ITO, WARD-1(3)(2), NEW DELHI vs. LAXMI ELECTRONICS, , HARIDQAR

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN CIRCUIT BENCH, DEHRADUN BEFORE SHRI SAKTIJIT DEY, VICE-PRESIDENT AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER

ITA No. 4711/Del/2017 Assessment Year: 2009-10 Income-tax Officer, Versus Laxmi electronics, F-32, Ward 1(3)(2), New Delhi. Industrial Area, Haridwar. PAN:AACFL6648R (Appellant) (Respondent) Assessee by : None Revenue by : Sh. A.S. Rana, Sr. DR Date of hearing : 22.06.2023 Date of pronouncement: 22.06.2023 ORDER This is an appeal by the Revenue against order dated 31.01.2017 of learned Commissioner of Income-tax (Appeals), Agra (camp at Dehradun) for the assessment year 2009-10.

ITA No. 4711/Del/2017

PCB/electronic items. In the assessment year under dispute, the

assessee filed its return of income on 24.09.2009 declaring nil

income after claiming deduction under section 80IC of the Income-tax

Act, 1961. In course of assessment proceedings, while examining

financial statements of the assessee, the Assessing Officer noticed

that the assessee had shown purchases of Rs.15,62,09,848/-.

However, the assessee could not furnish complete bills and vouchers

relating to such purchases. Further, as observed by the Assessing

Officer, independent enquiry conducted by him through notice issued under section 133(6) of the Act in respect of the persons/entities from

whom the assessee had purchased the goods, revealed that the

assessee has inflated his purchases by Rs.3,69,73,180/-.

Accordingly, he added back the said amount to the income of the

assessee.

Commissioner (Appeals). While deciding assessee’s appeal, learned

Commissioner (Appeals) granted partial relief to the assessee.

Against the decision of the first appellate authority, both, the

assessee and the Revenue went in appeal before the Tribunal. While

2 | P a g e

ITA No. 4711/Del/2017

deciding the appeals, the Tribunal dismissed the appeal of the

Revenue. Whereas, in so far as the issue of addition made on

account of inflated purchases arising in assessee’s appeal and

disallowance made u/s. 40(a)(ia) of the Act, the Tribunal restored the

issues to the first appellate authority for fresh adjudication. While

implementing the directions of the Tribunal, learned first appellate

authority called upon the assessee to furnish the requisite details

relating to the purchases. In response to the query raised, the

assessee furnished various details and evidences in respect of the purchases. The submissions made and evidences furnished by the

assessee were forwarded to the Assessing Officer for examination

and report. After considering the remand report of the Assessing

Officer, learned Commissioner (Appeals), having found that the

Assessing Officer has accepted the genuineness of the transactions, deleted the addition.

on record. From the observations made by learned Commissioner

(Appeals) in paragraph No. 5 and 5.1 of his order, it is very much

clear that in remand proceedings, the Assessing Officer verified

3 | P a g e

ITA No. 4711/Del/2017

purchase bills/invoices and various other documents relating to the

purchases made by the assessee. On verifying such evidences on

test check basis, he has reported that the purchase transactions were

found to be genuine and correct. That being the observation of the

Assessing Officer in the remand report, we do not find any infirmity in

the decision of learned Commissioner (Appeals) in deleting the addition. Ground raised is dismissed.

disallowance made by the Assessing Officer under section 40(a)(ia) of the Act.

Assessing Officer noticed that the assessee has paid an amount of

Rs.3,92,550/- towards freight and Rs.1,28,000/- towards job work

expenses. Being of the view that payments made are covered u/s.

194C of the Act, thereby requiring the assessee to deduct tax at

source, the Assessing Officer made disallowance under section

40(a)(ia) of the Act for an amount of Rs.5,20,550/-.

4 | P a g e

ITA No. 4711/Del/2017

before learned Commissioner (Appeals) and ultimately, the Tribunal

restored the issue back to the first appellate authority for fresh

adjudication. In course of fresh proceedings before the first appellate

authority, the assessee furnished certain documentary evidences,

which were forwarded to the Assessing Officer for verification and

report. After verifying the evidences furnished by the assessee, the

Assessing Officer furnished a remand report, wherein, he accepted

that most of the payments made were petty amounts below Rs.20,000/-. Only three payments towards job work expenses were

exceeding the threshold limit of Rs.20,000/-.

concerned, though, the assessee urged before learned

Commissioner (Appeals) that they were not covered under section

194C of the Act, hence, there was no obligation on the assessee to

deduct tax at source, however, it is apparent, learned Commissioner

(Appeals) did not accept the said submission of the assessee and

sustained disallowance of Rs.1,08,000/-. Whereas, he deleted

balance amount of Rs.4,12,550/-. Thus, from the facts discussed

5 | P a g e

ITA No. 4711/Del/2017

above, it is evident in the remand report, the Assessing Officer

himself has admitted that except the amount of Rs.1,08,000/-, rest of

the payments were of petty amounts below the threshold limit of

Rs.20,000/-. That being the case, learned first appellate authority was

justified in deleting the disallowance made under section 40(a)(ia) of

the Act to that extent. Ground raised is dismissed.

Order pronounced in the open court on 22/06/2023. Sd/- Sd/- (M. BALAGANESH) (SAKTIJIT DEY) ACCOUNTANT MEMBER VICE-PRESIDENT

Dated: 22.06.2023 *aks/-

6 | P a g e