2026 (5) TMI 45

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....unt on salary payment made to two persons for which the assessee was found to be in default u/s. 201(1) of Rs. 11,40,596 on which interest u/s. 201(1A) was charged of Rs. 9,35,288 was dismissed. 2. The assessee is in appeal raising the following grounds of appeal: - "1. The order passed under the provisions of section 250 of the Act by ADDL/JCIT (A)-4 for short [for short "learned CIT(A)"] confirming the order passed by the learned Assessing Officer in so far as it is against the Appellant, is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the case. 2. The order passed by the learned CIT(A) is in gross violation of principles of natural justice in not affording the appellant reasonable opportunity of being heard under the facts and circumstances of the case. 3. The learned CIT(A) has erred by confirming the order passed by the learned Assessing Officer learned Assessing Officer treating the Appellant as Assessee in default for not deducting the taxes at source on certain provisions for expenses made in the books of accounts on the facts and circumstances of the case. The learned Assessing Officer erred in....

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....red in law in confirming the initiation of the penalty proceedings under the provisions of the Act on the facts and circumstances of the case. 13. The Appellant craves to add, alter, delete or substitute any of the grounds urged above. 14. In view of the above and other grounds as may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity." 3. Ground Nos. 1 & 2 are general in nature, nothing was submitted before us and therefore the same are dismissed. 4. Ground No.3 of the appeal is with respect to non-deduction of tax at source of the provisions made in the books of account wherein the ld. AO determined the liability of the assessee amounting to Rs. 39,47,249. Ground No.4 is with respect to the fact that provision made at the end of the year has not crystallised and therefore there is no requirement of tax deducted at source. Ground No.5 relates to the fact that the provisions have been reversed subsequently in the books of account, the assessee should not have deducted tax at source. Ground No.6 to 12 are also supporting the above issue. 5. Briefly stated the facts show th....

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.... the end of the year on 31.3.2018 is reversed and no payment has been made to the vendors in respect of such provision and therefore on such provision the liability to deduct tax at source does not arise. 10. Before us, the ld. AR, Shri Shesha Hegde, CA, appeared, who filed a paperbook containing 156 pages. He referred to the provisions of section 4(1) of the Act and explained the facts of the case stating that assessee has made provision at the end of the year in its books of account for which the invoices have not been received and therefore no tax is required to be deducted thereon as on 31.3.2018. He submitted that this provision is reversed on the first day of the next year and thereafter as and when bills are received, the expenses are debited to the books of account and tax is deducted at source. His main contention is that on the year end provisions, no tax is required to be deducted at source, that in subsequent year whenever invoices are received and bills are paid adequate tax is deducted. He referred to the list of 16 such transactions totalling to Rs. 77,55,264 at page 114 of the PB wherein name of the party, PAN, nature of expenses, total provision made was explain....

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....he case of the assessee that payee and amount is unascertainable. b) Though the amount was credited to the expenditure payable account does not merit any consideration for relief or realization from the provisions of the year end made by the assessee for non-deduction of tax at source. According to section 19C (2) of the Act, even if the amount is credited to any other account other than the account of creditor, TDS is required to be made. Similar provision exists in explanation (C) of Section 194 J of the Act. c) It is also an established fact that assessee is a company which is audited by Lodha & Co., has maintained its books of accounts in terms of provisions of section 134 of the Companies Act, 2013. The books of account are also maintained on the accrual system of accounting. This is so stated by Auditor in audit Report as well as the Directors of the company in Report of Board of Directors. Thus, it cannot be said that the amount of Rs. 77,55,264 which is provided by the assessee at the end of the year, did not incur the expenditure. Further according to Note No.2 to the financial statement, this fact is also confirmed. d) According to the provision....