NAZIR AHMED,KOLKATA vs. ACIT CIRCLE 32 KOLKATA, KOLKATA

That the order passed by the Ld. CIT (Appeals), NFAC (“Ld. CIT(A)”) is bad in law and on facts, and is liable to be quashed/modified to the extent it is prejudicial to the Appellant. Travelling expenses - Rs. 1,66,63,613

That the Ld. CIT(A) erred in law and on facts in confirming the disallowance of travelling expenses amounting to Rs. 1,66,63,613, and in upholding the addition made by the Assessing Officer, despite the Appellant's explanation that such expenditure was incurred wholly and exclusively for the purposes of business.

That the Ld. CIT(A) failed to appreciate that assessing authorities cannot sit in judgement regarding the commercial expediency of incurring expenses to facilitate carrying out of business, and that allowability u/s 37(1) cannot be denied merely on an allegation that traveling expenses did not have “positive impact” on revenue generation or that revenue generation was attributable to acts of commission agents and as such travelling expenses has no role to play and hence to be disallowed. Violation of natural justice / additional evidence

That the Ld. CIT(A) erred in not granting proper and effective opportunity and/or in not admitting/considering relevant supporting evidence in terms of Rule 46A of the Income-tax Rules 1962, even though the Appellant pleaded inability to submit voluminous documents within the extremely short time available during assessment, and on account of internet disruptions/suspensions caused by the Citizenship Amendment Act agitations and sought admission of additional evidence under the said Rule.

Without prejudice, the Appellant prays that the issue of travelling expenses be restored to the Assessing Officer for verification after admission of evidence, in the interest of justice. Depreciation on motor cars - Rs. 24,41,163

That the Ld. CIT(A) erred in law and on facts in confirming the disallowance of depreciation on motor cars amounting to Rs. 24,41,163, merely on the reasoning that the cars were “luxurious” and therefore it was “unbelievable” that the cars were used for the purposes of business.

That the Ld. CIT(A) failed to appreciate that “luxury” is not a statutory test under section 32, and depreciation cannot be denied arbitrarily and on conjectures/surmises, and by ignoring the principle of consistency since the depreciation on such cars was claimed & allowed for several years in the past and that depreciation has to be mandatorily to be allowed under Sec 32 of the Income-Tax Act

That depreciation on a block of assets cannot be denied asset-wise, where the block is used for business and conditions of section 32 are satisfied; the Ld. CIT(A) erred in ignoring the settled position that individual assets lose separate identity once forming part of a block. Speaking Order

That the CIT/AO erred in not considering & disposing off each of the various arguments argued before him and instead perfunctorily and summarily dismissing the appeal without application of mind and consequently, he erred by not passing a speaking order. Liberty / General

The Appellant craves leave to add, alter, amend, vary and/or withdraw any ground(s) at or before the time of hearing.

Brief facts of the case are that the assessee had filed the return of income on 29.10.2017 declaring total income of ₹12,12,22,470/-. The case was selected for scrutiny under Computer Assisted Scrutiny Selection (in short 'CASS') and statutory notices u/s 143(2) and 142(1) along with questionnaires were issued to the assessee. In response to the notices, the assessee furnished necessary details electronically which were examined by the Assessing Officer (hereinafter referred to as Ld. 'AO'). The Ld. AO disallowed a sum of ₹1,66,63,613/- on account of travelling expenses and ₹24,41,163/- on account of depreciation on motor cars and framed assessment u/s 143(3) of the Act determining the total income of the assessee at ₹14,03,27,246/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who called for the remand report from the Ld. AO and considered the written submission filed by the assessee and dismissed the appeal of the assessee as per his findings as under: “6.3 Decision: I have carefully examined the assessment order and the written submissions filed by the appellant, it is noticed that the AO has clearly mentioned in the assessment order that detail of travelling expenses was produced without any evidential documents in support of the claim. Therefore, it could not establish that expenses claimed have been incurred wholly and exclusively for the purpose of business. In view of the above, the addition amounting to Rs. 1,66,63,613/- made by the A.O. is being upheld. Hence, Ground Nos. 1, 2 & 4 of appeal are dismissed.

Ground No. 3: The AO has mentioned in the assessment order that the appellant has claimed depreciation for 20 cars. These cars are mostly luxurious in nature so it was unbelievable that the luxurious cars were being used for business purposes. In view of the above, the addition amounting to Rs.24,41,163/- made by the A.O. is being upheld. Hence, Ground No. 3 of appeal is dismissed.

Ground No. 5: The appellant has not exercised the option during the appellate proceedings, therefore, this ground of appeal is dismissed.

In the result, the appeal is dismissed.”

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. It was submitted by the Ld. AR that the documents for travelling expenses were not submitted and 20 cars were used in the business. The assessee also filed newspaper cutting and other evidence in support of the the fact that there was disruption in Internet services and therefore, the required evidence could not be filed the written submission filed before us have also been examined. It was claimed that 5 of the vehicles were held to be luxury vehicles and it was not unreasonable that in several cars which are used for business. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Ld. CIT(A) confirmed the addition by holding that “I have carefully examined the assessment order and the written submissions filed by the appellant, it is noticed that the AO has clearly mentioned in the assessment order that detail of travelling expenses was produced without any evidential documents in support of the claim. Therefore, it could not establish that expenses claimed have been incurred wholly and exclusively for the purpose of business. In view of the above, the addition amounting to Rs.1,66,63,613/- made by the A.O. is being upheld. Hence, Ground Nos. 1, 2 & 4 of appeal are dismissed”. The Bench was of the view that as proper justification could not be given for the expenditure claimed and the use of assets could not be established for the claim of depreciation, therefore, in the interest of justice and fair play, the request of the assessee to remand the case before the Ld. AO may be allowed so that a proper opportunity of being heard may be provided. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit both the issues before the Ld. AO for granting an opportunity of being heard to the assessee in respect of the disallowances made on account of expenses and depreciation claimed and framed the assessment de novo. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission he wants to make in support of the claim that the expenditure incurred was for the business purposes and the depreciation was allowable as the vehicles were put to use for the purpose of the business and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 14th May, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 14.05.2026 Bidhan (Sr. P.S.)

CIT(A)-NFAC, Delhi.

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order