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Facts
The assessee declared an income of Rs. 28,87,270 for AY 2014-15. The Assessing Officer completed the assessment at Rs. 1,85,91,170, making additions of Rs. 4,68,55,195 on account of alleged bogus outward expenses.
Held
The CIT(A) restricted the disallowance to 2% of the total outward expenses. The Tribunal, after considering the submissions and perusing the materials, found the CIT(A)'s order to be well-reasoned but deemed it necessary to remand the issue back to the Assessing Officer for fresh examination.
Key Issues
Disallowance of outward expenses claimed by the assessee and the genuineness of supporting documents.
Sections Cited
143(2), 142(1)
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Income Tax Appellate Tribunal, “PATNA BENCH, PATNA
Before: Shri Sonjoy Sarma & Shri Sanjay Awasthi
Assessment Year: 2014-15 M/s Trimurti Concern Pvt. Ltd ……………………………………….…..Cross-Objector 74, Bengali Colony, Muzaffarpur- 842001. [PAN: AADCT0534G] vs. DCIT, Circle-3, Darbhanga............................................. …........……...…..…..Respondent Appearances by: Shri Pankaj Jyoti, CA, appeared on behalf of the assessee. Shri Ashwani Kr. Singal, JCIT- DR, appeared on behalf of the Revenue. Date of concluding the hearing : January 07, 2025 Date of pronouncing the order : January 13, 2025 ORDER
Per Sonjoy Sarma, Judicial Member:
The revenue has filed appeal under 20.02.2019 by the Commissioner of Income Tax (Appeals)-2, Patna [hereinafter referred to as the ‘CIT(A)’] and additionally, the assessee has filed corresponding cross-objections in C.O No.05/Pat/2022 for assessment years 2014-15.
Brief facts of the case are that the respondent-assessee filed its return of income for the assessment year 2014-15 declaring total income of Rs.28,87,270/- admitting aggregate tax liability of Rs.9,88,891/-. The case of the assessee was selected for scrutiny under CASS followed by notices issued u/s 143(2) and 142(1) of the Act. Subsequently, the assessment was completed by determining total income of the assessee at Rs.1,85,91,170/- and certain additions were made on account of alleged bogus outward expenses claimed by the assessee amounting to Rs.4,68,55,195/-. The reason behind such disallowance on the part of the Assessing Officer was that the discrepancies in vouchers/documents submitted by the assessee and additions were made.
Aggrieved by the above order, the assessee went in appeal before the ld. CIT(A). After considering the facts of the case, the ld. CIT(A) restricted the disallowance to the extent of 2% of the total outward expenses claimed by the assessee by granting partial relief to the assessee. The order was passed on specific facts and nature of the business operation of the assessee which involved large number of transactions nearly 2553 payments made under various heads of expenditure.
Dissatisfied with the above order, the revenue has come in appeal stating that the outward expenses of Rs.4,68,55,195/- were incurred by the assessee only on 28 business days which has raised suspicion about their authenticity. The ld. DR stated that the expenses were supported by self-generated vouchers which have limited evidentiary value. Moreover, the assessee failed to produce ledger and supporting documents before the Assessing Officer for verification. He, therefore, argued that the ld. CIT(A)’s decision of granting relief without proper verification was arbitrary and prayed for setting aside the same.
On the other hand, the ld. AR in his cross-objection stated that while passing of the order, the ld. CIT(A) had appropriately analysed the facts and nature of the business and allowed relief to the assessee towards outward expenses incurred under various heads and the assessee furnished necessary details or evidences in support of his claim, which is evident from the order of the ld. CIT(A) itself at page no.6. The ld. AR further stated that the ld. CIT(A) has clearly considered all the facts related to outward expenses and that the revenue’s grounds of appeal were not based on facts but rather on assumptions. He, therefore, prayed that the Tribunal may uphold the relief already granted by the ld. CIT(A) by dismissing the appeal of the revenue.
6. We, after hearing the rival submissions and perusing the materials available on record, find that the ld. CIT(A) had carefully analysed the outwards expenses and restricted the disallowance at 2% based on the peculiarities of the business and the materials available on record. We note that the order of the ld. CIT(A) is a well-reasoned order considering the relevant aspects including the nature of transaction and limitations of documentation in transport business. However, the revenue authority raised concern about the genuineness of the documents besides this issue has been duly addressed in ld. CIT(A)’s order. In view of the above, we deem it necessary to remand back the issue to the file of the Assessing Officer for fresh examination. We direct the Assessing Officer to verify the details or documents in respect of outward expenses by allowing the assessee a reasonable opportunity to present its case and submit necessary evidences. In terms of the above, the revenue’s appeal is allowed for statistical purposes and the corresponding cross-objection filed by the assessee is dismissed as per direction given above.
In the result, the appeal filed by the revenue is allowed for statistical purposes and cross-objection filed by the assessee is dismissed. Kolkata, the 13th January, 2025.