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2016 (7) TMI 382 - AT - Income TaxDisallowance under section 40A(3) - Power of CIT(A) to enhance the assessment - principles of natural justice - Held that:- Section 251(2) of the Act stipulates that the learned CIT(A) shall not enhance an assessment, or a penalty, etc. unless the appellant has had a reasonable opportunity of showing cause against such enhancement. As per the relevant portion of the learned CIT(A)’s finding in the impugned order we find that the learned CIT(A) did not afford the assessee in the case on hand any opportunity whatsoever, let alone reasonable opportunity of showing cause against such enhancement and in our considered view this failure on the part of the learned CIT(A) being in violation of the basic principles of natural justice would render his enhancement unsustainable in law. We, therefore, in the interest of substantial justice set aside the learned CIT(A)’s finding enhancing the assessee’s income by ₹ 81,05,294/- under section 40A(3) of the Act, comprising the total actual payment of handling charges plus sweeping labour charges and restore the matter to his file for de novo consideration and adjudication thereon after affording the assessee adequate opportunities to make submissions, file details, documents, etc. required in this regard. - Decided in favour of assessee for statistical purposes. Disallowance under section 40(a)(ia) - payments made by the assessee for audit fees, legal fees and professional fees for non-deduction of tax at source - Held that:- While making this disallowance under section 40(a)(ia) of the Act it is seen that neither the AO nor the learned CIT(A) has mentioned under which section of the Act the assessee was required to deduct tax at source on the aforesaid payments. Moreover, as observed that, the assessee’s contentions that no disallowance under section 40(a)(ia) of the Act was called for since the parties to whom such payments were made during the year, i.e. Advocate, Lawyer, etc. had included the same in their respective returns of income; was also brushed aside without being addressed by the learned CIT(A) while recording his finding. We, therefore, in the interest of equity and justice set aside the findings of the authorities below and restore this issue to the file of the learned CIT(A) for de novo examination and adjudication thereon in accordance with law by way of a speaking order, after affording both the AO and the assessee, adequate opportunity of being heard and to file details/submissions required in this regard - Decided in favour of assessee for statistical purposes. Disallowance of clearing and forwarding charges - Held that:- There is no dispute with the fact that the cash expenditure claimed to have been incurred for clearing and forwarding activities of the employees/ labourers of the assessee firm at Bombay Docks and JNPT, Nava Sheva are only supported by self made vouchers. In our view, the authorities below appear to have been reasonable in allowing 70% of the expenditure claimed and in disallowing only 30% thereof, considering the business activities of the assessee. From the details on record, we find that apart from raising this ground of appeal, the assessee has failed to place on record before us any material evidence to controvert the factual findings rendered by the authorities below on this issue. In this view of the matter, we find no reason to interfere with or deviate from the finding recorded by the learned CIT(A) in the impugned order and therefore uphold the disallowance of 30% of clearing and forwarding expenses - Decided against assessee
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