Basanti Auto Agency, Balasore V. ACIT, Circle Balasore, Balasore

ITA 109/CTK/2023

AI Insights

The case involves an appeal by Basanti Auto Agency against the order of the CIT(A), National Faceless Appeal Centre, Delhi, concerning the assessment year 2017-2018. The appeal raised two main issues: the disallowance made under Section 40(a)(ia) for non-deduction of TDS under Section 194C, and an adhoc disallowance of 15% expenses totaling Rs.2,13,330. The Tribunal found that the AO's adhoc disallowance was not justified as it was based on vague terms without specific details of personal use or unreasonable expenses. The Tribunal deleted this disallowance but restored the issue of TDS non-deduction to the AO for further examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127100 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 25-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-04-2023
• Other Referred Cases: R.G.Buildwell Engineers Ltd., 259 Taxman 370
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; TDS
• Section: 40(a)(ia)

Judgement Text

आयकर अऩीऱीय अधधकरण, कटक न्यायऩीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य एवं श्री राजेश क ु मार, ऱेखा सदस्य के समक्ष । (THROUGH VIRTUAL HEARING) BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER आयकर अऩीऱ सं/ITA No.109/C TK/2023 (ननधाारण वषा / Asses s m ent Year : 2017-2 018) Basanti Auto Agency, Remuna Golai, PO/PS: Januganj, Dist: Balasore-756019 Vs ACIT, Circle-Balasore, Balasore PAN No. :AAJTS 1630 D (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee by : Shri P.K.Mishra, Advocate राजस्व की ओर से /Revenue by : Shri S.C.Mohanty, Sr. DR स ु नवाई की तारीख / Date of Hearing : 26/06/2023 घोषणा की तारीख/Date of Pronouncement : 26/06/2023 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 31.01.2023, passed in DIN & Oder No.ITBA/NFAC/S/250/2022- 23/1049270091(1), for the assessment year 2017-2018. 2. It was submitted by the ld. AR of the assessee that two issues have been raised in the appeal, one against the disallowance made by invoking provisions u/s.40(a)(ia) of the Act on the ground of non-deduction of TDS u/s.194C. The second issue was against the adhoc disallowance of 15% expenses under different heads totaling to Rs.2,13,330/-. It was the submission that in view of the decision of the Hon’ble Supreme Court in the case of R.G.Buildwell Engineers Ltd., 259 Taxman 370 as the books of accounts have not been rejected, no adhoc disallowance can be made. ITA No.109/CTK/2023 2 In respect of the disallowance made by invoking the provisions of Section 40(a)(ia) of the Act, it was submitted that the AO had made disallowance in respect of professional charges, annual maintenance charges and carriage outward, respectively. It was the submission that to such extent as TDS is liable to be made, the assessee has made the same and the AO has not considered the fact that the TDS was not required to be made on the said payments, the assessee has not made the TDS as the amounts were below the limits for deduction of TDS. He had no objection if the issue is restored to the file of AO for verification and re-adjudication of the issue. 3. In reply, ld.Sr. DR vehemently supported the order of the ld. AO and ld. CIT(A) and submitted that the details have not been produced in respect of non-deduction of TDS. 4. We have considered the rival submissions. A perusal of the facts of the present case, clearly shows that the AO has made adhoc disallowance by stating that “in the absence of all the details like bills/vouchers and taking into account the unreasonable increase in the expenses, booked under the head and also the personal use of the above expenses cannot be ruled out”, he has disallowed 15% of the expenses. If the AO is of the view that the details have not been produced or that expenses are unreasonable or that there is personal use, any personal expenses has been brought into accounts of the assessee, then it is open to the AO to make the specific disallowance. A disallowance cannot be made on vague terms. This being so, respectfully following the decision in ITA No.109/CTK/2023 3 the case of R.G.Buildwell Engineers Ltd., referred to supra, the disallowance of 15% of the expenses as made by the AO and as confirmed by the ld. CIT(A) stands deleted. 5. Coming to the issue of disallowance made by invoking provisions of Section 40(a)(ia) of the Act, as the assessee has not produced the details of the break-up of the expenses on which he claims that the TDS was not liable to be made and the TDS has been deducted on such payments, which exceeded the prescribed limit, the issue is restored to the file of AO for readjudication after granting adequate opportunity of being heard. 6. In the result, appeal of the assessee is partly allowed for statistical purposes. Order dictated and pronounced in the open court on 26/06/2023. Sd/- (राजेश क ु मार) (RAJESH KUMAR) Sd/- (जाजज माथन) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 26/06/2023 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : आदेशान ु सार/ BY ORDER, (Assistant Registrar) आयकर अऩीऱीय अधधकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- Basanti Auto Agency, Remuna Golai, PO/PS: Januganj, Dist: Balasore-756019 2. प्रत्यथी / The Respondent- ACIT, Circle-Balasore, Balasore 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ज पाईऱ / Guard file. सत्यावऩत प्रयत //True Copy//