The ACIT, Gandhidham Circle, GANDHIDHAM V. M/s Raghuvirsingh Movers Pvt. Ltd., GANDHIDHAM

ITA 132/RJT/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7157 (ITAT-RAJKOT)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 20-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L MEENA
• Assessee Lawyers: J C RANPURA
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI M.V.NAYAR (AM) AND SHRI D.T. GARASIA (J M) ITA NO. 132/RJT/2009 - AY 2004-05 THE ACIT CIRCLE GANDHIDHAM, APPELLANT V/S. M/S. RAGHUVIRSINH MOVERS P LTD. GANDHIDHAM RESPONDENT PAN : AABCR0511P APPELLANT BY : SHRI S L MEENA, CIT(DR) RESPONDENT BY : SHRI J C RANPURA, CA O R D E R PER M.V. NAYAR, A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE APPELLATE ORDER PASSED BY THE CIT(A)-II RAJKOT DATED 23.12.2008. THE FOLLOWING G ROUND HAVE BEEN RAISED IN THE PRESENT APPEAL. A. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS 6,05,595/- OUT OF INFLATED DIESEL EXPENSES. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANS PORTATION AND MOVEMENT OF GOODS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD OB SERVED THAT THE ASSESSEE HAD CLAIMED DIESEL EXPENSES OF RS 63,03,558/- FOR ITS OWN 14 VEHICLES AGAINST WHICH THE GROSS RECEIPTS WERE SHOWN AT RS 2,37,41,513/-. THE AO TOOK A SAMPLE OF ONE V EHICLE WHEREIN THE PERCENTAGE OF FUEL CHARGES VIS--VIS GROSS RECEIPTS WAS NOTED, AND THI S RATIO WAS ADOPTED FOR ALL THE VEHICLES RUN BY ITA NO. 132/RJT/2009 A.Y. 2004-05 2 THE ASSESSEE. HE THEREFORE CONCLUDED THAT THE DIESE L EXPENSES WERE INFLATED TO THE EXTENT OF RS 6,05,595/- AND THUS MADE THE ADDITION. 3. THE MATTER WAS CARRIED IN APPEAL BEFORE THE CIT( A)-II RAJKOT. HE DELETED THE ADDITION BY HOLDING THAT, THE AO DID NOT BRING ANYTHING ON RECO RD TO PROVE THAT THE ASSESSEE WRONGLY CLAIMED DIESEL EXPENSES, THAT THE ASSESSEE HAS MAINTAINED I TS BOOKS REGULARLY AND GOT THE SAME AUDITED BY A CHARTERED ACCOUNTANT AND THAT THE DISALLOWANCE WA S BASED ON ONE SIMPLE SAMPLE TEST CHECK AND BASED ON THE DIESEL EXPENSE RATIO INCURRED BY T HE SISTER CONCERN OF THE ASSESSEE. HE FURTHER HELD THAT, DISALLOWANCE BASED ON SUCH TEST CHECK IS HYPOTHETICAL AND IS BASED ON PRESUMPTION. MOREOVER, THE ASSESSEES CASE COULD NOT BE COMPARED TO THE SISTER CONCERN DUE TO SIZE OF THE BUSINESS AND VAST DIFFERENCE IN TOTAL TURNOVER. THE INVESTIGATION BROUGHT FORTH BY THE AO IS ONLY ON SURMISES AND SUCH COMPARISON CAN BE A USEFUL TOO L IN THE HANDS OF MANAGEMENT IN BETTERMENT OF COST EARNING RATIO BUT CAN NEVER BE A CONCLUSION ON THE PART OF THE AO TO ESTABLISH THAT THE ASSESSEE WAS GUILTY. 4. WE HAVE PERUSED THE ASSESSMENT ORDER, ORDER OF T HE LD. CIT(A) AND THE SUBMISSION PUT FORTH BY THE LD. AR OF THE ASSESSEE IN THE FORM OF PAPER BOOK ALONG WITH SUPPORTING EVIDENCES. WE FIND SUBSTANTIAL FORCE IN THE FINDING OF THE LD. CIT(A). HOWEVER, IT IS ALSO A FACT THAT THE ENTIRE DIESEL EXPENSES COULD NOT BE VERIFIED IN THE ABSENCE OF PROPER FOOL PROOF TEST CHECK. THEREFORE, IN THE INTEREST OF JUSTICE, IT WOULD BE MOST APPROPRIATE IF THE DISALLOWANCE IS RESTRICTED TO RS 3,00,000/- ON AD-HOC BASIS. THIS WILL TAKE CA RE OF ALL OR ANY DISCREPANCY, IF ANY. THEREFORE, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. 8. IN THE RESULT BOTH THE APPEALS ARE THEREFORE PAR TLY ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 09/ 03/2010 _ SD/- SD/- (D.T. GARASIA) (M.V. NAYAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 09/03/2010 RAJKOT ITA NO. 132/RJT/2009 A.Y. 2004-05 3 COPY FORWARDED TO, 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, GANDHI DHAM CIRCLE, GANDHIDHAM 2. M/S RAGHUVIRSINGH MOVERS PVT. LTD., PLOT NO. 74, NATIONAL HIGHWAY 8A, GANDHIDHAM 3. THE CIT-I, RAJKOT 4. THE CIT(A)-II, RAJKOT 5. THE D.R., I.T.A.T., RAJKOT 6. THE GUARD FILE TRUE COPY BY ORDER SENIOR P RIVATE SECRETARY