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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 26/06/2024 Date of Order – 26/06/2024
O R D E R PER K.M. ROY, A.M.
The present appeal has been filed by the assessee challenging the impugned order dated 20/02/2023, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2018–19.
Following grounds have been raised by the assessee:–
The Ld. AO without providing any justification / supporting document / The Ld. disallowances of AO 10 percent evidences reduced the loss as the of the expenses of Rs.60,30,992/- on claimed in the return of income by ad hoc basis made and the Ld. CIT(A) the Appellant of 10 percent of the erred in confirming the same. total expenses for which the Appellant did not provide proper evidence and the Ld. CIT(A) erred in confirming the same.
BUCCS Limited and NBC and JV ITA no.67/Nag./2023
2. The Ld. AO without considering the genuine reason of the ongoing The Ld. AO and Ld. CIT both lockdown in the state of the Appellant disregarded the genuine reason for not passed the ex-parte assessment filing the submissions by the Appellant. order and the Ld. CIT(A) erred in confirming the same which is bad in law.
3. The Ld. CIT(A) erred in appreciating that stating that the Ld. AO has failed to compare the expenses claimed in AY 2018-19 with The Ld. AO failed to make comparison the previous assessment years by of expenses for AY 2018-19 with the which he would have known that the previous assessment years. expenses are in line with those years which includes amortization of TOLL expenses also. 4. If the CIT(A) is not convinced with the er written submission so filed by the co Appellant during the Appellate re proceedings, he should communicate the same by raising queries / requirements seeking proper explanation before dismissing the Appeal against the Appellant. The Ld. CIT(A) did not provided proper However, the Ld. CIT (A) did not opportunity to heard to the Appellant provided proper opportunity to heard before disposing of the Appeal. to the Appellant and passed the order by dismissing all the grounds of appeal made by the Appellant which makes entire appellate order so passed is against the principle of natural justice deserves to be set aside in the interest of law. Appellant is aggrieved with addition made to total income. Accordingly, Penalty U/s 272A(1)(d) o Income Tax the Appellant is also aggrieved with Act, 1961 penalty proceedings initiated U/s 272A(1)(d). The Appellant craves to add, delete, insert, and omit any ground or part of Any other matter the grounds of appeal at the time of hearing of the appeal.
Brief facts are, the assessee is a joint venture for construction of toll road and BOT basis and in operation since 2007 between Buldana Urban Credit Co–operative Society Ltd. And National Building Construction. The assessee filed his e-return for the assessment year 2018-19 on 17.09.2018 declaring total income of ` Nil. The case was selected for scrutiny through Page | 2
BUCCS Limited and NBC and JV ITA no.67/Nag./2023 CASSon the issue "Refund claim and Contract receipts of fees". Accordingly, notices under section 143(2) and 142(1) of the Income Tax Act, 1961 (“the Act”) were issued to the assessee. The assessee debited the amortization expenses due to road construction of ` 7,92,63,747. Out of the total revenue, the receipt of ` 12,99,35,303, was from toll collection and road crossing income. As per the clarification of the board, Circular No.9/2014 dated 23/04/2014, regarding treatment of expenditure incurred for development of road and highway, expenditure incurred on development and construction of infrastructural facilities like roads/highways on Build-Operate- Transfer (BOT) basis with right to collect toll is entitled for depreciation under section 32(1)(ii) of the Act or the same can be amortized by treating it as an allowable business expenditure under the relevant provisions of the Act. As per the previous details of ITR and records available of ITBA. It was observed that the assessee was claiming amortization expenses of Road construction regularly and return income was accepted in previous years assessments made under section 143(3). The assessee was claiming the same amortization expense in the year under consideration and not claiming any deprecation in the ITR. Therefore, no adverse inference was drawn on these expenses. However, the assessee was not responding to any of the notices under section 142(1) of the Act issued on various dates, the claims of the other expenses debited to profit and loss account remains unverified in the absence of the any documentary evidence. From the return of income, the Assessing Officer noticed that the copy of audited accounts and other details/documents that the assessee had claimed various expenses. On examination, expenses from the details found on e-filing portal during the Page | 3
BUCCS Limited and NBC and JV ITA no.67/Nag./2023 course of assessment proceedings, it was found that expenses claimed under the head Road Maintenance Expenses, Travelling Expenses, Toll Staff Salary, Misc. Expenditure, Professional Fess and Toll Expenses were mainly supported by debit entries. The assessee had failed to fully substantiate the claim of expenses under these heads. There was no proper evidence to establish that expenses had been incurred and even if incurred the same had been done wholly and exclusively for the purpose of business. It was a settled legal position that for claiming any deduction on account of any expenditure, burden was on the assessee to establish that the expenditure had been incurred wholly and exclusively for the purpose of business. In such a situation when there was no proper evidence available, 10% of the expenses claimed under the head Road Maintenance Expenses, Travelling Expenses, Toll Staff Salary, Misc. Expenditure, Professional Fess and Toll Expenses calculated at ` 60,30,992, and was disallowed. Penalty proceedings under section 272A(1)(d) of the Act was also initiated separately for non-compliance of the notices in each default. Aggrieved, the assessee carried the matter before the first appellate authority.
The learned CIT(A) confirmed the order passed by the Assessing Officer by observing as follows:–
“5.2 During the course of appellate proceeding, the appellant has filed written submission in response to notice u/s 250 of the I.T. Act, 1961 whereby it has only taken the plea that due to the ongoing Covid-19 pandemic, there was a lockdown in the state in which the appellant trust was functioning and hence the appellant could not make the submissions during assessment proceeding. However, in the appellate stage also the appellant could not submit documentary evidence to substantiate the genuineness of expenses claimed under different heads for the subject assessment year, only chosen to file comparison of the quantum of expenses claimed for the year under consideration i.e. 2018-19 with the quantum of expenses as claimed in the Page | 4
BUCCS Limited and NBC and JV ITA no.67/Nag./2023 preceding year i.e. 2017-18. Since the appellant has not counter the findings of the Ld. AO along with supporting evidence during the appellate proceeding also, the addition made in the impugned order is confirmed. Therefore, Ground Nos. 1 to 3 taken by the appellant are rejected.
We have heard the arguments of rival parties, perused the material available on record and gone through the orders of the authorities below. Before us, the learned Counsel for the assessee submitted that the Assessing Officer has not given reasonable opportunity of hearing to the assessee to pursue its case before him and passed the order rejecting the claim of the assessee. The assessee could not appear before the Assessing Officer due to COVID pandemic resulting lockdown in the whole country. Even before the learned CIT(A) also, the assessee could not file any supporting evidence to corroborate its claim. Since the learned A.R. prayed for granting one opportunity to substantiate its claim, therefore, we are of the opinion that by following the principles of natural justice, one more opportunity should be given to the assesse to substantiate his case before the learned Assessing Officer,. In view of these facts and circumstances of the case, the order passed by the learned CIT(A) is set aside and remit the matter to the file of the Assessing Officer and direct him to adjudicate the matter afresh after considering all the documents available before him. The assessee is also directed to submit all the relevant documents and evidences, etc., before the Assessing Officer. It is also directed that the assessee should not seek adjournment without there being a justified reason. Accordingly, all the grounds raised by the assessee in this appeal are allowed for statistical purposes.
BUCCS Limited and NBC and JV ITA no.67/Nag./2023
In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 26/06/2024