TaxTMI 
TaxTMI 
2026 (3) TMI 1016
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....raw material used in the business. For the year under consideration, the assessee filed its return of income under section 139(1) on 31.10.2023 declaring total income of Rs. 87,43,270/-. In the return of income, the assessee reported gross turnover of Rs. 1,03,41,80,891/- and gross profit of Rs. 5,41,17,453/- from its business activities. The return was initially processed under section 143(1) on 19.02.2024. Subsequently, the case of the assessee was selected for complete scrutiny under CASS primarily for the following reasons: i. High liabilities as compared to low income/receipts; and ii. Large turnover from the gems and jewellery business with comparatively low returned income. 3. During the course of assessment proceedings, the assessee furnished certain details from time to time, including copies of return of income, computation of income, tax audit report, financial statements, bank statements, ledger accounts of fixed assets and expenses, and loan confirmations. However, according to the Assessing Officer, the assessee failed to furnish complete details and supporting documents as called for during the course of assessment proceedings despite several opp....
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....f assessment proceedings it had furnished detailed information regarding deduction of tax at source on various payments and the same was also duly reported in Clause 34(a) of Form 3CD of the tax audit report. The assessee also submitted statements showing details of TDS deducted on payments such as purchases, labour charges, interest, rent, salary and professional fees and contended that the disallowance made under section 40(a)(ia) was unjustified. With regard to the addition made under section 68, the assessee submitted that the unsecured loans had been received through banking channels and that the assessee had furnished copies of income-tax returns, computations of income and loan confirmations of the concerned parties. It was therefore contended that the identity and genuineness of the loan creditors stood established. 8. After considering the submissions of the assessee and the material placed on record, the CIT(A) held that the assessee had furnished detailed statements showing deduction of tax at source and therefore the disallowance made by the Assessing Officer under section 40(a)(ia) was not sustainable. Accordingly, the CIT(A) deleted the addition of Rs. 23,35,80,090....
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....s, as required under law. 4. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in law in shifting the burden to the AO for issuing notice under section 133(6), even though the initial onus to substantiate the cash credits under section 68 lies entirely with the assessee. 5. The appellant craves leave to amend or alter or add a new ground which may be necessary. 11. During the course of hearing before us, the learned Departmental Representative strongly relied upon the assessment order passed by the Assessing Officer and submitted that the learned CIT(A) erred in deleting the disallowance made under section 40(a)(ia) of the Act. Referring to the details furnished by the assessee before the learned CIT(A) on page No. 6 of the Order, the learned DR submitted that the very statement relied upon by the assessee clearly demonstrates that the assessee had not fully complied with the provisions relating to deduction of tax at source under section 194Q of the Act. The learned DR drew our attention to the chart of purchases and TDS computation furnished before the first appellate authority, wherein the assessee itself had worked out....
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....ned Authorised Representative (AR) for the assessee fairly conceded that tax was not deducted at source under section 194Q in respect of purchases amounting to Rs. 13,55,918.86/-, as reflected in the statement furnished before the learned CIT(A). The learned AR submitted that to this limited extent there was a shortfall in deduction of tax at source. However, it was contended that even assuming such non-deduction, the provisions of section 40(a)(ia) provide for disallowance of only thirty per cent of the sum on which tax was deductible but not deducted, and therefore the disallowance, if any, ought to be restricted to 30% of Rs. 13,55,918.86/- and not the entire amount as disallowed by the Assessing Officer while computing the addition under section 40(a)(ia). The learned AR accordingly submitted that appropriate relief may be granted by restricting the disallowance to the extent permissible under the provisions of the Act. 15. The learned AR submitted that the issue sought to be raised by the Revenue in Ground No. 2, namely verification of compliance with the proviso to section 40(a)(ia), is not emanating from the reasoning recorded by the Assessing Officer in the assessment or....
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....lates to the deletion by the learned CIT(A) of the disallowance made by the Assessing Officer under section 40(a)(ia) of the Act. From the assessment order it is evident that the Assessing Officer had made a disallowance of Rs. 23,35,80,090/- on the premise that the assessee had failed to deduct tax at source on certain payments including purchases on which provisions of section 194Q were applicable. The learned CIT(A) deleted the disallowance on the ground that the assessee had furnished details of TDS deduction along with statements and documents. However, during the course of hearing before us, the learned DR drew our attention to the details furnished by the assessee itself before the learned CIT(A), wherein the assessee had tabulated the purchases, threshold exemption and the amount on which tax was deductible under section 194Q. From the said statement it emerges that though the aggregate purchases liable for TDS were reflected at Rs. 89,07,85,740.27/-, the purchases considered in the TDS return were Rs. 88,94,29,821.41/-, leaving a difference of Rs. 13,55,918.86/- relating to Purchases from Amar Tara Jewellers on which tax was deductible but was not deducted. Significantly, ....