What did the Tribunal hold?

The Tribunal found that the Assessing Officer did not specify which bills pertained to the sister concern and made an estimated disallowance. Since no material was presented to justify a higher disallowance or to show the CIT(A)'s figure was excessive, the Tribunal upheld the CIT(A)'s order.

The Assessing Officer disallowed 35% of certain expenses claimed by the assessee, a transport contractor, finding that some bills were related to a sister concern. The CIT(A) restricted this disallowance to Rs. 5,00,000/-.

What were the issues?

Whether the disallowance of expenses claimed on bills related to a sister concern was justified and whether the quantum of disallowance made by the Assessing Officer and restricted by the CIT(A) was appropriate.

ACIT vs M/S. Dushasan Jena | ITAT Cuttack 2017

Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE

For Respondent: Shri D.K.Pradhan, DR

Hearing: 03/07

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No. 164/CTK/2015 Assessment Year : 2010-2011

ACIT, Circle 1(1), Cuttack Vs. M/s. Dushasan Jena, At: Talasahi, Jobra, Cuttack

PAN/GIR No. AAAFD 9502 C (Appellant) .. ( Respondent)

ITA No. 182/CTK/2015 Assessment Year : 2010-2011

M/s. Dushasan Jena, At: Vs. ACIT, Circle 1(1), Cuttack Talasahi, Jobra, Cuttack

PAN/GIR No. AAAFD 9502 C (Appellant) .. ( Respondent)

Assessee by : None Revenue by : Shri D.K.Pradhan, DR

Date of Hearing : 03/07/ 2017 Date of Pronouncement : 03 /07/ 2017

O R D E R Per N.S.Saini, AM These are cross appeals filed by the Revenue and the Assessee

against the order of CIT(A)-Cuttack, dated 29.1.2015, for the assessment

year 2010-2011.

Notice of hearing sent to the assessee by Speed Post has not been

returned back unserved. However, when the case was called for hearing,

none appeared on behalf of the assessee nor any application was filed for

2 ITA No. 164/CT K/ 2015 ITA No. 182/CT K/ 2015 Asse ssment Year : 20 10- 201 1 adjournment. Therefore, we proceed to decide the cross appeals after

hearing ld D.R. and on the basis of materials available on record.

In Revenue’s appeal, the grievance of the revenue is that the

CIT(A) was not justified in restricting the disallowance of expenses

claimed under the heads, i) transportation & hire charges, (ii) Oil &

lubricants (iii) loading charges and (iv) shifting charges to Rs.5,00,000/-

as against Rs.42,12,029/- disallowed by the Assessing Officer.

The assessee is in appeal against the sustenance of disallowance of

Rs.5,00,000/- out of total disallowance of Rs.42,12,029/-.

Brief facts of the case are that the Assessing Officer during the

course of assessment proceedings found that the assessee is a transport

contractor and that has claimed expenditure on the bills and vouchers of

another firm namely M/s. Baba Lingaraj Enterprises, Bhubaneswar. The

expenditures as found to have been claimed were for i) transportation &

hire charges, (ii) Oil & lubricants (iii) loading charges and (iv) shifting

charges. The Assessing Officer then considering the bills and vouchers

which were not related to the assessee firm disallowed 35% of the

expenditures claimed by the assessee under the above heads and made

an addition of Rs.42,12,029/- to the income of the assessee.

On appeal, the CIT(A) restricted the disallowance to Rs.5,00,000/-

on the ground that the net profit shown by the assessee was more than

12% of the gross turnover.

3 ITA No. 164/CT K/ 2015 ITA No. 182/CT K/ 2015 Asse ssment Year : 20 10- 201 1 7. Ld D.R. relied on the order of the Assessing Officer and submitted

that the CIT(A) was not justified in restricting the disallowance of

expenditure of Rs.5,00,000/- and, therefore, the order of the CIT(A)

should be reversed and that of the Assessing Officer should be restored.

After hearing ld D.R. and perusing the materials on record, we find

that the Assessing Officer on examining the bills and vouchers for

expenses claimed under the heads i) transportation & hire charges, (ii)

Oil & lubricants (iii) loading charges and (iv) shifting charges found that

some of the vouchers were related to sister concern of the assessee i.e.

M/s. Baba Lingaraj Enterprises. Hence, he disallowed 35% of the

expenses out of the total expenses clamed under the above heads

amounting to Rs.1,20,34,377/-.

On appeal, the CIT(A) restricted the disallowance to Rs.5,00,000/-.

10.

We find that while making the disallowance, the Assessing Officer

has not pointed out which of the specific bills and vouchers related to the

expenses of sister concern M/s. Baba Lingaraj Enterprises. In our

considered view, the disallowance should have been made by the

Assessing Officer only of those bills and vouchers which pertain to sister

concern M/s. Baba Lingaraj Enterprises and not on an estimated basis of

35% out of total expenses claimed by the assessee under the above four

heads of expenditures. We find that the CIT(A) has restricted the

disallowance of expenses to Rs.5 lakhs. Ld D.R. could not bring any

material on record to show that any amount more than Rs.5 lakhs was

4 ITA No. 164/CT K/ 2015 ITA No. 182/CT K/ 2015 Asse ssment Year : 20 10- 201 1 incurred by the assessee for expenses of the sister concern M/s. Baba

Lingaraj Enterprises. Similarly, the assessee has also not brought any

material on record to show that the disallowance sustained at Rs.5 lakhs

out of the total expenses by the CIT(A) was on higher side. Hence, we

find no good reason to interfere with the order of the CIT(A), which is

hereby confirmed and grounds of appeal of the revenue and assessee are

dismissed.

11.

In the result, the appeal filed by the Revenue and the assessee are

dismissed.

Order pronounced in the open court on03 /07/2017 in the presence of parties.

Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 03 /07/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant/Revenue : ACIT, Circle 191), Cuttack 2. The Respondent/Assessee: M/s. Dushasan Jena, At: Talasahi, Jobra, Cuttack 3. The CIT(A) Cuttack 4. Pr.CIT, Cuttack 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//

SR.PRIVATE SECRETARY ITAT, Cuttack

ACIT, CUTTACK vs. M/S. DUSHASAN JENA, CUTTACK

What did the Tribunal hold?

What were the facts?

What were the issues?

Recent GST High Court judgments