M/s Lion Exports, RAJKOT-GUJARAT V. The Income Tax Officer, Wd-5(2), RAJKOT-GUJARAT

ITA 758/RJT/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7298 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 24-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Corroborative evidences; TDS
• Section: 143(3); 5(2); 40(a)(ia); 194C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: SHRI MAHAVIR PRASAD , JUDICIAL MEMBER AND S H RI AMARJIT SINGH , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] M/S. LION EXPORTS, NR. S.T. WORKSHOP, GONDAL ROAD, DR. VIKRAM SARABHAI MARG, RAJKOT PAN: AAAFL7431J (APPELLANT) VS THE ITO, WARD - 5(2) , RAJKOT (RESPONDENT) REVENUE BY : S H RI PRAVEEN VERMA , SR. D . R. ASSESSEE BY: NONE (WRITTEN SUBMISSION) DATE OF HEARING : 0 3 - 07 - 2 019 DATE OF PRONOUNCEMENT : 15 - 07 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THI S ASSESSEE S APPEAL FOR A.Y. 2005 - 06 , AR ISES FROM ORDER OF THE CIT(A) - IV, RAJKOT DATED 29 - 10 - 2014 , I N PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSE SSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CIT(A) ERRED IN LAW AND FACTS IN CONFIRMING THE RE - OPENING PROCEEDINGS THE ASSESSMENT U/S. 148 AGAINST THE STATUTORY PROVISIONS. THE RE ASSESSMENT PROCEEDINGS BEING BAD IN LAW NEED CANCELLATION. I T A NO . 758 / RJT /20 14 A SSESSMENT YEAR 200 5 - 06 I.T.A NO. 7 58 /RJT /20 14 A.Y . 2005 - 06 PAGE NO M/S. LION EXPORTS VS. ITO 2 2. THE LD. CIT(A) ERRED IN LAW AND FACTS IN CONFIRMING RE - OPENING THE ASSESSMENT U/S. 148 WITHOUT CONSIDERING THAT THERE WAS FAILURE IN PROVIDING REASONS FOR RE - OPENING OF THE ASSESSMENT. THE RE - ASSESSMENT PROCEEDINGS BEING BAD IN LAW NEED CANCELLATION. 3.1. THE LD. CIT(A) ERRED IN LAW AND FACTS IN CONFIRMING DISALLOWANCE OF RS. 2,36,767/ - IN RESPECT OF FOREIGN TOURS EXPENSES. THE DISALLOWANCE NEEDS DELETION. 3.2. WITHOUT PREJUDICE, THE LD. CIT(A) ERRED IN LAW AND FACTS IN CONFIRMING DISALLOWANCE OF RS. 2,36,7 67/ - IN RESPECT OF FOREIGN TOURS EXPENSES IN FULL. THE DISALLOWANCE NEEDS SUITABLE REDUCTION. 4. THE LD. CIT(A) ERRED IN LAW AND FACTS IN CONFIRMING ADDITION OF RS. 1,37,940/ - U/S. 40(A)(IA). THE ADDITION NEEDS DELETION. 5. THE RE - ASSESSMENT FRAMED BEING BAD IN LAW NEEDS CANCELLATION. 6. NO REASONABLE AND ADEQUATE OPPORTUNITIES WERE GIVEN AND AS SUCH THE RE ASSESSMENT IS BAD IN LAW. 7. TAKING INTO CONSIDERATION THE LEGAL, STATUTORY, FACTUAL AND ADMINISTRATIVE ASPECTS, RE - OPENING OF ASSESSMENT U/S. 14 8 BEING BAD IN LAW, NO SUCH PROCEEDINGS OUGHT TO HAVE BEEN INITIATED. THE INITIATION AND COMPLETION OF THE SAME NEED CANCELLATION. 8. TAKING INTO CONSIDERATION THE LEGAL, STATUTORY, FACTUAL AND ADMINISTRATIVE ASPECTS, DISALLOWANCE OF RS. 2,36,7 67/ - AND ADD ITION OF RS. 1,37,940/ - OUGHT NOT TO HAVE BEEN MADE. THE DISALLOWANCE NEEDS DELETION. 9. WITHOUT PREJUDICE, NO ADEQUATE, SUFFICIENT AND REASONABLE OPPORTUNITY HAS BEEN PROVIDED WHILE PASSING ASSESSMENT ORDER. THE ASSESSMENT NEEDS ANNULMENT. 10. WITHOUT PRE JUDICE, NO ADEQUATE, SUFFICIENT AND REASONABLE OPPORTUNITY HAS BEEN PROVIDED WHILE PASSING APPEAL ORDER. THE ASSESSMENT NEEDS ANNULMENT. 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECALING TOTAL INCOME OF RS. 44,500/ - WAS FILED ON 24 TH OCTOBER, 20 05. THE ASSESSMENT U/S. 143(3) WAS FINALIZED ON 20 TH DEC, 2010 DETERMINING TOTAL INCOME AT RS. 87,500/ - . ON VERIFICATION OF THE R ECORD, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD PAID PAYMENT FOR TRANSPORT EXPENSES TO THE AMOUNT OF RS. 1,06,348/ - . OUT OF THE AFORESAID TRANSPORT EXPENSES, THE ASSESSEE HAS MADE PAYMENT OF RS. 68,828/ - TO USHA INTERNATIONAL. T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSING OFFICER HAS NOT DE DUCTED TDS U/S. 194C OF THE ACT, THEREFORE, THESE EXPENSES REQUIRED TO BE DI SALLOWED U/S. 40(A)(IA) OF THE ACT. ON FURTHER VERIFICATION OF THE RECORD, THE ASSESSING OFFICER HAS NOTICED THAT DURING THE YEAR UNDER CONSIDE RATION, THE ASSESSEE HAS DEBITED TRAVEL EXPENSES OF RS. 2,36 ,767/ - IN THE P & L A/C. OUT OF THE TRAVELLING EXPE NSES , AN AMOUNT OF RS. 10,000/ - WAS DISALLOWED WHILE COMPLETING ASSESSMENT MADE U/S. 143(3) OF THE ACT ON 28 TH DEC, 2007 . THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FAILED TO I.T.A NO. 7 58 /RJT /20 14 A.Y . 2005 - 06 PAGE NO M/S. LION EXPORTS VS. ITO 3 ESTABLISH THE GENUINENESS OF THE EXPENSES AND CONCEALED PARTICULARS OF INCOME TO THE EXTENT OF RS. 2,26,767/ - . IN VIEW OF THE ABOVE CIRCUMSTANCES, THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT U/S. 148 OF THE ACT BY ISSUING OF NOTICE U/S.147 OF THE ACT ON 1 ST D ECEMBER, 2009. THE ASSESSEE EXPLAINED THAT IT HAS MADE T RANSPORT EXPENSES TO USHA INTERNATIONAL TOWARDS SHIPMENT EXPENSES FOR EXPORT OF ITS GOODS. IT WAS FURTHER EXPLAINED THAT SUCH EXPENSES WERE KIND OF REIMBURSEMENT EXPENSES MADE TO THE ABOVE CITED CONCERN ON BEHALF OF THE ASSESSEE FIRM. THEREFORE, IT IS NO T REQUIRED TO DEDUCT ANY TDS ON SUCH PAYMENT WHICH WAS REIMB URSEMENT. REGARDING TRAVELLING EXPENDITURE OF RS. 2,36,767/ - , IT WAS EXPLAINED THAT NECESSARY DETAIL OF THESE EXPENSES WERE PROVIDED AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS CARRIED OUT I N THE CASE OF THE ASSESSEE U/S. 143(3) OF THE ACT. THESE EXPENSES WERE INCURRED FOR FOREIGN TRAVEL BY TWO PARTNERS AND ITS CORRESPONDING BI LL AND CONFIRMATION OF THE PARTIES WAS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS FURTHER SUBMITT ED THAT MAIN BUSINESS OF THE ASSESSEE FIRM WAS TO EXPORT GOO DS AND TO NEGOTIATE THE SAL E PRICE AND QUANTITIES OF GOODS, THE PARTNERS HAVE VISITED FR ANCE FOR THE BUSINESS PURPOSE OF THE ASSESSEE FIRM. THE ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSION O F THE ASSESSEE . THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS NOT FURNISHED PROOF IN RESPECT OF FOREIGN TRAVELLING EXPENSES OF RS. 2,36,767/ - AND ALSO PRODUCE SUPPORTING EVIDENCES OF ANY MEETING TAKEN PLACE WITH THE FOREIGN PARTIES DURING THE COURSE OF FOREIGN TOUR OF THE PARTNERS. THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED CLAIM OF FOREIGN EXPENSES RS. 2,36,767/ - AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. REGARDING NON - DEDUCTION OF TDS ON PAYMENT MADE TO USHA INTERNATIONAL TO THE AMOUNT O F RS. 68,828/ - AS TRANSPORT EXPENSE S , IN THIS REGARD , THE ASSESSING OFFICER HAS STATED THAT ON I.T.A NO. 7 58 /RJT /20 14 A.Y . 2005 - 06 PAGE NO M/S. LION EXPORTS VS. ITO 4 VERIFICATION OF THE COPY OF ACCOUNT SUBMITTED BY THE ASSSESSEE, IT IS FOUND THAT ASSESSE E HAS ACTUALLY PAID RS. 1,37,940/ - TO USHA INTERNATIONAL ON WHICH NO TDS WAS MADE. THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE AMOUNT OF RS. 1,37 , 940/ - U/S. 40(A)(IA) OF THE ACT. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD . CIT(A) . THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 5. DURIN G THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, WE HAVE HEARD LD. DEPARTMENTAL REPRESENTATIVE AND GONE THROUGH THE SUBMISSIONS FILED BY THE ASSESSEE. REGARDING DISALLOWANCE OF FOREIGN TRAVEL EXPENSES O F RS. 2,36,767/ - , THE ASSESSEE HAS FURNISHED ALL THE BILLS ALONG WITH THE COPIES OF PASSPORT FOR UNDERTAKING FOREIGN TRAVEL BY THE TWO PAR T NERS OF THE ASSESSEE FIRM. THE ASSESSEE HAS ALSO FURNISHED C ONFIRMATION S FROM THE CONCERN ED PARTIES AS EVIDENCE BEFORE T H E ASSESSING OFFICER. IT IS OBSERVED THAT T HE A SSESSING OFFICER HAS DISALLOWED THE EXP ENDITURE ON ASSUMPTION BASIS WITHOUT CONTRADICTING SUPPORTING EVIDENCES PERTAINING TO THE FOR EIGN TRAVEL EXPENDI TURE FURNISHED BY THE ASSESS EE . THE LD. CIT(A) HAS REITERATED THE FINDING OF THE A SSESSING OFFICER AND CONFIRMED THE AFORESAID DISALLOWANCE MADE BY THE ASSESSING OFFICER. IN THIS REGARD, WE HAVE NOTICED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT, THE ASSESSING OFFICER H A S VERIFIED THE CLAIM OF THE ASSESSEE FOR FOREIGN TRAVEL EXPENSES AT TH E TIME OF ORIGINAL ASSESSMENT COMPLETED U/S. 143(3 ) OF T H E ACT ON 12 TH DEC, 2007 AND DISALLOWED AN AMOUNT OF RS. 10,000/ - OUT OF SUCH EXPENSES. DURING THE COURSE OF RE - ASSESSMENT PROCEEDING, THE ASSESSEE HAS SUBMITTED REL EVANT BILLS AND COPIES OF DOCUMENTS IN RESPECT OF FOREIGN TRAVEL MADE BY I.T.A NO. 7 58 /RJT /20 14 A.Y . 2005 - 06 PAGE NO M/S. LION EXPORTS VS. ITO 5 T H E PARTNERS OF THE ASSE SSEE FIRM ALONG WITH CONFIRMATION LETTERS AND PURPOSE OF FOREIGN VISIT E TC. HOWEVER , IT IS NOTICED THAT ASSESSING OFFICER HAS NOT MADE A NY VERIFICATION AND E XAMINATION TO DISPROVE THE GENUINENESS OF THE CLAIM MADE BY THE ASSESSSEE. THEREFORE, WE DO NOT FIND ANY SUBSTANCE IN T H E FINDING OF THE LD. CIT(A), A CCORDINGLY , THIS GROUND OF APPEAL OF THE ASESSEE IS ALLOWED. 5.1 REGARDING DISALLOWANCE OF RS. 1, 37 ,940/ - U/S. 40(A)(IA) OF THE ACT FOR NOT DEDUCING TAX AS PER PROVISION OF SECTION 194C OF THE ACT ON TRANSPORT PAYMENT MADE TO M/S. USHA INTERNATIONAL. IN THIS REGARD, WE HAVE NOTICED THAT ASSESSEE HAS NOT MADE TDS ON THE ABOVE PAYMENT AND ALSO COULD NO T SUBSTANTIATE WITH ANY DOCUMENTARY OR RELEVANT EVIDENCES THAT THE AFORESAID PAYMENT WAS OF THE NATURE OF REIMBURSEMENT OF EXPENSES. THEREFORE, WE DO NO T FIND ANY ERROR IN THE DECISION OF LD. CIT(A) IN SUSTAINING THE DISALLOWANCE OF THE ABOVE EXPENSES MAD E BY THE ASSESSING OFFICER U/S. 40(A)( I A ) OF THE ACT FOR NOT DEDUCTING TDS. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 15 - 07 - 201 9 SD/ - SD/ - (MAHA VIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 15 /07 /201 9 I.T.A NO. 7 58 /RJT /20 14 A.Y . 2005 - 06 PAGE NO M/S. LION EXPORTS VS. ITO 6 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT