ANIL DAGA,MORBI vs. ITO, WARD-1, MORBI, MORBI

ITA 883/RJT/2026Status: DisposedITAT Raipur23 September 2026AY 2014-157 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the entire transportation expenditure could not be disallowed merely on the ground of non-verification of certain Form No. 402 entries from the online portal, especially when the assessee's books of account were not rejected and sales figures were accepted. The Tribunal noted that the movement of goods necessitates transportation expenditure, and the inability to verify certain forms online does not automatically render the entire expenditure fictitious. However, considering that the assessee could not reconcile all forms and some discrepancies remained, the Tribunal deemed it reasonable to sustain a disallowance of 2% of the transportation expenditure, amounting to approximately Rs. 2,37,310. The balance disallowance of Rs. 1,16,28,182 was deleted. Regarding commission expenditure, the Tribunal found that the assessee had provided evidence of payments through banking channels, TDS deduction, and agents accounting for transactions in their VAT returns. The AO had not brought any specific material to prove the commission payments were bogus. Therefore, the disallowance of Rs. 3,10,282 on account of commission expenditure was deleted. The ratio is that disallowance of expenditure based solely on non-verification of supporting documents online, without rejecting books or specific contrary evidence, is not sustainable, but a reasonable estimation for unexplained discrepancies may be upheld.

What were the facts?

The assessee, Shri Anil Daga, an individual engaged in wholesale trading, filed his return for AY 2014-15 declaring an income of Rs. 8,91,000. The Assessing Officer (AO) selected the case for scrutiny. During assessment, the AO disallowed Rs. 1,18,65,492 of transportation expenses, citing non-verification of certain Form No. 402 entries from the Commercial Tax Department's online portal. This disallowance comprised Rs. 1,01,43,892 for unverified forms and Rs. 17,21,600 for unverified forms where expenditure was not identified in books. The AO also disallowed Rs. 3,10,282 of commission expenses paid to consignment agents, suspecting it was not genuine due to alleged unverified sales in Rajasthan. The assessee appealed to the CIT(A) after the AO completed the assessment under section 143(3) with aggregate additions of Rs. 1,21,75,774. The CIT(A) dismissed the appeal, leading to the present appeal before the ITAT.

What were the issues?

1. Whether the entire transportation expenditure of Rs. 1,18,65,492 could be disallowed solely on the ground that certain Form No. 402 entries were not verifiable from the Commercial Tax Department's online portal, when the assessee's books of account were not rejected and sales figures were accepted (Question of law and fact, turning on Section 145(3)). 2. Whether the disallowance of Rs. 3,10,282 on account of commission expenditure was sustainable, given that payments were made through banking channels, TDS was deducted, and agents accounted for sales and commission in their VAT returns (Question of law and fact). Assessee's contentions: The disallowance of transportation expenses was not sustainable as books were not rejected, sales were accepted, and non-verification of forms online could be due to technical reasons. The commission disallowance was also unsustainable as payments were genuine, evidenced by banking channels, TDS, and agent's VAT returns. Revenue's contentions: The assessee failed to satisfactorily substantiate transportation expenses, and therefore, the disallowances made by the AO and sustained by the CIT(A) deserved to be upheld.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 145(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. Arjun Lal Saini & Shri Sonjoy Sarma

For Appellant: Shri Mehul Ranpura, Ld. AR
For Respondent: Shri Pravin Sinha, Ld. Sr. DR
Hearing: 14/09/2026Pronounced: 23/09/2026

Per, Shri Sonjoy Sarma, JM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2014-15, is directed against the order under section 250 of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’] passed by the National Faceless Appeal Centre [hereinafter referred to as ‘NFAC’], dated 22.05.2026, which in turn arises out of an order passed by assessing officer u/s. 143(3) of the Act, dated 26.12.2016. 02. Brief facts of the case are that the assessee is an individual engaged in the busi

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 145(3)

All 3,640 judgments and leading authorities on Section 145(3) →

Recent GST High Court judgments

Search GST case law →