Disallowance made u/s 40(a)(ia) of Income Tax Act on ground of Non Disclosure of Payment of Transportation Charges in Income Tax Return: ITAT Directs Re-adjudication [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to re-adjudicate the disallowance made under section 40(a)(a) of the Income Tax Act,1961 on the ground of nondisclosure of payment of transportation charges in income tax returns. 

Cargo Handling Corporation, the appellant assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the disallowance made by the assessing officer under section 40(a)(a) of the Income Tax Act for non-deduction of tax at source on the transportation charges. 

Soumitra Choudhury, the counsel for the assessee contended that out of the alleged sum which had been paid to three parties and already offered the alleged sum as revenue in the regular return of income and paid due taxes thereon and therefore, there is no loss to the revenue. 

It was further submitted that the disallowance made by the assessing officer was not as per the law and is liable to be deleted. 

Ranu Biswas, the counsel for the revenue relied on the decisions made by the lower authorities and contended that the assessing officer made the disallowance for non-deduction of tax at source on the transportation charges which was not mentioned in the income tax returns. 

It was further submitted that the assessee failed to deduct tax at source on the above-stated transportation charges due to which the assessing officer during assessment proceedings invoked the provisions of section 40(a)(a) of the Income Tax Act and made the alleged disallowance. 

The bench observed that no disallowance is called for on the transportation charges paid to other parties and as the alleged sum was offered as revenue in their Income Tax Returns. 

The two-member panel comprising Manish Borad (Accountant) and Sonjoy Sarma (Judicial) held that the assessee was entitled to get relief from the disallowance made by the assessing officer while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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