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Income Tax Appellate Tribunal, BANGALORE BENCH-SMC “ C ”
Before: SHRI VIJAY PAL RAO
Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the order dt.29.8.2016 of Commissioner of Income Tax (Appeals)-5, Bangalore for the Assessment Year 2012-13.
The assessee has raised the following grounds :
3. The only issue arises in this appeal is regarding adhoc disallowance of freight charges for want of bills/vouchers. The assessee is a dealer in construction field. During the course of assessment proceedings, the Assessing Officer noted that the assessee has claimed huge freight charges. The Assessing Officer directed the assessee to furnish the bills on freight charges incurred expenditure. Since the assessee could not furnish the bills in support of the entire expenditure of Rs.1,08,70,166. The Assessing Officer has made an adhoc disallowance of 10% of expenses amounting to Rs.10,87,016. The assessee challenged the action of the Assessing Officer before the CIT (Appeals). The assessee claimed that it has furnished all the particulars called for and no shortcomings were noticed by the Assessing Officer however the Assessing Officer has made an adhoc disallowance. It was further contended that there was not even a single occasion on which the bills and evidences were not furnished. However, the CIT (Appeals) has confirmed the disallowance made by the Assessing Officer by considering the fact that the Authorised Representative of the assessee has signed the noting of the Assessing Officer that 10% of freight inward expenditure would be disallowed. The CIT (Appeals) has also noted that during the appeal proceedings the AR was asked to furnish all the bills to substantiate the claim but the assessee could not furnish the same.
Before the Tribunal, the learned Authorised Representative of the assessee has submitted that though the Assessing Officer as well as CIT
(Appeals) has given the reason for disallowance as not furnishing of the bills and vouchers however neither the Assessing Officer nor the CIT (Appeals) has pointed out to the assessee that there is a shortcoming in the bills and vouchers furnished by the assessee in respect of the claim. He has further contended that even otherwise the assessee was having bills and vouchers of entire expenditure and therefore the disallowance made by the Assessing Officer and confirmed by the CIT (Appeals) is based on the conjucture and surmises. Thus the learned Authorised Representative has submitted tht when the assessee is having the supporting evidence then adhoc disallowance is not justified. He has pleaded that the matter may be remanded to the Assessing Officer for proper verification of evidences.
On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below and submitted that both the Assessing Officer as well as CIT (Appeals) has categorically stated that the assessee has failed to furnish the bills and vouchers to support the entire expenditure.
Having considered the rival submissions and carefully perused the material on record, it is noted that the adhoc disallowance of 10% of the expenditure has been made by the Assessing Officer on the ground that the assessee has not furnished bills/vouchers in support of the whole expenditure and therefore 10% of the expenditure was disallowed. The Assessing Officer has also mentioned that AR of the assessee has accepted the 10% of disallowance. The CIT (Appeals) has confirmed the disallowance by taking note of the noting sheet of the Assessing Officer where the A.R. of the assessee has signed and the Assessing Officer has mentioned disallowance of 10% of the freight charges.
Thus it is clear that neither the Assessing Officer nor the CIT (Appeals) has given a specific finding how the bills/invoices produced by the assessee are not complete and to what extent there is a shortcoming of the bills/vouchers furnished by the assessee. Even otherwise the assessee has stated that it was not given an appropriate opportunity to explain and furnish the requisite bills/vouchers as the assessee is having complete bills/vouchers in support of the expenditure. In view of the facts and circumstances of the case and in the interest of justice, the matter is set aside to the record of the Assessing Officer for proper verification of the supporting evidence in respect of the freight charges. If the evidence already filed by the assessee is not sufficient then the assessee is at liberty to file the complete evidence for verification of the Assessing Officer.
In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 28th Feb., 2017.