ACIT Vs Orbit Ventures Developers (ITAT Mumbai)
In this case before the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), the Revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] concerning disallowance under Section 40(a)(ia) of the Income Tax Act in relation to non-deposit and non-deduction of tax deducted at source (TDS). The assessee, a partnership firm engaged in redevelopment activities, had filed its return for Assessment Year 2018–19 declaring a loss of Rs. 19.13 crore. The case was selected for scrutiny on issues including income from real estate business, TDS defaults, and loans and advances.
During assessment proceedings, the Assessing Officer (AO) noted that the assessee had shown TDS payable of Rs. 6.08 crore in its balance sheet and sought evidence of payment. The AO also found discrepancies between the tax audit report and the disallowance already made by the assessee under Section 40(a)(ia). Further information regarding property sale deeds was also sought, but the AO recorded that the assessee failed to furnish the required details.
A show cause notice along with a draft assessment order was issued proposing disallowance. The assessee argued that Section 43B was not applicable to non-payment of TDS and that disallowance, if any, would fall under Section 40(a)(ia). It also contended that certain disallowances had already been made in the return of income and further additions would amount to double disallowance. The AO rejected the explanation and made disallowances under Section 40(a)(ia), including 30% of unpaid TDS-related expenditure and additional disallowance for non-deduction of TDS on certain payments. Penalty proceedings under Section 270A were also initiated.
