Wesman Thermal Engineering Processes Private Limited, Kolkata V. A.C.I.T., Circle - 1(2), Kolkata, Kolkata

ITA 60/KOL/2023

AI Insights

The case involves Wesman Thermal Engineering Processes Pvt. Limited, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, confirming an addition of Rs.3,24,827 to the assessee's income for the Assessment Year 2015-16. The addition was initially made by the Assessing Officer, who disallowed 5% of the total domestic travelling expenses claimed by the assessee, citing unsatisfactory explanations for the expenses. The CIT(Appeals) upheld this disallowance, noting violations of section 40A(3) regarding cash payments. However, the Tribunal found that the cash payment limit for the relevant year was Rs.20,000, not Rs.10,000 as misread by the CIT(Appeals), and that the disallowance was not justified.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129116 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-05-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 24-01-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(2)

Judgement Text

ITA No. 60/KOL/2023 Assessment Year : 2015-2016 Wesman Thermal Engineering Processes Pvt. Limited 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘A’ BENCH, KOLKATA Before Shri Rajpal Yadav, Vice-President & Dr. Manish Borad, Accountant Member I.T.A. No. 60/KOL/2023 Assessment Year: 2015-2016 M/s. Wesman Thermal Engineering Processes Pvt. Limited,..........................Appellant 3 rd Floor, Wesman Centre, 8, Mayfair Road, Kolkata-700019 [PAN: AAACW2786Q] -Vs.- Assistant Commissioner of Income Tax,..Respondent Circle-1(2), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 Appearances by: Shri P.R. Kothari, A.R., appeared on behalf of the assesseee Shri Vijay Kumar, Addl. CIT, appeared on behalf of the Revenue Date of concluding the hearing : May 10, 2023 Date of pronouncing the order : June 22, 2023 O R D E R Per Shri Rajpal Yadav, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), ITA No. 60/KOL/2023 Assessment Year : 2015-2016 Wesman Thermal Engineering Processes Pvt. Limited 2 Delhi dated 1 st December, 2022 passed for assessment year 2015-16. 2. In the solitary ground of appeal, the assessee has pleaded that the ld. CIT(Appeals) has erred in confirming the addition of Rs.3,24,827/-. 3. Brief facts of the case are that the assessee has filed its return of income on 30.09.2015 for A.Y. 2015-16 declaring total loss of Rs.86,78,737/-. This return was selected for scrutiny assessment and a notice under section 143(2) was issued and served upon the assessee. The ld. Assessing Officer while making the disallowance of Rs.3,24,827/- out of travelling expenses has observed as under:- “Disallowance under travelling expense (domestic):- Having gone through the profit and loss account, it is observed that assessee has debited Rs.64,96,552/- under the head ‘travelling expense (domestic)’. The assessee has been asked to furnish details of travelling expenses during the year, but the explanation is unsatisfactory in nature. As the assessee company could not furnish the requisite details satisfactorily, hence 5% of total expenditure on ad hoc basis which works out to Rs.3,24,827/- has been disallowed as not relates to assessee’s business and added back to the total income of assessee-company. Disallowance Rs.3,24,827/-“. 4. On appeal, the ld. CIT(Appeals) confirmed this disallowance by observing that on certain occasions, the assessee has made cash payments exceeding Rs.10,000/- ITA No. 60/KOL/2023 Assessment Year : 2015-2016 Wesman Thermal Engineering Processes Pvt. Limited 3 in violation of section 40A(3). The ld. CIT(Appeals) thereafter made reference to those debts. 5. The ld. Counsel for the assessee submitted that in A.Y. 2015-16, the limit for making cash payment was Rs.20,000/-. Hence, ld. 1 st Appellate Authority has totally misread the provision. On the other hand, ld. D.R. was unable to controvert the submissions of the ld. Counsel for the assessee. 6. On due consideration of the record, we are of the view that firstly the ld. Assessing Officer has not justified as to why ad hoc disallowance has to be made. He has not pointed out which detail and how it is not satisfactory. His order (extracted supra) is totally a non- speaking order. The ld. 1 st Appellate Authority has again approached the controversy in an erroneous manner. Hence, both the orders are not sustainable. We allow the appeal of the assessee and delete the disallowance. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on June 22, 2023. Sd/- Sd/- (Manish Borad) (Rajpal Yadav) Accountant Member Vice-President(KZ) Kolkata, the 22 nd day of June, 2023 ITA No. 60/KOL/2023 Assessment Year : 2015-2016 Wesman Thermal Engineering Processes Pvt. Limited 4 Copies to : (1) M/s. Wesman Thermal Engineering Processes Pvt. Limited, 3 rd Floor, Wesman Centre, 8, Mayfair Road, Kolkata-700019 (2) Assistant Commissioner of Income Tax, Circle-1(2), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 (3) Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi; (4) Commissioner of Income Tax , (5) The Departmental Representative (6) Guard File TRUE COPY By order Assistant Registrar Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.