Loading judgment…
Facts
The assessee, engaged in transportation services for PDS, claimed lorry expenses of ₹5.40 Crore. The Assessing Officer disallowed ₹4.75 Crore (88%) u/s 69C, and alternatively u/s 40(a)(ia) for non-deduction of TDS, primarily because the hired vehicles were not found on the VAHAN portal and the assessee's declared net profit was low. The Ld. CIT(A) upheld this disallowance.
Held
The Tribunal held that disallowance solely based on vehicle non-appearance on the VAHAN portal is not justified, especially since the books of account were not rejected u/s 145(3) and the assessee provided supporting evidence like goods received confirmations and truck union certificates. The CIT(A) also erred in applying provisions of Section 194C/40(a)(ia) alternatively for estimation of income. Considering precedents and the assessee's average net profit, the Tribunal directed the AO to estimate income by disallowing 2% of the total expenses, amounting to ₹11,01,641/-, thereby deleting the remaining addition of ₹4,64,90,566/-.
Key Issues
Whether disallowance of transport expenses is justified solely due to non-availability of vehicle details on the VAHAN portal; and if an estimation of income is warranted, what constitutes a reasonable basis for such estimation.
Sections Cited
Section 69C, Section 40(a)(ia), Section 194C, Section 145(3), Section 234B, Section 234C, Section 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 20.05.2025 for the AY 2014-15.
The grounds raised by the assessee are as under: - “The appellant company prefers an appeal against an order passed u/s.250 dated 20/05/2025 by the Commissioner of Income Tax, National Faceless Appeal Centre, Delhi on following amongst other grounds, each of which are without prejudice to any other: - 1.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition u/s.69C of transport expenses of Rs.4,75,92,207/- made on adhoc estimation basis @ 88% of expense disclosed in audited P&L account of Rs.5,40,82,053/-; 2.0 On facts and circumstances of the case and in law, Ld. CIT(A), in alternate manner, erred in making the disallowance of transport expense u/s 40(a)(ia) of “6.7 Final Conclusion: Yogesh Transport Private Limited (A.Y. 2014-15) In conclusion, the appeal of the appellant is dismissed. The addition of Rs. 4,77,21,330/- as unexplained expenditure (Section 69C) and the related addition of 88% of lorry expenses as income are upheld due to the appellant's failure to provide credible evidence, including valid> bills, vouchers, and proof of genuine transportation expenses. The disallowance of Iprry expenses due to non- deduction of TDS under Section 1940 is also upheld, as the appellant failed to produce declarations from transporters, violating the TDS provisions. The levy of interest under Sections 234B and 234C is valid as it is mandatory for default in advance tax payment. The initiation of penalty proceedings under Section 271(1)(c) is justified due to the appellant's inability to substantiate the claimed expenses. The appeal is dismissed in full.”
After hearing the rival contentions and perusing the materials available on record, we find that the assessee is a government contractor for transporting of goods from the railway rack to the PDS centers. We note that the assessee is hiring trucks / lorries from the truck unions and transporting goods as such. During the year, the assessee claimed lorry expenses of ₹5,40,82,053/- against the revenue from operation of ₹5,50,35,367/- as per audited balance sheet filed by the assessee. During the year the assessee declared net profit of ₹1.09% vis-a-vis the profit of 3.2 % in A.Y. 2013-14 vis-a-vis 0.84 % in A.Y. 2015-16, wherein the learned AO observed from the details furnished by the assessee in respect of transport lorries/ trucks that certain trucks were not appearing in the site (vahan.nic.in) and made adhoc disallowance by estimating the addition at the rate of 88% of the total expenses claimed which worked out to ₹4,75,92,207/-. The learned AO made disallowance on the ground that the trucks were not appearing in the in portal “vahan.nic”. and therefore, treated the expenses to the tune of ₹4,75,92,207/- as unexplained expenditure u/s 69C of the Act and added to the total income of the assessee. It was submitted before us that the trucks were in fact hired and used for the
We also note that assessee furnished truck union certificate, certifying that lorries were hired from the truck unions, the copies of such certificate are available from page no.170 to 183. The assessee has also filed the details of these vehicles as per transport department which are available at page nos. 184 to 195. Therefore, in view of the above evidences placed by the assessee before the learned AO as well as the learned CIT (A) and before us also, we observe that the transport
In our opinion the disallowance of expenses cannot be made on the sole ground that the vehicles are not appearing in the Vahan portal of Govt of India. In coming to the above conclusion, we are also supported the decision of Hon'ble Delhi High Court in case of Mahajan Fabrics (P.) Ltd. vs. Commissioner, Central Goods and Services Tax [2023] 147 taxmann.com 460 (Delhi), wherein the Hon'ble Court has held that where the assessee has claimed refund of ITC, necessary details required under section 16 were given, refund claim could not be denied on ground that details of all vehicles mentioned in invoices were not given or their registration with e-vahan portal were not established, though the decision was rendered in the context of Central goods and service tax Act, 2017, however, the ratio laid down is squarely applicable to the case at hand.
Moreover, we note that the books were not rejected u/s 145(3) of the Act which is mandatorily to be done for estimating the income/ “1. Maa Mangala Transport Vs. ITO dated 24.08.2012. 2. Sri Raghavendra Lorry Services Vs. DCIT in ITA No. 41/Viz.2020 dated 22.08.2022 3. Sahani Transport Corpn. Vs. DCIT 58 taxmann.com 297 (ITAT Cuttack) 4. CIT Vs. Sandeep Bus services Pvt. Ltd. 316 ITR 244 (HC-Punjab & Haryana)” 012. We note that in the case of Maa Mangala Transport Vs. ITI (supra), the estimation made by the co-ordinate Bench at the rate of 4% by observing and holding as under: - “6. We have heard the rival contentions and perused the impugned orders of the authorities below and the material available on record. The learned Counsel for the assessee relied on the decision of this Bench of ITAT in the case of M/s.Bhukta Transport v. Income-tax Officer (supra) when 3% Net profit was held to be accepted further relying on the decision of this Bench of ITAT in the case of M/s.Parida Transport for the Assessment Year 2001- 02. We are inclined to hold that the transport business as contractor could not result in a 5% margin being a service provider. The value of service could not be computed in money valuing insofar as the direct expenses have been claimed by the assessee when the assessee himself has own trucks claim depreciation thereon. On such types of business, the incomes charged by the assessees are known to the payees. Therefore, we do not find that the case laws cited at the Bar do have a meaning
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 27.10.2025.