DHARMENDRA PRASAD MORE,BALASORE vs. INCOME TAX OFFICER, WARD-1, BALASORE

Shri P.K.Mishra, ld AR appeared for the assessee and Shri Shri P.K.Mishra, ld AR appeared for the assessee and Shri Shri P.K.Mishra, ld AR appeared for the assessee and Shri S.C.Mohanty, ld Sr DR appeared for the revenue. S.C.Mohanty, ld Sr DR appeared for the revenue.

It was submitted by ld AR that the assessee is an individual, who is It was submitted by ld AR that the assessee is an individual, who is It was submitted by ld AR that the assessee is an individual, who is deriving income as a clearing & forwarding agent of Lafarge India Pvt Ltd.. iving income as a clearing & forwarding agent of Lafarge India Pvt Ltd.. iving income as a clearing & forwarding agent of Lafarge India Pvt Ltd..

P a g e 1 | 4 It was the submission that in the course of assessment, the Assessing Officer had disallowed 5% out of labour charges and transportation charges on the ground that the vouchers were self made vouchers and complete details of the labourers as also the vehicles used for transportation was not available. It was the submission that this was nothing but adhoc disallowance. It was the submission that the ld CIT(A) has admittedly dismissed the assessee’s appeal on account of non-representation. It was the submission that the addition involved in the appeal is meager and restoring the issue to the file of the ld CIT(A) would just prolong the issue. It was the prayer that the addition as made by the AO and confirmed by the ld CIT(A) is liable to be deleted in view of the decision of the Hon’ble Supreme Court in the case of Pr. CIT vs. R.G.Buildwell Engineers Ltd., (2018) 99 taxmann.com 284 (SC), wherein, the Hon’ble Supreme Court has upheld the action in deleting the adhoc disallowance by the Tribunal on the ground that there was omission to reject the books of account of the assessee and historical treatment of such expenses cannot be termed as unreasonable. Ld AR has also placed reliance on the decision of the Co- ordinate Bench of this Tribunal in the case of Bhikari Charan Meher vs DCIT in for A.Y. 2017-18 order dated 17.11.2022, wherein, the Co-ordinate Bench in para 6, under similar circumstances, has held as under:

It was the prayer that the addition as made by the AO and confirmed by the ld CIT(A) may be deleted.

In reply, ld Sr DR vehemently supported the order of the AO and ld CIT(A). It was the submission that the assessee has not produced all the details before the AO, which has compelled the AO to make the adhoc disallowance. It was the prayer that the addition as made by the AO and confirmed by the ld CIT(A) be upheld.

We have considered the rival submissions. A perusal of the facts in the present case shows that the disallowance as made by the AO at 5% out of labour charges and transportation expenses are clearly on adhoc basis. If the AO had found that there was discrepancy in the vouchers produced, it was very much open to the AO to identity the defect and disallows the same. This has not been done. Also the books of account of the assessee have not been rejected. The assessee is in the business of clearing & forwarding agent in respect of cement. This admittedly involves substantial labour charges and transportation charges. Considering these facts, we are of the view that the adhoc disallowance made by the AO is uncalled for.

In the result, appeal filed by the assessee stands allowed.