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Income Tax Appellate Tribunal, BANGALORE BENCH C, BANGALORE
Before: SHRI. N. V. VASUDEVAN & SHRI. ABRAHAM P. GEORGE
O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
In this appeal filed by Revenue, directed against an order of the CIT (A) (LTU), DT.30.09.2014, it has altogether taken 7 grounds of which grounds 1, 6 and 7 are general needing no specific adjudication.
ITA.1692/Bang/2014 Page - 2
Vide its grounds 2 to 4, Revenue is aggrieved that CIT (A) allowed expenditure for quarterly taxes on vehicle and traffic check report expenditure, though the additions were agreed by the assessee before the AO. In its ground 5, grievance raised by the Revenue is that CIT (A) restricted the disallowance of expenditure to 10%.
Facts apropos are that assessee engaged in transport service had filed a return of income for the impugned assessment year declaring income of Rs.67,83,078/-. Assessee was doing lorry transportation. Total receipts for the relevant previous year came to Rs.4,17,56,502/-. Books of account were maintained by assessee. Audit reports were also furnished to the AO. Assessee had some rental income from the property let out to one M/s. Sheshi Distilleries. Transportation receipts of the assessee were for carrying liquor from Sheshi Distilleries to various depots. Assessee itself had in its computation of income made a suo motu expenditure disallowance of Rs.10,66,000/- for want of TDS. AO was of the opinion that some of the items charged in the P & L account were not fully supported with vouchers. He made the following disallowances :
ITA.1692/Bang/2014 Page - 3 AO has also stated that Shri. M. C. Shekhar who appeared for the assessee had accepted the above disallowances.
Aggrieved assessee moved in appeal before the CIT (A). Assessee produced vouchers for the expenditure and argued that though there were certain defects in the vouchers, disallowances made by the AO were unreasonable. According to him, disallowance of vehicle quarterly tax of Rs.6,03,350/- ought not to have been done since the tax payments made to the RTO were evidenced by receipts. Assessee pointed out that without such statutory payments, assessee could not have plied its 59 lorries. CIT (A) after considering the arguments of the assessee deleted the disallowance made for ITA.1692/Bang/2014 Page - 4 vehicle quarterly taxes. He also scaled down the disallowance for the balance expenses to 10%.
Now before us, Ld. DR strongly assailing the order of CIT (A) submitted that assessee by its own admission had agreed to the disallowance by the AO. Further according to him, the vouchers maintained by the assessee were incorrect and this was also an admitted position. Vis-a-vis quarterly vehicle tax, Ld. DR stated that evidences were produced for the first time before the CIT (A). According to the Ld. DR in the circumstances of the case, CIT (A) fell in error in considering such evidence which was in violation of Rule 46A. Ld. DR also submitted that 20% disallowance of various expenditure made by the AO was scaled down by the CIT (A) for no valid reason.
Per contra, Ld. AR supported the order of the CIT (A).
We have perused the orders and heard the rival submissions. There is no dispute that assessee had maintained books of account and filed audit reports and final accounts for the impugned assessment year. This has been admitted by the AO himself in the assessment order. Assessee had gross receipts of Rs.4,17,56,502/- on which it had declared income of Rs.67,83,075/-. In the computation assessee had suo motu made disallowance of Rs.10,66,000/- for want of TDS. That vehicle quarterly tax payment is a necessity for plying of vehicles on the road cannot be disputed. The reason cited by the AO is that some of the items debited to P & L account were not supported with proper vouchers. However, he has not pointed out which of the items of expenditure ITA.1692/Bang/2014 Page - 5 were not supported with proper vouchers. What the AO did was to make an ad hoc disallowance. In the process, the claim of traffic check expenditure was disallowed in full. AO had not made any corelation between the claim of expenditure which were not supported with vouchers while making such disallowance. In our opinion, when assessee had produced books of account and where AO had not made a clear demarcation of expenditure that were not supported with vouchers, the course of action adopted by CIT (A) was justified. We do not find any reason to interfere.
In the result, appeal of the Revenue stands dismissed.
Order pronounced in the open court on 7th day of August, 2015.