Appeal details
Counselvise Citation
[2023] 102 COUNSELVISE.COM (IT) 7451 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 11 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-05-2023
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
10-04-2023
Assessment Year
2013-2014
Appeal Filed On
28-05-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Patidar Exports Pvt. Ltd. 411, Shanti Arcade, 132, FT Ring Road, Naranpura, Ahmedabad PAN: AAGCP1577L (Appellant) Vs The ITO, Ward-3(1)(2), Ahmedabad (Respondent) Assessee Represented: None Revenue Represented: Shri Atul Pandey, Sr.D.R. Date of hearing : 11-04-2023 Date of pronouncement : 26 -05-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the order dated 20.03.2019 passed by the Commissioner of Income Tax (Appeals)-9, Ahmedabad arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2013-14. 2. The brief facts of the case is that the assessee is a Private Ltd. Company engaged in the business of Export of Cotton and Spices. ITA No. 946/Ahd/2019 Assessment Year 2013-14 I.T.A No. 946/Ahd/2019 A.Y. 2013-14 Page No Patidar Exports Pvt. Ltd. vs. ITO 2 For the Assessment Year 2013-14, the assessee filed its return of income declaring total income of Rs. 6,61,970/-. The return of income was selected for scrutiny assessment and after detailed discussions, the Assessing Officer made the following disallowances: Sr. No. Particulars of Expenses ( Addition) Amount in Rs. 1 Rent Expenses 4,80,000/- 2 Clearing and Forwarding Expenses 14,10,000/- 3 Commission Expenses 14,59,160/- 4 Detention Expenses 32,54,583/- 5 Weight Shortage Expenses 93,95,196/- 6 Shipping freight Expenses 1,34,94,654/- 7 Excess payment to specified person 22,95,378/- 8 Interest Income 26, 328/- 3. Aggrieved against the same, the assessee filed an appeal before Commissioner of Income Tax (Appeals). The Ld. CIT(A) partly allowed the assessee appeal after hearing the assessee in detail each issue as follows: (i) Issue No. 1, Rent expenses “....5.4 During the course of assessment proceedings as well as the present appeallate proceedings, the appellant has not furnished any details in respect of furnishing the form No.26A along with the certificate of an accountant as defined us 288 of the Act The proviso to section 201(1) of the Act prescribes that the person(including the Principal Officer of the company) failing to deduct the whole or any part of the tax in accordance with the provisions of the Chapter XVII(Collection and recovery of tax) on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such person(deducts) furnished the return of income u/s 139 of the Act, taken into account such sum for computing the income in the return of income so filed and paid the tax due on the such income as declared in the return of income so filed and such person has furnished a certificate in form No.26A as per the provisions of Rule 31ACB of the LT. Rules. 5.5 If the provisions of the Act as amended by the Finance Act 2012 w.ef. 1.7.2012 read with Rule 31ACB prescribing the form No.26A are fitted in the case of the appellant, then it is noticed that there is a failure on the I.T.A No. 946/Ahd/2019 A.Y. 2013-14 Page No Patidar Exports Pvt. Ltd. vs. ITO 3 part of the appellant for deducting the full tax on the rent of Rs.4,80,000/- credited on various dates in the account of M/s Shiv Shakti Trade Link Pvt. Ltd. as per the copy of account filed. The appellant has debited an amount of Rs 20,000/- on 31.3.2013. The appellant was required to deduct the tax @ 10% and therefore, there should be deduction of tax for Rs.48,000/- from the total credits of Rs.4,80,000/- for the whole financial year 2012-13 Thus, there is a shortfall of Rs 28,000/- in deduction of tax from the credits made in the account of the landlord company. Further, the A.O. has rightly observed that the amount of Rs.20,000/- has not been paid as reflected in the quarterly returns filed by the appellant. M/s. Shiv Shakti Tradelink Pvt. Ltd. has filed the return of income for A.Y 2013-14 on 27.09.2013 wherein the rental income of Rs 4,80,000- has been declared. However, no details of furnishing form No.26A required to be furnished by the appellant, being a person responsible for paying or crediting the amounts in the account of payee i.e. M/s. Shiv Shakti Tradelink Pvt. Ltd., have been furnished. Thus, the A.O. has rightly disallowed the sum of Rs.4.80.000/- as the appellant did not satisfy the conditions as provided in section 201(1) of the Act as discussed in detail in the foregoing paragraphs. 5.6 The appellant has cited a decision of ITAT, B Bench, Kolkata in ITA No.422 & 423/2009 rendered by the Hon'ble ITAT, Kolkata Bench in the case of Debdutta Construction Vs. ITO, Wd.2(1), Medinipur which is in respect of AYS 2005-06 and 2006-07. In this case, the applicant has raised a contention that it should be allowed to furnish the details of returns of income filed by the labourers in whose cases TDS had not been deducted so as to support the contention that all these labourers had declared the amounts on which no TDS has been made by the applicant as income in their respective income-tax returns. The same has been accepted by the Hon'ble ITAT following the decision of the co- ordinate bench in the case of Santosh Kumar Dedola Vs. ITO for A.Y.2007-08 for A.Y.2007-08. Here, the contention raised by the appellant in the present case is that when the payee has declared the rental income of Rs 4 80,000/-, the expenditure of rent expenses of Rs.4,80,000/- ought to have been allowed. Since the facts of relied upon case are different to the extent for those assessment years, there was no obligation cast on the persons for furnishing a certificate in form No.26A which was brought in the Statue wef.19.02.2013 and 12.09.2012(both dates falling in the financial year relevant to AY 2013-14) Therefore, the relied upon decision cannot be fitted to the facts of the appellant.” (ii) Issue no. 2, Cotton weight shortage expenses: “....9.3 During the course of appellate proceedings, the appellant has filed the copy of weight shortage claims made by different purchasing parties which are further found to be based on credit notes prepared by I.T.A No. 946/Ahd/2019 A.Y. 2013-14 Page No Patidar Exports Pvt. Ltd. vs. ITO 4 the appellant company. Weight shortage is worked out on the basis of weight taken at the time of delivery of cotton bales and the weight as per the invoices prepared at the time of loading of cotton bales. The appellant has also filed the copies of debit notes issued by the purchasing parties, viz. M/s Samsung C & T Hong Kong Ltd., M/s Pakiza Cotton Spinning Mills (Pvt.) Ltd., M/s H.S. Corporation, etc. The difference of invoiced quantity and actual quantity has also been found to be reimbursed through foreign remittance through Kalupur Comm. Co. Op. Bank Ltd, for which banker's certificates have also been enclosed. Further, the appellant has contended that the assessment for A.Y 2014-15 in the case of appellant itself has been finalized by the Assessing Officer who has also examined this issue in depth and disallowed the weight expenses of Rs.25,27,755/- being 25% of total claim of Rs.1,01,11.020/- claimed in the profit & loss account which included the disallowance of Rs.7,49,489/- for want of debit note in respect of M/s Samsung C & T Hongkong Ltd. The appellant has not stated as to whether any appeal has been filed against this assessment order and its outcome, if any. Further, it has been contended that in the assessment order for A.Y.2012-13, the claim of the appellant for shortage was allowed as such(however, copy of the assessment order has not been placed on record, though claimed to have been enclosed as an attachment.) 9.4 I have carefully perused all the above details and documents. The A.O. has not discussed the issue in depth and summarily disallowed the claim of the appellant I whereas in the assessment order for A.Y.2014- 15, the A.O. has put his efforts to arrive at a logical conclusion of disallowing the expenses @ 25% of the total claim, after considering the appellant's explanation. It is observed that in the year under consideration, the appellant has shown the total export turnover of Rs.89,58,45,989/- against which the shortages of Rs.93,15,196/-(1.02%) has been claimed which was further reduced to 0.79% in the subsequent assessment year 2014-15 which has been reflected at Rs.1,01.11.020/- on the total export turnover of Rs.1,27,81,88,700/-(details abstracted from page 112 of the paper book). After disallowing the shortages @ 25% and thereby allowing the shortages to the extent of 75% worked out to 75,83,265/-, if applied to the total export turnover of Rs.1,27,81,88,700/-, the same has been worked out to 0.59% of the turnover. In absence of relevant details, the fair and reasonable estimate of allowing the weight loss would be 0.60% of the total export turnover reported at Rs.89,58,45,989/- which is worked out to Rs.53,75,076/- out of disallowed expenses of Rs.93,15,196/- by the A.O. By applying this formula, the appellant would get relief of Rs.39,40,120/- on this account.” I.T.A No. 946/Ahd/2019 A.Y. 2013-14 Page No Patidar Exports Pvt. Ltd. vs. ITO 5 (iii) Issue no. 3, Shipping freight expenses: “...10.2 I have carefully considered the facts of the case, observation of the A.Q. submission as well as case laws relied upon by the appellant. On perusal of the assessment order, it is noticed that the A.O. has made the disallowance of Rs. 1,34,94,654/- being shipping freight paid to M/s. Surya Shipping Service, which is claimed to be a non-resident shipping agency covered u/s 172 of the Act but the A.O. rejected this explanation by holding that the appellant did not prove the same. 10.3 During the course of appellate proceedings, the appellant has filed the copy of transportation expenses (Export Sea) and the amounts have been mostly found to be debited in respect of shipping fees paid to M/s Surya Shipping Service, M/s Broekman Logistics Pvt. Ltd. and M/s Damco India Pvt. Ltd. The appellant has relied on the decisions of various Tribunals viz. Freight Systems (India) Pvt. Ltd. of ITAT, Bench Delhi, Arunkumar Meerut Vs. I.T.O. of Delhi Bench and St. Mary's Rubbers Pvt. Ltd. of Cochin Bench wherein the issue of payments to the shipping agencies has been examined with reference to the Board's Circular Nos.715 and 723 on the issue. The A.O. made the disallowance only because the appellant did not prove that these three parties were non-residents and engaged in the business of shipping agency to which the provisions of section 172 of the Act could be applied. During the course of appellate proceedings also, the appellant did not make any attempt to prove that these three parties were covered under the provisions of section 172 of the Act. Further, M/s Surya Shopping Services had many branch offices including one at Ahmedabad and others at all the major ports of Gujarat and established in India in the year 2010(as per the details available on the website of this company) and therefore, it cannot be said that this company was a non-resident shipping company. Another company M/s Broekman Logistics India Pvt. Ltd. is a company operating its business from India and having head office at Rajkot with branch offices at Ahmedabad. The third company Le. M/s Damco India Pvt. Ltd. is also having its permanent business establishment in India. Further, the appellant has deducted the tax from the handling charges as per the chart of reconciliation of TDS provided during the course of appellate proceedings and has also been dealt with in para 6.2 above. Furthermore, section 172 of the Act is made applicable to the persons carrying on shipping business who are non- residents. Since the appellant has made TDS on handling charges debited in the profit & loss account and this issue has been agitated and adjudicated vide para 6.1 to 6.2 of this appellate order, it cannot be said that the provisions of TDS as per section 195 of the Act are not applicable to the appellant in respect of these three parties. 10.4 The appellant has placed reliance on the decision of Bhadresh Yarn Traders decided by the Hon'ble ITAT, Ahmedabad in ITA No.2456/AHD/2010 for AY 2006-07 wherein the issue of TDS from the I.T.A No. 946/Ahd/2019 A.Y. 2013-14 Page No Patidar Exports Pvt. Ltd. vs. ITO 6 payments made to the transporters with whom no written contract was made has been examined. Therefore, the facts as examined by the Hon'ble ITAT, Ahmedabad in this case are quite distinguishable and cannot be made applicable to the facts of the appellant's case. Further, the appellant has relied upon the decision in the case of Freight Systems (India) Pvt. Ltd. In the foregoing paragraph no.8.2 while dealing with the ground against disallowance of detention charges, this decision has been analyzed. The facts in that case were that the assessee in that case was itself a limited company and doing the business of carriage of goods and acted as clearing and forwarding agent and did not deduct the tax on the payments made on account of ocean freight and inland haulage charges and penalties were imposed. In the instant case of the appellant, the facts are quite different and distinguishable as the appellant is not engaged in the business of carriage of goods but sent its goods to the shipping agencies having their permanent establishment in India and governed under the provisions relating to TDS and due TDS has also been made by the appellant company. The appellant has further relied on the decision of St. Mary's Rubber Private Ltd, decided by the Hon'ble ITAT Cochin and the appellant has made the copy of this decision available through pages 148 to 154 of the paper book. In this relied upon case, the issue examined by the Hon'ble Tribunal was non-deduction of tax from the reimbursed amounts paid by that assessee to the C & F Agent. In the case of the appellant, no such facts have been put forth before the A.O. or have been admitted by the A.O. in the assessment order. Therefore, this decision is held to be on different footing, distinguishable and not found to be fitted with the facts of the appellant's case. 10.5 The appellant has also made further submissions vide its letter dated 28.12.2018 and contended that M/s Surya Shipping Services was acting as an agent of shipper's line and between the customers and filed the copies of bills of landing and also contended that there is no such disallowance in the assessment order for AY 2015-16 recently passed. However, these evidences cannot be entertained without making a specific request in Rule 46A of the I.T. Rules as the same are filed for the first time before the undersigned. Therefore, the submissions made vide letter dated 28.12.2018 have not been taken into consideration. The decision of St. Mary's Rubber Pvt. Ltd. has already been elaborately discussed in the foregoing paragraph and therefore, need not require further findings. 10.6 Considering all the factual and legal aspects of the issue, the disallowance of Rs.1,34,94,654/- being transportation expenses(Export Sea) made by the A.O. is confirmed and this ground of appeal is rejected.” I.T.A No. 946/Ahd/2019 A.Y. 2013-14 Page No Patidar Exports Pvt. Ltd. vs. ITO 7 (iv) Issue no. 4, Excess payment to specified person u/s. 40A(2)(b): “.....11.2. The AO has observed that the payments of Rs.22,95,37,826/- had been made by the appellant to its sister concern M/s. Patidar Industries Pvt. Ltd. against the purchases made by it. However, the appellant did not file the required form No.10E as per the provisions of section 92E of the Act and the appellant has been asked as to whether any excessive payment has been made or not. However, the appellant did not furnish the details of form No.3CEB as well as any explanation for the alleged excessive payment. The A.O. has, therefore, made the disallowance @ 1% of the payments of Rs.22,95,37,826/-. The appellant has contended that this issue has been covered by the appellate order for A.Y. 2013-14 against the order of imposing the penalty u/s.271AA of the Act which has been decided on 8.11.2017 by the predecessor CIT(A) in the office who has deleted the penalty on the ground that the provisions of section 92D and 271BA were made applicable covering the specific domestic transactions and were brought in the statute book w.e.f. 01.04.2013 and applicable to A.Y.2014-15 and onwards. Therefore, a wrong reliance has been placed on the decision of the CIT(A) for A.Y.2013-14 by the appellant. Since no explanation has been furnished during the course of assessment proceedings as well as during the course of present appellate proceedings to justify the payments made to its sister concern against the purchase of goods as pointed out by the Tax Auditors through Tax Audit Report, therefore, the disallowance made by the A.O. for Rs.22,95,378/- is confirmed and this ground of appeal is rejected.” (v) Issue no. 5, Interest income of Rs. 26,328: “....13. the appellant has challenged the addition of Rs.26,328/- made by the A.O on account of bank interest. However, during the course of appellate proceedings, the same has not been pressed for and therefore rejected.” 4. Aggrieved against the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal: 1 The order passed u/s 143(3) on 22/03/2016 for the assessment year 2013-14 by ITO ward 3(1)(2) Ahmadabad making an additions/ disallowances of Rs. 3,18,15,299/-is wholly illegal, unlawful and against the principal of natural justice. The Ld. CIT(A) has passed the order u/s 143(3) and has confirm the addition of Rs. 21645108/- 2. The Ld. A.O has grievously erred in law and or on facts in not considering fully and properly explanation furnished and evidence produced by the appellant. I.T.A No. 946/Ahd/2019 A.Y. 2013-14 Page No Patidar Exports Pvt. Ltd. vs. ITO 8 3. The Ld. A.O. has grievously erred in making impugned additions/ disallowances without giving sufficient and specific opportunity to the appellant and thereby violating the principal of natural justice. The appellant should therefore be allowed to produce additional evidence during the course of appellate proceedings and should be admitted. 4. The Ld. A.O has grievously erred in law and or on facts making addition in respect of Rent expenses even if the there is no loss or escape of income to the government as the party has shown the said income in their return and paid full tax on it. So pray for disallow the addition made by A.O. 5. The Ld. A.O. has disallow the weight shortage expenses and added Rs.93,95,196/-in gross total income. The appellant is in the business of export of raw cotton and cotton one of the most affected commodities by atmosprific change and up to 25 to 30% c volume. The debit note raised by the foreign customer has been paid and same ha been treated as weight shortage. Earlier year same expense has been allowed. More over payment made to foreign parties against their debit note. The Ld. CIT (A) has n taken into consideration the proof given to counter the arguments and confirm the par addition. 6. The Ld. A.O has made an addition because of non-deduction of TDS on Export freight of Rs. 1,34,94,654/- and Ld. CIT (A) has not granted an additional documents submitted at the time of hearing u/s 46A as per page 27 of order with the remarks (submissions made vide letter dated 28.12.2018 have not been taken into consideration as the same has been filed for the first time before the undersign.) The AO before making addition has not asked for the documents and the LD CIT (A) has not considered the documents submitted before them as an addition documents. 7. The Ld. A.O has made an addition on account of payment to specified persons. The payment made to the said company against the supply of materials. The purchase made from that party is at par with the other companies or ultimate benefit to appellant. The addition made is no base or reason. Addition made in total income on assumption basis which violating the principal of natural justice. The CIT (A) in PANELY CASE HAS DELEATE THE PENALTY AS PER ORDER. 8. The Ld. A.O has grievously erred in law and or on facts making an addition of Rs.26,328/ of bank interest which already reconcile by the books. The bank deducted the TDS on receipt basis while we keep our books in mercantile basis. So we pray to disallow the said addition. 9. Any other ground or grounds as may be urged at the time of hearing. It is therefore prayed that the disallowance/additions of Rs. 21645108/- made by the A. O out of total Addition of Rs. 3,24,77.269/- and confirm by the CIT should be deleted. 5. Today this appeal is listed for hearing 13 th time, None appeared on behalf of the assessee, one Chartered Accountant Shri Yogesh A. Thakkar sought for adjournment by sending email. On perusal of records, there is no authorization given by the assessee to anyone. Thus repeatedly the assessee is not appearing for the above appeal and not filed any Paper Books or evidences. Thus the Ld. D.R. was asked to proceed with the case, however he sought for one day’s time and hence adjourned today 11.04.2023. Again None appeared I.T.A No. 946/Ahd/2019 A.Y. 2013-14 Page No Patidar Exports Pvt. Ltd. vs. ITO 9 on behalf of the assessee, hence with the available materials on record, we are proceeding to dispose of the appeal with the assistance of Ld. D.R. 6. Ground nos. 1 to 3 are general in nature and the assessee alleged that the Ld. CIT(A) not considered the evidences produced by the assessee fully and properly and without giving sufficient and specific opportunity thereby violating the Principles of Natural Justice. The averments made by the assessee in the above grounds are without any basis. Perusal of the order of the Ld. CIT(A) makes it very clear that the Ld. CIT(A) has given ample opportunities to the assessee and decided the appeal based on the material submitted by the assessee. Furthermore, the assessee has not filed any evidence before us, how the ld. CIT(A) has not considered the issues properly. In the absence of the same, Ground Nos. 1 to 3 raised by the Assessee are devoid of merits and the same is dismissed. 7. Regarding ground no. 4, Rent Expenses. This ground is general in nature wherein the A.O. made the addition for non-deduction of Tax on rent paid by the assessee. The Ld. CIT(A) has considered the issue in detail which is already extracted herein in Para 3(i) of this order. In the absence of any new material before us and this ground also general in nature, the same is liable to be rejected and dismissed. 8. Ground no. 5, Cotton weight shortage expenses. On this issue, the Ld. CIT(A) after considering the disallowance made by the Assessing Officer in assessee’s own case for the next assessment I.T.A No. 946/Ahd/2019 A.Y. 2013-14 Page No Patidar Exports Pvt. Ltd. vs. ITO 10 year 2014-15 and estimated the cotton weight loss at 0.60% of the total export turnover, which is worked out to Rs. 53,75,076/- thereby giving a relief of Rs. 39,40,120/-. The assessee could not place on record any further records to delete the above addition of Rs. 53,75,076/-. In the absence of the same, this ground raised by the assessee is also devoid of merit and the same is liable to be dismissed. 9. Ground no. 6, non-deduction of TDS on export freight of Rs. 1,34,94,654/-. Though the allegation of the assessee, the Ld. CIT(A) has not entertained the additional documents under Rule 46A of the I.T. Rules. But before us, no such new documents are filed by the assessee. Hence the question of adjudicating the new documents does not arise. However on merits of the case, the Ld. CIT(A) has held that the assessee during the appellate proceedings did not make any attempt to prove that three parties were covered under the provisions of section 172 of the Act. The Ld. CIT(A) also distinguished the case laws relied by the assessee. In the absence of any further details before us, the ground raised by the assessee is hereby rejected. 10. Ground no. 7, addition on account of payment to specified person u/s. 40A(2)(b). The Ld. CIT(A) confirmed the addition on the ground that the assessee failed to file the required Form No. 10E as per the provisions of Section 92E of the Act and the assessee was asked, whether any excessive payment has been made or not. However the assessee failed to furnish the details in Form No. 3CEB as well as any explanation for the alleged excessive payment. I.T.A No. 946/Ahd/2019 A.Y. 2013-14 Page No Patidar Exports Pvt. Ltd. vs. ITO 11 Thus the assessee could not produce before us any contra view taken by the Ld. CIT(A). In the absence of the same, the ground raised by the assessee is hereby rejected. 11. Ground no. 8, addition of Rs. 26,328/- of bank interest. During the first appellate proceedings, the assessee has not pressed this ground and therefore rejected by Ld. CIT(A). Before us, the assessee has not produced any details. Therefore this ground raised by the assessee is also rejected. 12. In the result, the appeal filed by the Assessee is hereby dismissed. Order pronounced in the open court on 26 -05-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 26/05/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद
AI Insights
Patidar Exports Pvt. Ltd., engaged in the export of cotton and spices, appealed against the order of the Commissioner of Income Tax (Appeals) which had partly confirmed the disallowances made by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2013-14. The disallowances included significant amounts for rent, weight shortage, and shipping freight expenses, among others. The Tribunal found that the assessee failed to provide sufficient evidence to substantiate the claims and did not comply with the necessary procedural requirements, such as furnishing Form No. 26A for tax deduction at source on certain payments. The Tribunal also noted the absence of the assessee's representative during multiple hearings, which further hindered the presentation of their case.
