UNITED TOURIST SERVICE PRIVATE LIMITED,NEW DELHI vs. DCIT CIRCLE 25(1), NEW DELHI

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ITA 1237/DEL/2024Status: DisposedITAT Delhi25 July 2024AY 2018-19Bench: SHRI PRADIP KUMAR KEDIA (Accountant Member), SHRI SUDHIR PAREEK (Judicial Member)4 pages

AI SummaryRemanded

Facts

The assessee, engaged in the travel and transport business, faced a disallowance of Rs. 77,31,182/- under Section 40(a)(ia) of the Income Tax Act for alleged non-deduction/remittance of TDS on hiring charges paid to vendors, as per Section 194C. The first appellate order by the CIT(A) was passed ex-parte because the assessee did not receive notices due to a breakdown in communication with their previous counsel, whose email ID was registered with the CIT(A).

Held

The Income Tax Appellate Tribunal found the assessee's explanation for non-compliance before the CIT(A) to be plausible and determined it was a fit case for re-appreciation of facts. Consequently, the Tribunal set aside the ex-parte order of the CIT(A) and restored the matter to the file of the CIT(A) for fresh determination, ensuring proper opportunity is given to the assessee.

Key Issues

Whether the ex-parte order passed by the CIT(A) should be set aside and the matter restored for fresh determination, given the assessee's plausible reasons for non-compliance before the CIT(A).

Sections Cited

Section 143(3), Section 143(3A), Section 143(3B), Section 40(a)(ia), Section 194C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “H” DELHI

Before: SHRI PRADIP KUMAR KEDIA & SHRI SUDHIR PAREEK

For Respondent: Shri Amit Katoch, Sr.DR

PER PRADIP KUMAR KEDIA - A.M.: The captioned appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [‘CIT(A)’ in short] dated 31.01.2024 arising from the assessment order dated 31.03.2021 passed by the Assessing Officer (AO) under Section 143(3) r.w. Section 143(3A) & 143(3B) of the Income Tax Act, 1961 (the Act) concerning A.Y. 201 8- 19.

As per the grounds of appeal, the assessee has challenged the addition of Rs.77,31,182/- to the return of income of the assessee by invoking provisions of Section 40(a)(ia) of the Act.

3. When the matter was called for hearing, the ld. counsel for the assessee submitted at the outset that the assessee-company is engaged in the business of travels and transport and paid hiring charges to vendors who are said to be small vendors and do not possess more than 10 vehicles. The ld. counsel further submitted that the payments made to such vendors are within the specified limits provided under Section 194C which do not require any deduction of tax at source. A list of vendors along with PAN were provided to the AO. The AO however did not find the explanation offered to be satisfactory. Based on disclosure made in column No.21(ii)(B) of the Tax Audit Report, the AO concluded that the Assessee neither deducted TDS under Section 194C nor deposited the tax with the Govt. The AO thus held that the Assessee has committed default towards non deduction and non- remittance on sum of Rs.2,57,70,608/-. A disallowance of Rs.77,31,182/- was carried out under Section 40(a)(ia) of the Act attributable to such default. The ld. counsel submitted that against the assessment order, the first appellate order is passed ex-parte without opportunity to the assessee.

The ld. counsel adverted to an affidavit dated 6 th July, 2024 4. administered on oath by Shri Sushil Dagar, Director of the assessee- company, to submit that the Income Tax matter of the assessee company was looked after by counsel Mr. Mukul Gupta and his e-mail id and phone number was noted in appeal memo filed before CIT(A). The notices of hearing were plausibly issued through e-mail Id of the previous counsel. The relationship with the previous counsel turns sour and due to such dysfunctional relations with previous counsel, the assessee was not made privy to the ongoing proceedings before the CIT(A) resulting in ex-parte order. The ld. counsel submitted that failure to attend before the CIT(A) is not deliberate but because of non-communication of notices so issued by the First Appellate Authority to the assessee. The ld. counsel also pointed out that the assessee has a prima facie strong case on merits to justify non- applicability of Section 40(a)(ia) attributable to alleged default in TDS with reference to Section 194C of the Act. The ld. counsel urged for restoration of matter back to the file of CIT(A) for fresh determination of issue in accordance with law after giving proper opportunit y to the assessee.