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Income Tax Appellate Tribunal, ‘B’ BENCH,
Before: Shri M.Balaganesh & Shri S.S.Viswanethra Ravi
This appeal by the Assessee is directed against the order 02-10-2013 of the Commissioner of Income Tax(Appeals), I, Kolkata dated for the assessment year 2009-10.
In this appeal, the Assessee has raised the following effective ground:- 1. That for the facts and under the circumstances of the case Ld. CIT(A) has erred in sustaining Rs.3,00,000/- out of Rs. 15,00,000/- made by Addl.CIT., Cir-3.
The brief facts of this case are that the assessee is a company involved in the business of transportation of goods by road. The assessee filed its return of income declaring total M/s. Union Roadways Ltd 1 income of Rs.2,58,90,470/-. Under scrutiny notices u/s. 143(2)/142(1) of the Act were issued. In response to which, the assessee filed various details, accounts and evidences in support of the return filed.
During such proceedings, the AO found that the assessee had debited an amount of Rs.168.12 cores being expenses on hire trucks and own trucks. In support of is claim, the assessee furnished party-wise break up of expenses on hire trucks and maintenance and running of own trucks branch wise. The AO found that Rs.163.07 crores were on hired trucks and Rs.5.04 crores on own trucks. In explanation the assessee filed the details of break up branch wise, according to the AO, which were difficult to verify the same and was of the opinion that the assessee should have filed party wise details for which, the assessee, further, submitted that the hired trucks were engaged through brokers in large numbers and names of owners/drivers and their addresses and details of driving licence were entered on challans and produced the same before the AO. Considering the same, the AO held that the details filed by the assessee are unverifiable, accordingly, he disallowed of Rs. 15 lakhs towards the said expenses on estimation by treating the same as bogus expenditure.
5. Aggrieved by such order of the AO, the assessee preferred an appeal before the CIT-A, who restricted the said disallowance to Rs. 3 lakhs by stating as under:-
The submissions of the Appellant have been considered. It is seen that the A.O has made a lump-sum disallowance from the Head of lorry hire charges and lorry expenses, on the grounds that the satisfactory details were not provided by the Appellant and that the lorry charges did not have the verifiable details of M/s. Union Roadways Ltd 2
the lorry owners/drivers. He, therefore, went on to hold that there was a possibility of such expenses being inflated or bogus. In Appeal it has been admitted that due to the peculiarities of the transportation business, the Appellant did not have the lorry owners address and other details which it had been asked to provide in Assessment proceedings. The Appellant however did provide to the A.O, the details of payments in subsequent years ie A.Y 2010-11 and 2011-12 of the balances which were outstanding as on 31.03 2009.It is also claimed that the Lorry Challan is prepared in each case giving details of the Lorry No., drivers name, advance paid if any and brokers name etc. It is also seen that in A.Y 2008-09, the disallowance by the A.O was made only from the Appellant's own truck expenses and that too on estimate basis, whereas in the current year, the disallowance had been made from the lorry charges when these expenses are in fact comparatively lower than the previous year. Therefore, considering the above facts including the booking of trucks through the brokers, the ad-hoc disallowance of such huge amount cannot be made only on the ground that full details of drivers including their addresses etc. were not maintained. However looking to the fact that the Appellant has shown a huge amount outstanding which was apparently paid In the subsequent financial years and full verification of such cash payments would not be actually possible. Therefore considering all the facts, it would be reasonable for the disallowance to be restricted to Rs.3,00,000/-, the disallowance is accordingly confirmed to this extent only.
Not satisfied with the order of the CIT-A, now the assessee is in appeal before us by raising the above mentioned ground of appeal
and contended that the disallowance made by the AO is bad in law for the reason that the said disallowance made on the basis of estimation. He further submits that the respondent revenue had disallowed an amount of Rs.2.51 lakhs for the AY 2008-09 in support of which filed a chart showing the same. He fairly stated that no appeal was preferred by the assessee against the order passed for A.Y 2008-09. However, he prayed the Bench to restrict the disallowance in AY 2009-
10. ( i.e. the year under appeal) to 50% of Rs.3,00,000/-.
The Ld. DR relied on the order of the AO. M/s. Union Roadways Ltd 3
Heard rival submissions and perused the material available on record. We find that the assessee has incurred own lorry expenses, which is lesser than that compared to A.Y 2008-09. Hence, we find that disallowance of own lorry expenses at Rs.1,50,000/- would meet the ends of justice in the facts and circumstances of the case. The ground raised by the assessee is partly allowed.
In the result, the appeal filed by the assessee is partly allowed.
Order Pronounced in the Open Court on 7th October,2016.