2017 (3) TMI 795 - AT - Income Tax

TDS u/s 194C - non TDS on freight and forwarding expenses - Held that - On the similar facts and circumstance this Hon ble Tribunal in the case of Vas Electronics v. ACIT 2015 (11) TMI 1528 - ITAT KOLKATA restored the file to the AO for fresh adjudication in the light of amended provisions of the Act and to verify whether the recipients have included the income in their respective returns and also paid taxes on the same. Bogus purchases - Held that - As observed that the assessee has shown excess purchases from the party M/s. Heritage. The ld. AR before us submitted that the effect of credit note was not given therefore the difference arose in the balance of the parties. Thus we are inclined to restore this issue to the file of the AO for fresh adjudication in accordance with law. This ground of appeal is allowed for statistical purposes

Summary

Issues Involved:
1. Opportunity of being heard not provided by CIT(A)
2. Disallowance under section 40(a)(ia) for non-deduction of TDS
3. Disallowance of expenses for non-deduction of TDS
4. Disallowance of expenses without proper consideration
5. Treatment of purchases as bogus

Issue 1: Opportunity of being heard not provided by CIT(A)
The appellant contested that the CIT(A) did not offer a reasonable opportunity to be heard. However, the Tribunal deemed this issue as general and not requiring separate adjudication.

Issue 2 & 3: Disallowance under section 40(a)(ia) for non-deduction of TDS
The AO disallowed expenses of ?23,52,612 under section 40(a)(ia) due to non-deduction of TDS. The appellant argued that the recipient had paid taxes on the income, requesting a verification by the AO. Citing precedents, the Tribunal directed the matter back to the AO for fresh adjudication in line with amended provisions.

Issue 4: Disallowance of expenses without proper consideration
The appellant challenged the disallowance of expenses totaling ?21,63,590 and ?6,19,108 for non-deduction of tax. The Tribunal consolidated these grounds for convenience. The AO disallowed the expenses incurred towards freight and forwarding without deducting TDS under section 194C. The CIT(A) upheld the AO's decision, citing the necessity of TDS deduction. The Tribunal, in line with previous rulings, remitted the matter back to the AO for verification.

Issue 5: Treatment of purchases as bogus
The AO treated purchases of ?19,792 as bogus due to a discrepancy in accounts. The appellant explained the difference was due to credit notes/discounts, not undisclosed purchases. The CIT(A) upheld the AO's decision, citing lack of documentary evidence for reconciliation. The Tribunal, considering the explanation provided, directed the issue back to the AO for fresh adjudication in accordance with the law.

In conclusion, the Tribunal allowed the appellant's appeal for statistical purposes, remitting certain issues back to the AO for further examination and compliance with legal provisions.