2023 (9) TMI 617 - HC - Income Tax

Delay of 968 days in approaching the Tribunal - Disallowance of hiring charges - Tax Deducted at Source (TDS) had not been deducted by the appellant/assessee while paying the charges for hiring equipment and machinery - AO noticed that although summons were issued u/s 133(6) to the sundry creditors, none of them responded to the same - HELD THAT - Having regard to the overall sense that the AO had, which was that this was not a genuine transaction, in our view, if the appellant/assessee was aggrieved by the conclusions reached in the matter, it should have acted with alacrity, and not slept over its right. As noted above, there was a failure on the part of the appellant/assessee to institute an appeal even after it discovered the order passed by the CIT(A) in the second round, i.e., the order dated 01.012.2015. It took nearly three (3) months to approach the Tribunal. We are of the opinion that no interference is called for with the order of the Tribunal.

Summary

Issues involved: Delay in approaching the Tribunal for appeal, Disallowance of hiring charges by the Assessing Officer, Failure to provide documentary evidence for expenses incurred on hiring equipment and machinery.

Delay in approaching the Tribunal for appeal: The appellant/assessee appealed against the order of the Income Tax Appellate Tribunal (Tribunal) for Assessment Year (AY) 2006-07. The Tribunal dismissed the appeal due to a delay of 968 days in approaching the Tribunal. The appellant claimed the delay was due to the fact that their accountant, who handled the case, had left the organization, and they were unaware of the receipt of the Commissioner of Income Tax (Appeals)'s order until later. The order was brought to their attention in July 2018, leading to the appeal being filed in September 2018.

Disallowance of hiring charges by the Assessing Officer: The appellant/assessee contended that the disallowance of hiring charges by the Assessing Officer (AO) was unjustified. The AO disallowed the charges as Tax Deducted at Source (TDS) had not been deducted by the appellant while paying for hiring equipment and machinery. However, the appellant argued that TDS was not required to be deducted during AY 2006-07 as per the provisions of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) had initially scaled down the disallowance and remanded the issue to the AO for examination.

Failure to provide documentary evidence for expenses incurred on hiring equipment and machinery: The AO, in the second round, found the appellant/assessee unable to prove the genuineness of the expenses incurred on hiring equipment and machinery. Although bills and vouchers were produced, the AO deemed it insufficient as documentary evidence establishing the hiring was not provided. Summons issued to creditors went unanswered, and no confirmation of the suppliers' addresses was submitted. The AO concluded that the transaction was not genuine, and the appellant failed to act promptly upon discovering the order passed by the CIT(A), leading to the dismissal of the appeal by the Tribunal.