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Income Tax Appellate Tribunal, “C”, BENCH MUMBAI
Before: SHRI G. MANJUNATHA & SHRI RAM LAL NEGI
Date of Hearing 25/07/2019 Date of Pronouncement 23/08/2019 आदेश आदेश / O R D E R आदेश आदेश PER G.MANJUNATHA (A.M):
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)–21, Mumbai, dated 22/08/2016 and it pertains to the Assessment Year 2013-14. 2. The assessee has raised the following grounds of appeal:-
1. On the basis of facts and circumstances of the case the Ld. AO erred in disallowing the and adding back a sum of Rs. 1,77,888/- being the interest paid to NBFC on vehicle Loans.
2. On the basis of the facts and circumstances of the case the Ld.AO erred in disallowing and adding back a sum of Rs. 2,60,000/- being loan taken from Mr. Sunil Mishra.
3. On the basis of the facts and circumstances of the case, tehLd.AO erred in adding a sum of Rs. 3,03,467/- and Rs. 25,16,428/- being amount of MVT and Service Tax payable shown in the Balance sheet.
4. On the basis of the facts and circumstances of the case, the Ld.AO erred in disallowing a sum of Rs. 2,41,182/- being the amount of Labor Charges.
3. The brief facts of the case are that the assessee company is engaged in the business of contractor for laying and installation of gas pipeline, sewerage pipeline and telephone cable laying etc., filed its return of income for AY 2013-14 on 20/09/2013, declaring total income at Rs. 25,19,221/-. The case was selected for scrutiny and the assessment has been completed u/s 143(3) of the I.T.Act, 1961, determining the total income at Rs. 63,99,843/- by making various additions, including additions towards interest paid on vehicle loans u/s 40a(ia) of the Act, for failure to deduct tax at source u/s 194A of the I.T.Act, 1961, additions towards disallowances of unpaid service tax and VAT and also additions towards unexplained cash credit towards loans taken from shri Sunil Mishra, for failure to prove identity, genuineness of transactions and credit worthiness of the parties.
4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assesee submitted that the question of TDS on interest payment does not arise, because the assesee has repaid loan on monthly instalments by post dated cheques to non banking finance companies.
Therefore, there is no occasion for deduction of TDS on interest payments. Similarly, the assesee has submitted that it has filed various details, in respect of loans taken from shri Sunil Mishra.
However, the AO has disregarded all evidences filed by the assessee. Similarly, in respect of disallowances of unpaid liability of VAT and service tax u/s 43B, it was stated that the said liability was not taken into account to profit and loss account and hence, when such liability is not taken into profit and loss account and corresponding payment is not claimed as deduction, the question of disallowances of unpaid liability u/s 43(b) does not arise. The Ld. CIT(A), after considering relevant submissions of the assessee and also taken note of facts brought out by the AO, dismissed appeal filed by the assessee and sustained additions made by the AO towards disallowances of interest paid on vehicle loans u/s 40a(ia) r.w.s. 194A of the Act, additions towards unexplained cash credit being loan taken from shri Sunil Mishra, and also unpaid liability towards VAT and service tax. Aggrieved by the Ld.CIT(A) order, the assessee is in appeal before us.
The Ld. AR for the assessee, at the time of hearing, submitted that the assessee has filed additional evidences under Rule 29 of the I.T.Rules, 1963, in respect of additions made by the AO towards disallowances of interest u/s 40a(ia) for failure to deduct tax at source u/s 194A, additions made by the AO towards unexplained cash credit being loan taken from Shri Sunil Mishra and also additions made by the AO towards unpaid liability of VAT and service tax u/s 43B of the Act. The assesee has also filed additional evidences in respect of disallowances of labour charges. Therefore, the additional evidences filed by the assesee may be admitted and the issue may be set aside to the AO for re-verification. The Ld. DR, on the other hand, strongly supported order of the Ld.CIT(A).
However, fairly accepted that the issue may be set aside to the file of the AO to verify facts with regard to the additional evidences filed by the assesee, in respect of various additions made by the AO.
We have heard both the parties, perused material available on record and gone though orders of the authorities below. The first and foremost arguments of the Ld. AR for the assesee in light of additional evidences filed under Rule 29 of the I.T.Rules, 1963 is that the additional evidences were not before the Ld.AO and also said additional evidences are relevant to decide the issues in question. Therefore the same may be admitted and set aside to the file of the AO. We find that the assesee has filed a paper book containing various addition evidences, including details of interest paid to NBFC, in respect of vehicle loans and also argued that the payee of interest had admitted such interest in the return of income and paid taxes, consequently, the same cannot be subjected to disallowances u/s 40a(ia) of the Act, for failure to deduct tax at source u/s 194A of the Act. No doubt, when payees are included sum so paid without deduction of tax in their income tax returns and paid consequent taxes thereon then, the same cannot be disallowed in the hands of the assessee u/s 40a(ia) of the Act. But, facts with regard to payees have paid taxes on said interest income in their return of income is not clear from the records. Therefore, we are of the considered view that the issues needs to be go back to the file of the AO for, further verification of facts in light of claim of the assessee. As regards, additions towards unexplained cash credit being loan taken from Shri Sunil Mishra, amounting to Rs. 2,60,000/- the claim of the assesee is that it has obtained necessary confirmation and other evidences from the creditor to discharge, the onus cast upon u/s 68 of the Act, 1961. Likewise, the assessee claims that disallowances of unpaid liability, in respect of MVAT and service tax payable is incorrect, because said liability has not been claimed as deduction in the profit and loss account. Similarly, the assesse claims that it has filed additions evidences, in respect disallowances of labour charges. No doubt, the assessee has filed a paper book, which contents various additional evidences, in respect of additions made by the AO towards disallowances of interest, additions towards unexplained cash credit, disallowances of unpaid liability u/s 43B and disallowances of labour charges. These additional evidences cannot be verified at our end. Therefore, we are of the considered view that the issues involved in this appeal needs to go back to the AO for further verification in light of various additional evidences filed by the assesee and hence, we set aside the appeal filed by the assessee to the file of the AO and direct him to cause necessary enquiries, in respect of various additions challenged by the assessee before us. Needless to say, the assesee is direct to file necessary evidences before the AO for his verification.
In the result, appeal filed by the assesee is allowed for statistical purposes.
Order pronounced in the open court on this 23 /08/2019