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Income Tax Appellate Tribunal, KOLKATA BENCH ‘D’, KOLKATA
Before: Shri P.M. Jagtap, AM & Shri S.S. Viswanethra Ravi, JM]
order
: December 20, 2017 ORDER
Per P.M. Jagtap, AM
This appeal is preferred by the revenue against the order of Ld. CIT (Appeals) – 8, Kolkata dated 03.02.2015 whereby he deleted the various disallowances made by the A.O. under section 40(a)(ia) of the Act aggregating to Rs. 1,82,25,009/-.
The assessee in the present case is an individual who is engaged in the business of air cargo and ocean cargo handling under the name and style of his proprietary concern M/s. D.S. World Cargo. The return of income for the year under consideration was filed by him on 15.10.2010 declaring a total income of Rs. 3,03,901/-. As noted by the A.O. during the course of assessment proceedings, the assessee had paid air freight to various airlines without deducting tax at source. In 2 Assessment Year: 2010-11 Deepak Malik this regard, it was explained by the assessee before the A.O. that the assessee being an authorised agent of IATA, the relationship between the assessee and the concerned airlines was that of Principal - Agent and the provisions of TDS were not applicable. This explanation of the assessee was not found acceptable by the A.O. in the absence of any documents / agreements filed by the assessee to support and substantiate its claim. He accordingly proceeded to make the disallowance of Rs. 59,81,255/- under section 40(a)(ia) for the failure of the assessee to deduct tax at source from the payments made to various airlines on account of air freight. Similarly the A.O. also made the disallowance of Rs. 23,70,772/-, Rs. 96,84,114/- and Rs. 1,88,868/- under section 40(a)(ia) on account of freight handling charges, ocean freight charges and port charge respectively on the ground that no documentary evidence was produced by the assessee to support and substantiate his explanation that there was no obligation to deduct tax at source from the said amounts. Accordingly in the assessment completed under section 143(3) vide order dated 01.03.2013, the total income of the assessee was determined by the A.O. at Rs. 1,86,49,360/-. 3. Against the order passed by the A.O. under section 143(3), an appeal was preferred by the assessee before the Ld. CIT(A) disputing inter alia the various disallowances made by the A.O. under section 40(a)(ia) for non deduction of tax at source from the payments made on account of freight charges, freight handling ocean freight and port charges. During the course of appellate proceedings before the Ld.
3 Assessment Year: 2010-11 Deepak Malik CIT(A), the detailed submissions was made by the assessee in support of its case that there being no obligation to deduct tax at source from the concerned payments, the various disallowances made under section 40(a)(ia) were not sustainable. Keeping in view these submissions made by the assessee as well as the details and documents filed in support, the Ld. CIT(A) held that the assessee was not liable to deduct tax at source from the amounts in question. He accordingly deleted the disallowances made by the A.O. under section 40(a)(ia). Aggrieved by the order of the Ld. CIT(A), the revenue has preferred this appeal before the Tribunal on the following grounds: “
1. That the Ld. CIT(A) has erred in not considering the fact that relation between assessee and airlines is that of principal – principal and assessee could not produce any evidence before the A.O. to counter this fact.
2. That the Ld. CIT(A) has erred in not considering the fact that payment made under the head freight charges attracts TDS and A.O. had rightly disallowed the same u/s 40(a)(ia) of the Act.
3. That the Ld. CIT(A) has erred in accepting new documents from the assessee during appellate proceedings, on the issue of ocean freight payment and port charge payment to KPT in violation of Rule 46A of the I.T. Rule.
4. That the appellant craves leave to add, alter, modify, delete or include any of the grounds of appeal.
4. At the time of hearing fixed in this case on 14.12.2017, none appeared on behalf of the assessee. Even on the earlier occasions when the appeal of the revenue was fixed for hearing on 29.06.2017 and 20.09.2017, none had appeared on behalf of the assessee. On the date of hearing fixed earlier on 02.11.2017, adjournment was sought 4 Assessment Year: 2010-11 Deepak Malik by the assessee. Keeping in view this non compliant and non cooperative attitude of the assessee, we are left with no option but to dispose of the appeal of the revenue ex-parte qua the respondent assessee after hearing the arguments of the learned DR and perusing the relevant material on record. The learned DR has invited our attention to the relevant portion of the Ld. CIT(A)’s impugned order as contained in paragraph no 4.2, 5.2, 6.2 and 7.2 to show that the four disallowances in question made by the A.O. under section 40(a)(ia) were deleted by the Ld. CIT(A) by relying on the various documents and materials filed by the assessee for the first time before him. He has contended that since the said documents and materials filed by the assessee for the first time before the Ld. CIT(A) in support of its case on the issues under consideration were not before the A.O. as is clearly evident from the assessment order, the Ld. CIT(A) should have given an opportunity to the A.O. to verify the same as per the Rule 46A of the Income Tax Rules, 1962 by remanding the matter to the A.O. before giving relief to the assesee by relying on the same. He has contended that there is thus a clear violation of Rule 46A by the Ld. CIT(A) and since this position is clearly evident from the record available before us including especially the orders of the A.O. and the Ld. CIT(A), we set aside the impugned order passed by the Ld. CIT(A) deleting the disallowances made by the A.O. under section 40(a)(ia) and restore the matter to the file of the A.O. for deciding the said issues afresh after verifying the various details and documents filed by the assessee for the first time before the Ld. CIT(A) and after giving proper and sufficient opportunity of being heard to the assessee.