TaxTMI 
TaxTMI 
2011 (12) TMI 389
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....nlawful and against the principles of natural justice. 1.2. The Ld. CIT (A) has grievously erred in upholding the disallowance without considering fully and properly the explanation offered and evidence produced by the appellant. 2.1. The Ld. CIT (A) has grievously erred in law and/or on facts in upholding the following disallowance: (a) Out of interest expenses. Rs.2,125/- (b) Cessation of liability u/s. 41(1) Rs.1,31,313/- (c) Vehicle hire charges u/s.40(a)(ia) Rs.63,52,786/- 2.2. That in the facts and circumstances of the case, the Ld. CIT (A) ought not to have upheld the above said disallowance. 3.1. The Ld. CIT (A failed to appreciate that in respect of vehicle hire cha....
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....4 of AO's order at pages 2 and 3 are as under:- " The assessee has shown creditors of Rs.77,49,761/- in the balance sheet. The assessee was asked to give detailed postal addressed, copy of account and confirmation of creditors of creditors exceeding Rs.50,000/-.He was also asked to give particulars of creditors who are more than 3 years old. The assessee simply furnished list of creditors without any postal address or confirmation. Again vide letter dated 2-11-2007 he was asked to furnish full and complete address, confirmation and details of creditors more than 3 years old. These details were to be submitted by 17-11-2007. However on the stipulated date no one attended but I received a telephone call from the Authorized Represent....
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....ed representative has simply written in order sheet dated 3-12-2007 as follows: "We are not agreeable on the above addition." He has offered no explanation or argument on why such disallowance should not be made. The assessee has not satisfactorily discharged the onus cast upon him to prove that the trading liabilities of Rs.1,31,313/- have not ceased to exist. As mentioned earlier, he has not furnished the detailed addresses of the creditors to enable the undersigned to make any inquiries. In view of all these facts, I have no option but to treat the liabilities as non existent and add the same as the income of the assessee u/s. 41(1) of the Act, I therefore hereby add Rs.1,31,313/- to the total income of the ....
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....ccordingly. Thus ground No.2.1 (b) of the assessee is allowed. 10. As regards ground No.2.1 (c) the brief facts as emanating from AO's order vide paragraph-5 at pages 3 to 5 are as under:- 5. Disallowance u/s. 40(a)(ia) of I.T. Act:- The assessee is in the business of hiring of passenger vehicles to companies and Government sector undertakings. For this he has his own vehicles. However, whenever there is an order for more number of vehicles, he is hiring vehicles from third parties, i.e. he is giving a subcontract to other vehicle owners. As per section 194(c), the assessee is liable to deduct tax at source @ 1% on such sub contract. As per section 200(1) he is bound to deposit the same into Government account ....
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....serted with effect from 1-10-2004 only. As such the assessee was liable to deduct tax at source only on payments made after 1-10-04, though for calculation limit of Rs.50,000/- payments from 1-4-04 have to be considered. He has given details of payment made before 1-10-04 which amount to Rs.29,98,990/-. Balance payment of Rs.40,13,901/- has been made after 1- 10-04. In the order sheet entry dated 3-12-07 he has also objected to the addition of Rs.40,13,901/- by writing as below:- "We are not agreeable on the above additions". The Authorized Representative has not stated anything about why he is not agreeable to the additions. He has no arguments to offer regarding the applicability or otherwise of section 40a(ia). ....