P.N. Memorial Neuro Centre & Research Institute Ltd. Vs DCIT (ITAT Kolkata)
When TDS Details Are Already Filed, AO Cannot Disallow on Guesswork- No TDS Default, No Disallowance – Presumption Isn’t Proof
Assessee, a medical institution, faced three major disallowances u/s 40(a)(ia) for alleged non-deduction of TDS: ₹2,59,40,940 on miscellaneous expenses of ₹8,64,69,802; ₹1,62,66,583 on incentive payments of ₹5,42,21,943; & ₹1,02,32,441 on sales-promotion expenses of ₹3,41,08,137. AO presumed that these expenses attracted TDS u/s 194J/194H & disallowed 30% of each item, stating that details were not furnished. CIT(A) upheld AO’s action on the same reasoning.
Before Tribunal, Assessee produced audited accounts, tax-audit report, detailed break-up of expenditure, proof of TDS deduction wherever applicable, & complete ledgers already filed before AO/CIT(A). Tribunal noted that tax-audit report raised no adverse comment on TDS compliance, & Assessee had furnished full details which authorities ignored. AO made disallowance purely on presumption that payments such as doctors’ fees, radiology fees, nurses’ fees, security charges, generator hire, etc., must automatically fall u/s 194J without verifying actual nature or TDS already deducted. Tribunal held that disallowance cannot be made on assumptions & surmises; once Assessee has placed complete evidence of TDS deduction & nature of expenses, the burden shifts to AO. Finding factual compliance, Tribunal deleted all three disallowances in full & allowed the appeal.
