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Income Tax Appellate Tribunal, KOLKATA BENCH (SMC
Before: Shri P.M. Jagtap, AM]
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (SMC), KOLKATA [Before Shri P.M. Jagtap, AM] Assessment Year: 2008-09 ITO, Ward 42(3) Kolkata..............................…………………………..............................Appellant Poddar Court, 4th Floor, 18, Rabindra Sarani, Kolkata – 700 001 Ram Sagar Verma....................……………………………………………..........................Respondent 3A/7, B.K. Paul Lane, Dum Dum, Kolkata – 700 030 [PAN: ACKPV 7764 J] Appearances by: Shri P.K. Mondal, Addl. CIT appearing on behalf of the Revenue. None appearing on behalf of the Assessee Date of concluding the hearing : June 12, 2018 Date of pronouncing the order : June 20, 2018 ORDER This appeal is preferred by the revenue against the order of Ld. CIT(Appeals) – XII, Kolkata dated 19.03.2013.
The assessee in the present case is an individual who is engaged in the business of hatchery. The return of income for the year consideration was filed by him on 30.09.2008 declaring a loss. In the said return, deduction of Rs. 37,77,871/- was claimed by the assessee on account of expenses incurred on growing charges (farmer). During the course of assessment proceedings, the assessee was called upon by the A.O. to furnish the relevant details of growing charges such as name and address of the farmer, details of farm land, quantitative details of ready eggs, growing birds etc. The assessee however failed to produce the said details required by the A.O. and in the absence of Assessment Year: 2008-09 Ram Sagar Verma the same, the A.O. held that the growing charges paid by the assessee in cash remained unverifiable. He also noted that there was no written agreement entered into by assessee with farmer. He also noted that the total purchase of egg, chicks by the assessee during the year under consideration was Rs. 2,08,34,336/-. According to him, the expenses of growing charges would reasonably be allowed to the extent of 5%. He therefore, restricted the claim of the assessee for growing charges to Rs. 10,41,717/- and disallowed the balance amount of Rs. 27,36,154/-. During the course of assessment proceedings, the assessee also failed to produce the relevant details required by the A.O. to verify the claim for other transport charges of Rs. 10,21,101/-. In this regard, it was noticed by the A.O. that the assessee had claimed separately substantial amount on account of lorry freight, air transportation, railway freight, car hire charges, motor cycle expenses and conveyance expenses. Keeping in view these amounts separately claimed by the assessee as well as the failure of the assessee to furnish the relevant details, the A.O. disallowed the entire other transport charges of Rs. 10,21,101/- claimed by the assessee. Accordingly, the total income of the assessee was determined by the A.O. at Rs. 8,07,777/- in the assessment completed under section 143(3) vide an order dated 31.12.2010.
Against the order passed by the A.O. under section 143(3), an appeal was preferred by the assessee before the Ld. CIT(A) challenging the disallowance made by the A.O. on account of growing charges and other transportation charges and after considering the submissions made by the assessee as well as the material available on record, the Ld. CIT(A) restricted the disallowance made by the A.O. on Assessment Year: 2008-09 Ram Sagar Verma account of growing charges and other transportation expenses to Rs. 3,77,000/- and Rs. 50,000/- respectively for the following reasons given in para no 4 of his impugned order: “I have considered the finding of the A.O. in his order dated 31.12.2010 and the written submission filed by the AR during the appellate proceeding. Appeal on Ground No. 1(a) is against the disallowance of Rs. 2736154/- on account of growing charges and Rs. 1021101/- on account of other transportation charges. The assessee did not press for disallowance of telephones charges of Rs. 34425/- and addition of other source income of Rs. 32369/-. I have considered the finding of the A.O. in his assessment order and I have also considered the report submitted by the A.O. vide letter no ITO. Ward 42(3)/RR/2012-13/692 dtd. 14.03.2013. The A.O. in his assessment order as well as in his remand report as pointed out that since assessee had not produced all the relevant papers, documents and details at the time of assessment, therefore, the A.O. disallowed Rs. 2736154/- on estimate basis on account of growing charges. During the appellate proceeding the A.R. has explained the process of growing of chicks into chickens. Since all the details were not filed before the A.O. Therefore, they are not being considered at the appellate stage afresh. However, the A.R. has submitted that the disallowance by the A.O. on estimate basis is very high and excessive in nature. I have taken into consideration the finding of the A.O. and submissions and explanations made/discussed by the A.R. during the appellate proceeding. I find that the A.O. has made the decision of Rs. 2736154/- out of Rs. 3777871/- on estimate basis without bringing any finding/evidence contrary to the claim of the assessee on record. Therefore, in my opinion the adhoc disallowances by the A.O. on estimate basis is very high. But there is no denying the fact that in the absence of supporting details and documents assessee’s claim could also not be accepted completely. Hence, disallowance under this head is restricted to 10% of the total claim made by the assessee under the head growing charges i.e. Rs. 3,77,000/-. Thus, assessee’s appeal on ground no 1(a) is partly allowed.
Assessee’s appeal on ground no 1(b) is against the disallowance of Rs. 1021101/- under the head other transportation charges. The A.O. in his assessment order has disallowed this amount on the ground that the assessee is claiming expenditure on AIR Transportation, Rly. Freight, Car Hire Charges, motorcycle expenses is for employees to visit firms and conveyance is for TA of various staffs. The AR has also clarified that Assessment Year: 2008-09 Ram Sagar Verma vehicle charges has been claimed for transporting eggs and chickens by assessees’ own vehicle. The AR has also submitted a list of such vehicles, expenditure of diesels, insurance, salary, repairs etc. have also been submitted. The A.O. in his remand report has mentioned that the AR could not produce all the vouchers before him. I have considered the finding of the A.O. in the assessment order, comments of the A.O. in the remand report and the submission filed by the AR during the appellate proceeding. I find that the assessee has claimed vehicle expenses for expenditure incurred on his own vehicles which are being used for transporting eggs and cheeks to farms and bringing them back. So the expenditure incurred under this head cannot be denied. But at the same time since the AR could not produce all the relevant vouchers before the A.O. therefore, some claim for other than business purposes cannot be denied. However, disallowance of Rs. 1021101/- is very high and excessive in nature. Therefore, addition under this head is restricted to Rs. 50,000/-, thus appeal on ground no 1(b) is partly allowed.”
Aggrieved by the order of the Ld. CIT(A), the revenue has preferred this appeal before the Tribunal on the following ground: “
1. Ld. CIT(A) erred in law as well as in fact and restricted the addition to 10% of expenditure claimed under the head ‘Growing Charges (Farmer)’ by admitting fresh evidence in violation of Rule 46A.
2. Ld. CIT(A) erred in law as well as in fact and restricted the addition to Rs. 50,000/- with respect to expenditure claimed under the head of Transportation Charge by admitting fresh evidence in violation of Rule 46A.”
5. At the time of hearing before the Tribunal, none has appeared on behalf of the assessee. Even on the earlier occasions when this appeal was fixed for hearing, nobody had appeared on behalf of the assessee. This appeal of the revenue is therefore being disposed of ex- parte qua the respondent assessee after hearing the arguments of the learned DR and perusing the relevant material available on record. It is observed that the relief allowed by the Ld. CIT(A) to the assessee restricting the disallowance made by the A.O. on account of growing charges and other transportation charges is challenged by the Assessment Year: 2008-09 Ram Sagar Verma revenue in this appeal on a specific ground that the additional evidence filed by the assessee was relied upon by the Ld. CIT(A) while giving relief to the assessee in contravention of Rule 46A. In this regard, the learned DR was directed to point out specifically such additional evidence relied upon by the Ld. CIT(A) while giving relief to the assessee. He however was unable to do so. A perusal of the relevant portion of the impugned order also shows that the details sought to be filed by the assessee for the first time before him were not taken into consideration by the Ld. CIT(A) on the ground that the same were not filed before the A.O. Moreover, there is a mention of the remand report submitted by the A.O. in the impugned order of the Ld. CIT(A) which shows that a remand report was also sought by the Ld. CIT(A) from the A.O. The learned DR has not disputed this position which is clearly evident from the record. He however has contended that the disallowance sustained by the Ld. CIT(a) out of growing charges and other transportation charges is very low and unreasonable in the facts and circumstances of the case. He has contended that the same may be appropriately increased. I am unable to accept this contention of the learned DR. As already noted, the relief allowed by the Ld. CIT(A) to the assessee on both the issues is specifically challenged by the revenue on the ground of violation of Rule 46A which is not there. Moreover, the disallowance made by the A.O. on account of growing charges and other transport charges was highly excessive and unreasonable as found by the Ld. CIT(A) and there is nothing brought on record by the learned DR to rebut or controvert the findings recorded by the Ld. CIT(A) in this regard. The learned DR has also not been able to point out as to how the disallowance sustained by the Ld. CIT(A) out of growing charges and Assessment Year: 2008-09 Ram Sagar Verma other transport charges is not fair and reasonable. In my opinion, the relevant facts and figures as discussed by the Ld. CIT(A) in his impugned order show that the disallowance so sustained by him is quite fair and reasonable and there is no justifiable reason to interfere with the same, I, therefore, uphold the impugned order of the Ld. CIT(A) giving relief to the assessee on both the issues under consideration and dismiss this appeal filed by the revenue.