FAST FORWARD LOGISTICS INDIA PRIVATE LIMITED,CHENNAI vs. ITO C(2)(1), CHENNAI

The First Appellate Authority has erred on facts and in law by affirming the additions made the Learned AO under section 37 of the Income Tax Act, 1961 of Rs. 8,23,883/- (Rupees Eight Lakhs Twenty Three Thousand Eight Hundred and Eighty Three only) which represent interest and late fees paid by the company under the Goods and Service Tax Act, 2017

That the appellant craves leave for reserving the rights to 3 amend, modify, alter, add, OR forego any ground(s) of appeal at any time before OR during the hearing of this appeal.

Briefly, the facts of the case are that the appellant is a Company incorporated under the provisions of Companies Act. It is engaged in the business of Clearing Agents and Forwarding Agents, Freight Forwarding Agents, Customs House Representative and handling cargo in for Airlines, Shipping, Railways, Roadways and all other mode of conveyances and that are engaged in transporting cargo by air, sea, road all other means. The appellant filed return of income under the provisions of section 139 of the Income Tax Act, 1961 for the Assessment Year 2021-22 was filed on 11.01.2022 declaring business income of Rs.4,50,01,790/-. Against the said return of income, the Assessment was completed by the e-Assessment Unit of the Department(hereinafter called ‘AO’) vide order dated 26.12.2022 passed u/s.143(3) read with section 144B of the Income-tax Act, 1961 at a total income of Rs.5,46,18,824/-. While doing so, the Assessing Officer made disallowance of purchases of Rs.87,93,151/- from the following parties :  WELSHIP LOGISTICS INDIA PRIVATE LIMITED  EMIRATES SHIPPING LINE DMCEST  GATEWAY DISTRIPARKS LTD  THSEEN TAJ  SALIENT CONTAINER LINE PRIVATE LIMITED  BIG WINGS LOGISTICS  AWARDLINK LOGISTICS INDIA PRIVATE LIMITED on the ground that the suppliers neither responded to the notices issued u/s.133(6) of the Act nor those parties filed the returns of income/GST Returns. The Assessing Officer also made addition on GST Late Fee of Rs.8,23,883/-.

Being aggrieved by the assessment order, the appellant filed an appeal before the Learned CIT(A), who vide impugned order after taking into consideration submissions made confirmed the action of the Assessing Officer by holding that the appellant had not filed any documentary evidence rebutting the findings of the Assessing Officer. The Learned CIT(A) also confirmed addition of the GST Late Fee holding that it is penal in nature.

Being aggrieved by the order of the Learned CIT(A), appellant preferred an appeal before the Tribunal. The Learned Counsel submits that the Learned CIT(A) ought not have confirmed the disallowance of purchase of Rs.87,93,151/- merely based on the surmises, suspicion and conjectures. He further submitted that no disallowance of purchases can be made merely because the suppliers have failed to respond to notices issued by the Assessing Officer. The appellant had discharged the primary onus lying upon it to prove the genuineness of purchases made. As regards to the disallowance of late fee he submits that interest paid on belated payment of GST, is not penal in nature, therefore, no disallowance can be made.

On the other hand, the Learned Sr.DR opposed the above submissions and submits that the suppliers from whom the purchases were made were not genuine as they have not filed any Income Tax Returns or GST Returns nor responded to the notices issued u/s.133(6) of the Income Tax Act, issued by the Assessing Officer. Therefore, the Learned CIT(A) rightly confirmed the action of the Assessing Officer. The interest payment for late payment of GST of Rs.8,23,883/- as same is penal in nature.

We heard rival submissions and perused the material available on record. The first ground of appeal relates to disallowance of purchase of Rs.87,93,151/-. On careful perusal of the assessment order, it would reveal that the Assessing Officer made disallowance of the purchases made from the above mentioned parties. The suppliers neither responded to the notices u/s.133(6) of the Act issued by the Assessing Officer nor filed the Income Tax Returns or GST Returns. In our considered opinion, these factors does not ipso lead to the conclusion that purchases made are bogus. The Assessing Officer had not brought on record the details of payment made from the above purchases nor brought on record whether the corresponding sales were reflected in the return of income. When the suppliers have not responded to the notices issued u/s.133(6) of the Act by the Assessing Officer, it is incumbent upon the Assessing Officer to give opportunity to the appellant to prove the genuineness of purchases made, which Assessing Officer had failed to do so. Therefore, we are of the considered opinion that interest of justice would be met if the matter is restored to the file of Assessing Officer to the stage of issuing notices to the appellant to produce the suppliers or produce some conclusive evidence to prove genuineness of the purchases made. Therefore, this ground of appeal stands partly allowed for statistical purpose.

The next ground of appeal challenges the disallowance of interest on late payment of GST. This payment is not penal in nature it is merely compensatory and partake the character of GST paid, which is clearly allowable as business deduction u/s.37(1) of the Act. Therefore, we direct the Assessing Officer to allow this as business deduction. Accordingly, this ground of appeal raised by the assessee stands allowed.

To sum up, appeal filed by the assessee partly allowed. Order pronounced in the open Court on 31st August, 2026. (SS VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; िदनांक / Dated : 31st Aug, 2026 SGR, Sr.PS आदेश क" "ितिलिप अ"ेिषत / Copy of the Order forwarded to : अपीलाथ" / The Appellant.

""यथ" / The Respondent.

The CIT Chennai/Madurai/Coimbatore/Salem. 4. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, “सी” ब"च, चे"नई / DR, ITAT Chennai. गाड" फ़ाइल / Guard File.

GANGADHARA RAO SALEELA RAO SALEELA Date: 2026.09.01 16:14:57 +05'30'