2020 (3) TMI 1139 - AT - Income Tax

Appellant's Appeal Allowed for Statistical Purposes, Issues Remanded for Further Investigation

M/s Mahanadi Metal And Chemicals Private Limited Versus ITO, Ward-1, Rourkela

M/s Mahanadi Metal And Chemicals Private Limited Versus ITO, Ward-1, Rourkela - TMI Issues involved:1. Nature of expenses - commission or contract work2. Treatment of discount and sundry creditor3. Rejection of additional evidence and disallowance for non-submission of VAT return4. Addition of amount and remand for further investigationAnalysis:Issue 1: Nature of expenses - commission or contract workThe appellant contested the CIT(A)'s decision regarding the nature of expenses paid under the head of commission instead of contract work. The AO observed discrepancies in TDS deductions and cash payments to the payee, leading to disallowances under various sections. The Appellate Tribunal acknowledged the contradictions in the submissions and documents provided by the appellant. Consequently, the issue was remanded back to the AO for a thorough examination to ascertain the correct nature of payments made to the payee, emphasizing the need for clarity to avoid confusion.Issue 2: Treatment of discount and sundry creditorThe AO disallowed a claimed amount as discount based on discrepancies in VAT returns and ledger entries related to purchases. The CIT(A) dismissed the appeal due to the appellant's failure to provide VAT returns as additional evidence. However, the Appellate Tribunal accepted the documents submitted by the appellant as they were crucial to the matter at hand. The issue was remanded back to the AO for proper adjudication, emphasizing the importance of cooperation from the appellant for a fair resolution.Issue 3: Rejection of additional evidence and disallowance for non-submission of VAT returnThe AO added an amount to the total income due to the appellant's failure to produce VAT returns for specific purchases. The CIT(A) rejected the additional evidence filed by the appellant, citing non-compliance with providing necessary documents. The Appellate Tribunal disagreed with this decision, accepting the VAT return as essential and sending the issue back to the AO for further consideration, emphasizing the need for cooperation from the appellant.Issue 4: Addition of amount and remand for further investigationThe AO made an addition to the total income based on discrepancies in raw material purchases, which the appellant failed to reconcile adequately. The CIT(A) dismissed the appeal, stating that crucial documents were not submitted before the AO. The Appellate Tribunal, after reviewing the documents provided by the appellant, accepted them as part of the record and remanded the issue back to the AO for proper adjudication, stressing the importance of cooperation from the appellant for a fair resolution.In conclusion, the appeal of the appellant was allowed for statistical purposes, and the issues were remanded back to the AO for further investigation and resolution in accordance with the law.