M/s. Raghoji Transport , Solapur V. Deputy Commissioner of Income-tax, Circle - 1, Solapur

ITA 1305/PUN/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9864 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-06-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 14-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V.K. SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO. 1305/PUN/2018 / ASSESSMENT YEAR : 2015-16 M/S. RAGHOJI TRANSPORT, 89A/261/A-2, BHAVANI PETH, HYDERABAD BY-PASS ROAD, SOLAPUR 413002 PAN : AABFR7396H VS. DCIT, CIRCLE-1, SOLAPUR (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSE D BY THE CIT(A)-7, PUNE ON 30-05-2018 IN RELATION TO THE ASSESSMENT YEAR 2015-16. 2. THE FIRST GROUND IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF CERTAIN EXPENSES TO THE TUNE OF RS.11,65,62 9/-. APPELLANT BY SMT. DEEPA KHARE RESPONDENT BY SHRI V.K. SINGH DATE OF HEARING 03-01-2020 DATE OF PRONOUNCEMENT 03-01-2020 ITA NO. 1305/PUN/2018 M/S. RAGHOJI TRANSPORT 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF TRANSPORTATION. ON EXAMINATION OF THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER (AO) FOUND TH AT CERTAIN EXPENSES, NAMELY, HAMALI, COMMISSION, MISCELLANEOUS EXPENSES AND ALLOWANCE CLAIMED UNDER THE HEAD TRUCK EXPENSES IN THE PROFIT AND LOSS ACCOUNT WERE NOT PROPERLY VOUCHED. ON BEING CALLED UPON TO SUBSTANTIATE THE CLAIM, THE ASSESSEE SUBMITTED THAT THE EXPENSES WERE BASED ON THE EXPENSE VOUCHERS PRODUCED/INFORMATION PROVIDED ORALLY B Y THE DRIVERS OF THE VEHICLES. THE AO DISALLOWED 15% OF HAMALI, 10% OF COMMISSION, 15% OF MISCELLANEOUS EXPENSES AND 10% OF ALLOWANCE, WHICH RESULTED INTO TOTAL DISALLOWANCE ON THIS COUNT TO THE TUNE OF RS.20,32,760/-. THE LD. CIT (A) SUSTAINED THE DISALLOWANCE AT 10% ACROSS THE BOARD ON THESE FOUR EXPENSES. THE ASSESSEE IS AGGRIEVED BY THE SUSTEN ANCE OF DISALLOWANCE TO THIS EXTENT. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD, IT IS SEEN AS AN ADMITTED POSITION THAT ALL THE EXPENSES WERE NOT PROPERLY VOUCHED. SOME OF THE ITA NO. 1305/PUN/2018 M/S. RAGHOJI TRANSPORT 3 EXPENSES WERE RECORDED EVEN ON THE BASIS OF INFORMATION PROVIDED ORALLY BY THE DRIVERS, FOR WHICH THERE WAS NO MATE RIAL TO BACK THE SAME. UNDER THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT ALL THE EXPENSES WERE PROPERLY VOUCHED AND THERE WAS NO INFIRMITY IN THE CLAIM. TAKING INTO CONSIDERATION THE PECULIARITY OF THE FACTS AND CIRCUMSTANCES OBTAINING IN THE INSTANT CASE, I AM OF THE CONSIDERED OPINION THAT THE DISALLOWANCE AT 10% AS SUSTAINED IN THE FIRST APPEAL IS IN ORDER , WHICH DOES NOT CALL FOR ANY FURTHER INTERFERENCE. THIS GR OUND IS NOT ALLOWED. 5. THE ONLY OTHER GROUND IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.11,73,794/- U/S. 40A(2) OF THE ACT. 6. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE MA DE CERTAIN FREIGHT PAYMENTS TO THE PERSONS COVERED U/S. 40A(2) (B) OF THE ACT. THE AO OBSERVED THAT THE ASSESSEE MADE EXCE SSIVE PAYMENTS TO THE SPECIFIED PERSONS VIS--VIS THE THIRD PARTIES. ON DISCUSSION WITH THE AUTHORIZED REPRESENTATIVE, IT TRANSPIRED THAT, ON AN AVERAGE TONNAGE OF LOAD OF RS.443 /- PER ITA NO. 1305/PUN/2018 M/S. RAGHOJI TRANSPORT 4 TON, THE ASSESSEE PAID APPROXIMATELY RS.25/- PER TON EXTRA TO THE RELATED PARTIES. THIS RESULTED INTO A DISALLOWANCE OF RS.11,73,794/-, WHICH CAME TO BE SUSTAINED IN THE FIRST AP PEAL. 7. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD, IT IS SEEN FROM THE IMPUGNED ORDER THA T THE ASSESSEE SPECIFICALLY STATED BEFORE THE LD. CIT(A) THAT THE EXCESS FREIGHT OF RS.25/- PER TON WAS PAID TO RELATED PA RTIES BECAUSE THE VEHICLES WERE DEDICATED SPECIFICALLY TO THE ASSESSEE IN CONTRAST TO THE OUTSIDERS, WHO WERE PROVIDING VEHICLES ONLY ON REQUEST AND SOMETIMES SUCH A REQUEST WAS NOT ACCEDED TO AS WELL. SINCE THE VEHICLES OF THE RELATED PARTIES REMAINED AVAILABLE ROUND THE CLOCK AND WERE DEDICATED SPECIFICALLY TO THE ASSESSEE, THE RATE CHARGED BY THE THIRD PARTY TRANSPORTERS CANNOT CONSTITUTE A GOOD BASE FOR COMPARISON W ITH THE RATE OF FREIGHT PAID TO THE RELATED PARTIES. IT IS FURTHER A MATTER OF FACT THAT ALL THE RECIPIENTS FURNISHED THEIR RETURNS B Y INCLUDING THE AMOUNT OF FREIGHT RECEIVED FROM THE ASSESSEE AND OFFERED THE SAME TO TAX. TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, I AM OF THE CONSIDERED OP INION ITA NO. 1305/PUN/2018 M/S. RAGHOJI TRANSPORT 5 THAT THE DISALLOWANCE U/S.40A(2) HAS BEEN WRONGLY MADE AND SUSTAINED. I, THEREFORE, ORDER TO DELETE THE ADDITION. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD JANUARY, 2020. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 03 RD JANUARY, 2020 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-7, PUNE 4. THE PR. CIT-6, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO. 1305/PUN/2018 M/S. RAGHOJI TRANSPORT 6 DATE 1. DRAFT DICTATED ON 03-01-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 03-01-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -- JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -- JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *