M/S SHANTI PARBOILING INDUSTRIES,RAIPUR,RAIPUR (CG) vs. THE DY. COMMISSIONER OF INCOME TAX 1(1), RAIPUR (CG)

The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-1, Raipur, dated 13.10.2016, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961(in short ‘the Act’), dated 11.02.2016 for assessment year 2013-14. Before us the assessee has assailed the impugned order on the following grounds of appeal:

Succinctly stated, the assessee firm which is engaged in the business of Rice Milling had filed its return of income for the assessment year 2013-14 on 05.10.2013, declaring a total income of 3 Shanti Parboiling Industries Vs. DCIT ITA No. 12/RPR/2017 Rs.19,08,570/-. The assessment was, thereafter, framed by the Assessing Officer vide his order passed u/s.143(3) of the Act, dated 11.02.2016 determining the income of the assessee at Rs.19,08,570/- i.e,, after making the following additions/disallowances:

Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success.

The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. As the assessee appellant despite having been intimated about the hearing of appeal has failed to put up an appearance before us, therefore, we are constrained to proceed with and dispose off the appeal as per Rule 24 of the 4 Shanti Parboiling Industries Vs. DCIT ITA No. 12/RPR/2017 Appellate Tribunal Rules, 1963, i.e, after hearing the respondent revenue and perusing the orders of the lower authorities.

As regards the disallowance of the assessee’s claim for deduction of “Final Settlement Expenses” of Rs.6,36,959/-, we find that the Assessing Officer after observing that the assessee had failed to place on record any material to substantiate his aforesaid claim for deduction of expense had on an ad hoc basis disallowed 20% of the same i.e. an amount of Rs.1,27,391/.

On a perusal of the orders of the lower authorities, we find that the assessee on being queried as regards the nature of the aforesaid expenditure, viz. “Final Settlement Expenses”, had therein submitted that the same was booked at the time of final payment when buyer would retract from the ‘payment agreed upon’. It was claimed by the assessee that the aforesaid expenditure could vary each year and was dependent on multiple factors. Observing, that the assesee had failed to discharge the ‘onus’ that was cast upon him as regards proving the allowability of its claim for deduction of the expenditure in question on 5 Shanti Parboiling Industries Vs. DCIT ITA No. 12/RPR/2017 the basis of supporting documentary evidences, the Assessing Officer had disallowed 20% of the aforesaid expenditure amounting to Rs.1,27,391/-. On appeal, the CIT(Appeals) finding no infirmity in the view taken by the Assessing Officer had upheld the disallowance made by him.

After having given a thoughtful consideration to the aforesaid issue we find no infirmity in the view taken by the lower authorities. In our considered view, as the assessee had failed to substantiate the nature of the aforesaid expenditure which was claimed by him as a deduction therefore, the lower authorities had in all fairness disallowed 20% of the said amount. We, thus, concur with the view taken by lower authorities as regards the aforesaid issue in question and uphold the same. Thus, Ground of appeal No.1 raised by the assessee is dismissed in terms of our aforesaid observations.

We have given a thoughtful consideration to the aforesaid issue in hand, and are of the considered view that as the lower authorities have rightly observed that the personal element qua incurring of the aforesaid expenses could not be ruled out, therefore, a part of the same was liable to be disallowed on the said count. Considering the reasonableness of the disallowance i.e. 20% of the respective expenses, we find no reason to interfere with the view taken by the lower authorities. Thus, the Ground of appeal No.2 raised by the assessee is dismissed in terms of our aforesaid observations.

In the result, appeal of the assessee is dismissed in terms of our aforesaid observations.