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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI O.P. KANT & SHRI K.N. CHARY
ORDER PER K. NARSIMHA CHARY, J.M.
Challenging the order dated 16/11/2012, in appeal No.
346/2011-12 passed by the Ld. Commissioner of income tax (appeals)-XXVIII (for short hereinafter referred to as “Ld.
CITA”), Revenue preferred this appeal.
Facts in brief are that the assessee is an individual deriving income from his proprietary concern M/s Tigrania
Transport company. For the assessment year 2009-10, he filed his return of income on 30/09/2009 declaring a total income of Rs.12,29,700/-and during scrutiny, Ld. Assessing Officer found that the assessee had shown an amount of Rs.3,90,17,453/-as lorry hire charges payable in the balance sheet under the heading sundry creditors and the total lorry charges claimed in Profit and Loss account was Rs. 7,89,21,046/-and when called for, the assessee explained that lorry hire is payable to various truck owners/agents/drivers and as per trend prevailing in the goods transport industry, there are number of drivers, agents and owners of the means of transportation which includes tempo, many trucks, normal truck and long lorries etc; that these truck owners, agents, or drivers are numerous in number and scattered over the various parts of Delhi and NCR; that is neither feasible nor necessary to maintain account of each transporter/truck owner; that details of lorry hire charges payable was submitted as per Annexure II; that the assessee was not required to deduct TDS because if the amount is less than Rs. 20,000 in single payment and Rs. 50,000 in aggregate payment; that as per 2nd proviso to section 194 C (3) of the Act, noted deduction shall be made if the subcontractor does not warn more than 2 two goods carriage at any time during the previous year and the assessee submitted the declaration received from the truck owner; that on the basis of rule of consistency of accounting systems, assessee maintains the details of lorry hire charges on the basis of tolerance, the assessee submitted the declaration along with the details of lorry hire charges as per Annexure I, copy of GR and other relevant and documents; that the assessee has other forms and documents in his possession and was willing to submit the same as and when required; and that the payment made to lorry owners is towards hire charges of the lorries.
However, Ld. Assessing Officer observed that inasmuch as the assessee had shown his inability to provide the person- wise/party-wise details as specifically required by him, and the assessee is not maintaining the records without verification of which it would be difficult to determine whether the crime of the assessee was correct or not, as such considering the nature of business, instead of dissolving the whole lorry charges, only a nominal disallowance of 5% of the lorry charges was made, and added back to the income of the assessee.
In the appeal preferred by the assessee, Ld. CIT(A) on verification of record found that the assessee had produced details to explain his case and he has been maintaining form 15-1 and produced the same on a random basis to explain the case; that as such there is only cooperation on the part of the assessee to explain the case in order to prove the claim on lorry expenses; that considering the history of the case and the nature of business, it is clear that the assessee was following the procedure regarding maintenance of necessary forms and documents and was ready to produce the same in support of his claim; and that the Assessing Officer should have appreciated the nature of business of the assessee. After considering the facts and circumstances of the case, Ld. CIT(A) found merit in the contention of the assessee and further observed that unverifiable claim does not mean that such claim is not a genuine one and the Assessing Officer without pinpointing any unverifiable claim cannot make disallowance on estimate basis. Holding so, Ld. CIT(A) allowed the appeal of the assessee and deleted the additions made by the Ld. AO.
Challenging this, Revenue preferred this appeal.
Ld. DR vehemently relied upon the orders of the Ld. Assessing officer. However, the impugned order reads that the 4
assessee has been following the procedure regarding maintenance of necessary forms and documents and he was also ready to produce them before the Ld. Assessing Officer as and when required, in support of his claim but without calling such record and verification thereof, Ld. Assessing Officer proceeded to make addition on estimate which has no basis at all.
We have gone through the record. The observations of the Ld. CIT(A) that the assessee has been following the procedure recording maintenance of necessary forms and documents, and was ready to produce them in support of his claim goes uncontroverted. Further, the observations of the Ld.CIT(A) that the record must be had to the nature of business and the requirements of law while appreciating the merits of the case, is very apt and sound in the facts and circumstances of the case. We are in agreement with the Ld.CIT(A) that when the assessee is ready to produce different forms and documents, Ld.AO is not justified in making addition that too on estimate which has no basis at all. We, therefore, are of the considered opinion that the addition made on estimate basis cannot be sustained and the impugned order cannot be disturbed. We accordingly do not find any merits in this appeal and dismiss the same.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 26.12.2017