M/S. SHRI KRISHNA URJA PROJECT LTD, JAIPUR V. INCOME TAX OFFICER, JAIPUR

ITA 1026/JPR/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3258 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 26-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANMOHAN KANDPAL ACITOSDDR DHK
• Assessee Lawyers: S R SHARMA
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JESK LH-'KEKZ] YS[KK LNL; DS LE{K BEFORE : SHRI RAMESH C.SHARMA, ACCOUNTA NT MEMBER VK;DJ VIHY LA-@ ITA NO. 1026/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 SHRI KRISHNA URJA PROJECT LTD SANGHI BUILDING, PANCHBATTI, M.I. ROAD, JAIPUR CUKE VS. THE ITO WARD- 2(2), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABCS 9741 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.R.SHARMA, CA JKTLO DH VKSJ LS@ REVENUE BY: SHRI MANMOHAN KANDPAL, ACIT(OSD)-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/11/2019 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 22 /11/2019 VKNS'K@ ORDER PER RAMESH C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 08-11-2017 FOR THE ASSESS MENT YEAR 2013-14, IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE I. T. ACT, 1961. 2.1 THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO A DHOC DISALLOWANCE OF RS. 10.00 LACS OUT OF WAY AND GENERAL EXPENSES CLAI MED BY THE ASSESSEE ON ACCOUNT OF PAYMENT MADE TO TRUCK DRIVERS. ITA NO.1026/JP/2017 M/S. SHRI KRISHAN URJA PROJECT LTD., JAI PUR VS ITO , WARD-2(2), JAIPUR 2 2.2 RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS P ERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSIN ESS OF TRANSPORTATION, FABRICATION AND CONTRACT WORK. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO MADE DISALLOWANCE OF RS. 28,28,977/-. 2.3 BY IMPUGNED ORDER, THE LD. CIT(A) HAS SUSTAINED THE DISALLOWANCE OF RS. 10.00 LACS OUT OF WAY AND GENERAL EXPENSES O N THE ALLEGED GROUND THAT PAYMENTS WERE MADE TO RTO AND POLICE AUTHORITI ES ON THE WAY BY THE TRUCK DRIVERS. 2.4 DURING THE COURSE OF HEARING, IT WAS ARGUED BY THE LD.AR OF THE ASSESSEE THAT THE WAY AND GENERAL EXPENSES ARE RELA TED TO TOLL TAX, ENTRY FEE/TAX OF TRUCKS IN OTHER STATES, FIXED DA OF DRIV ER FOR FOODING EXPENSES, RTO FEES, ON THE WAY REPAIRS AND MAINTENANCE OF TRU CKS, PARKING CHARGES, OCTROI, TRANSIT PASS AND VARIOUS OTHER GEN ERAL EXPENSES INCURRED ON THE WAY. THERE IS NO PAYMENT OF ANY TRAFFIC POLI CE DEBITED IN THE EXPENSES BECAUSE THE DRIVER ALWAYS KEEP ALL THE REQ UIRED DOCUMENT FOR TRANSIT AND TRAVEL AND FOLLOWS TRAFFIC RULES, IF AN Y, VIOLATION MADE THEY THEMSELVES REMAIN RESPONSIBLE. THE PAYMENTS TO VARI OUS RTO ARE PERMIT FEE, ENTRY FEE FOR ENTRY OF VEHICLES IN A STATE AS PER LAW. THE ASSESSEE SUBMITTED DETAILS OF WAY AND GENERAL EXPENSES BEFOR E AO ALONGWITH VOUCHERS AND ALLEGATION MADE THAT ASSESSEE DEBITED RTO AND POLICE BRIBE EXPENSES IN HEAD ON THE WAY EXPENSES IS WRONG AND O N WITHOUT EVEN A ITA NO.1026/JP/2017 M/S. SHRI KRISHAN URJA PROJECT LTD., JAI PUR VS ITO , WARD-2(2), JAIPUR 3 SINGLE SPECIFIC INSTANCE. IT IS BASED ON GUESS WORK AND GENERAL OBSERVATION WHICH IS NOT VALID FOR EVERY CASE. THE A/R WHO APPE ARED BEFORE A.O. IN ASSESSMENT PROCEEDINGS NEVER STATED THAT IT IS NOT FEASIBLE TO FURNISH TOTAL DETAILS OF SUCH EXPENSES IN FACT WHAT IS STATED IS THAT THERE ARE NO SUCH EXPENSES. 2.4.1 THE LD.AR FURTHER STATED THAT THAT ASSESSEE C OMPANY HAS ITS OFFICE AT GURGAON FROM WHERE ALL TRANSPORT TROLLA VEHICLES ST ART AND STATIONED. THE ASSESSEE COMPANY GIVES FIXED ALLOWANCE TO DRIVERS D EPENDING ON DISTANCES AND ALLOWANCE ARE CALCULATED ON THE BASIS OF DISTANCE OF TRIP INCLUDING FIXED DA OF DRIVER FOR FOODING EXPENSES, RTO FEES, ON THE WAY REPAIRS AND MAINTENANCE OF TRUCKS, PARKING CHARGES, OCTROI, TRANSIT PASS AND VARIOUS OTHER GENERAL EXPENSES INCURRED ON THE WAY. THE SAME ACCOUNTING SYSTEM FOR THESE EXPENSES DEBITED IN THE BOOKS OF ACCOUNTS UNDER THEIR HEAD WAS ADOPTED IN ALL THE EARLIER YEA RS INCLUDING IN A.Y. 2012-13 WHERE APPEAL DISALLOWANCE MADE BY A.O. FROM THESE EXPENSES WAS DELETED IN APPEAL. 2.5 ON THE OTHER HAND, THE LD. DR SUBMITTED THAT OU T OF TOTAL EXPENSES SO CLAIMED BY THE ASSESSEE, THE LD. CIT(A) HAS VERY REASONABLY UPHELD THE DISALLOWANCE OF RS. 10.00 LACS AND THE SAME SHOULD BE UPHELD BY THE HON'BLE TRIBUNAL. ITA NO.1026/JP/2017 M/S. SHRI KRISHAN URJA PROJECT LTD., JAI PUR VS ITO , WARD-2(2), JAIPUR 4 2.6 I HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE ASSESSEE IS MAINLY ENGAGED IN THE BUSINESS OF TRANS PORTATION AND CONTRACT WORK. AS PER GENERAL PRACTICE, THE ASSESSEE COMPANY USED TO PAY ITS TRUCK DRIVERS A SUM OF RS. 12,100/- PER TRIP WHICH INCLUD ES ALL THE EXPENDITURES TO BE INCURRED BY THE DRIVERS DURING TRANSIT. THIS ALLOWANCE ALSO DEPENDS UPON THE DISTANCE AND CALCULATED ON THE BASIS OF FI XED DA OF DRIVER FOR FOODING EXPENSES, RTO FEES, ON THE WAY REPAIRS AND MAINTENANCE OF TRUCK, PARKING CHARGES, OCTROI, TRANSIT PASS AND VA RIOUS OTHER GENERAL EXPENSES INCURRED ON THE WAY. THE TRUCK DRIVERS USE D TO GIVE RECEIPTS FOR THE AMOUNT SO GIVEN TO HIM AND SPENT BY HIM. THE SA ME ACCOUNTING SYSTEM FOR THESE EXPENSES DEBITED IN THE BOOKS OF A CCOUNT UNDER THEIR HEAD WAS ADOPTED IN ALL THE EARLIER YEARS INCLUDING IN ASSESSMENT YEAR 2012-13 WHEREIN APPEAL DISALLOWANCE MADE BY THE AO WAS DELETED. THUS THE BENCH FOUND THAT THE ADHOC DISALLOWANCE MADE BY THE AO WAS WITHOUT ANY BASIS. IN THE CASE OF M/S NISHOTECH SYS TEMS PVT. LTD. VS. ACIT, (ITA NO. 6116/M/11 DATED 8 AUGUST 2012) WHERE IN THE HON'BLE MUMBAI ITAT HAS HELD THAT 'LOOKING AT THE ISSUE FROM THE ASSESSEE'S POINT OF VIEW, ONCE AN EXPENSE HAS BEEN INCURRED AND BOOK ED IN BOOKS OF ACCOUNTS, IT PERTAINS TO THE COMPANY'S EXPENSE AND WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE COMPANY, SUBJECT TO BEING PROVED ITA NO.1026/JP/2017 M/S. SHRI KRISHAN URJA PROJECT LTD., JAI PUR VS ITO , WARD-2(2), JAIPUR 5 OTHERWISE, WHERE THE ONUS IS HEAVILY PLACED ON THE REVENUE TO PROVE THAT THE EXPENSE HAS BEEN INCURRED WHICH IS NOT WHOLLY A ND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS.' IT WAS HELD BY HON'BLE MUMB AI TRIBUNAL IN THE CASE OF ARTHUR & ANDERSON & CO. VS. ADDL. CIT (2010 TI OL-416-ITAT) 'THAT THE VERY CONCEPT OF TOKEN (LUMP SUM) DISALLOW ANCE WAS BAD IN LAW, BECAUSE SUCH A DISALLOWANCE WAS INHERENTLY BASED ON SURMISES AND CONJECTURES AND DEVOID OF A LEGALLY SUSTAINABLE FOU NDATION. IT WAS A CASE WHERE ONE ACCEPTED ALL THE CONTENTIONS BUT NOT THE CONSEQUENCES FLOWING FROM ACCEPTING THE SAME. THIS COULD NOT MEET APPROV AL. NO PARTICULAR INFORMATION HAD BEEN CALLED FOR BY THE AO NOR HAD T HE AO POINTED OUT ANY DEFICIENCY IN THE DETAILS FURNISHED BY THE ASSESSEE . THE AO HAD NOT GIVEN ANY JUSTIFIABLE REASONS FOR MAKING ADHOC DISALLOWAN CES WITHOUT SOUND BASIS OR REASON. THIS COULD NOT BE PERMITTED. THE L D.CIT (A) HAD ALSO NOT JUDICIOUSLY DEALT WITH THE MATTER. NO DISALLOWANCE COULD BE MADE JUST FOR THE SAKE OF DISALLOWANCE. RECENTLY THE HON'BLE ITAT , JAIPUR BENCH, JAIPUR IN M/S KGK ENTERPRISES VS. ACIT (ITA NO. 567 /JP/2016 AND OTHERS) VIDE ORDER DATED 28-11-2017 IN PARA 61 OF A PPEAL ORDER CONSIDERING THE SUBMISSION OF ASSESSEE THAT DISALLO WANCE PURELY ON ESTIMATE BASIS WITHOUT PIN POINTING ANY SPECIFIC DE FECTS AND BOOKS OR VOUCHERS MAINTAINED HELD THAT WHEN 'DISALLOWANCE HA S BEEN MADE PURELY ON ADHOC BASIS SUCH DISALLOWANCE CANNOT BE SUSTAINE D IN THE EYES OF LAW. ITA NO.1026/JP/2017 M/S. SHRI KRISHAN URJA PROJECT LTD., JAI PUR VS ITO , WARD-2(2), JAIPUR 6 IT WILL BE THUS VERY EVIDENT THAT EXPENSES DEBITED IN THIS ACCOUNT DO NOT CONTAIN ANY RTO AND POLICE BRIBE EXPENSES AND FINDI NG OF AO ARE NOT CORRECT. 2.6.1 IN VIEW OF THE ABOVE DISCUSSIONS AND KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I RESTRICT THE DISALLOWANCE TO THE EXTENT OF RS. 1.00 LAC. I DIRECT ACCORDINGLY. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 22 /11/2 019. SD/- JESK LH 'KEKZ (RAMESH C. SHARMA) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22 /11/ 2019 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. SHRI KRISHNA URJA PROJECT LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO , WARD- 2(2), JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.1026/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR