WESMAN THERMAL ENGINEERING PROCESSES PRIVATE LIMITED,KOLKATA vs. A.C.I.T., CIRCLE - 1(2), KOLKATA, KOLKATA
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Income Tax Appellate Tribunal, ‘A’ BENCH, KOLKATA
Before: Shri Rajpal Yadav, Vice- & Dr. Manish Borad
Per Shri Rajpal Yadav, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC),
ITA No. 60/KOL/2023 Assessment Year : 2015-2016 Wesman Thermal Engineering Processes Pvt. Limited Delhi dated 1st December, 2022 passed for assessment year 2015-16.
In the solitary ground of appeal, the assessee has pleaded that the ld. CIT(Appeals) has erred in confirming the addition of Rs.3,24,827/-.
Brief facts of the case are that the assessee has filed its return of income on 30.09.2015 for A.Y. 2015-16 declaring total loss of Rs.86,78,737/-. This return was selected for scrutiny assessment and a notice under section 143(2) was issued and served upon the assessee. The ld. Assessing Officer while making the disallowance of Rs.3,24,827/- out of travelling expenses has observed as under:- “Disallowance under travelling expense (domestic):- Having gone through the profit and loss account, it is observed that assessee has debited Rs.64,96,552/- under the head ‘travelling expense (domestic)’. The assessee has been asked to furnish details of travelling expenses during the year, but the explanation is unsatisfactory in nature. As the assessee company could not furnish the requisite details satisfactorily, hence 5% of total expenditure on ad hoc basis which works out to Rs.3,24,827/- has been disallowed as not relates to assessee’s business and added back to the total income of assessee-company. Disallowance Rs.3,24,827/-“.
On appeal, the ld. CIT(Appeals) confirmed this disallowance by observing that on certain occasions, the assessee has made cash payments exceeding Rs.10,000/-
ITA No. 60/KOL/2023 Assessment Year : 2015-2016 Wesman Thermal Engineering Processes Pvt. Limited in violation of section 40A(3). The ld. CIT(Appeals) thereafter made reference to those debts.
The ld. Counsel for the assessee submitted that in A.Y. 2015-16, the limit for making cash payment was Rs.20,000/-. Hence, ld. 1st Appellate Authority has totally misread the provision. On the other hand, ld. D.R. was unable to controvert the submissions of the ld. Counsel for the assessee.
On due consideration of the record, we are of the view that firstly the ld. Assessing Officer has not justified as to why ad hoc disallowance has to be made. He has not pointed out which detail and how it is not satisfactory. His order (extracted supra) is totally a non- speaking order. The ld. 1st Appellate Authority has again approached the controversy in an erroneous manner. Hence, both the orders are not sustainable. We allow the appeal of the assessee and delete the disallowance.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on June 22, 2023.
Sd/- Sd/- (Manish Borad) (Rajpal Yadav) Accountant Member Vice-President(KZ) Kolkata, the 22nd day of June, 2023
ITA No. 60/KOL/2023 Assessment Year : 2015-2016 Wesman Thermal Engineering Processes Pvt. Limited
(1) M/s. Wesman Thermal Engineering Copies to : Processes Pvt. Limited, 3rd Floor, Wesman Centre, 8, Mayfair Road, Kolkata-700019
(2) Assistant Commissioner of Income Tax, Circle-1(2), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 (3) Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi; (4) Commissioner of Income Tax , (5) The Departmental Representative (6) Guard File TRUE COPY By order
Assistant Registrar Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.
