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Income Tax Appellate Tribunal, KOLKATA BENCH “D” KOLKATA
Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
आदेश /O R D E R PER Waseem Ahmed, Accountant Member:- This is an appeal filed by the Revenue is against the order of Commissioner of Income Tax (Appeals)-Asansol for the assessment year 2010- 11, in the matter of order passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 12.08.2013. Shri Saurabh Kumar, Ld. Departmental Representative appeared on behalf of Revenue and Shri Binay Agarwal, Ld. Authorized Representative appeared on behalf of assessee.
A.Y. 2010-11 ITO Wd-2(2) Asl Vs. Maa Sarweshwari Constrn. Page 2 2. Sole issue raised by Revenue is as regard that Ld. CIT(A) erred in restricting the addition of ₹45,38,955/- to ₹6,80,843/- only.
Briefly stated facts are that assessee is a partnership firm and engaged in mining contracts. During the year, assessee has claimed an expense of ₹45,38,955/- in its profit and loss account towards hire charges. However, assessee during the course of assessment proceedings failed to substantiate its genuineness of the said expenses on the basis of documentary evidence and also failed to justify whether Tax was deducted at Source (TDS) u/s 194I of the Act. Therefore, Assessing Officer disallowed the same and added to the total income of assessee.
Aggrieved, assessee preferred an appeal before Ld. CIT(A). At the appellate stage the ld. CIT-A called for remand report from AO. The assessee at the remand stage submitted that the parties to whom the payment was made was less than Rs. 20,000.00 therefore there is no TDS liability. However the AO in its remand report submitted that assessee has not produced necessary copies of ledger justifying that the impugned expense is outside the purview of TDS provision. However, Ld. CIT(A) restricted the addition @ 15% for ₹45,38,955/- only i.e. ₹6,80,843/- by observing as under:- “9. Before me it was stated that there is no default under section 194-I and hence disallowance cannot be made. In regard to hire charges paid, it is a case of lack of correctness and completeness of accounts. There is no specific TDS default that is identified. If a case of default of section 194-I identified then naturally section 40a(ia) is attracted. Since assessee maintained improper vouchers the right course of assessment should to be exercise best of judgment as produced in section 145(3). Power of CIT(Appeals) is co-terminus with that of Assessing Officer. The Assessing Officer in assessment order also states that the disallowance is on account of “genuineness of the expenditure is doubtful”. The onus is on assessee to establish that expense is wholly and exclusively for business. For this liability has to produce correct and complete vouchers which the assessee has not produced. Hence considering all aspects, I hold that in place of disallowance of Rs.45,38,955/- on facts and circumstances of case a 15% disallowance is sufficient to absorb all deficiencies accounts. A.Y. 2010-11 ITO Wd-2(2) Asl Vs. Maa Sarweshwari Constrn. Page 3 Accordingly I direct Assessing Officer to replace the addition of Rs.45,38,955 by Rs.6,80,843/-. The ground is partly allowed.” The Revenue, being aggrieved, is in appeal before us.
Ld. DR before us submitted that Ld. CIT(A) erred in reducing the amount of disallowance on ad hoc basis. There is no ambiguity that assessee failed to furnish necessary evidentiary documents in support of its claim. In this view, Ld. DR requested the Bench to restore the matter back to the file of AO for fresh adjudication. On the other hand, Ld. AR for the assessee raised no objection if the matter is restored back to the file of AO for fresh adjudication. At the end, both parties relied on the order of Authorities Below as favourable to them.
We have heard the rival contentions of both the parties and perused the material available on record. In the instant the issue before us is that the disallowance for hire charges were made by AO on account of two reasons: Firstly, assessee failed to prove the genuineness of expense on the basis of documentary evidence. Secondly, assessee failed to deduct TDS as provided u/s. 194-I of the Act. However, Ld. CIT(A) restricted the addition made by AO at ₹6,80,843/- i.e @ 15% of ₹45,38,955/- on ad hoc basis. 6.1 From the foregoing discussion, we find that the addition was made by AO on account of non-production of documentary evidence. In this regard we find that assessee also failed to produce the necessary evidence even during remand stage. We also further note that Ld. CIT(A) has also not called for the necessary documents for the purpose of verification whether the impugned expense are genuineness or not. We also note that Ld. CIT(A) has confirmed the disallowance @ 15% for total expense without comparing the same with the earlier year as well as subsequent year. In this view of the matter, we feel that Ld. CIT(A) has not passed a speaking order. Thus in this backdrop of the facts