2019 (10) TMI 645 - AT - Income Tax

Scope of the limited scrutiny assessment - Tax credit (and receipts) in ITR is less than tax credit in 26AS - Disallowance towards opening balance included transport charges, brokerage difference, cash payments made u/s 40A(3), Off Dock dues and difference between bank statement and actual payments made for transport charges - HELD THAT - AO undertook scrutiny to examine the aspects falling under tax credit (and receipts) in ITR is less than tax credit in 26AS . While doing so, he has made the impugned disallowances and hence the AO s action is well within his jurisdiction. However, the assessee pleaded that the impugned issues require re-examination afresh, which is not opposed by the Ld. DR. We deem it fit to remit these issues back to the AO for a fresh examination. The assessee shall place all the materials in its support before the AO and comply to the AO s requirements as per law. AO is free to conduct appropriate enquiry as deemed fit, but he shall furnish adequate opportunity to the assesssee on the material etc to be used against it and decide the matter in accordance with law. Assessee s appeal is treated as partly allowed for statistical purposes.

Summary

Issues:
1. Disallowance of various expenses in assessment year 2014-15.
2. Disallowance made under section 40A(3) for cash payments to truck drivers.
3. Disallowance of dock dues and transport charges.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding disallowances made by the Assessing Officer during the assessment for the year 2014-15. The Assessing Officer disallowed various expenses including transport charges, brokerage difference, cash payments under section 40A(3), Off Dock dues, and differences in bank statements. The appellant contended that the order was illegal and beyond the mandate of limited scrutiny. The appellant challenged the disallowances made by the AO and confirmed by the CIT(A) on various grounds, including the incorrect application of rules and instructions. The Tribunal remitted the issues back to the AO for fresh examination, allowing the appellant to present all materials and comply with legal requirements.

2. The disallowance made under section 40A(3) for cash payments to truck drivers was contested by the appellant, arguing that the payments were necessary due to business exigencies and the absence of bank accounts for the drivers at delivery locations. The appellant disputed the reliance on Rule 6ABA for disallowance. The Tribunal noted the arguments presented by both parties and decided to send this issue back to the AO for re-examination, providing the appellant with an opportunity to present supporting evidence.

3. The disallowance of dock dues and transport charges was also challenged by the appellant, claiming that the Assessing Officer erred in making these disallowances. The Tribunal considered the contentions of both parties and decided to remit these issues back to the AO for fresh examination. The AO was instructed to conduct a thorough enquiry, provide the appellant with a fair opportunity to present evidence, and make a decision in accordance with the law. The Tribunal partially allowed the appeal for statistical purposes, emphasizing the need for a proper re-examination of the disputed issues.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the parties, and the Tribunal's decision to remit the issues back to the Assessing Officer for a fresh examination in accordance with the law.