M/S LION EXPORTS,,RAJKOT-GUJARAT vs. THE INCOME TAX OFFICER, WD-5(2),, RAJKOT-GUJARAT

The assessee has raised following grounds of appeal:- “1. The Ld. CIT(A) erred in law and facts in confirming the re-opening proceedings the assessment U/s. 148 against the statutory provisions. The reassessment proceedings being bad in law need cancellation.

The Ld. CIT(A) erred in law and facts in confirming re-opening the assessment U/s. 148 without considering that there was failure in providing reasons for re-opening of the assessment. The re- assessment proceedings being bad in law need cancellation.

The Ld. CIT(A) erred in law and facts in confirming disallowance of Rs. 2,36,767/- in respect of foreign tours expenses. The disallowance needs deletion.

Without prejudice, the Ld. CIT(A) erred in law and facts in confirming disallowance of Rs. 2,36,767/- in respect of foreign tours expenses in full. The disallowance needs suitable reduction.

The Ld. CIT(A) erred in law and facts in confirming addition of Rs. 1,37,940/- U/s. 40(a)(ia). The addition needs deletion.

The re-assessment framed being bad in law needs cancellation.

No reasonable and adequate opportunities were given and as such the reassessment is bad in law.

Taking into consideration the legal, statutory, factual and administrative aspects, re-opening of assessment u/s. 148 being bad in law, no such proceedings ought to have been initiated. The initiation and completion of the same need cancellation.

Taking into consideration the legal, statutory, factual and administrative aspects, disallowance of Rs. 2,36,767/- and addition of Rs. 1,37,940/- ought not to have been made. The disallowance needs deletion.

Without prejudice, no adequate, sufficient and reasonable opportunity has been provided while passing assessment order. The assessment needs annulment.

Without prejudice, no adequate, sufficient and reasonable opportunity has been provided while passing appeal order. The assessment needs annulment.”

The fact in brief is that return of income decaling total income of Rs. 44,500/- was filed on 24th October, 2005. The assessment u/s. 143(3) was finalized on 20th Dec, 2010 determining total income at Rs. 87,500/-. On verification of the record, the assessing officer noticed that assessee had paid payment for transport expenses to the amount of Rs. 1,06,348/-. Out of the aforesaid transport expenses, the assessee has made payment of Rs. 68,828/- to Usha International. The assessing officer observed that the assessing officer has not deducted TDS u/s. 194C of the act, therefore, these expenses required to be disallowed u/s. 40(a)(ia) of the act. On further verification of the record, the assessing officer has noticed that during the year under consideration, the assessee has debited travel expenses of Rs. 2,36,767/- in the P & L a/c. Out of the travelling expenses, an amount of Rs. 10,000/- was disallowed while completing assessment made u/s. 143(3) of the act on 28th Dec, 2007. The assessing officer observed that the assessee has failed to I.T.A No. 758/Rjt/2014 A.Y. 2005-06 Page No 3 M/s. Lion Exports vs. ITO

Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.

During the course of appellate proceedings before us, we have heard ld. departmental representative and gone through the submissions filed by the assessee. Regarding disallowance of foreign travel expenses of Rs. 2,36,767/-, the assessee has furnished all the bills along with the copies of passport for undertaking foreign travel by the two partners of the assessee firm. The assessee has also furnished confirmations from the concerned parties as evidence before the assessing officer. It is observed that the assessing officer has disallowed the expenditure on assumption basis without contradicting supporting evidences pertaining to the foreign travel expenditure furnished by the assessee. The ld. CIT(A) has reiterated the finding of the assessing officer and confirmed the aforesaid disallowance made by the assessing officer. In this regard, we have noticed that during the course of assessment proceedings u/s. 143(3) of the act, the assessing officer has verified the claim of the assessee for foreign travel expenses at the time of original assessment completed u/s. 143(3) of the act on 12th Dec, 2007 and disallowed an amount of Rs. 10,000/- out of such expenses. During the course of re-assessment proceeding, the assessee has submitted relevant bills and copies of documents in respect of foreign travel made by I.T.A No. 758/Rjt/2014 A.Y. 2005-06 Page No 5 M/s. Lion Exports vs. ITO

1 Regarding disallowance of Rs. 1,37,940/- u/s. 40(a)(ia) of the act for not deducing tax as per provision of section 194C of the act on transport payment made to M/s. Usha International. In this regard, we have noticed that assessee has not made TDS on the above payment and also could not substantiate with any documentary or relevant evidences that the aforesaid payment was of the nature of reimbursement of expenses. Therefore, we do not find any error in the decision of ld. CIT(A) in sustaining the disallowance of the above expenses made by the assessing officer u/s. 40(a)(ia) of the act for not deducting TDS. Therefore, this ground of appeal of the assessee is dismissed.

In the result, the appeal of the assessee is partly allowed.