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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K & SHRI LAXMI PRASAD SAHU
Per George George K, Judicial Member :
This appeal at the instance of the assessee is directed against the CIT(A)’s order dated 10.02.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
The entire Appeal order passed by Learned CIT in so far it is against the Appellant is opposed to principle of equity and justice.
2. The Learned AO and Learned CIT Appeals are erred in disallowing 30% of freight charges paid Rs.9,52,671/- by invoking provisions of Section 40(a)(ia). 3. The Learned Authorities ought to have considered submission of appellant that, amount paid to lorry freight to the extent of Rs.9,52,671/- paid to different parties lower than limit specified U/s.194C of the Act and is not liable for TDS.
The learned AO ought to have appreciated fact that, the payment to parties does not exceed limit specified for deduction of taxes.
5. The Learned CIT (A) ought to have considered the submission by the appellant, the details freight charges, with vehicle numbers, amount etc., filed before CIT, Appeals along with the written submissions on 05th Nov 2022 vide Ack No. 782164741051122 before disallowing the expenditure.
Learned Authorities ought to have given sufficient opportunity of being heard if the submission of the appellant a disagreed.
7. The learned CIT, ought to have excised his power U/s.250 of the Act, for further enquiry before disposing the appeal against the appellant.
Entire order bad in law and against the principals of natural justice.
The Appellant reserves the right to add, delete. substitute the grounds of appeal.
The brief facts of the case are as follows:
Assessee is a firm. For the Assessment Year 2017-18, return of income was filed on 01.11.2017 declaring total income of Rs.44,52,080/-. The assessment was selected for scrutiny and notice under section 143(2) of the Act was issued on 16.08.2018. The assessment under section 143(3) was completed vide order dated 06.12.2019. In the said order, the AO made disallowance of Rs.2,85,801/- by invoking section 40(a)(ia) of the Act (being 30% lorry freight charges amounting to Rs.9,52,671/- on account of non-deduction of tax at source). The relevant observation of the AO in making the disallowance reads as follows:
“I have carefully gone through the reply of the assessee. With regard to the payment made to other transportation charges of Rs.9,52,671/-, the assessee has submitted that the same is below threshold limit prescribed u/s 194C of the Act. However, the assessee has not e-filed details and supporting evidences for verification. Hence, the same is not considered and accordingly 30% of the expenses amounting to Rs.2,85,801/- is disallowed and brought to tax by invoking the provisions of section 40(a)(ia) of the Act".
Aggrieved, the assessee filed appeal before First Appellate Authority. The CIT(A) rejected the grounds relating to the above addition by observing as under: “During the appellate proceedings, the appellant again reiterated that the charges are only reimbursement of cost to JSW Steel Ltd and that the AO had not granted opportunity to the appellant during the assessment proceedings. In this regard, it is stated that the appellant had granted opportunity to the appellant and the reply of the appellant is also reproduced in page 2 & 3 of the assessment order.”
4. Aggrieved, the assessee has filed the present appeal before the Tribunal. The learned AR has filed a Paper Book enclosing therein the statement indicating the payment of freight charges. The learned AR submitted that all the payments are paid to different parties and each of the payments are below the prescribed limit specified under section 194C of the Act and hence the assessee was not liable for TDS in the facts and circumstances of the case. The learned AR submitted that from the impugned order of CIT(A), it is clear that CIT(A) has not considered the written submission of the assessee and has not properly adjudicated the issue raised before him. Therefore, it was prayed that matter may be remanded to the CIT(A) for fresh consideration.
The learned Standing Counsel supported the orders of the AO and CIT(A).
6. We have heard the rival submissions and perused the material on record. From the findings of the CIT(A), we notice the contentions raised by the assessee before him was not adjudicated. Assessee has filed a written submission before the CIT(A) on 05.11.2022 and has also placed on record the details of payments of the freight charges. Since the CIT(A) has not adjudicated the issue in a proper manner, we are of the view that the matter needs to be examined afresh by the CIT(A). Accordingly, the issue of disallowance of Rs.2,85,801/- by invoking the provisions of section 40(a)(ia) of the Act is restored to the file of the CIT(A). The CIT(A) is directed to consider the written submissions of the assessee filed before him and shall decide the issue in accordance with law. The CIT(A) shall afford reasonable opportunity of being heard to the assessee. The assessee shall not seek unnecessary adjournments and shall co-operate with the Department for an expeditious disposal of the matter. It is ordered accordingly.
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on the date mentioned on the caption page.