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2023 (11) TMI 402 - ITAT AHMEDABADRevision u/s 263 - non-examination of the issue of contractual payment made to a related party of the assessee without deduction of tax at source as applicable, which warranted disallowance of 30% of the expenses as per section 40(a)(ia) - HELD THAT:- The documents in the assessment records itself substantiated the assessee’s explanation that it had not incurred any job work charges of the nature of granules work at all. Therefore, PCIT’s finding of error in the order of the Assessing Officer that the assessee having made payment for job-work without deducting tax at source and the AO having not examined the issue, we find, does not emanate and is in fact negated from the facts on records before him by way of audited financial statements which do not reveal any payment /expense incurred by the assessee for job-work. For the above reason we do not agree with the ld. PCIT that the assessee failed to substantiate its explanation that the tax audit report mistakenly mentioned “granule work”, when the fact is that his explanation was patently obvious from the data revealed in the financial statements of the assessee itself. Even otherwise, assessee has demonstrated before us that the Assessing Officer had appreciated the nature of income and expenses incurred by the assessee correctly and noted that the assessee had earned income from job work charges and not paid any expenses on account of the same. As obvious records with the AO, which included the financial statements of the assessee – more particularly the Profit and Loss Account as noted by us above along with its schedules, the purchase books of the assessee, the ledger of purchases, the copy of job work account, the copy of account of Anand Synthetic - all revealed the fact that the assessee had not incurred any expenses on account of job work; that the expenses incurred in relation to Anand Synthetic, noted by the ld. PCIT, was in relation to purchase of granules and not for any job work and in fact the assessee had earned job work income from M/s. Anand Synthetic. The facts coming out so clearly from the records, PCIT surely was misguided by the incorrect words used by the Tax Auditor in the Tax Audit Report mentioning expenses incurred by the assessee with its related party Anand Synthetic in the nature of granules work instead of granules purchased. We are convinced that there was no error in the order of the AO vis-à-vis the issue of the assessee having not deducted tax at source on any alleged granules work payment made to its related parties warranting disallowance of expenses @ 30%; the order passed by the ld. PCIT is, therefore, held to be not sustainable in law and is, therefore, set aside. Appeal of assessee allowed.
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