No Documents to substantiate TDS Deduction by Principal before Payment of Sale: ITAT extends disallowance to 6% [Read Order]
![No Documents to substantiate TDS Deduction by Principal before Payment of Sale: ITAT extends disallowance to 6% [Read Order]](https://www.taxscan.in/wp-content/uploads/2022/08/documents-TDS-deduction-payment-of-sale-ITAT-taxscan.jpg "No Documents to substantiate TDS Deduction by Principal before Payment of Sale: ITAT extends disallowance to 6% [Read Order]")
In the absence of documents to substantiate the TDS deduction by the principal before the payment of sale, the Surat bench of the Income Tax Appellate Tribunal (ITAT) has extended the disallowance to 6%. The assessee, Vimalchand Manikchand Jain engaged in the business of purchasing and sales of diamonds for and on behalf of importers and exporters. The assessee case was reopened under...
In the absence of documents to substantiate the TDS deduction by the principal before the payment of sale, the Surat bench of the Income Tax Appellate Tribunal (ITAT) has extended the disallowance to 6%.
The assessee, Vimalchand Manikchand Jain engaged in the business of purchasing and sales of diamonds for and on behalf of importers and exporters. The assessee case was reopened under section 147 on the information. The statement of Rajendra Jain was recorded by Investigation Wing under section 132 of the Income Tax Act, 1961 (the Act) and was confirmed that he was managing various bogus entries for providing accommodation of entry without delivery of actual goods.
The Assessing Officer made disallowance only based onthe report of investigation Wing without making any independent investigation. No finding on the documentary evidence files by the assessee was given by Assessing Officer.
It was viewed that even if the parties failed to prove the genuineness of the entire transaction of tainted purchases, the revenue authorities are not entitled to bring the entire transaction to tax.Further observed that there was no other document to substantiate that the principal deducted TDS before making payment of sale was filed on record.
Shri Pawan Singh, judicial member and Dr Arjun Lal Saini, accountant memberviewed that the disallowance restricted by CIT(A) was on the little lower side, to avoid the possibility of Revenue leakage, the Coram modified the order of CIT(A) by restricting the addition of impugned/bogus purchasesto the extent of 6%.
The appeals of the Revenue are partly allowed and the cross objections by the assessee are dismissed. The revenue was represented by Shri H.P. Meena& Shri Vinod Kumar and the assessee was represented by Shri Himanshu Gandhi.
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