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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: SRI SANJAY GARG & SRI GIRISH AGRAWAL
order : February 9th, 2022 ORDER Per Bench: These present appeals have been preferred by the assessee against the order of the Commissioner of Income Tax (Appeals)-2, Kolkata [hereinafter referred to as ld. ‘CIT(A)’] dated 10.04.2018 & 009.05.2018 passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’) for AYs 2012-13 & 2013-14 respectively.
Though the assessee was supposed to follow up its appeals, however, separate notices were also issued regarding the fixation/date of hearing of the appeal by the Registry. However, the said notice has been received back with the remark “Left”. Even the earlier Counsel for the assessee, Sri Subash Agarwal, Advocate was contacted telephonically who informed that he has no instruction on behalf of the assessee. In view of this, we have been left with no alternative than to proceed to decide the appeals of the assessee after considering the material on record and after hearing the ld. D/R.
The assessee in these appeals have taken the identical grounds of appeal. is taken as lead case for the purpose of narration of facts and issues. The grounds of appeal taken in ITA No. 1572/Kol/2018 are reproduced as under:
2 & 1573/Kol/2018 Assessment Years: 2012-13 & 2013-14 Transafe Services Ltd. “1. (a) For that on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the disallowance of Rs. 16,73,566/-, being depot expenses (Reimbursable in nature) for non deduction of TDS by wrongly invoking section 40(a)(ia) without considering that the same is reimbursible in nature. (b) For that on the facts and circumstances of the case, Ld. CIT(A) ought to have deleted the aforesaid addition of Rs. 16,73,566/- made by the A.O. u/s. 40(a)(ia).
2. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the disallowance of liquidated damages of Rs. 21,17,589/- made by the A.O.
3. For that on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the action of the A.O. in making estimated disallowance of Rs. 96,42,968/-, being 50% of the expenditure incurred under the head “Indo Trailer Exp-Market Load”.
The appellant craves leave to add further grounds of appeal
or alter the grounds at the time of hearing.”
3. Ground No.-1 Vide ground no. 1, the assessee has contested the disallowance of Rs. 16,73,566/- made by the Assessing Officer (hereinafter the ‘AO’) on account of non deduction of tax at source (TDS) by invoking the provisions of Section 40(a)(ia) of the Act. The ld. D/R has brought our attention to the relevant observations made by the ld. CIT(A) in the impugned order, wherein, the ld. CIT(A) has held that though the assessee had claimed that the said payment was in fact reimbursement of expenditure to the concerned party, however no evidence was brought on record to prove that contention. The ld. CIT(A), therefore upheld the disallowance made by the AO observing as under:
I have considered the submissions of the authorized representative of the appellant as well as the assessment order framed in the light of the materials available on record before the assessing officer during the assessment proceedings. The AO has mentioned that the payments were made without TDS so it is not allowable. The AR in his statement of facts has mentioned that it is reimbursement of expenses so it is allowable expenses. The issue here is whether the payment requires deduction of TDS or not and if yes, than it has to be deducted either by the appellate company or the person who made the payment. The AR in his written submission has mentioned that tax is deducted properly within the legal parameters by the associated company and later on it was reimbursed to the associate company. There is nothing on record which suggested that the TDS was deducted by the associated company. This facts does not come out from the order of the AO. The AR of the appellate also did not field any submission and evidences during the appellate proceeding in the matter. The AR only stated that he rely on the statement of facts filed with the appeal memo. This facts has been noted in the order sheet on the date of hearing i.e. 09.04.2018. Keeping in view of above, in the absence of any cogent material evidence, I do not find any infirmity in the order of the assessing officer and the same is hereby upheld. In view of above, the appeal of the appellant is dismissed.
3.1. After going through the record and after hearing the ld. D/R, we do not find any reason to interfere with the above finding of the ld. CIT(A). Hence, ground no. 1 of the appeal is dismissed.
Vide ground no. 2, the assessee has contested the confirmation of disallowance of liquidated damages of Rs. 21,17,589/-. The ld. D/R has brought our attention to relevant paras of the order of the ld. CIT(A) and has submitted that the impugned disallowance was made by the AO and further confirmed by the ld. CIT(A) because the said expenditure was not incurred by the assessee for the purpose of business of the assessee, rather the said damages were paid because of the violation of the terms of the contract. The ld. CIT(A), further observed that the assessee had not furnished any evidence for justification of the said expenditure. The relevant part of the finding of the ld. CIT(A) is reproduced as under:
I have considered the submissions of the authorized representative of the appellant as well as the assessment order framed in the light of the materials available on record before the assessing officer during the assessment proceedings. The AO has pointed out that there is payment of damage and it is on violation of terms of the contract. When it is violation of contract terms and conditions than it is very much penal in nature and accordingly, the AO has taken correct view in the matter. I am also agree with the view as taken by the AO in the matter. Keeping in view of above, in the absence of any cogent material evidence, I do not find any infirmity in the order of the assessing officer and the same is hereby upheld. In view of above, the appeal of the appellant is dismissed.
4.1. After considering the material on record and after hearing the ld. D/R, we do not find any reason to interfere with the above finding of the ld. CIT(A) and the same are upheld. Hence, ground no. 2 of the appeal is dismissed.
Ground No.-3 Vide ground no. 3, the assessee has contested the action of the ld. CIT(A) in confirming the estimated disallowance of Rs. 96,42,968/- being at the rate of 50% of the expenditure claimed under the head “Indo Trailer Exp-Market Load”. The ld. CIT(A) in the impugned order has observed that the assessee had claimed that the aforesaid expenditure was made in cash and that no bills, vouchers, evidences/confirmation etc. were furnished to prove that the said expenditure was actually incurred by the assessee. The AO, considering the overall facts and circumstances has made the disallowance of 50% of the aforesaid expenditure. The ld. CIT(A) confirmed the said disallowance observing as under:
“I have considered the submissions of the authorized representative of the appellant as well as the assessment order framed in the light of the materials available on record before the assessing officer during the assessment proceedings. The AO has mentioned that the most of the 4 & 1573/Kol/2018 Assessment Years: 2012-13 & 2013-14 Transafe Services Ltd. expenses were made in cash and the evidences were not filed during the assessment proceeding. The AR although did not field any submission but he rely of statement of facts as filed with appeal memo and it has mentioned therein that there was cash expenses. Keeping in view of above, in the absence of any cogent material evidence, I do not find any infirmity in the order of the assessing officer and the same is hereby upheld. In view of above, the appeal of the appellant is dismissed.” 5.1. Since, neither anyone has appeared nor any document has been furnished to show the veracity of the aforesaid expenditure, we therefore are not inclined to interfere with the order of the ld. CIT(A) on this issue also. In view of this, we do not find any merit in the appeal of the assessee and the same is accordingly dismissed.
In view of the findings given above, the facts and issues involved being identical, the assessee’s appeal for the AY 2013-14 is also accordingly dismissed.
In the result, both the appeals of the assessee are dismissed. Order is pronounced in the open court on 09.02.2022. Sd/- Sd/- [Girish Agrawal] [Sanjay Garg] Accountant Member Judicial Member Dated: 09.02.2022 Bidhan (P.S.) Copy of the order forwarded to:
1. 1. Transafe Services Ltd., C/o Subash Agarwal & Associates, Advocates Siddha Gibson, 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata-700 069.
2. DCIT, Circle-6(1), Kolkata. 3. CIT(A)-2, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata.