Case Law Details
Legend Transport Solutions Pvt. Ltd. Vs ITO (ITAT Delhi)
Introduction: The case of Legend Transport Solutions Pvt. Ltd. vs. Income Tax Officer (ITO) before the Income Tax Appellate Tribunal (ITAT) Delhi has brought to light important issues concerning Tax Deducted at Source (TDS) claims and potential misuse of Permanent Account Numbers (PANs). This article provides an overview of the case, the grounds of appeal, and the ITAT Delhi’s decision.
Background of the Case: Legend Transport Solutions Pvt. Ltd. is a service provider offering cab facilities to multinational companies and generates income from cab hire charges. The company filed its income tax return for Assessment Year 2016-17, declaring an income of Rs. 22,01,779. The case underwent scrutiny under the Computer Assisted Scrutiny Selection (CASS) process, leading to further investigation.
Assessment by the Assessing Officer (AO): The AO, during the assessment proceedings, discovered that Legend Transport Solutions had received contractual payments amounting to Rs. 4,85,76,223 from M/s AON Services India Pvt. Ltd. during the relevant assessment year. TDS of Rs. 9,71,532 under Section 194C of the Income Tax Act was deducted on this payment. However, the company had not recorded these contractual receipts in its books of accounts. Consequently, the AO, on 18th December 2018, added the contractual receipts as undisclosed business income for the relevant assessment year.
Appeal to the CIT(A): Dissatisfied with the AO’s decision, Legend Transport Solutions appealed to the Commissioner of Income Tax (Appeals) [CIT(A)]. The fundamental issue at hand was the validity of the contractual payments received by the company from M/s AON Services India Pvt. Ltd. The company vehemently denied receiving such income and submitted various pieces of evidence to support its claim, including audited financials, bank statements, an affidavit stating non-receipt of contractual payments, and responses submitted during the assessment proceedings.
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