2021 (5) TMI 682 - AT - Income Tax

Reopening of assessment u/s 147 - Disallowance u/s. 40(a)(ia) - assessee not deducting tax on transport rent expenses as prescribed in the provision of section 194I - CIT-A deleted the addition - HELD THAT - As noticed that ld. CIT(A) has deleted the disallowance holding that assessee has not taken the trucks on rent and all the payees were having PAN No. In this regard, the ld. CIT(A) has also not admitted any evidences under rule 46A since assessee has not made any compliance before the AO. CIT(A) has also not called any remand report from the Assessing Officer in respect of the evidences produced by the assessee. Section 250(6) of the Act contemplates that first appellate authority would state, the points in dispute and thereafter record reasons in support of his finding on these points in dispute. Normally whenever any irregularity crept in the proceedings, then after removing the irregularities, proceedings is to be initiated from that stage but by remitting the issue to the ld. first appellate authority we would be multiplying the litigation, because the ld. CIT(A) would call for a remand report from the Assessing Officer and proceedings would commence on two stages in order to avoid that situation we would deem it proper to set aside order of both the revenue authorities and remit all the issues to the Assessing Officer. It is needless to say that observation made by us will not injure or impair the case of the Assessing Officer and will not cause any prejudice to the defense/explanation of the assessee. Therefore, we refer this issue to the file of Assessing Officer deciding afresh after examination and verification of the relevant supporting material on this issue. Accordingly, this appeal of the revenue is allowed for statistical purpose.

Summary

Issues:
Deletion of addition under section 40(a)(ia) of the Income Tax Act, 1961.

Analysis:
The appeal and cross objection in this case pertain to the assessment year 2009-10 and arise from an order of the CIT(A) in proceedings under section 144 r.w.s. 147 of the Income Tax Act, 1961. The main issue in the appeal of the revenue is the deletion of the addition of ?2,11,88,730 on account of disallowance under section 40(a)(ia) of the Act.

The facts of the case reveal that the return of income was filed declaring ?4,64,630, and the assessment under section 143(3) was made resulting in a total income of ?4,99,950. Subsequently, the case was reopened on the ground that tax was not deducted under section 194I of the Act in respect of transport rent expenses amounting to ?2,11,88,780. The Assessing Officer completed the assessment under section 144 r.w.s. 147, disallowing the rent expenses and adding it to the total income due to the assessee's non-compliance.

The assessee appealed before the CIT(A) who allowed the appeal, stating that no truck was taken on rent and all payees had PAN. The Departmental Representative contended that the CIT(A) erred in not admitting evidence or calling for a remand report. Upon hearing both sides, the ITAT observed that the CIT(A) had not followed proper procedure and remitted all issues to the Assessing Officer for fresh examination and verification of relevant material, allowing the revenue's appeal for statistical purposes.

The cross objection filed by the assessee was dismissed as not pressed. Therefore, the appeal of the revenue was allowed for statistical purposes, and the cross objection was dismissed. The order was pronounced on 05-05-2021.