JCR Traders Vs DCIT (ITAT Chennai)
Income Tax Appellate Tribunal (ITAT) Chennai Bench has remanded the case of JCR Traders back to the Assessing Officer (AO) for fresh adjudication. The appeal involved an addition of Rs. 2.31 crore to the firm’s income, comprising disallowances under Section 40(a)(ia) for non-deduction of TDS and an addition for unexplained cash deposits under Section 69 of the Income Tax Act, 1961. The ITAT’s decision provides the assessee a fresh opportunity to present its case, which it had failed to do during earlier assessment and appeal proceedings.
JCR Traders, a firm, had filed its return of income for the assessment year 2017-18, declaring a taxable income of Rs. 11,25,800/-. The case was selected for complete scrutiny under the Computer Assisted Scrutiny Selection (CASS) system. The Assessing Officer initiated proceedings by issuing a notice under Section 143(2) of the Act on September 24, 2018. However, the assessee reportedly failed to respond to this and subsequent notices, including one under Section 142(1) dated November 2, 2019, and a show-cause notice dated December 26, 2019, proposing to complete the assessment under Section 144.
Due to the consistent non-compliance, the AO proceeded to complete the assessment ex parte under Section 144 of the Act. During this assessment, the AO observed that the assessee had debited expenses for audit fees amounting to Rs. 1,95,000/- and interest & finance charges of Rs. 3,71,550/-. However, the assessee had not deducted Tax Deducted at Source (TDS) on these expenses as required. Consequently, the AO disallowed these amounts under Section 40(a)(ia) of the Act, adding them back to the firm’s total income.
