MOHIT METALS PRIVATE LIMITED,BHIWADI vs. CIT (APPEALS), NFAC

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC’’ JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ds le{k BEFORE: Hon’ble SHRI SANDEEP GOSAIN, JUDICIAL MEMBER vk;dj vihy la-@ITA No. 173 & 174/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2016-17 & 2017-18 cuke M/s. Mohit Metals Private Ltd The ACIT G-1208, Rampura, Mundana, RIICO Vs. Circle-2 Indl. Area, Bhiwadi Alwar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAECM 0087 C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Praphull Mehta, CA jktLo dh vksj ls@ Revenue by: Mrs. Monisha Choudhary, JCIT lquokbZ dh rkjh[k@ Date of Hearing : 15/11/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 1412/2022 vkns'k@ ORDER PER: SANDEEP GOSAIN, JM Both these appeals are filed by the assessee against two different orders of ld. CIT(A) both dated 20-12-2021, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2016-17 and 2017-18. The grounds of appeal raised by the assessee in both the appeals are as under:-

2 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR ITA No. 173/JP/2022 – 2016-17 ‘’1. That the appellant prays to add or alter any ground of appeal at or before the time of hearing. It also reserves his right to produce paperssssss, documents, material in support of the above grounds of appeal at or before the time of hearing. 2. That the ld.CIT(A) erred in not disposing of Ground No.1 as per Form No. 35 which is on law point of making another addition of Rs.2,28,705/- u/s 147 even when no addition was made for the reasons recorded u/s 147. Due to continuous ill health of the mother of the Director of the appellant company the director could not attend e-appellate proceedings still there was no necessity of any material in disposing of this legal ground. Accordingly, the impugned addition of Rs.2,28,705/- deserves to be deleted since it was done without jurisdiction by the AO u/s 147 of the I.T. Act, 1961. 3. That without prejudice to the above,even on merits of the case, the ld.CIT (A) erred in sustaining addition of Rs.2,28,075/- made by the AO on the reason that the addition was made without any basis merely on conjectures and surmises. Accordingly, the impugned addition of Rs.2,28,705/- deserves to be deleted since it was made on estimated basis done without cogent basis.

ITA No. 174/JP/2022 – 2017-18 1. That the ld. CIT(A), NFAC has erred in sustaining the disallowance u/s 40(a)(ia) of the I.T, Act, 1961 of Rs.94,541/- (being 30% of Freight Expenses of Rs.3,15,137/-) even when there was no requirement to deduct tax on the said expenses. As such, the impugned disallowance of Rs.94,541/- deserves to be deleted. 2. That the ld. CIT(A) has erred in sustaining the disallowance u/s 40(a)(ia) of the I.T. Act, 1961 of Rs. 11,875/- (being 30% of Staff Welfare Expenses of Rs.39,586/-) even

3 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR when there was no requirement to deduct tax on the said expenses. As such, the impugned disallowance of Rs.11,875/- deserves to be deleted. 3. That the ld. CIT(A), NFAC has erred in sustaining the disallowance u/s 40(a)(ia) of the I.T, Act, 1961 of Rs.18,000/- (being 30% of Accountant’s salary of Rs.60,000/-) even when there was no requirement to deduct tax on the said expenses. As such, the impugned disallowance of Rs.18,000/- deserves to be deleted 3. That the ld. CIT(A) has erred in sustaining the addition of Rs.2,66,550/- made by AO u/s 69C of the I.T. Act, 1961 on the reason that the addition was made without any basis merely on conjectures and surmises. Accordingly, the impugned addition of Rs.2,66,550/- deserves to be deleted since it was made on estimated basis done without cogent basis.

2.1 At the outset of the hearing, the Bench noted that there is delay of 80 days in filing the above mentioned appeals by the assessee for which the Director of the assessee company submitted that due to continuous sickness of his mother, he could not check up his e-mail and thus the delay occurred in late filing both the appeals. To this effect, the Director of the company submitted his affidavit as well as medical report of Max Healthcare Hospital of his mother, giving the same reason. Thus, the Director of the company prayed to condone the delays made in both the appeals. 2.2 On the other hand, the ld. DR opposed the condonation applications of the assessee but submitted that the Court may decide the issue as deem fit and proper in the case.

4 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR 2.3 The Bench heard both the parties and perused the materials available on record. The Bench feels that the case of the assessee should be disposed off on merit instead of some latches on such delays in filing the appeals by the assessee company. The Bench also noted that the assessee is prevented by sufficient cause in late filing the appeals. Hence, in view of the decision Hon’ble Supreme in the case of Collector, land Acquisition vs. MSt. Katiji and Others, 167 ITR 471 (SC), the delays so made in filing the appeals are condoned. 3.1 The Ground No. 1 raised by the ld. AR of the assessee is general in nature which does not require any adjudication. 4.1 The Ground No. 2 and 3 of the assessee are interrelated and interconnected and also relates to challenging the order of ld.CIT(A) in upholding the addition of Rs.2,28,705/- and also challenging the proceedings initiated u/s 147 of the Act. Therefore, the Bench thought it fit to dispose off both the grounds through a common order. 4.2 The brief facts of the case are that the assessee filed its return of income declaring total income at Rs.25,31,430/-. The case was reopened u/s 147 of the Act by recording reasons that purchases were not genuine. The reasons recorded by the AO before issuing the notice u/s 148 of the Act is as under:- ‘’On the basis of information of possession of this office that the assessee company had made fake ITC claim (input tax credit) without actual purchase of goods. Vide this office letter No. 2523

5 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR dated 15-11-2018, information of party wise purchases made were called u/s 133(6) of the Income Tax Act alongwith full name and address, TIN number thereof. The assessee has shown purchases of Rs.92,93,46,747/- in the year under consideration. The assessee failed to file full name and address, TIN numbers of parties whereby purchases were made in F.Y.2015-16. Inquiry revealed that goods were not purchased in physical form by the assessee, therefore, fake claim of purchase of Rs.92,93,46,747/- is not admissible as per Income Tax Act. In view of above, I have reason to beleive that the income to the extent of Rs.92,93,46,747/- has escaped assessment within meaning of Section 147 of the I.T. Act, 1961. Therefore, it is a fit case for issuance of notice u/s 148 of the I.T. Act, 1961’’

It was submitted by the ld. AR of the assessee that during the assessment proceedings, the AO came to the conclusion that income with respect to which he has recorded ‘’reason to believe’’ to have escaped assessment, did not escape. Therefore, as per ld. AR of the assessee, no addition could have been made in connection with the above grounds. In this regard, the ld.AR relied upon detailed written submission before the Bench which are reproduced below

‘’1. ADDITION OF RS.228075/- MADE WITHOUT JURISDICTION

The reason recorded by the Ld. Assessing Officer before issuing the notice u/s148 is as under: "On the basis of information in possession of this office that the assessee company had made fake ITC claim (Input Tax Credit) without actual purchase of goods. Vide this office letter No. 2523 dated 05/11/2018, information of party wise purchases made were called u/s 133(6) of the Income Tax Act along with full name & address, TIN Number thereof. The assessee has shown purchases of Rs.92,93,46,747/- in the year under consideration. The assessee failed to file full name and address, TIN numbers of parties where by purchases were made in FY.2015-16.

6 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR Inquiry revealed that goods were not purchased in physical form by the assessee therefore, fake claim of purchase of Rs. 92,93,46,747/- is not admissible as per Income Tax Act. In view of above, I have reason to believe that the income to the extent of Rs.92,93,46,747/- has escaped assessment within the meaning of section 147 of the IT Act, 1961. Therefore, it is a fit case for issuance of notice u/s 148 of the IT Act 1961." During the assessment proceedings the Assessing Officer comes to the conclusion that the income, with respect to which he has recorded "reason to believe" to have escaped assessment, did not escape. The bare reading of the language of Section 147, rather makes it clear, that of we Recourse the sine-qua-non for assumption of jurisdiction is, that the Assessing Officer should have a reason to believe, that any income chargeable to tax, has escaped assessment, for any assessment year, and on such jurisdiction coming into existence, he is to proceed under that Section, but then, he is to assess or reassess "such income", obviously the income, regarding which he has "reason to believe" to have escaped assessment, for any assessment year, and while so assessing, such "income" of course may make assessment with respect to other income, which also may have escaped, and which comes to his notice subsequently, in the course of the proceedings, but then, if while exercising powers under Section 147, the Assessing Officer comes to conclusion, that the income, with respect to which he has entertained "reason to believe" to have escaped assessment, did not escape, or that it was not liable to tax, then merely because he had initiated proceedings, would not confer on him the continued jurisdiction, to assess the other incomes, which have come to his notice subsequently, in the course of proceedings, to have escaped assessment. In the present case, since the "reason to believe" entertained by the Assessing Officer was only with respect to the purchases of Rs.92,93,46,747/-, while the Assessing Officer himself found the purchases to be genuine. That being the position, the jurisdiction of the AO came to an end as soon as no addition made by him for the reasons recorded u/s 147. To further continue with the assessment proceedings, simply because, he was of the opinion, that other escaped income had come to his notice, subsequently, in the course of the proceedings is not legal and valid. There are plethora of judgements supporting our contention. Few such judgements are: 1. CIT v. Atlas Cycle Industries [1989] 180 ITR 319 (Punj. & Har.) 2. Aravali Kshetriya Gramin Bank v. Assistant Commissioner of Income-tax, Circle Sawaimadhopur (2018) 409 ITR 242 (RAJ) 3. CIT v. Shri Ram Singh 306 ITR 343 (RAJ) 4. CIT vs. Jet Airways 195 Taxman 117 (BOM) 5. Smt. Saraswati Devi v. ITO, Ward 1(2), Alwar ITA No.219/JP/2012 Jaipur)

7 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR 6. Ranbaxy Laboratories Ltd. v.CIT ITA No. 148/2008 (Del.) 7. Sheela Foam Limited v. DCIT ITA No.4096/Del/2018 (ITAT Delhi.) Further, it is submitted that Hon'ble ITAT, Jodhpur Bench in the case of DCIT vs Kishan Lal Lila 34 Tax World 40 has held that proceedings u/s 148 can justifiably be quashed as illegal in a case wherein reasons for which the proceedings were initiated were not found correct while finalizing the reassessment. The principal place of appellant is Bhiwadi (District Alwar) which comes under the Jurisdiction of ITAT, Jaipur. We are enclosing herewith the judgement of Hon'ble ITAT Jaipur Bench in the case of Smt. Saraswati Devi v. ITO, Ward 1(2), Alwar ITA No.219/JP/2012 in which after relying on many Judgements including Rajasthan High Court Judgement of CIT v. Shri Ram Singh 306 ITR 343 (RAJ) it has been held categorical that the jurisdiction of the AO comes to an end if no addition is made on account of so-called escaped income mentioned in the reasons recorded u/s 147. In our case no addition was made on account of reason recorded u/s 147. It is therefore requested to delete the addition made by AO because no addition was made covered by the reason u/s 147 and the addition was beyond the reasons recorded u/s 147. 2. ADDITION OF RS.228075/- NOT SUSTAINABLE EVEN ON MERITS Without prejudice to the above, the Ld. AO has made an estimated addition on account of unexplained expenditure u/s 69C of the IT Act for Rs.228075/- on account of freight incurred which might have been incurred for the purchases made. In this regard, we humbly submit that during the assessment proceedings the Ld. AO has taken statement on oath from the suppliers from whom we had purchased the goods. All the suppliers had stated on oath that they used to send the goods to the appellant in their own vehicle/on their own cost and the appellant had not incurred any amount on account of freight. The appellant has not made any expenditure on account of transportation of trading goods. As such there was no expenditure incurred by the appellant on account of freight expenses. The AO without having any material on record and without mentioning any cogent reason made the impugned addition of Rs.228075/- which was purely based on conjectures or surmises. In view above submissions, we request you to kindly delete the addition of Rs.228075/- made on estimated basis on account of so-called freight expenses and without having any contrary material on record. As such even on merits, the addition of Rs.228075/- is not sustainable which may kindly be deleted.’’

8 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR 4.3 On the contrary, the ld. DR relied upon the orders of the Revenue Authorities and also the decision of Hon’ble Supreme Court in the case of Director of Income Tax (IT)-II vs Black & Veatech Prichard, Inc, (2019) 107 taxmann.com 290. It was further submitted by the ld. DR that the assessee has neither cooperated with the Revenue Authorities nor filed any written submission/information/documents before the Revenue Authorities. Even in spite of the fact that sufficient opportunities were granted to the assessee. Therefore, in the absence of any written submissions or details, the appeal filed by the assessee was dismissed by the ld. CIT(A). It was further submitted that the grounds so raised by the assessee before the Tribunal are lacking in merits which deserves to be dismissed.

4.4 The Bench has heard both the parties and perused the materials available on record including the judgements cited by both the sides. From the records, it is noticed that reasons recorded by the AO before issuance of notice u/s 148 are as under:-

‘’On the basis of information of possession of this office that the assessee company had made fake ITC claim (input tax credit) without actual purchase of goods. Vide tis office letter No. 2523 dated 15-11-2018, information of party wise purchases made were called u/s 133(6) of the Income Tax Act alongwith full name and address, TIN number thereof. The assessee has shown purchases of Rs.s92,93,46,747/- in the year under consideration. The assessee failed to file full name and address, TIN numbers of parties whereby

9 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR purchases were made in F.Y.2015-16. Inquiry revealed that goods were not purchased in physical form by the assessee, therefore, fake claim of purchase of Rs.92,93,46,747/- is not admissible as per Income Tax Act. In view of above, I have reason to beleive that the income to the extent of Rs.92,93,46,747/- has escaped assessment within meaning of Section 147 of the I.T. Act, 1961. Therefore, it is a fit case for issuance of notice u/s 148 of the I.T. Act, 1961.’’

During the assessment proceedings, the AO came to conclusion that the income with respect to which he has recorded ‘’reasons to believe’’ to have escaped assessment, did not in fact escape. Now at this stage, the Bench refers to the bare reading of the language of Section 147 which makes it clear that of course the sine- qua-non for assumption of jurisdiction u/s 148 is that the AO should have a ‘’reason to believe’’ that any income chargeable to tax, has escaped assessment for any assessment year and on such jurisdiction coming into existence, the AO is to proceed under that section. However, the AO is to assess or reassess ‘’such income’’ obviously the income regarding which he has ‘’reason to believe ‘’ to have escaped assessment, for any assessment year and while so assessing such ‘’income’’, the AO can make assessment with respect to other income which may also have escaped and which comes to his notice subsequently in the course of the proceedings. But at the same time, if while exercising powers u/s 147, the AO comes to conclusion that income with respect to which he has entertained ‘’reason to believe’’ to have escaped assessment, did not in fact escape, then in that

10 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR eventuality he is not liable to tax merely because he had initiated proceedings, would not confer in the AO’s power to continue jurisdiction for assessing the other incomes which has come to his notice subsequently in the course of proceedings. In this case, identical proposition has been dealt with by the Hon’ble Bomaby High Court in the case of CIT vs Jetairways 195 taxman 117. However, in the facts of the present case, since the ‘’reason to believe’’ entertained by the AO was only with respect to the purchases of Rs.92,93,46,747/- while the AO himself found the purchases to be genuine and that being the factual position, the jurisdiction of the AO came to an end as soon as no addition was made by him for the reasons recorded u/s 147 of the Act. Therefore, to further continue with the present assessment proceedings, simply because he was of the opinion that other escaped income had come to his notice, subsequently, in the course of the proceedings is not legal and valid. Since this is a jurisdictional requirement as held in the case CIT vs Jet Airways (supra), therefore, in view of the fact that issue arising herein stands concluded by the decision of in the case of Jet Airways (supra) and other case laws as relied upon by the assessee are as under:-

11 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR 5. Ranbaxy Laboratories Ltd. v.CIT ITA No. 148/2008 (Del.) 6. Sheela Foam Limited v. DCIT ITA No.4096/Del/2018 (ITAT Delhi.) Apart from this, the Coordinate Bench of ITAT, Jodhpur in the case of DCIT vs Kishan Lal Lila 34 TW 40 has held that proceedings u/s 148 can justifiably be quashed as illegal in a case wherein reasons for which the proceedings initiated were not found correct while finalizing reassessment. Even another Coordinate Bench of ITAT, Jaipur in the case of Smt. Saraswati Devi vs ITO, Ward 1(2), Alwar (ITA No. 219/JP/2012) while relying upon many judgements including the jurisdictional High Court in the case of CIT vs Ram Singh, 306 ITR 343 (Raj) had held that jurisdiction of the AO comes to an end if no addition is made on account of so-called escaped income mentioned in the reasons recorded u/s 147 of the Act. Thus considering the totality of the facts and circumstances of the case as discussed hereinabove, no addition was made on account of reasons recorded u/s 147 of the Act. Therefore, the AO was not having jurisdiction or competence to bring to tax any other income as escaped assessment. In view of the above deliberations, the Bench quashes the AO’s order and deletes the addition. Thus the appeal of the assessee for the assessment year 2016-17 is allowed.

5.1 Now we take up the appeal of the assessee for the assessment year 2017-18 wherein the delay in late filing of the appeal has been condoned by the Bench (supra).

12 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR 6.1 As regards the ground No. 1 to 4 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:-

‘’4. In form 35, the appellant has submitted as follows:-

‘’The appellant had filed the return of income truly and correctly declaring total income at Rs.21,22,520/-.Yet by making disallowance u/s 40(a)(ia) for Rs.1,24,416/- and addition u/s 69C of Rs.2,66,550/- the assessment was completed u/s 143(3) at Rs.25,13,490/- and demand of Rs.3,29,424/- was created. Aggrieved by the addition and demand, the appeal prefers this appeal.’’ 5. Findings: ….In this case, notice was issued on 13-01-2021 to the appellant to furnish written submissions and document on or before 17-02-2021. It was specifically stated in the said notice that if no submissions/ information/documents were received within the stipulated time period, it would be presumed that the appellant had nothing to say in the matter and the department may proceed ahead based on material available on record. In view of the fact that no written submissions/information/documents were received from the appellant nor any adjournment sought, another notice was issued on 6-10-2021 to t4he appellant to furnish written submission, information and documents on or before 13-10- 2021. It was specifically stated in the said notice that if no submission/information/documents were received within the stipulated time period, it would be presumed that the appellant had nothing further to say in the matter and the appeal would be decided on merits on the basis of material available on record. No written submissions/ information/documents were received nor any adjournment sought. Accordingly, yet another notice was issued on 1-12-2021 to the appellant to furnish written submissions, information and documents on or before 8-12- 2021. In view of the fact that no written submission/information/documents have been received till date

13 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR from the appellant nor any adjournment sought, appeal is being decided on the basis of material available on record. Despite repeated notices as delineated above, the appellant has not seen it fit to file any submissions, information or documents during appeal proceedings. The only material on record in this case is Form 35 filed by appellant and copy of assessment order dated 28-12-2019 filed by the appellant alongwith Form 35. The material on record has been carefully perused. The additions on various counts have been dealt with cogently by the AO in the aforesaid order. There is no material on record to warrant interference in the order of the AO. In view of the fact that there is no material on record to warrant interference in the order of the AO, the Grounds of appeal are hereby dismissed.’’ 6.2 During the course of hearing, the ld. AR of the assessee filed the following written submission praying therein that lower authorities have wrongly made the addition of Rs.1,24,414/- u/s 40(a)(ia) and Rs.2,66,550/- u/s 69C of the Act which should be deleted.

‘’1. ADDITION OF RS.124414/- MADE U/S 40(a)(ia) During the year under appeal the appellant had made payment of Rs.315137/- to M/s Marudhar Roadline for freight. The transporter had given a declaration u/s 194C(6) which was duly given to the Ld. AO at the time of assessment proceedings. The declaration was given by the transporter on his letter head in which PAN of the transporter was duly mentioned. It was duly verified by the Proprietor. Copy of declaration is enclosed for your ready reference. The details of same declarations were duly furnished in the TDS Return by the appellant. Form 16A is enclosed for your ready reference. The AO while disallowing the expenses misguided himself by mentioning that the declaration was given on a plain paper and no pan card was furnished to the AO. The principal place of appellant is Bhiwadi (District Alwar) which comes under the Jurisdiction of ITAT, Jaipur. We are enclosing herewith the judgement of Hon'ble ITAT Jaipur Bench in the case of ACIT, Circle-Bharatpur vs. "M/s Arihant Trading Company ITA

14 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR No.1113/JP/2018 which followed the decision of the Co-ordinate Bench in case of M/s Manglam Housing & Developers vs. ACIT, Jaipur (ITA No. 324/JP/2018 dated 04.06.2018) in which it has been held categorical that no disallowance can be made u/s 40(a)(ia) if the PAN has been furnished by the transporter. In light of the above facts, there was no liability to deduct TDS on the freight payment of Rs.315137/- as such we request you to kindly delete the addition of Rs.124414/- sustained by the Commissioner of Income Tax(Appeals), NFAC. 2. ADDITION OF RS.266550/- MADE ON ESTIMATED BASIS The Ld. AO has made an estimated addition on account of unexplained expenditure u/s 69C of the IT Act for Rs.2,66,550/- on account of freight incurred which might have been incurred for the purchases made. In this regard, we humbly submit that during the assessment proceedings, the Ld. AO has taken statement on oath from the suppliers from whom we had purchased the goods. All the suppliers had stated on oath that they used to send the goods to the appellant in their own vehicle/on their own cost and the appellant had not incurred any amount on account of freight. The appellant has not made any expenditure on account of transportation of trading goods. As such there was no expenditure incurred by the appellant on account of freight expenses. The AO without having any material on record and without mentioning any cogent reason made the impugned addition of Rs.266550/- which was purely based on conjectures or surmises. The AO without rejecting the books of account made the addition on his estimation. It is well-settled law that no addition could be made on estimated basis without rejecting books of account of assessee as held by various Courts in the case of (1) Samir Kishore Parekh Vs ACIT (ITAT Ahmedabad) ITA No.265 & 266/Ahd/2020 (2) Asian Grantio India Ltd.[2020] 113 taxmann.com 445 (Ahmedabad - Trib.) (3) Shree Asutosh Transport Co.[1997] 90 Taxman 331 (Ahmedabad ITAT) (4) Royal Marwar Tobacco Product (P.) Ltd.[2009] 29 SOT 53 (Ahmedabad) (URO) (5) Anil Kumar & Company [2016] 67 taxmann.com 278 (Karnataka) (6) Ercon Composites[2014] 49 taxmann.com 489 (Jodhpur - Trib.) (7) Arup Kumar Hazara Vs.ITO (Kolkata - ITAT) etc. to name a few. In view above submissions, we request you to kindly delete the addition of Rs.266550/- made on estimated basis on account of so-called freight expenses and without having any contrary material on record. As such even on merit the addition of Rs.2,66,550/- is not sustainable which may kindly be deleted.’ 6.3 On the other hand, the ld. DR supported the orders of the lower authorities

but did not submit any contrary material to the issue in question.

15 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR 6.4 The Bench has heard both the parties and perused the materials available on record. As regards the grounds of Appeal relating to addition of Rs.1,24,414/- made u/s 40(a)(ia) of the Act, in this case, the return of income was e-filed on 23- 10-2017 by the assessee declaring income of Rs.21,22,520/-. However, the AO made the addition by making disallowance u/s 40(a)(ia) of the Act. From the record, it is noticed that during the year under consideration, the assessee had made payment of Rs.3,15,137/- to M/s. Mardudhar Roadline for freight. In this regard, the transporter had given declaration u/s 194C(6) which was submitted by the assessee to the AO and accordingly the AO rejected the same by holding that the said declaration was given by the transporter on a plain paper without having details of PAN. The ld. AR of the assessee drew attention of the Bench vide paper book page 1 that required certificate was issued by the transporter on its letter head in which PAN of the Transporter was also mentioned and the same was verified by the Proprietor. It was also submitted by the ld. AR that details of the same declaration was also duly furnished in the TDS Return by the assessee and in this regard Form 16A has already been placed in the paper book of the assessee. After going through the facts of the case and appreciating the documents placed on record, the Bench finds that the AO had made the disallowance on flimsy ground and it is not sustainable in eyes of law as has been held by the Coordinate Bench of ITAT, Jaipur in the case of ACIT vs Arihant Trading Company (ITA

16 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR No.1113/JP/2018 dated 19-03-2019) which followed the decision of the Coordinate Bench in the case of Manglam Housing & Developers vs ACIT (ITA No. 324/JP/2018 dated 04-06-2018) and it has categorically been held in the order that no disallowance can be made u/s 40(a)(ia) of the Act if the PAN has been furnished by the furnished by the Transporter. In view of the above facts and also the decisions of the ITAT Jaipur Coordinate Benches, the Bench is of the view that there was no liability to deduct TDS on the freight payment of Rs.3,15,137/- and the addition so made of Rs.1,24,414/- u/s 40(a)(ia) is directed to be deleted.

6.5 As regards the addition of Rs.2,66,550/- made on estimate basis u/s 69C, in this case it is noted from the record that the AO had made estimated addition on account of unexplained expenditure u/s 69C of Rs.2,66,550/- on account of freight incurred which might have been incurred for the purchases. It is noted that the AO had taken statements on oath from the suppliers from the assessee had made purchased the goods and all the suppliers had categorically stated on oath that they used to send the goods to the assessee in their own vehicle/ on their own cost and the assessee had not incurred any amount on account of freight. Since the assessee has not made any expenditure on account of transportation of trading goods, therefore, in such circumstances, there was no expenditure incurred by the assessee on account of freight expenses. It is noted that the AO without having any material on record and without mentioning any cogent reasons made the impugned addition

17 ITA NO. 173/JP/2020 M/S. MOHIT METALS PRIVATE LTD VS ACIT, CIRCLE-2, ALWAR which was purely based on conjectures and surmises. It is also noted that during the assessment proceedings the AO without rejecting the books of account made the addition on estimate basis. It is also noteworthy to mention that no addition can be made on estimate basis without rejecting the books of account as held by the ITAT Benches (supra). Keeping view the above facts, circumstances of the case and legal position, the Bench directs the AO to delete the addition of Rs.2,66,550/- made u/s 69C of the Act on estimate basis on account of freight expenses.

In the result, both the appeals filed by the assessee are allowed. 7.0 Order pronounced in the open court on 14/12/2022.

Sd/- ¼lanhi xkslkbZ½ (Sandeep Gosain) U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 14/12/2022 *Mishra आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- M/s. Mohit Metals Private Ltd, Bhiwadi 1. 2. izR;FkhZ@ The Respondent- The ACIT, Circle-2, Alwar 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 173/JP/2022) vkns'kkuqlkj@ By order,

Asstt. Registrar