MOVEX SERVICES PVT LTD.,DELHI vs. ITO, WARD-17(1), DELHI

The appeal in AY 2020-21, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] in Appeal No. ITBA/NFAC/S/250/2022- 23/1048598343(1) dated 10.01.2023 against the order of assessment passed u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 18.12.2021 by the Assessing Officer, ADIT, CPC, Bangalore (hereinafter referred to as ‘ld. AO’).

At the outset, we find that there is a delay in filing of appeal before us by the Assessee by 36 days. Considering the reasons adduced by the Assessee in the condonation petition, in the interest of substantial justice, we are inclined to condone the delay in filing of appeal before us and admit the appeal of the Assessee for adjudication.

The only issue to be decided in this appeal is as to whether the Learned CITA was justified in confirming the disallowance made by the Learned AO under section 40A(3) of the Act in the facts and circumstances of the instant case.

We have heard the rival submissions and perused the materials available on record. The Assessee is engaged in the business of freight forwarding and transportation. The return of income for the Assessment Year 2020-21 was filed by the Assessee company on 19-01-2021 declaring total income of Rs 21,87,790/-. This return was duly processed under section 143(1) of the Act by the Learned CPC wherein an adjustment of Rs 40,79,029/- was made by disallowing certain cash payments by invoking the provisions of section 40A(3) of the Act. This expenditure was admittedly made on account of transportation charges based on the disclosure made by the tax auditor in Form No. 3CD. On appeal by the Assessee, the Learned NFAC upheld the action of the Learned CPC by passing an exparte order without deciding the issue independently on merits. Before us, the Learned AR pointed out that there was an increase in the limit for cash payments made on account of transportation expenses to Rs 35,000/- which was not considered by the tax auditor in the tax audit report which eventually led to the error in the orders of the lower authorities. The Learned AR also pointed out that the payments made to each of the transporters were indeed less than Rs 35,000/- and he fairly agreed for verification of these facts by the lower authorities. Considering this submission, we deem it fit and Page 2 of 4 appropriate, in the interest of justice and fair play, to restore this issue to the file of Learned NFAC for denovo adjudication in accordance with law. Needless to mention that the Assessee be given reasonable opportunity of being heard. The Assessee is directed to cooperate with the Learned NFAC for expeditious disposal of this appeal by not taking unwarranted adjournments except due to exceptional or bonafide circumstances. The Assessee is at liberty to furnish fresh evidences, if any, in support of its contentions. Accordingly, the grounds raised by the Assessee are restored to the file of Learned CITA for de novo adjudication in accordance with law and allowed for statistical purposes.