The Income Tax Appellate Tribunal (ITAT), Cuttack bench, observed that CIT(A) failure to issue enhancement notice before addition shall invalidate such addition and therefore, deleted the addition on non-deduction of TDS of interest paid on the borrowed capital.
The Assessing Officer (AO) raised issues against the assessee on being non-deduction of TCS in respect of the sale of minerals and the non-deduction of TDS in respect of interest paid on the borrowed capitals paid to NBFCs. It was then submitted by the assessee that they have certificates from the various purchasers confirming that the purchases were disclosed in their turnover and interest on borrowed capital has been disclosed by various NBFCs in their returns of income.
The AO in the remand proceedings raised various other issues like TDS on repairs and maintenance, TDS in respect of labour charges, TDS in respect of tours and travels, TDS in respect of rent, port levy charges & wharfage charges and TDS in respect of business promotion, etc. and the CIT(A) had made the addition therein.
The assessee contended that the CIT(A) has not issued any enhancement notice for making the addition. In contra, the revenue stated that if the assessee desires to produce the evidence before the AO as per section 206C(6A) of the Income Tax Act, 1961 r.w 37J of the Income-tax Act, the assessee had to comply with the notification No.12/2016 dated 8.12.2016.
The Tribunal observed that the assessee has prayed that to restore the issue to the file of the Assessing Officer to produce the evidence in respect of same having been disclosed by the purchasers in respect of the purchase of iron & steel and recipients of the interest.
Shri George Mathan, Judicial Member and Arun Khodpia, Accountant Member restored the issue to the file of the AO for re-adjudication after granting the assessee adequate opportunity to substantiate its claims and addition based on other fresh issues raised by the CIT(A) was deleted on failure in the issuance of enhancement notice before making the addition. The appeals of the assessee were partly allowed for statistical purposes.
Shri K.K.Bal appeared for the assessee and Shri S.C.Mohanty appeared for the revenue.
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