GRAND ARK LOGISTICS PVT. LTD.,CHENNAI V. DCIT, CORP. CIRCLE-1(1), CHENNAI

ITA 862/CHNY/2025

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The case involves Grand Ark Logistics Pvt. Ltd., which appealed against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning the disallowance of Rs.70,06,900 under Section 40(a)(ia) of the Income Tax Act, 1961. This disallowance was initially made by the Assessing Officer due to non-deduction of TDS on payments made to contractors for transport hire charges. The assessee argued that the disallowance was unjust and not in accordance with the law, citing compliance with Section 194C(6) and the extraordinary circumstances due to the COVID-19 pandemic. The Tribunal found merit in the assessee's arguments regarding the rejection of additional evidence and the need for a thorough re-examination of the facts and documents presented.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782187 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Appeal Filed On: 27-03-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOUTHAMI MANIVASAGAM
• Assessee Lawyers: ARJUN RAJ
• Keywords: Set aside; Additional evidence; TDS; Non-deduction of tax
• Section: 143(3); 142(1); 133(6); 40(a)(ia)

Judgement Text

"आयकर अपीलȣय अͬधकरण,‘बी’ Ûयायपीठ,चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI सुĮी पɮमावती एस, लेखा सदèय एवं Įी मनु क ुमार ͬगǐर,ÛयाǓयक सदèय क े सम¢ BEFORE Ms. PADMAVATHY S, ACCOUNTANT MEMBER AND SHRI MANU KUMAR GIRI, JUDICIAL MEMBER आयकर अपील सं./ITA No.: 862/CHNY/2025 िनधाᭅरण वषᭅ/Assessment Year : 2021-22 Grand Ark Logistics Pvt. Ltd., 58, Chennai Bangalore Highway, Vigneshwara Nagar, Sriperumbudur, Beemanthangal Village, Chennai – 602 117. Vs. The Deputy Commissioner of Income Tax, Corporate Circle 1(1), Chennai. PAN: AAFCG 6884L (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri Arjun Raj, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Ms. Gouthami Manivasagam, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 06.08.2025 घोषणा कᳱ तारीख/Date of Pronouncement : 29.10.2025 आदेश /O R D E R PER MANU KUMAR GIRI, JM: This appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax(Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter the “Ld.CIT(A)”] dated 23.12.2024 arising out of the order dated 27.12.2022 passed by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as the \"AO\") passed u/s.143(3) r.w.s.144B Printed from counselvise.com -2 - ITA. No:862/Chny/2025 of the Income-tax Act, 1961 (hereinafter \"the Act') for the Assessment Year 2021-22 (hereinafter the \"AY\"). 2. The Registry has noted a delay of 27 days in the filing of the appeal. Considering the reasons stated in the condonation petition and the affidavit filed by the assessee, and finding the explanation satisfactory, the delay is condoned. Accordingly, the appeal is admitted for adjudication. 3. The assessee, Grand Ark Logistics Private Limited, a company engaged in the business of transporting goods through road, filed its return of income for AY 2021-22 on 02.08.2022, declaring a total income of Rs.1,08,61,070/-. The department issued notices u/s.142 of the Act and in response the assessee has filed the required details called for then and there. During scrutiny, the Assessment Unit observed that the assessee debited Rs.11,47,30,371/- as cost of services, of which Rs.10,18,75,686- was paid to various contractors for transport hire charges. No TDS was deducted on payments amounting to Rs.5,15,48,393/-. The assessee claimed exemption from TDS under Section 191C(6) of the Act, asserting that 16 contractors furnished declarations stating they owned 10 or fewer goods carriages and provided their PANs. However, the Assessment Unit, after verification, found that for 8 contractors, either no response was received to notices under Section 133(6) or evidence was lacking to prove that the transport work was performed using vehicles owned by them. Consequently, Rs.70,06,900/-, being 30% of Rs.2,33,56,331/- (payments to non- compliant contractors), was disallowed under Section 40(a) (ia) and added to the total income, resulting in an assessed income of Printed from counselvise.com -3 - ITA. No:862/Chny/2025 Rs.1,78,70,970/-. The ld.CIT(A), in its order dated 23.12.2024, upheld the disallowance, dismissing the assessee's appeal after considering all submissions, including claims of compliance with Section 194C(6) and the impact of the COVID-19 pandemic. Aggrieved by the order of the Ld. CIT(A), the assessee preferred an appeal before us. 4. Before us, the ld.counsel for the assessee contends that the order passed by Ld. CIT(A) dated 31.12.2024 is contrary to the law and the facts and circumstances of the case. The Ld. CIT(A) erred in disallowing an expenditure of Rs.70,06,900 incurred towards transport hire charges under Section 40(a)(ia) for alleged non-deduction of TDS amounting to Rs.23,35,633. The disallowed amount was unjustly added back to the assessee’s income without assigning proper reasons. The assessee submits that Section 40(a)(ia) is not applicable in the present case, and its invocation for making the impugned additions is improper and unjustified. The assessee further submitted that assessee had submitted detailed party-wise breakup along with PAN details and proof of payment through banking channels. The ld. Counsel contends that despite this, the ld.CIT(A) failed to acknowledge the proper compliance and wrongly disallowed the expenses. The ld.Counsel contends that the ld.CIT(A) failed to exercise its powers under Section 133(6) to call for third-party confirmations. The assessee argues that without exercising such powers, the consequential disallowance lacks legal validity. The ld.Counsel contends that the disallowance is contrary to the second proviso to Section 40(a)(ia), which provides relief in cases where payments are not subject to TDS due to compliance by the recipient. Even otherwise, the provisions of Section 40(a)(ia) Printed from counselvise.com -4 - ITA. No:862/Chny/2025 are not applicable to the present case, and ld.CIT(A) erred in applying them without due consideration of the facts. The ld.Counsel contends that the assessee had disputed the disallowance and substantiated the genuineness of transport hire charges incurred. The disallowance made without proper application of mind is unjustified and unsustainable. The ld.Counsel contends that the ld.CIT(A) wrongfully rejected the assessee's plea for admission of additional evidence under Rule 46A of the Income Tax Rules, 1962, without appreciating the extraordinary circumstances that led to the non-submission during assessment proceedings. The ld.Counsel contends that the ld.CIT(A) failed to independently verify the disallowance under Section 40(a)(ia)/194C. This resulted in an unjust, unsustainable, and factually incorrect addition. The ld. Counsel for the assessee to substantiate his arguments has filed paper book in detailed as under: Sl. No. Date Particulars Page No. FINANCIALS FOR ASSESSMENT YEAR : 2021-22 1. 02.03.2022 Return of income 1 2. 04.02.2022 Tax audit report in Form No.3CA – 3CD 2 3. 30.11.2021 Audited Financials 22 4. 02.03.2022 Statement of Income 55 SCRUTINY ASSESSMENT PROCEEDINGS 5. 28.06.2022 Notice under Section 143(2) of the Act 59 6. 04.08.2022 Reply to Notice under Section 142(1) of the Act dated 18.07.2022 62 7. 19.10.2022 Reply to Notice under Section 142(1) of the Act dated 07.10.2022 67 8. - Details of Cost of Service for the Financial year 2020-2021 71 9. 01.04.2020 Declaration under Section 194C(6) of the Act by Jeeva Transport 149 Declaration under Section 194C(6) of the Act by Sudha 150 Declaration under Section 194C(6) of the Act by Sri Vatchala Transport 151 Declaration under Section 194C(6) of the Act by Sri Thai Mugambikai Transport 152 Declaration under Section 194C(6) of the Act by Sri Murugan Transport 153 Declaration under Section 194C(6) of the Act by Sri 154 Printed from counselvise.com -5 - ITA. No:862/Chny/2025 Mahalakshmi Transport Declaration under Section 194C(6) of the Act by Shri Annamalaiar Transport 155 Declaration under Section 194C(6) of the Act by Rajsundar 156 Declaration under Section 194C(6) of the Act by PJ Transport 157 Declaration under Section 194C(6) of the Act by Paneer Logistics 158 Declaration under Section 194C(6) of the Act by SLB Logistics Private Limited 159 Declaration under Section 194C(6) of the Act by N.S.K. Services 160 Declaration under Section 194C(6) of the Act by Mathan Transport 161 Declaration under Section 194C(6) of the Act by Kailai Logistics 162 Declaration under Section 194C(6) of the Act by M.S. Transport 163 Declaration under Section 194C(6) of the Act by Innila Cargo Movers 164 Declaration under Section 194C(6) of the Act by H.S.M Enterprises 165 Declaration under Section 194C(6) of the Act by Geetha Transport Service 166 Declaration under Section 194C(6) of the Act by C.S. Dilli Babu 167 Declaration under Section 194C(6) of the Act by C.E. Anbazhagan 168 Declaration under Section 194C(6) of the Act by Sri Jegathambal Transport 169 Declaration under Section 194C(6) of the Act by Panner Selva.S Transport 170 Declaration under Section 194C(6) of the Act by Swathi Transports 171 Declaration under Section 194C(6) of the Act by B. Bagiyam Transport 172 Declaration under Section 194C(6) of the Act by VBT Enterprises 173 10 - Ledger account of Mathan Transport 174 Invoices raised by Mathan Transport 175 11 - Ledger account of S.S.Diesel Pump Service 176 Ledger account of PMK Transport 177 Invoice raised by PMK Transport 183 12 - Ledger account of Manikandan Battery 186 Invoice raised by Manikandan Battery 187 13 - Ledger account of Vaska Consultancy Pvt Ltd 188 Invoice raised by Vaska Consultancy Pvt. Ltd. 190 14. 17.11.2022 Reply to the Notice under Section 142(1) of the Act dated 10.11.2022 191 15. - Details of Contractual Payments made during the Financial year 2020-2021 197 Printed from counselvise.com -6 - ITA. No:862/Chny/2025 16. - Deductee Consol based on TDS return for the FY 2020-2021 199 17. - Ledger account of Apollo Supply Chain Pvt. Ltd 202 Invoices raised by Apollo Supply Chain Pvt. Ltd 203 18. Ledger account of Omega Enterprises 207 Invoices raised by Omega Enterprises 208 19. Ledger account of PMK Transport 209 Invoices raised by PMK Transport 215 20. Ledger account of Swathi Transports 218 Invoices raised by Swathi Transports 224 21. - GSTR – 2A – Andhra Pradesh 244 22. GSTR – 2A – Tamil Nadu 252 23. - Compliance Check for Section 206AB & 206CCA 260 24. Ledger account of Anbazhagan 261 25. Ledger account of Geetha Transport Service 265 Invoices raised by Geetha Transport Service 266 26. Ledger account of H.S.M. Enterprises 269 27. Ledger account of Innila Cargo Movers 270 28. Ledger account of Kailai Logistics 276 Invoices raised by Kailai Logistics 277 29. Ledger account of Leema Designers & Decorators 279 30. Ledger account of Mathan Transport 280 Invoices raised by Mathan Transport 281 31. Ledger account of P.J. Transport 282 Invoices raised by P.J. Transport 286 32. Ledger account of Panner Logistics 289 Invoices raised by Panner Logistics 293 33. Ledger account of Rajsundar 296 Invoices raised by Rajsundar 297 34. Ledger account of Sri Jegathambal Transport 300 Invoices raised by Sri Jegathambal Transport 301 35. Ledger account of Sri Mahalakshmi Transport 302 Invoices raised by Sri Mahalakshmi Transport 324 36. Ledger account of Sri Murugan Transport 328 Invoices raised by Sri Murugan Transport 329 37. Ledger account of Sri Thai Mugambikai Transport 330 Invoices raised by Sri Thai Mugambikai Transport 332 38. Ledger account of Sudha 335 Invoices raised by Sudha 336 39. Ledger account of VBT Enterprises 339 40. Certificate of Registration – Form 23 340 41. 10.08.2019 Tax invoice raised by T V Sundram Iyengar & Sons Private Limited – 1 382 42. 13.12.2018 Tax invoice raised by Tata Motors – 1 384 43. 31.01.2019 Tax invoice raised by Eicher 387 44. 07.09.2019 Tax invoice raised by Tata Motors – 2 388 45. 27.02.2020 Tax invoice raised by T V Sundram Iyengar & Sons Private Limited – 2 392 46. 13.12.2022 Show Cause Notice 393 47. 20.12.2022 Reply to the Show Cause Notice 405 48. - Certificate of Registration of HSM Enterprises 412 Printed from counselvise.com -7 - ITA. No:862/Chny/2025 - Statement showing Trip Details of HSM Enterprises 413 49. 11.09.2019 Deed of Partnership of Kailai Logistics 418 - Details of Certificate of Registration – Kailai Logistics 425 - Statement showing Trip Details of Kalai Logistics 428 50. Details of trips – Sri Mahalakshmi Transport 441 Details of Certificate of Registration – Sri Mahalakshmi Transport 442 51. Details of Certificate of Registration – Sri Murugan Transport 464 Statement showing Trip Details of Sri Murugan Transport 469 52. Details of Certificate of Registration – Leema Designers & Decorators 475 Statement showing Trip Details of Leema Designers & Decorators 476 53. Statement showing Trip Details of VBT Enterprises 483 54. Death Certificate of Badri Narayanan A.K. 495 55. Statement showing Trip Details of Innila Cargo Movers 496 56. 27.12.2022 Scrutiny assessment order passed under Section 143(3) of the Act 59 57. 25.11.2024 Written submissions filed before the First Appellate Authority 538 58. - Details of Contractual Payments made during the assessment year 2021-22 544 59 - Compliance Check for Section 206AB & 206CCA 546 60. 23.12.2024 Order of the First Appellate Authority (Impugned Order) 547 5. Per contra, the ld. DR for the revenue submitted that the order passed by the ld.CIT(A) dated 23.12.2024, upholding the assessment order dated 27.12.2022 passed u/s.143(3) read with Section 144B of the Income Tax Act, 1961 (the Act), is lawful, reasoned, and sustainable both on facts and in law. The disallowance of Rs.70,06,900/-, being 30% of Rs.2,33,56,331/-, u/s.40(a)(a) of the Act, for non-deduction of tax at source (IDS) on transport hire charges as required u/s.194C, is well-founded. She further contends that the assessment and appellate orders are in accordance with the provisions of the Act. The disallowance u/s.40(a)(ia) was made after thorough verification, including notices u/s.133(6) to contractors and opportunities to the assessee to substantiate its claims. The facts, as evidenced by incomplete documentation and non-compliance by contractors, justify the Printed from counselvise.com -8 - ITA. No:862/Chny/2025 addition. She further contends that for 8 contractors (e.g., Innila Cargo Movers, Kailai Logistics, Mathan Transport, etc.), the assessee failed to substantiate that the transport work was performed using vehicles owned by them. Notices u/s.133(6) either went unanswered or revealed discrepancies. The ld. DR for the revenue furthermore contends that the burden lies on the assessee, as the deductor, to verify the authenticity of declarations and ensure compliance with Section 191C(6). Mere submission of declarations without evidence of ownership and usage of owned vehicles does not suffice. The disallowance is lawful and justified. 6. We have heard the rival submissions and carefully perused the material on record, including the voluminous paper book filed by the assessee. We note that the assessee had filed certain additional evidence before the Ld. CIT(A), including transport declarations, registration certificates, trip details, and ledger accounts of various contractors. However, the Ld. CIT(A) rejected the admission of these documents under Rule 46A of the Income Tax Rules, 1962 without recording adequate justification. In our considered view, the additional evidence submitted by the assessee is relevant and crucial to determine the applicability of Section 194C(6) and the corresponding disallowance under Section 40(a)(ia). The documents pertain to the ownership and use of transport vehicles, and their verification is central to the dispute. We find that in the interest of justice and to arrive at the correct tax liability, such evidence should be considered. Accordingly, we deem it fit to set aside the order of the Ld. CIT(A) and restore the matter to the file of the Assessing Officer (AO). The AO shall consider the additional evidence and any Printed from counselvise.com -9 - ITA. No:862/Chny/2025 other evidence that the assessee may furnish in support of its claim and pass a speaking order after affording adequate opportunity to the assessee. We make it clear that we have not expressed any opinion on the merits of the issue and all grounds are kept open for adjudication afresh. The assessee is directed to extend full cooperation during the remand proceedings and file all necessary documents and evidence as required by the AO. 7. In the result, appeal filed by the assessee is allowed for the statistical purposes. Order pronounced in the open court on 29th October, 2025 at Chennai. Sd/- Sd/- (पɮमावती एस) ( मनु क ुमार िगįर) (PADMAVATHY S) (MANU KUMAR GIRI) लेखा सद˟/ACCOUNTANT MEMBER Ɋाियक सद˟/JUDICIAL MEMBER चेÛनई/Chennai, Ǒदनांक/Date: 29.10.2025 RSR आदेशकȧĤǓतͧलͪपअĒेͪषत/Copy to: 1. अपीलाथȸ/Appellant 2. Ĥ×यथȸ/Respondent 3. आयकर आयुÈत /CIT, Chennai 4. ͪवभागीय ĤǓतǓनͬध/DR 5. गाड[ फाईल/GF. Printed from counselvise.com "