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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य लेखा सद�य,राजे�� के अनुसार लेखा सद�य लेखा सद�य राजे�� के अनुसार राजे�� के अनुसार -Per Rajendra,AM: राजे�� के अनुसार Challenging the order,dated 19/11/2012,of the CIT(A)-1,Mumbai,the Assessing Officer(AO) has filed the present appeal.Assessee-company,engaged in the business of custom house agent, freight forwarders and clearing and forwarding agents,filed its return of income on 29/ 09/2009,declaring loss of Rs.44.50 lakhs. The AO completed the assessment,u/s.143 (3) r.w.s.147 of the Act,on 26/12/2011, determining its income at Rs. 87.10 lakhs. 2.Effective ground of appeal is about deleting the addition in respect of custom formality and custom expenses.During the assessment proceedings, the AO found that an action under section 133A was conducted at the office premises of the assessee on 07/03/2011, that it had debited a sum of Rs.10.14 lakhs under the head custom formality of,that as custom expenses it had claimed expenditure of Rs. 32.45 lakhs,that the expenses were not supported by documentary evidences, that the director of the company,in his statement, had admitted that there were no supporting bills and vouchers except the self made voucher of his employees to support the expenses,that all the expenses were incurred in cash and were not supported by third-party bills and vouchers. He held that assessee had not substantiated the expensive the supporting evidences is required under the Act, that the disputed expenses were not eligible for deduction and were to be disallowed in computing business income for the year under appeal. But,in a subsequent affidavit, dated 31/03/200,the director stated that only 25% of the expenses were offered for taxation and the balance was claimed a genuine business expenses. As the director had agreed to offer the whole expenses for taxation and his statement dated
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07/03/2011,so,the AO disallowed the entire expenditure i.e. Rs. 46.59 lakhs (Rs. 10.14 lakhs+ Rs. 32.45 lakhs).
3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA).Before him,it made elaborate submissions and relied upon the decision of Tribunal in the case of A.P.L.(India) Private Ltd. (97 TTJ187). After considering the available material,he held that the assessee was carrying on the business of clearing and forwarding agents,that cash payments were incurred at the port to expedite the process of cargo clearance, that the contention raised by the AO that the assessee had changed the statement recorded during the survey proceedings did not hold significant relevance, that in the statement recorded during survey operations the assessee had not accepted that these payments were not incurred for business purposes or that same were bogus or non-genuine transactions, that the director had confirmed that the payments were required to be incurred as business expediency for which no bills could be obtained,that the issue was to be decided not merely on the strength of the statement recorded during the course of survey only, that considering the nature of business of the assessee the necessity for such expenses could not be denied, that it had submitted documents that prove that to some extent those expenses were also recovered from the customers,that the recoveries were duly reflected in the income is offered for taxation, that when the income returns by the assessee form the business of clearing and forwarding had been accepted then the expenses incurred as per prevailing business practice had to be accepted, that the assessee had affirmed that expenses were required to be made in order to carry on its normal business of loading and unloading, that disallowance of entire expenditure was not justified, that the expenses were without any third-party affirmations, that entire expenses could not be accepted a genuine.Referring to the order of the A.P.L. India Private Ltd.(supra),he held that payments made to dockworkers expedite the loading and unloading was allowable as deduction u/s.37 of the Act, that the deduction was allowable because the payments were not illegal or proposed to public policy, that the Tribunal has restricted the disallowance, on estimate basis, 25% of the expenditure incurred. Finally, he held that disallowance of 25% offered by the assessee in the affidavit of the director, dated 31/03/2011 was reasonable.
4.During the course of hearing before us,the Departmental Representative(DR) stated that the director of the company in his statement recorded during the survey proceedings had admitted to offer entire expenses for taxation, that retraction filed by him was an afterthought,
1197/M/13-ASR Logistics (I)PL.(09-10) that the AO had rightly disallowed the entire expenditure.The Authorised Representative (AR) supported the order of the FAA.