMI 
TaxTMI 
2018 (5) TMI 51
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....d a government contractor. The assessee filed his return of income for the A.Y under consideration on 23-0-09 declaring total income at Rs. 1,30,14,057/-. Notice u/s. 143(2) and 142(1) of the Act were issued to assessee. In response to which, the assessee appeared and filed books of account and bank statement. 5. The AO found that the assessee had not deducted TDS on payments/expenses i.e a) labour charges of Rs. 36,15,736 b)installation charges of Rs. 7,75,362/- & c)hire charges of Rs. 9,60,000/- totaling to 53,51,098/- and for non deduction of TDS by invoking the provisions of section 40(a)(ia) of the Act added a sum of Rs. 53,51,098/- to the total income of assessee by an order dt. 29-12-2011 passed u/s. 143(3) of the Act. 6. Before the CIT-A the assessee filed a written submission along with supporting documents in this regard. The ld.AR of the assessee before him submits that the assessee is a government contractor and incurred the said expenditure towards labour charges, installation charges and hire charges totaling to Rs. 53,51,116/-. During the F.Y 2008-09 relevant to A.Y under consideration the assessee spent a sum of 1,72,23,736/- as labour charges on account of operat....
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....e assessment order. Now the assessee is ready to produce all the details of said payees as referred in para- 2 of AO 's order for his verification to find out whether the payees shown respective amounts received from assessee in their accounts and offered the same for taxation in their returns of income and prayed to remand the matter to the file of AO for his verification in terms of 2nd proviso to section of section 40(a)(ia) of the Act. 9. The ld.DR submits that the assessee has admitted during the course of assessment proceedings that it was a mistake in not deducting TDS on such payments and offered to tax vide his reply dt. 12-12-2011 and referred to page 2 & 3 of the AO's order. The assessee has taken a submission before the CIT-A stating that the said payments were made to labour and deduction of TDS on labour payment does not arise. Before this Tribunal the assessee has raised a new submission for remanding the matter to the file of AO. The ld.DR argued that in the submissions of assessee has no force and merit in remanding the matter to the AO for his verification and prayed to dismiss the ground nos. 2 to 7 raised by the assessee in the appeal. 10. Heard rival submissi....
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....d to benefit the Assessee. It also states that where a person fails to deduct tax at source on the sum paid to a resident or on the sum credited to the account of a resident such person shall not be deemed to be an assessee in default in respect of such tax if such resident has furnished his return of income under Section 139 of the Act. No doubt, there is a mandatory requirement under Section 201 to deduct tax at source under certain contingencies, but the intention of the legislature is not to treat the Assessee as a person in default subject to the fulfillment of the conditions as stipulated in the first proviso to Section 201(1). The insertion of the second proviso to Section 40(a) (ia) also requires to be viewed in the same manner. This again is a proviso intended to benefit the Assessee. The effect of the legal fiction created thereby is to treat the Assessee as a person not in default of deducting tax at source under certain contingencies. 12. Relevant to the case in hand, what is common to both the provisos to Section 40 (a) (ia) and Section 201 (1) of the Act is that the as long as the payee/resident (which in this case is APIL) has filed its return of income disclosing t....
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....r tax withholding lapse but it is a sort of compensatory deduction restriction for an income going untaxed due to tax withholding lapse. The penalty for tax withholding lapse per se is separately provided for in Section 271 C, and, section 40(a)(ia) does not add to the same. The provisions of Section 40 a)(ia1 as they' existed prior to insertion of second proviso thereto, went much beyond the obvious intentions of the lawmakers and created undue hardships even in cases in which the assessee's tax withholding lapses did not result in any loss to the exchequer. Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have be....
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....000/- received as ad-interim advance from South 24-Pgs, Mechanical Division, Govt. of W.B. Further contended that TDS certificate(s) shows only contractual value and the payment is decided on various reasons depending upon report verification certificate and final payment is net result of payment after such deduction. The CIT-A has not considered the above submissions of assessee and confirmed the addition made by the AO by stating as under:- "6.2 I have perused the assessment order and the submission of the appellant on the issue at hand for coming to a decision on merits. At the assessment stage, the appellant admitted in his submission that contractual receipt of Rs. 77,26,433/- was not considered by him in his Total Turnover in the P & L A/c and offered the same for taxation. The appellant also paid Rs. 10,00,000/- by way of Self Assessment Tax on 08.12.2011, Rs. 5,00,000/- on 14.12.2011, Rs. 5,00,000/- on 21.12.2011. The AO observed that from the above submission of the assessee, it was proven beyond doubt that the assessee had not considered the contractual receipt of Rs. 77,26,433/- in his P&L A/c whereas he had debited the expenses/TDS of Rs. 11,99,860/- on account of Ces....