Non deduction of expenses for non-deduction of TDS & inclusion of same by deductee in their income tax return – ITAT directs assessee to submit CA certificate

Viral Ashish Parikh Vs ACIT (ITAT Ahmedabad)

it is transpired that the assessee can be granted immunity from disallowances of expenses on account of non/short deduction of taxes provided that the assessee (payer) furnishes the certificate in the prescribed form. Thus the onus is upon the assessee. However we find that assessee has not furnished the necessary certificate in form 26A prescribed by the CBDT.

We also find that similar prayer was also made by the assessee before the learned CIT (A) but the same was rejected by him by observing that the assessee has not complied the conditions as specified under the provisions of law i.e. furnishing the certificate of the CA.

Now at the time of hearing before us, the learned AR has also not furnished any certificate in form 26A prescribed by CBDT. Now the issue arises, can the matter be set aside to the file of the AO for collecting the necessary evidences from the respective payees to ensure that such payees have paid the taxes on the amount received from the assessee?

 In this regard we note that it is the duty of assessee to deduct appropriate tax from the amount paid/payable to any party i.e. payee if such amount falls under the purview of the provision of chapter XVII (B) of the Act i.e. deduction at source. Further the provision of section 40(a)(ia) of the Act provides that if assessee failed to deduct or failed to deduct appropriate tax on amount paid on which it was liable to deduct tax then such amount will not be allowed as business expenses. However the legislator provided relaxation to the assessee by inserting the 2^nd proviso to section 40(a)(ia) on account of failure to deduct the tax if it fulfills the condition prescribed under proviso to section 201(1) of the Act i.e. furnishing a certificate from accountant in from 26A. To our understanding the duty cast on the assessee cannot be transferred to revenue. If such burden is transferred to Revenue then the importance of provision of tax deduction at source under the provision of chapter XVII (B) of the Act i.e. deduction at source will be of no relevance. However, in the interest of justice and to avoid the double taxation, we set aside the issue to the file of the AO with the direction to the assessee to submit the CA certificate to the effect that the payees have included the amount received in their income return and offer the same to tax. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.

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