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Income Tax Appellate Tribunal, “DB” BENCH, JABALPUR
IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, JABALPUR BEFORESHRI OM PRAKASH KANT, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 104/Jab/2022 (A.Y: 2016-17) Alka Jain Vs. ACIT, Arihant Petroleum, Aayakar Bhawan, Main Road, Barghat, Opportunity to Daniel Seoni-480661, Son College, Nagpur Madhya Pradesh. Road,Seoni-480001, Madhya Pradesh. PAN/GIR No. : ACFPJ9409D Appellant .. Respondent Appellant by : Shri Neeraj Agrawal, FCA.AR Respondentby : Shri Rajesh Kumar Gupta.Sr.DR Date of Hearing 13.09.2023 Date of Pronouncement 14.09.2023 आदेश / O R D E R PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of the National Faceless Appeal Centre (NFAC) / CIT(A) passed u/s 143(3) and 250 of the Act. The assessee has raised the following grounds of appeal:
The learned CIT(A) erred in upholding the impugned order of addition made by the Ld. AO under the Assessment proceedings.
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2The Ld. CIT(A) erred in disallowing the Compensation to Employees and Tanker Running Expenditure ignoring the documentary evidences including Ledger Accounts, Bills etc. produced on record.
3The Ld. CIT(A) erred in facts in alleging that the assessee could not submit documents and evidences to substantiate its claim of tanker running and vehicle expenses on the contrary the assessee furnished Bills, Ledger Accounts Details among other documentary evidences in support of its claim.
4 The Ld. CIT(A) erred in upholding the ad-hoc addition towards Compensation to Employees and Tanker Running Expenditure which was based on the Ld. AO's own inventiveness and surmises.
The Ld. CIT(A) erred in upholding the additions made as a result of an afterthought of the Ld. AO while passing the order given that not even a single query, whatsoever was raised during the course of assessment proceedings towards reasonableness of the said expenditure.
6The learned CIT(Appeal) erred in disposing of appeal without considering the grounds of appeal raised by the appellant.
7 The Ld. CIT(A) erred in upholding the additions made by the Ld. AO in violation of Principle of Natural Justice. Thus, the addition is bad in law and should be deleted
That the assessee craves leave to raise any other grounds on the before the date of hearing to prove that the order of the CIT(A) is bad.
The brief facts of the case are that, the assessee is engaged in the business of sale of diesel and petrol in the name and style of M/s Arihant Petroleum. The assessee has
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filed the return of income for the A.Y 2017-18 on 22.02.2018 disclosing a total income of Rs.24,93,730/-, Subsequently the case was selected for scrutiny to verify “Large value cash deposit during demonetization period” and notice u/s 143(2) and 142(1) of the Act are issued. In response to the notice, the assessee has filed the details online in ITBA. The AO on perusal of the profit and loss account found that assessee debited Rs. 18,98,170/- under head Compensation to Employee which includes the salary and wages. In assessment proceedings, the assessee has submitted the details of salary and wages register which is not maintained properly and there are also cash payments. Further the A,O found that the assessee has debited the expenses of Rs.18,50,232/- under the head tanker expenses. On verification, it was noticed that the certain expenses are not been property vouched and the assessee was asked to explain these discrepancies with the supporting documents. Since the assessee could not substantiate with the proper vouchers and bills in respect of the disputed issues, the AO has made an adhoc addition @ 25% of both the compensation to employees and tanker expenses which worked out to Rs.9,37,100/- and assessed
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the total income of Rs.34,30,830/- and passed the order u/s 143(3) of the Act dated 12.12.2019.
Aggrieved by the order the assessee has filed an appeal before the CIT(A), whereas the CIT(A) considered the grounds of appeal, submissions of the assessee and findings of the AO but has confirmed the action of the AO and dismissed the assessee appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Hon'ble Tribunal.
At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in confirming the adhoc addition made by the AO in respect of tanker expenses and compensation to employees, irrespective of the fact that the assessee has substantiated with the evidences before the lower authorities. Further the Ld.AR emphasized that the assessee is maintaining books of accounts and are audited and addition is on the higher side. The Ld.AR substantiated the submissions with the Tax Audit report U/sec44AB of the Act and factual paper book and prayed for allowing the appeal. Per Contra, the Ld. DR supported the order of the CIT(A).
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We heard the rival submissions and perused the material on record. The sole crux of disputed issue envisaged by the Ld. AR that the CIT(A) has erred in sustaining the additions made by the AO overlooking the submissions , evidences and nature of the business transactions of the assessee. The Ld.AR mentioned that the assessee is in the business of purchase and sale of diesel and petrol, The books of accounts are Audited U/sec44AB of the Act and produced evidences in support of expenditure claimed in the profit & Loss account in assessment proceedings. Further the Ld. AR has referred to the Tax Audit Report in particular at clause 11 of Form.no. 3CD highlighting the books of account maintained. The Ld.AR emphasized that the assessee has submitted the details of nature of expenditure incurred in respect of the compensation to the employees and referred to the copy of the monthly salary register and ledger account placed at page 24 to 37 of the paper book. On the second disputed issue, with respect to tanker expenses the contentions of the Ld.AR are that the assessee has incurred the tanker expenses and referred to details filed at page No.38 to 73 of the paper book and demonstrated the comparison chart for the F.Y 2015-16, 2016-17 and 2017-18 placed at page 74 of the paper book.
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The Ld. AR referred to the profit and loss account placed at page 23 of the paper book, where the assessee has disclosed the tanker rent received and was credited to the profit and loss account and similarly tanker expenses are debited. The contentions of the Ld.AR are that the tanker rent received is more than the tanker expenses claimed. Prima-facie the Assessing Officer has not doubted the genuineness of expenditure incurred wholly and exclusively for the purpose of business and the A.O has not referred to any particular transaction of claim but made an adhoc addition @25% of expenses due not non maintenance proper vouchers. We considering the overall facts, turnover and nature of business of the assessee and to meet the ends of justice direct the Assessing officer to restrict the disallowance of above expenditure @ 5% and we partly allow the grounds of appeal of the assessee.
6.In the result, the appeal filed by the assessee is partly allowed.
Orders pronounced in the open court on 14.09.2023 Sd/- Sd/- (OM PRAKASH KANT) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER
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Jabalpur, Dated 14.09.2023
KRK, PS Copy of the Order forwarded to : The Appellant 1. 2. The Respondent The CIT (Judicial) 3. 4. The PCIT 5. DR, ITAT, Jabalpur Guard File 6. आदेशानुसार/BY ORDER, स�या�पत ��त //True Copy// 1.
( Asst. Registrar) ITAT, Jabalpur