PALDEWAR PRASHANT AGRO TECH PRIVATE LIMITED,NANDED vs. INCOME TAX OFFICER WARD 1, NANDED

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ITA 956/PUN/2026Status: DisposedITAT Pune15 October 2026AY 2022-2310 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found merit in the assessee's arguments. It was acknowledged that the assessee maintained proper books of account, audited under Section 44AB, with no defects pointed out by the auditors. The AO had not rejected the book results but made ad-hoc disallowances. A comparative analysis showed an increase in aggregate expenses as a percentage of turnover from 14.66% in AY 2021-22 to 20.90% in AY 2022-23. Concurrently, there was a substantial increase in the average prices of petrol, diesel, and LPG during the financial year 2021-22 compared to 2020-21. Therefore, the Tribunal considered the ad-hoc disallowance of 5% of fuel and transportation expenses unjustified. However, acknowledging the possibility of leakage in expenses due to lack of details to the AO's satisfaction, the Tribunal modified the disallowance. An ad-hoc disallowance of Rs. 5,00,000/- was deemed to meet the ends of justice, as against the total disallowance of Rs. 13,37,308/- for fuel expenses and Rs. 2,31,21,960/- for transportation expenses. The order of the CIT(A)/NFAC was modified accordingly.

What were the facts?

The assessee, Paldewar Prashant Agro Tech Pvt. Ltd., engaged in transportation services, filed its return for AY 2022-23 declaring Rs. 25,67,920/-. The Assessing Officer (AO) noted a significant increase in fuel expenses (318.94%) and other transportation expenses (296.32%) compared to AY 2021-22, while sales increased by 178.85% and 181% respectively. The AO disallowed Rs. 13,37,308/- (5% of fuel expenses) and Rs. 2,31,21,960/- (5% of other transportation expenses) on an estimated basis due to lack of satisfactory supporting documentary evidence. The CIT(A)/NFAC upheld these additions. The assessee appealed to the ITAT.

What were the issues?

1. Whether the disallowance of Rs. 13,37,308/- on account of fuel expenses, being 5% of the total fuel expenses, is justified, considering the increase in expenditure compared to the previous year, without establishing that the expenses were non-genuine or not for business purposes, and without rejecting books of account or invoking Section 145(3) of the Income-tax Act, 1961. Assessee's contention: The disallowance is ad-hoc, arbitrary, and based on surmises, as the books of account were audited without any defects, and the AO did not reject book results. The increase in fuel expenses is attributable to the substantial rise in diesel prices. Reliance was placed on the comparative chart of expenses as a percentage of turnover and the average prices of fuel. Revenue's contention: The Ld. DR heavily relied on the orders of the AO and CIT(A)/NFAC. 2. Whether the disallowance of Rs. 2,31,21,960/- on account of other transportation expenses, being 5% of the total other transportation expenses, is justified, without appreciating business realities, conducting independent enquiry, or identifying specific unverifiable expenditure. Assessee's contention: Similar to the first issue, the disallowance is ad-hoc, arbitrary, and based solely on a comparative analysis with earlier year figures, which is legally impermissible. The addition amounts to substitution of estimation for evidence. Reliance was placed on the comparative chart of expenses as a percentage of turnover and the average prices of fuel. Revenue's contention: The Ld. DR heavily relied on the orders of the AO and CIT(A)/NFAC.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 145(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI R. K. PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Shubham N. Rathi and Ashutosh Dhoot
For Respondent: Ms. Bhavya I.V., Jt. CIT-DR

आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; प्रत्यर्थी / The Respondent 2. 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune ग र्ड फ ईल / Guard file. 5. आदेशानुसार/ BY ORDER, Sunil Kumar Digitally signed by Sunil Kumar More // True Copy // More Date: 2026.10.25 10:48:00 +05'30' Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

10 ITA No.956/PUN/2026

S.No. Details Date Initials Designation 1 Draft dictated on 09.10.2026 Sr. PS/PS 2 Draft placed before author 14.10.2026 Sr. PS/PS Draft proposed & placed before 3 JM/AM the Second Member Draft discussed/approved by 4 AM/AM Second Member Approved Draft comes to the 5 Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to 9 the Office Superintendent Date on which file goes to the 10 A.R. 11 Date of Dispatch of order

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