RISCHICHEM DISTRIBUTORS P.LTD,MUMBAI vs. DCIT 3(3), MUMBAI

The solitary issue in this appeal arises from the action of the CIT(A) in confirming the action of the Assessing Officer in making addition of Rs.5,47,387/- out of transportation charges on an adhoc basis.

In brief, relevant facts are that the appellant is a company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of trading in chemicals products and indenting agent. In the course of assessment proceedings, the Assessing Officer noted that the assessee had claimed an expenditure of Rs.10,94,775/- on transportation charges on sales. After considering the details furnished by the assessee, the Assessing Officer observed that it was not possible to ascertain whether the expenditure claimed is incurred wholly and exclusively for the purposes of business. Accordingly, he disallowed 50% of such expenses, which came to a sum of Rs.5,47,387/- The CIT(A) has also affirmed the addition, against which assessee is in appeal before the Tribunal.

Before us, Paper Book has been filed on behalf of the assessee which contain written submission to the CIT(A). It is pointed out that no specific infirmity was pointed out by the Assessing Officer for making the impugned addition and further that even in other assessment years where scrutiny assessment has been done under section 143(3) of the Act, no such adhoc disallowance has been made out of transportation charges. It is also emerging that complete details of the expenditure, party wise was furnished, a copy of which has been placed in the Paper Book at page 22, Such details also reflect the Permanent Account Number of the recipients; and, thus as per the appellant there is no justification for making the impugned adhoc addition.

On the other hand, Ld. Departmental Representative has merely placed reliance on the orders of the authorities below.

We have carefully considered the rival submissions. It is quite clear from the orders of the authorities below that the impugned disallowance has been made purely on an adhoc basis without pointing out any specific defect in the claim of transportation expenses. It has been pointed out that the books of account of the assessee are subject to audit and the complete details of the expenses are on record. We find that even in the scrutiny assessments made for assessment years 2010-11 and 2013-14 on 18/2/2013 and 15/1/2016 respectively, no such adhoc disallowances have been made. In our considered opinion, there is no justification for the impugned disallowance as it is based on mere conjectures and surmises. Accordingly, the same is hereby directed to be deleted.

In the result, appeal of the assessee is allowed.