SATWINDER SINGH,KOLKATA vs. I.T.O., WARD - 43(1), KOLKATA

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ITA 177/KOL/2026Status: DisposedITAT Kolkata25 June 2026AY 2018-20194 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal acknowledged the difficulty in obtaining proper bills in the transportation business and the unrealistic net profit if the full disallowance was upheld. Therefore, it modified the disallowance on oil and fuel expenses to 5% of the total expenses.

What were the facts?

The assessee, engaged in transportation, claimed expenses including oil and fuel. The AO disallowed a significant portion of oil and fuel expenses due to lack of vouchers, along with depreciation and trip expenses. The CIT(A) sustained the oil and fuel disallowance but allowed the others.

What were the issues?

Whether disallowance of expenses claimed by the assessee is justified when proper bills and vouchers are not produced, considering the nature of the business and its profitability.

Which sections of the Income-tax Act were involved?

Section 37

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA

Before: SHRI RAJESH KUMAR & SHRI PRADIP KUMAR CHOUBEY

For Appellant: Shri Miraj D. Shah, AR
For Respondent: Shri Dheeraj, Sr. DR
Hearing: 16.06.2026Pronounced: 25.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘D’ BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.A. No.177/KOL/2026 (Assessment Year:2018-19) Satwinder Singh, ITO, 1st Floor, 140E, B.T. Road Dunlop, Vs. Ward – 43(1), Kolkata - 700035 Kolkata [PAN: ATBPS5422L] (Appellant) .. (Respondent) Appellant by : Shri Miraj D. Shah, AR Respondent by: Shri Dheeraj, Sr. DR Date of Hearing 16.06.2026 Date of Pronouncement 25.06.2026

O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER:

This appeal preferred by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (hereinafter referred to as the “ld. CIT(A)”], dated 27.11.2025 for the Assessment Year (AY) 2018-19.

2.

The assessee has raised the issue regarding the ld. CIT(A) confirming the addition made by the Assessing Officer (In short, ‘the AO’).

3.

Brief facts of the case are that assessee filed return of income on 05.10.2018, declaring total income of Rs. Nil. The case was selected for scrutiny. The statutory notices along with questionnaire were issued and served on the assessee. The assessee engaged in the business of

ITA No.177/Kol/2026/AY 2018-19 Satwinder Singh vs. ITO transportation and also derived income from remuneration, interest and share of profit from partnership firm. The AO after taking into account the evidences and documents filed by assessee, recorded a finding that vouchers and bills were not produced in respect of various expenses claimed by the assessee. The AO made the disallowance in respect of oil and fuel expenses of Rs.1,94,38,909/- for which the vouchers and bill were not produced. In respect of the remaining two items, the estimated disallowance was made. One, depreciation on the addition to fixed assets Rs.14,66,437/- and two, trip expenses @10% of the total expenses which comes to Rs.4,41,472/- were disallowed. The segregate disallowance of Rs.2,13,46,818/- on account of three items of expenses u/s 37 of the Act was made and added to the total income of the assessee in the assessment framed u/s 143(3) r.w.s. 144B of the Act, darted 20.04.2021.

4.

In the appellate proceedings, the ld. CIT(A) while sustaining the disallowance in respect of oil and fuel expenses, allowed the appeal by relating to the other two additions in respect of depreciation and trip expenses.

5.

The ld. AR submitted before us that the ld. CIT(A) has failed to take into account the submissions of the assessee wherein the assessee submitted that the average net profit in the business of the income is below 1%. Thus, if the disallowance sustained by the ld. CIT(A) in respect of oil and fuel expenses, then the net profit would be @9.18%, which is impractical and unrealistic. The ld. AR, therefore, prayed that disallowance may be deleted, keeping in view the net profit of the assessee, so that there is a consistency in the assessment in the income of the assessee.

ITA No.177/Kol/2026/AY 2018-19 Satwinder Singh vs. ITO 6. The ld. Sr. DR for the revenue heavily supported the order of ld. CIT(A).

7.

We have heard rival submissions and perused the materials available on record. We find that the ld. CIT (A) sustained the disallowance made by the AO in respect of oil and fuel expenses on the ground that assessee has not produced bills and vouchers in respect of some expenses, which were disallowed by the AO and confirmed by the ld. CIT(A). We have also examined the pattern of net profit earned by the assessee from A.Y. 2016-17 to 2020- 21, which is extracted below:

ITA No.177/Kol/2026/AY 2018-19 Satwinder Singh vs. ITO 8. We note that assessee engaged in the business of transportation and has to depend on drivers and illiterate staff to maintain the bills maintained. Normally, in the transportation business, the bills are submitted by the truck drivers manually, which are mostly self-made vouchers. Therefore, we find merit in contentions of the assessee that if the disallowance is confirmed , the net profit would be unrealistic and hypothetic as extracted above. Considering the facts and circumstances, we are of the view that the principles of equity and reasonableness would be served, we are inclined to modify the order of ld. CIT(A) and direct the AO to make disallowance @5% of the total oil and fuel expenses of Rs.2,90,89,505/-, which comes to Rs.14,54,475/-. Consequently, the appeal of the assessee is partly allowed.

9.

In the result, the appeal of the assessee is partly allowed.

The order is pronounced in the open Court on 25/06/2026.

Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated: 25/06/2026 SAMANTA ] �ȯ��ȧĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwarded to : 1. \ �Ȣ�ȡ�ȸ/ The Appellant 2. Ĥ×��ȸ/ The Respondent. 3. Ȳ�Ȳͬ��] ���] �ǕÈ�/ Concerned CIT 4. ] ���] �ǕÈ�(अपील) / The CIT(A) 5. ��ȡ�Ȣ�ĤǓ�Ǔ�ͬ �, ] ���\ �Ȣ�ȣ�\ͬ ����,/ DR, ITAT, Kolkata 6. �ȡ�[�ȡ_�/ Guard file.

BY ORDER, // TRUE COPY // Asstt.Registrar, ITAT, Kolkata

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