M/S. DREAM TEAM SAHARA,BHUBANESWAR vs. ITO, WARD-5(2), BHUBANESWAR
What did the Tribunal hold?
The Tribunal upheld the disallowance of donation and bus branding receivable due to lack of substantiation. However, it restricted the ad-hoc addition for vehicle maintenance expenses from 10% to 5% of the claimed expenses, considering that the expenses were incurred for business purposes.
What were the facts?
The assessee, a firm engaged in bus plying, appealed additions made by the AO and confirmed by the CIT(A) on account of donations, bus branding receivable, and a 10% ad-hoc addition towards expenses. The assessee had declared a total income of Rs. 9,83,390, which was assessed at Rs. 24,62,220 by the AO.
What were the issues?
Whether additions made on account of donations, bus branding receivable, and ad-hoc disallowance of expenses were justified. Whether the extent of disallowance for vehicle maintenance expenses was excessive.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM ITA No.492/CTK/2017 (नििाारण वषा / Assessment Year :2014-2015) M/s Dream Team Sahara, Vs. ITO, Ward-5(2), At-Plot No.N-5/538, IRC Village Bhubaneswar Nayapalli, Bhubaneswar- 751015, Odisha स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No. : AAHFD 2886 N (अऩीलाथी /Appellant) (प्रत्यथी / Respondent) .. ननधाारिती की ओर से /Assessee by : Shri S.K.Jena, AR िाजस्व की ओर से /Revenue by : Shri D.K.Pradhan, DR सुनवाई की तािीख / Date of Hearing : 17/05/2018 घोषणा की तािीख/Date of Pronouncement 17/05/2018 आदेश / O R D E R Per Shri Pavan Kumar Gadale, JM: The assessee has filed this appeal against the order of CIT(A)-2, Bhubaneswar, dated 25.08.2017, passed in I.T.Appeal No.0211/2016-17, u/s.143(3)/250 of the I.T.Act for the assessment year 2014-2015. 2. The assessee has raised the following grounds of appeal :- “1. For that, the lump-sum additions of Rs.50,000/- on account of donation, Rs.52,000/- on account of Bus Branding Receivable and the ad-hoc addition @10% towards expenses claimed amounting to Rs.3,01,428/- by the ld. AO are incorrect, particularly there is no material available on record to show that those expenses are bogus in nature, however, the ld. CIT(A) has confirmed the same by merely saying that the disallowance is not excessive therefore both the authorities are erred in disallowing the same hence the said additions are liable to be deleted.” 3. Brief facts of the case are that the assessee is a firm derives income from bus plying and filed the return of income on 29.11.2014 for assessment year 2014-2015 declaring total income of Rs.9,83,390/-. Subsequently, the return was processed u/s.143(1) of the Act and the
2 ITA No.492/2017 case was selected for scrutiny and notice u/s.143(2) and 142(1) of the Act along with questionnaire was issued to the assessee. In compliance the ld. AR of the assessee appeared and submitted the relevant details. The AO considering the submissions of the assessee and material placed on record completed the assessment making various additions and assessed the total income at Rs.24,62,220/- and passed order u/s.143(3) of the Act, dated 30.12.2016. 4. On appeal, the CIT(A) confirmed the additions made by the AO and partly allowed the appeal of the assessee. 5. Against the order of CIT(A), the assessee is in further appeal before the Tribunal. 6. Before us, ld. AR submitted that the CIT(A) erred in confirming the additions in respect of Donation, Bus Branding Receivable and the adhoc addition @10% towards expenses claimed for nipple greasing, pressure cheque and repair and maintenance charges. Ld. AR further submitted that the AO has disbelieved these expenses and estimated at 10%. The fact remains that the ledger account and bills and vouchers were produced and most of the payments were made on day-to-day basis. The AO having verified was not satisfied with the claim of expenses and, therefore, made addition @10%. Ld. AR submitted that the addition made by the AO and confirmed by the CIT(A) is not tenable in law and prayed for allowing the appeal.
3 ITA No.492/2017 7. Contra, ld. DR relied on the orders of AO. 8. We have heard rival submissions and perused the material available on record. On the disputed issue of disallowance of donation Rs.50,000/- and Rs.52,000/- on account of bus branding receivable, the AR could not bring out any material before the CIT(A). Even before us, the AR could not substantiate its claim. Therefore, we uphold the finding of the CIT(A). In respect of disallowance made by the AO @10% on the claim of vehicle maintenance expenses of Rs.30,14,284/-, we found that the assessee has produced the ledger account copies, whereas the AO having verified the bills and vouchers was not satisfied as they are mostly self-made and also they could not be properly examined but the fact remains that these expenses are incurred exclusively for the purpose of business and therefore, to be allowable under section 37(1) of the Act. Accordingly, we restrict the estimation made by the AO and confirmed by the CIT(A) to 5% of the total expenses claimed. Thus, this ground of appeal of assessee is allowed partly. 9. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 17/05/2018. Sd/- Sd/- (N. S. SAINI) (PAVAN KUMAR GADALE) ऱेखा सदस्य / ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 17/05/2018 प्र.कु.मि/PKM, Senior Private Secretary
4 ITA No.492/2017 आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अपीलाथी / The Appellant- 1. प्रत्यथी / The Respondent- 2. 3. आयकर आयुक्त(अपील) / The CIT(A), आयकि आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कटक / DR, ITAT, Cuttack 5. गार्ा पाईल / Guard file. 6. सत्यापऩत प्रनत //True Copy// आदेशािुसार/ BY ORDER,
(Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack
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