SHRI VAIKUNTH PAPER AND BOARDS PVT LTD.,COIMBATORE vs. DCIT, COIMBATORE

This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-1, Coimbatore dated 31.01.2017 in appeal No.84A/14-15 for the assessment year 2011-12 passed U/s.250(6) r.w.s. 143(3) of the Act.

The assessee has raised several grounds in its appeal however the crux of the issue is that the Ld.CIT(A) has erred in confirming the order of the Ld.AO who had disallowed payment of freight charges of Rs.15,46,330/- by invoking the provisions of Section 40(a)(ia) of the Act, for non-deduction of TDS on the payment made to M/s. Bedan Freight Systems.

The brief facts of the case are that the assessee is a private limited company engaged in the business of manufacture of paper, filed its return of income for the assessment year 2011-12 on 24.09.2011 declaring loss of Rs.2,88,00,029/-. The case was selected for scrutiny under CASS and finally the assessment order was passed U/s.143(3) of the Act on 28.03.2014 wherein the Ld.AO disallowed the payment of freight charges amounting to Rs.15,46,330/- by invoking the provisions of Section 40(a)(ia) of the Act, for non-deduction of TDS on the payment made to M/s. Bendan Freight Systems. The Ld.AO while arriving at his decision had observed as follows: “1.3 As per the details submitted, the assessee has given the PAN of M/s. Bendan Freight Systems (PAN – AGLPJ1687K) for the entire freight charges paid Rs.15,46,330/- during the year. Also the AR admitted during the hearing that the payment of freight charge of Rs.15,46,330/- is not made to the said party M/s. Bendan Freight Systems as contractor, for whom the PAN was produced as required u/s 194C(6) of the Act. In fact, the payments are made to different Lorry Owners from whom the PAN was not obtained. Instead the assessee has produced vouchers and PAN details in the name of M/s. Bendan Freight Systems and claiming benefit u/s 194C(6). In this entire transaction M/s. Bendan Freight Systems is acting as an agent for arranging vehicles for which M/s. Bendan Freight Systems is getting some commission amount from the assessee. The AR further submitted that whatever payment debited in the name of M/s. Bendan Freight Systems has not been reflected in M/s. Bendan Freight Systems P&L Account. So, the amount of freight charges Rs.36,83,992/- debited in the name of M/s. Bendan Freight Systems and for whom the PAN was produced u/s 194C(6) is not admitted. Hence, the amount of freight charges Rs.15,46,330/- is hereby disallowed u/s.40(a)(ia) rws 194C(6) of the Act for non-production of PAN of different Lorry drivers to whom the payment was made.”

On appeal, the Ld.CIT(A) confirmed the order of Ld.AO because the assessee had failed to produce the requisite details towards payment of freight charges for the sum of Rs.15,46,330/-.

Before us the Ld.AR reiterated the submissions made before the Ld.Revenue Authorities and pleaded for deleting the addition made. The Ld.DR on the other hand relied in the orders of the Ld.Revenue Authorities.

We have heard the rival submissions and carefully perused the materials available on record. Even before us at this stage neither the assessee nor its AR has produced the details of the payment made towards freight charges for the sum of Rs.15,46,330/-. Hence though we have no other option but to confirm the order of the Ld.Revenue Authorities, considering the state of affairs of the assessee and in the interest of justice, we hereby remit the matter

In the result, the appeal of the assessee is allowed for statistical purpose as indicated herein above.