2016 (4) TMI 469 - AT - Income Tax

TDS on account of hire charges - Held that - Respectfully following the aforesaid decision of the Hon ble Delhi High Court in the case of Ansal Land Mark Township (P) Ltd. (2015 (9) TMI 79 - DELHI HIGH COURT ) we deem it fit and appropriate in the interest of justice and fair play to set aside this issue to the file of AO to decide the issue afresh in the light of the aforesaid judgment. Accordingly we direct the AO to verify whether the payees have included the subject-mentioned receipts in their respective returns and paid taxes thereon or not. If that is so then disallowance u/s. 40(a)(ia) of the Act shall not be made in the hands of assessee. - Decided in favour of assessee for statistical purposes. Addition on account of balance-sheet difference by wrongly treating it as unexplained investment - Held that - during the course of assessment proceedings AO found the difference of small amount at 20, 000/- between ledger provided by party and amount show by assessee its books of account. However we find from the order of authorities below that the addition was made by the AO on account of the difference in the balancesheet item but without disputing gross income declared by assessee. The difference of 20, 000/- is arising from the ledger of the party of assessee which is a regular party and to whom assessee raises the bill for the services provided. In our view the AO failed to bring on record the bill of income which has not been recorded in the books. Therefore we find that the difference crept out of the balance-sheet item does not result as understatement of income. Accordingly we are convinced by the reasoning adduced by assessee. Accordingly in our considered view the addition made by AO on account of unexplained investment for Revenue account which subsequently confirmed by Ld. CIT(A) is without any sound basis - Decided in favour of assessee Unexplained expenditure u/s. 69C - Held that - AO has treated the sum as unexplained expenditure u/s. 69C of the Act as this fuel cost was not reflecting in the accounts of BECML. However the ld. AR submitted that this cost of fuel was paid by the assessee from the premises of the dumper owner to the place of the BECML. Therefore the same shall not be reflected in the statement of BECML. We find that the authorities below have disallowed the difference amount of 2, 99, 459/- on the ground that it was not reflecting in the statement of BECML. However we find from the ground raised by the assessee that the amount of 2, 99, 459/- was paid by the assessee directly for the running of the dumper from the place of dumper owner to the work place of BECML and when the dumper was not in the custody of BECML. The lower authorities have not considered this aspect in their order as raised in the ground of appeal by the assessee. Therefore in our considered view this aspect of the fuel cost needs to be verified by the AO

Summary

Issues Involved:
1. Disallowance of hire charges.
2. Non-deduction of tax at source (TDS) under Section 194C.
3. Failure to issue summons under Section 131.
4. Addition on account of balance sheet difference.
5. Charging of interest under Sections 234A and 234B.
6. Disallowance of fuel expenditure under Section 69C.

Detailed Analysis:

1. Disallowance of Hire Charges:
The assessee, engaged in the transport business, made payments for dumper hire charges and repair & maintenance to various parties. The Assessing Officer (AO) disallowed these expenses due to the assessee's failure to provide supporting documents and non-compliance with TDS provisions. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's decision. However, the Tribunal found that the necessary details to establish the genuineness of the parties were provided and accepted the argument that the amendment to Section 40(a)(ia) by the Finance Act, 2012, which is retrospective, should apply. The Tribunal directed the AO to verify if the payees included the receipts in their returns and paid taxes, and if so, to not disallow the expenses.

2. Non-Deduction of TDS under Section 194C:
The AO disallowed the expenses due to non-compliance with TDS provisions. The Tribunal noted the retrospective effect of the proviso to Section 40(a)(ia) and directed the AO to verify whether the payees had disclosed the receipts and paid taxes. If confirmed, the disallowance should not be made.

3. Failure to Issue Summons under Section 131:
The CIT(A) supported the AO's decision not to issue summons under Section 131, placing the onus on the assessee to establish the genuineness of the expenses. The Tribunal, however, found that the necessary details were provided, and thus, the disallowance on this ground was not justified.

4. Addition on Account of Balance Sheet Difference:
The AO added Rs. 20,000 as unexplained investment due to a difference in the balance sheet figures between the assessee and M/s Bengal Emta Coal Mines Ltd. The Tribunal found that the difference did not result in undisclosed income and reversed the addition, stating that the AO failed to show that any income was understated.

5. Charging of Interest under Sections 234A and 234B:
The issue of interest under Sections 234A and 234B was deemed consequential and did not require adjudication at this stage as the matter was restored to the AO.

6. Disallowance of Fuel Expenditure under Section 69C:
The AO treated the difference of Rs. 2,99,459 in fuel expenses as unexplained expenditure. The Tribunal noted that the assessee explained the difference as fuel costs incurred for running dumpers from the owner's place to the worksite, which was not reflected in the statements of BECML. The Tribunal restored the matter to the AO for fresh adjudication after verifying the assessee's claims.

Conclusion:
The Tribunal allowed the appeals for statistical purposes, directing the AO to re-examine the issues based on the provided evidence and the retrospective application of the amended provisions. The Tribunal emphasized the need for fair play and justice in reassessing the disputed expenses and charges.