M/S. STAR TRAVEL,KOLKATA vs. I.T.O., WARD - 50(3), KOLKATA

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ITA 1712/KOL/2025Status: DisposedITAT Kolkata13 August 2026AY 2005-20064 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found the ad-hoc disallowance of 20% of expenses to be neither just nor reasonable, considering the nature of the business and the profit margins. Therefore, the disallowance was modified.

What were the facts?

The assessee, M/s Star Travel, engaged in airline activities and earning commission, had its case selected for scrutiny. The Assessing Officer disallowed 20% of certain expenses, which was upheld by the CIT(A) after a previous remand from the Tribunal.

What were the issues?

Whether the CIT(A) erred in sustaining the disallowance of expenses without considering the assessee's claim and supporting documents, and whether the disallowance was excessive.

Which sections of the Income-tax Act were involved?

Section 147,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH,

Before: SHRI YOGESH KUMAR U.S. & SHRI RAKESH MISHRA

For Appellant: Smt. Rajshree Dutta, AR
For Respondent: Shri Ujjawal Mandal, Sr. DR
Hearing: 10.08.2026Pronounced: 13.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No.1712/KOL/2025 Assessment Year:2005-06 M/s Star Travel Vs. ITO, Ward-50(3), Kolkata 1/11B, East Mall Road, Kolkata West Bengal-700080 [PAN: AAOFS7244J] APPELLANT RESPONDENT Appellant by : Smt. Rajshree Dutta, AR Respondent by : Shri Ujjawal Mandal, Sr. DR Date of hearing : 10.08.2026 Date of Pronouncement : 13.08.2026 O R D E R PER YOGESH KUMAR U.S., JUDICIAL MEMBER: This Appeal is filed by the Assessee against the order of the NFAC, Delhi (‘Ld. CIT(A)’ for short) dated 20.05.2025, passed u/s 250 of the Income Tax Act, 1961 (“the Act”, for short) for the Assessment Year 2005-06.

2.

Brief facts of the case are that the Assessee firm runs various airlines and carries activities through the airlines and earned income by way of commission. The case of the Assessee was selected for scrutiny u/s 147 of the Act. An Assessment Order came to be passed on 31.12.2008 by disallowing 20% of certain expenses. Aggrieved by the Assessment Order dated 31.12.2008, the Assessee preferred an

ITA No.1712/Kol/2025 M/s Star Travel; A.Y: 2005-06 Appeal before the Ld. CIT(A). The Ld. CIT(A), vide order dated 20.05.2025, dismissed the Appeal of the Assessee.

3.

The Learned Counsel for the Assessee submitted that, this being the second round of litigation, after the remand from the Tribunal, the Ld. CIT(A) committed an error in making the addition of the whole turnover of the business as undisclosed income of the Assessee and not considering the claim of business expenses for the year under consideration by and disallowed 20% of the expenses. The Ld. AR, by taking us through the documents produced in the paper book, sought for allowing the Appeal.

4.

Per contra, the Ld. DR relying on the orders of the Lower Authorities, sought for dismissal of the Appeal.

5.

We have heard the parties and perused the material available on record. After the order of remand by the Tribunal dated 17.09.2010, in the second round the Ld. CIT(A) observed that the ‘Assessee has failed to support its claim of expenses during the assessment stage, first Appeal stage as well as the set-aside proceedings stage’. Therefore, the claim of the Assessee has not been entertained by the Ld. CIT(A) and sustained the disallowance made by the Assessing Officer in the first round. Before us, the Learned Counsel for the Assessee contended that the amount credited in the TDS Certificate cannot be treated as

ITA No.1712/Kol/2025 M/s Star Travel; A.Y: 2005-06 the entire income of the business/firm. Further submitted that in order to run the business, several expenses are incurred which are not considered by the Authorities below though the Assessee had provided all the materials in support of his claim. Further submitted that in the business of the Assessee, the profit percentage would be between 2% to 3% and contended that the adhoc disallowance of 20% is very much higher in side which does not match with the P&L account of the Assessee. Considering the fact that this being the second round of litigation upto the stage of the Tribunal and also looking into the P&L account of the Assessee and the nature of the activities of the Assessee, we are of the opinion that the adhoc disallowance of 20% of the expenses is not just and reasonable. Accordingly, the disallowance made by the Assessing Officer is hereby modified to 5% of the expenses and the Assessing Officer is directed to compute the same by disallowing 5% of the expenses.

6.

In the result, Appeal of the Assessee is partly allowed for statistical purposes.

Order pronounced on 13.08.2026. Sd/- Sd/- (RAKESH MISHRA) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 13.08.2026 DP, PS

ITA No.1712/Kol/2025 M/s Star Travel; A.Y: 2005-06 Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR) //TRUE COPY//

(MANISH BHOI) DEPUTY REGISTRAR KOLKATA BENCHES, KOLKATA

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