2016 (9) TMI 1660 - AT - Income Tax

Bogus debtors - as per AO assessee must have collected the amounts due from the concerned debtors outside the books of account - HELD THAT - As the said amount must have been collected by the assessee from the concerned party outside the books of account is taken to be true such collection from debtors outside the books of account could not give rise to any income chargeable to tax in the hands of the assessee. Assessee has also submitted that the amount received from the concerned debtors at the fag end of the year under consideration was duly accounted for by the assessee in the books of account of the next year. Addition made by the AO and confirmed by the ld. CIT(Appeals) on account of alleged bogus sundry debtors is not sustainable - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - payments of bus hire charges made by the assessee to five bus owners without deduction of tax at source - HELD THAT - We restore the issue relating to the disallowance u/s 40(a)(ia) on account of payment of bus hire charges to the file of the AO for deciding the same afresh in the light of the decision of the Tribunal in the case of Abhoy Charan Bakshi 2016 (5) TMI 755 - ITAT KOLKATA after verifying the claim of the assessee that the concerned recipients of the bus hire charges have already offered to tax the entire amount in question in their returns of income - Assessee ground allowed for statistical purposes.

Summary

Issues:
1. Consideration of written submission by Ld. CIT Appeal
2. Violation of principles of natural justice in appellate order
3. Addition of sum on account of disclosed sundry debtors
4. Addition on account of bus hire charges and other expenses
5. Interest computation under IT Act 1961

Analysis:

1. The appeal raised concerns regarding the Ld. CIT Appeal's order without considering the written submission and violation of natural justice principles. However, during the hearing, the counsel did not press these grounds, leading to their dismissal.

2. The issue of adding a sum on account of disclosed sundry debtors was raised. The Assessing Officer had added Rs.1,75,200 as alleged bogus damages, which was confirmed by Ld. CIT(Appeals). The Tribunal observed that since the amount was shown in the books of account, it was considered as income and offered for tax. The addition was deemed unsustainable, and Ground No. 3 of the appeal was allowed.

3. Concerning the addition on account of bus hire charges and other expenses under section 40(a)(ia), a disallowance of Rs.9,00,000 was made by the Assessing Officer. The Ld. CIT(Appeals) upheld this disallowance. The Tribunal noted the applicability of the second proviso to section 40(a)(ia) and referred to a previous Tribunal decision. The matter was remanded to the Assessing Officer for fresh consideration in light of the Tribunal's decision, allowing Ground No. 4 for statistical purposes.

4. The issue of interest computation under sections 234B, 234C, and 234D was considered consequential. The Assessing Officer was directed to provide consequential relief to the assessee on this matter.

5. Ultimately, the appeal was partly allowed, and the order was pronounced on September 28, 2016.