SOMA RANI GHOSH,KOLKATA vs. ACIT, CIR-49, KOLKATA, KOLKATA

The issue that arises from my adjudication is whether the disallowance made of Rs. 15,77,150/- being detention charges, claimed by the assessee as having been paid to M/s. D.B. Roadways was genuine expenditure or not.

The Commissioner of Income Tax, Kolkata – 17 vide order dated 20.12.2011 passed u/s 263 of the Act, set aside this issue of allowability of detention charges paid to M/s. D.B. Roadways for fresh adjudication, as no tax was deducted at source as required under the 2 A.Y. 2007-08 Soma Rani Ghosh Act. Before the Assessing Officer, the assessee has filed a ledger account, copy of which is at pages 17 to 27 of the Paper Book filed and a summary of which placed at page 16 of the Paper Book. It was explained that the journal entries in the ledger account of M/s. D.B. Roadways, copy of which placed at page 28 to 41 of the Paper Book, was but in cooperation of the cash payments made to various lorry driver whose lorries was detained at the Bangladesh Border, due to governmental procedures. Evidence in the form of debit vouchers, Invoices from M/s. D.B. Roadways which gives the lorry no, the amount paid towards detention charges, copy of payment advice from M/s. D.B. Roadways and a copy of import cargo manifest endorsed by Cargo Officer, Customs House, Benapol, has been furnished in support of the payments made to the lorry drivers. The Assessing Officer in his order passed in pursuance to the order passed under section 263 of the Act held that the ledger produced by the assessee to demonstrate that each payment made towards detention charges is below 50,000/-, is an afterthought and a fabricated document. He, in a detailed order, pointed out to the lacuna in the bills and vouchers produced, including that, one truck driver is said to run and control, more than one truck, which is impossibility.

He disallowed the amount claimed as detention charges paid. Before the Ld. CIT(A), the assessee claimed that section 40(a)(ia) is not attracted. The Ld. CIT(A) endorsed the findings of the Assessing Officer, that this is a case of non-production of proper evidences and not a mere case of disallowance under section 40(a)(ia) of the Act. After hearing rival contention, I find that section 40(a)(ia) cannot be invoked for the impugned assessment year as the assessee is an 3 A.Y. 2007-08 Soma Rani Ghosh individual and the amendment in question has been brought about in the Act with effect from 01.06.2007. As this a substantive amendment, it is prospective in nature and applying to payments made after 01.06.2007.

Coming to the genuineness of the expenditure, I find that the assessee has filed evidences from M/s. D.B. Roadways, where the amount is reflected in the ledger account as “detention charges”. This third party documentation cannot be ignored. The evidence produced by the assessee is brought out at para 39 of this order. On a perusal of this evidence, the genuineness of the payment cannot be doubted.

Be it as it may, in my opinion, the Assessing Officer should have conducted verification of these payments with the third party if he had any doubts. The evidence produced by the assesssee from the third party i.e. M/s. D.B. Roadways cannot be brushed aside. In my view, the assessee has discharged the onus that lay on him to prove the genuineness of the payment. Hence the disallowance is bad in law.

In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 25th May, 2018.