DCIT CIRCLE 1(1), GWALIOR V. SWASTIK ROADLINES P LTD, GWALIOR

ITA 146/AGR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9262 (ITAT-AGRA)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Depreciation; Business expenditure; Retrospective amendment; Additional evidence; Onus to prove; TDS
• Section: 143(3); 40(a)(ia); 201(1); 44AB; 13; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH: AGRA BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER I.T.A NO.146/AGRA/2019 (ASSESSMENT YEAR: 2010-11) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), GWALIOR (APPELLANT) VS. SWASTIK ROADLINES PRIVATE LIMITED, 19A/415, OPP:PARKING NO.6, TRANSPORT NAGAR, A.B.ROAD, GWALIOR PAN: AAGCS2195B (RESPONDENT) APPELLANT BY SHRI WASEEM ARSHAD, SR.DR RESPONDENT BY SHRI DEEPENDRA MOHAN, AR ORDER PER LALIET KUMAR, J.M.: THIS APPEAL OF REVENUE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-GWALIOR, DATED 27-02-2019, FOR THE AY.2010-11, RAISING THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCE OF THE CA SE THE CIT(A) JUSTIFIED IN LAW IN DELETING ADDITION OF RS.33,25,633/- MADE ON ACCO UNT OF DISALLOWANCE U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 IN VIEW OF SL P GRANTED BY THE HON'BLE DATE OF HEARING 08-01-2020 DATE OF PRONOUNCEMENT 09-01-2020 I.T.A NO. 146/AGRA/2019 2 SUPREME COURT IN THE CASE OF CIT V/S ANSAL LAND MAR K TOWNSHIP (P) LTD. TAXMANN. COM63(SC).' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, RULE 31 AC A OF THE IT RULES 1962, AND BOARD'S CIRCULAR NO. 10 ON 16.12.20 13 BINDING UPON THE CIT(A).' 3. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OFTHE CASE THE CIT(A) JUSTIFIED IN LAW IN SHIFTING ONUS OF BURDEN OF PROOF UPON THE AO IN DELETING ADDITION OF RS. 95,00,000/- MADE ON ACCOUNT OF DISALLOWANCE OFRS.1, 00,00,000/FROM FRIGHT & TRUCK RUNNING EXPENSES.' 4. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) JUSTIFIED IN LAW IN SHIFTING ONUS OF BURDEN OF PROOF UPON THE AO IN DELETING ADDITION OF RS. 24,00,000/- MADE ON ACCOUNT OF DISALLOWANCE OF RS. 25,00,000/-FROM FREIGHT AND TRUCK REPAIR & MAINTENANCE EXPENSES.' 5. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) JUSTIFIED IN LAW IN SHIFTING ONUS OF BURDEN OF PROOF UPON THE AO IN DELETING ADDITION OF RS. 1,00,00,000/- MADE ON ACCOUNT OF DISALLOWANCE UNDER THE HEAD OF DEPRECIATION.' 6. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. CIT(A) IS PERVERSE TO THE FACTS.' 7. 'ANY OTHER GROUND THAT MAY BE ADDUCED AT THE T IME OF HEARING.' 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE I S A PRIVATE LIMITED COMPANY, REGISTERED UNDER THE PROVISIONS OF THE COM PANIES ACT, 1956. FOR THE AY.2010-11, THE ASSESSEE-COMPANY HAD E-FILED IT S RETURN OF INCOME ON 08-10-2010 DECLARING THEREIN TOTAL INCOME NIL AND C LAIMING A REFUND OF RS.6,44,994/- ON ACCOUNT OF TDS IN EXCESS OF TAX PA YABLE ON RETURNED INCOME. I.T.A NO. 146/AGRA/2019 3 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE-COMPANY HAD FURNISHED EACH AND EVERY INFORMATION/DOCUMENTS SOUGHT FOR BY THE ASSESSING OFFICER. GROUND NOS.1 & 2: 4. THE LD.DR FOR THE REVENUE HAD SUBMITTED THAT THE LD.CIT(A) HAD WRONGLY ALLOWED THE DISALLOWANCE U/S.40(A)(IA) OF T HE ACT, RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. ANSAL LAND MARK TOWNSHIP (P) LTD., [73 TAXMANN.COM 63] (SC). FURTHER, IN THIS REGARD, OUR ATTENTION WAS DRAWN BY THE LD.DR TO PGS.21-22 OF THE CIT(A)S ORDER, WHEREIN THE CIT(A) HAS HELD HAS UNDER: .SUBSEQUENTLY, APPELLANT FURNISHED CERTIFICATE OF CHARTERED ACCOUNTANT (ANNEXURE A ) UNDER FIRST PROVISO TO SECTION 201(1) OF THE ACT C ERTIFYING THAT PAYEE M/S TATA MOTORS FINANCE LTD. HAS FURNISHED HI S RETURN OF INCOME FOR A.Y.2010-11 AND INCLUDED SAID AMOUNT OF RS.42,66,55 2/- IN HIS INCOME AND PAID DUE TAXES. THIS ANNEXURE BEING IN THE NATURE OF 'AD DITIONAL EVIDENCE' WAS FORWARDED TO PRESENT A.0 FOR CONSIDERATION WHO SUBM ITTED REMAND REPORT AND RAISED SEVERAL OBJECTIONS SUCH AS SECOND PROVISO T O SEC.40(A)(IA) APPLICABLE TO A.Y.2013-14 ONWARDS AND NOT TO A.Y.2010-11 AND AS P ER ANNEXURE A FIGURE OF INTEREST SHOWN RS.42,66,552/- RECEIVED BY M/S TATA MOTORS FINANCE LTD. INSTEAD OF INTEREST CLAIMED RS.33,25,633/- BY APPELLANT, LD . A.O. ALSO VERY STRONGLY CONTENDED THAT AS PER RULE 31ACB ASSESSEE IS REQUIR ED TO FURNISH ANNEXURE A ALONGWITH FORM 26A, BUT ASSESSEE HAS NOT FILED SUCH FORM 26A AS REQUIRED BY RULES. IN REJOINDER FILED VIDE LETTER DATED 04.05.2 018, LD. A.R OF THE ASSESSEE PLACED RELIANCE ON DECISION OF NEW ALIGNMENT VS ITO (2016)69 TAXMANN.COM 122(KO1) WHEREIN ITT WAS HELD THAT SECOND PROVISO I NSERTED IN SECTION 40(A)(IA) OF THE ACT BY FINANCE ACT 2012 SHOULD BE GIVEN RETROSP ECTIVE EFFECT FROM 01.04.2005. I HAVE PERUSED THE CASE LAW RELIED UPON BY THE ASSE S SEE AND FOUND THAT COURTS I.T.A NO. 146/AGRA/2019 4 HAVE BEEN ALMOST UNANIMOUS IN HOLDING THAT SECOND P ROVISO TO SECTION 40(A)(IA) SHOULD BE GIVEN RETROSPECTIVE EFFECT. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS ANSAL LAND MARK TOWNSHIP (P)LTD. 347 ITR 647(DEL ) AND HON'BLE ITAT, AGRA IN THE CASE OF RAJEEV KUMAR AGARWAL VS ADD.CIT, MAT HURA IN ITA NO.337/AGRA/2013 HAVE HELD THE SAID AMENDMENT AS RE TROSPECTIVE IN NATURE. WITH REGARD TO DIFFERENCE IN AMOUNT PAID TO M/S TATA MOT OR FINANCE LTD., IT HAS BEEN CLARIFIED THAT LD.A.O. HAS MADE DISALLOWANCE OF RS. 33,25,633/- FOR NON-DEDUCTION OF IDS FOR INTEREST PAID TO TATA MOTOR FINANCE LTD. AND THUS, THERE WAS NO DISCREPANCY IN BOTH THE FIGURES. AFTER DUE CONSIDER ATION, I FIND SIGNIFICANT FORCE IN THE ARGUMENT OF THE APPELLANT THAT THERE IS NO DISC REPANCY IN THE FIGURE MENTIONED IN LEDGER A/C AND AMOUNT DISALLOWED BY A.O. EVEN IF THE RECIPIENT HAS SHOWN MORE AMOUNT, THEN SAME SHOULD NOT BE VIEWED ADVERSE LY BECAUSE ASSESSEE IS NOT AT FAULT FOR SUCH MISTAKE. AS FAR AS OBJECTION OF LD. A.O. WITH REGARD TO COMPLIANCE OF RULE 31ACB IS CONCERNED WHICH REQUIRES SUBMISSION O F FORM 26A WITH CERTIFICATE ANNEXURE 'A' IS CONCERNED, I FIND APPROACH OF LD. A .O. BEING HYPER-TECHNICAL. HE HAS GIVEN MORE IMPORTANCE TO TECHNICALITIES INSTEAD OF FACTUAL ASPECT OF THE CASE. NEVERTHELESS, DURING APPELLANT PROCEEDINGS, ID AR O F THE ASSESSEE FILED FORM 26A. IN VIEW OF THIS, A.O IS DIRECTED TO GRANT RELIEF OF RS.33,25,633/- REPRESENTING INTEREST PAID TO M/S TATA MOTOR FINANCE LTD. FOR WH ICH NECESSARY DETAILS/EVIDENCES IN FORM 26A & ANNEXURE A HAS BEEN FILED BY THE APPELLANT. AS FAR AS DISALLOWANCE OF RS.6,81,657/- TOWARDS INTERE ST PAID TO M/S TATA MOTORS CAPITAL LTD. IS CONCERNED, THE ASSESSEE HAS NOT FUR NISHED ANY CERTIFICATE OF CHARTERED ACCOUNTANT IN FORM 26A & ANNEXURE TO PROV E THAT PAYEE HAS OFFERED SUCH AMOUNT AS INCOME IN HIS RETURN AND PAID DUE TA XES. IN VIEW OF THIS, ADDITION OF RS.6,81,657/-IS HEREBY CONFIRMED AND ADDITION OF RS.33,25,633/- IS ORDERED TO BEDELETED. HOWEVER, LD AO IS DIRECTED TO GRANT RELI EF IF APPELLANT FILES FORM 26A & ANNEXURE IN RESPECT OF INTEREST PAID TO M/S TATA MO TORS CAPITAL LTD. BEFORE HIM, THEN ASSESSEE WILL BE ELIGIBLE FOR RELIEF OF RS.6,8 1,657/-. SUBJECT TO ABOVE REMARKS, GROUND OF APPEAL IS PARTLY ALLOWED. 4.1. IN THIS REGARD IT WAS SUBMITTED BY THE LD.DR T HAT THE ACTION ON THE PART OF THE LD.CIT(A) WAS NOT CORRECT IN ALLOWING T HE BENEFIT OF THE EVIDENCE FURNISHED BY THE ASSESSEE, EVIDENCING THE FILING OF FORM-26A BY M/S.TATA MOTORS FINANCE LTD. I.T.A NO. 146/AGRA/2019 5 4.2. ON THE CONTRARY, LD.AR REPRESENTING THE ASSESS EE HAD SUBMITTED THAT THE ACTION ON THE PART OF LD.CIT(A) WAS IN ACCORDAN CE WITH LAW AND ALSO IN ACCORDANCE WITH PROVISO TO SECTION 40(A)(IA) OF THE INCOME TAX ACT [ACT]. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. AS IS CLEAR FROM THE PROVISIO NS OF SECTION 40(A)(IA) OF THE ACT, IF THE PAYEE HAD FILED THE RETURN OF INCOM E AND SHOWN THE INTEREST INCOME IN THE PROFIT & LOSS A/C WHICH IS CLEAR FROM THE FORM-26A FILED BY THE ASSESSEE, WHICH WAS SENT BY THE LD.CIT(A) TO TH E ASSESSING OFFICER FOR VERIFICATION AND THE ASSESSING OFFICER THEREAFTER H AD SUBMITTED THE REPORT BUT SIMULTANEOUSLY TAKEN THE OBJECTION THAT THE SAID CE RTIFICATE OF FORM -26A WAS NOT FILED BEFORE THE ASSESSING OFFICER. IN OUR VIEW , THE OBJECTIONS OF ASSESSING OFFICER BEFORE THE CIT(A) AND BEFORE THE LD.DR IS TECHNICAL IN NATURE AND ONCE THE CONTENT OF FORM-26AWERE NOT DIS PUTED, THEN THE ASSESSEE IS ENTITLED TO THE BENEFIT OF PROVISO TO S ECTION 40(A)(IA) OF THE ACT, FOR THAT PURPOSE WE MAY FRUITFULLY RELY UPON THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ANSAL LAND MAR K TOWNSHIP (P) LTD., [73 TAXMANN.COM 63] (SC) (SUPRA). ACCORDINGLY, GROU ND NOS.1 & 2 RAISED BY REVENUE ARE DISMISSED. I.T.A NO. 146/AGRA/2019 6 GROUND NO.3: 5. WITH RESPECT TO GROUND NO.3, LD.DR HAD SUBMITTED THAT THE LD.CIT(A) HAD UPHELD THE REJECTION OF BOOKS OF ACCO UNT. FOR THAT PURPOSES HE HAS DRAWN OUR ATTENTION TO THE FINDINGS RECORDED BY THE LD.CIT(A) AT PGS.19-20 TO THE FOLLOWING EFFECT: GROUND# 1: REJECTION OF BOOK RESULTS U/S 145 : 8. ADVERTING TO GROUND WISE DISCUSSION, IT IS SEEN THAT BY RAISING GROUND# 1APPELLANT HAS CHALLENGED THE ASSESSMENT ORDER AS U NSUSTAINABLE IN LAW BECAUSE INCOME WAS NOT COMPUTED IN ACCORDANCE WITH THE AUDI TED BOOKS OF ACCOUNTS WHEREIN NO DEFECTS WERE FOUND IN MAINTENANCE OF BOO KS OF ACCOUNTS BY LD AO. BECAUSE, AS PER APPELLANT, BOOKS OF ACCOUNTS WERE N OT REJECTED BY INVOKING THE PROVISION OF SECTION 145 OF THE ACT BY SPECIFYING A NY DEFECTS, LD. A.O. CANNOT MAKE ADDITION AND THUS IMPUGNED ASSESSMENT ORDER DE SERVES TO BE DISCARDED. I HAVE DULY CONSIDERED THE CONTENTION OF THE APPELLAN T AND TOOK NOTICEOF OBSERVATIONS MADE IN THE ASSESSMENT ORDER THAT DURI NG ASSESSMENT PROCEEDINGS, BOOKS OF ACCOUNTS WITH DETAILS WERE PRODUCED WHICH WERE EXAMINED ON TEST-CHECK BASIS. MY ATTENTION WAS ALSO DRAWN TO THE FACT THAT LD. A.O. NEITHER POINTED OUT ANY DEFECTS NOR EXPRESSLY REJECTED , BOOKS OF ACCOU NTS, SO, AS PER ID AR OF THE ASSESSEE PROFIT DISCLOSED ' IN AUDITED BOOKS CANNOT BE DISTURBED AND ADDITIONS/DISALLOWANCES CANNOT BE MADE. IN SUPPORT OF THIS PROPOSITION, LD.A.R PLACED RELIANCE ON FEW CASE LAWS. AFTER CAREFULLY G OING THROUGH THE ASSESSMENT ORDER, IT IS SEEN THAT LD.A.O. HAS CLEARLY OBSERVED VARIOUS DEFECTS/DISCREPANCIES IN MAINTENANCE OF BILLS/VOUCHERS AND OTHERRECORDS. IN CASE OF LARGE NUMBER OF EXPENSES, SUPPORTING BILLS/VOUCHERS WERE NOT EVEN P RODUCED BEFORE A.O. FOR VERIFICATION, SO, CONSIDERING NON-COMPLIANCE AND DE FECTS OF SERIOUS NATURE (NON- PRODUCTION OF BILLS/VOUCHERS) LD AO HAS NO OTHER OP TION BUT TO REJECT BOOK RESULTS. THIS IS TRUE THAT HE HAS NOT EXPRESSLY REJECTED THE BOOK RESULTS BY INVOKING THE PROVISION OF SEC. 145(3) OF THE ACT. BUT LD AO HAS IMPLIEDLY REJECTED THE BOOKS OF ACCOUNTS THOUGH FAILED TO MENTION SPECIFIC SECTION I.E 145(3) OF THE ACT BUT IN ESSENCE HE HAD REJECTED THE BOOK RESULTS. HON'BLE S UPREME COURT IN THE CASE OF CIT V/S MC MILLAN & CO. 33 ITR 182 (SC)HAS HELD THA T CIT(A) HAS POWERS TO REJECT THE BOOKS OF ACCOUNTS EVEN IF NOT DONE BY AO . THEREFORE, LOOKING TO SERIOUS DEFECTS AND NON-COMPLIANCE ON THE PART OF THE ASSES SEE TO THE SATISFACTION OF AO. I HEREBY EXERCISE MY POWERS AND INVOKE THE PROVISION OF SEC. 145(3) OF THE ACT AND I.T.A NO. 146/AGRA/2019 7 REJECT THE BOOK RESULTS AS DECLARED BY THE ASSESSEE . IN VIEW OF THIS, GROUND# 1FAILS. 5.1. IT WAS SUBMITTED THAT AFTER RECORDING THE REJE CTION OF BOOKS OF ACCOUNT, THE LD.CIT(A) IN PARA 10.3 HAD RECORDED THAT THE AS SESSING OFFICER NEVER ASKED THE ASSESSEE U/S.142(1) OF THE ACT VIDE ORDER SHEET TO PRODUCE BILLS/VOUCHERS RELATING TO THE IMPUGNED EXPENSES. THE ASSESSING OFFICER HAS MERELY ASKED THE ASSESSEE TO PROVE THE DETAILS SUCH AS NAME, ADDRESS AND PAN DETAILS, TO WHOM THE TRADE PAYMENTS WERE MADE. THE SAID DETAILS WERE PROVIDED BY THE ASSESSEE. THE LD.DR HAD SUBMITTED THAT CONTRARY TO THE ABOVE SUCH OBSERVATIONS, LD.CIT(A) AT PG.31 HAS MENTIONED THA T THE BILLS/VOUCHERS FOR EXPENSES WERE NOT PRODUCED DURING THE APPELLATE PRO CEEDINGS AS WELL AS IN THE ASSESSMENT PROCEEDINGS. HOWEVER, THEREAFTER TH E LD.CIT(A) HAD DELETED THE ADDITION OF RS.95 LAKHS AND HAD CONFIRMED THE A DHOC DISALLOWANCE OF RS.5 LAKHS. IT WAS SUBMITTED THAT THELD.DR HAD NOT HIMSELF VERIFIED THAT BOOKS OF ACCOUNT AND BILLS/VOUCHERS FOR THE PURPOSE OF DELETING THE ADDITIONS. HE HAD SUBMITTED THAT ONCE THE CIT(A) H AD UPHELD THE REJECTION OF BOOKS OF ACCOUNT, THEN, SOME GUESS WORK IS REQUI RED TO BE DONE AND WITHOUT VERIFICATION OF THE BOOKS OF ACCOUNT, MORE PARTICULARLY, THE I.T.A NO. 146/AGRA/2019 8 BILLS/VOUCHERS, IT WAS NOT APPROPRIATE FOR THE LD.C IT(A) TO REDUCE THE ADHOC DISALLOWED MADE BY THE ASSESSING OFFICER TO ONLY RS .5 LAKHS INSTEAD OF RS.1 CRORE. 5.2. PER CONTRA, LD.AR HAD SUBMITTED THAT THE EXPEN SES OF THE ASSESSEE DRASTICALLY HAVE REDUCED FROM 76.64% TO 73.56% IN T HE ASSESSMENT YEAR UNDER CONSIDERATION AND FURTHER IT WAS SUBMITTED TH AT THE REVENUE CANNOT BE GIVEN A SECOND HEARING TO THE CASE AND NO FRUITFUL PURPOSE WOULD BE SERVED FOR REMANDING BACK THE MATTER TO THE FILE OF CIT(A) OR TO THE FILE OF AO. HE HAD SUBMITTED THAT ONCE THE BOOKS OF ACCOUNT IS REJ ECTED, THEN, THE AO CANNOT MAKE ADHOC DISALLOWANCE OF THE EXPENDITURE A ND HE WAS REQUIRED TO SPECIFICALLY PROVIDE THE DETAILS OF BILLS/VOUCHERS, WHICH WERE IN HIS UNDERSTANDING WERE NOT CORRECT OR EXCESSIVE. HE HA D FURTHER SUBMITTED THAT THE ACTION ON THE PART OF THE LD.CIT(A) WAS IN ACCO RDANCE WITH LAW. 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED OPINION, ON CE THE BOOKS OF ACCOUNT HAVE REJECTED BY THE ASSESSING OFFICER AND CONFIRME D BY THE CIT(A), THEN, IT WAS INCUMBENT UPON BOTH THE LOWER AUTHORITIES I.E., AO AS WELL AS THE CIT(A) TO PHYSICALLY VERIFY THE BILLS/VOUCHERS OF T HE EXPENDITURE AND SPECIFY THE EXPENDITURE WHICH IN THE ESTIMATION OF BOTH THE AUTHORITIES WERE I.T.A NO. 146/AGRA/2019 9 EXCESSIVE OR WAS NOT RELATED TO THE BUSINESS OF THE ASSESSEE OR WAS BOGUS. NEEDFUL WAS NOT DONE BY THE LD.CIT(A) AND HE HAD RE DUCED THE DISALLOWANCE FROM RS.1 CRORE TO RS.5 LAKHS. IN VIE W OF THE ABOVE, WE ARE OF THE OPINION THAT THIS ISSUE IS REQUIRED TO BE RE MANDED BACK TO THE FILE OF LD.CIT(A) WITH A DIRECTION TO VERIFY THE BILLS/VOUC HERS AND GIVE A CATEGORICAL FINDING AS TO THE NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE, WHICH WERE FOUND TO BE EXCESSIVE/BOGUS ETC. WE MAY LIKE TO POINT OUT THAT WHILE EXAMINING THE BILLS/VOUCHERS, PERTAINING TO FREIGHT AND TRACK RUNNING EXPENSES, I F THE LD.CIT(A) COMES TO THE CONCLUSION THAT THE EXPENDITURE WERE MORE THAN RS.1 CRORE, THEN, HE WILL NOT ENHANCE THE DISALLOWANCE FROM RS.1 CRORE TO ANY OTHER AMOUNT. IN THE CONVERSE IF THE LD.CIT(A) COMES TO THE CONCLUSION T HAT THE EXPENDITURE (BILLS/VOUCHERS) PERTAINING TO FREIGHT AND TRUCK RU NNING EXPENDITURE WERE FOUND TO BE IN ORDER, THEN, NO DISALLOWANCE WOULD B E MADE OR THE DISALLOWANCE WOULD BE RESTRICTED TO THE ACTUAL BILL S/VOUCHERS FOUND TO BE INACCURATE/BOGUS/EXCESSIVE. THIS EXERCISE WOULD BE DONE BY THE CIT(A) IN ACCORDANCE WITH LAW, AFTER GIVING DUE OPPORTUNITY O F HEARING TO THE ASSESSEE. IT IS EXPECTED THE LD.CIT(A) SHALL PASS A REASONED AND SPEAKING ORDER IN THIS RESPECT, AFTER DEALING WITH CONTENTIONS, SUBMISSIO NS AND EVIDENCES, IF ANY, I.T.A NO. 146/AGRA/2019 10 FILED BY THE ASSESSEE, IN ACCORDANCE WITH LAW. HENC E, THE GROUND NO.3, RAISED BY THE REVENUE IS TREATED AS ALLOWED FOR STA TISTICAL PURPOSES. GROUND NO.4: 6. THIS GROUND IS RELATING TO SHIFTING ONUS OF BURD EN OF PROOF UPON THE ASSESSING OFFICER IN DELETING THE ADDITION OF RS.24 LAKHS MADE ON ACCOUNT OF DISALLOWANCE OF RS.25 LAKHS FROM FREIGHT AND TRU CK REPAIR & MAINTENANCE EXPENSES. IN THIS REGARD, LD.DR HAS DR AWN OUR ATTENTION TO THE ORDER OF LD.CIT(A), WHICH IS AS UNDER: 11. IT HAS BEEN OBSERVED IN THE ASSESSMENT ORDER T HAT THE ASSESSEE HAS CLAIMED A SUM OF RS.2.59 CRORES TOWARDS TRUCK REPAIR & MAINTE NANCE EXPENSES. LD.A.O. HAS OBSERVED IN PARA 3 OF ASSESSMENT ORDER .THAT BECAUS E ASSESSEE FAILED TO PRODUCE SUPPORTING BILLS AND VOUCHERS RELATING TO TRUCK REP AIR & MAINTENANCE EXPENSES HE COULD NOT VERIFY THE VERACITY OF GENUINENESS OF THE CLAIM OF THE SAID EXPENSES. ALTHOUGH HE HAS VERY FAIRLY ACCEPTED THAT EXPENDITU RE INCURRED IN RELATION TO REPAIR & MAINTENANCE IS A NORMAL BUSINESS EXPENDITU RE BUT SINCE THE ASSESSEE FAILED TO DISCHARGE HIS ONUS TO PROVE HE GENUINENES S OF EXPENSES A LUMP SUM DISALLOWANCE OF RS.25 LACS WAS MADE OUT OF THE SAID EXPENSES. ON THE OTHER HAND, THE APPELLANT HAS CONTENDED THAT AN AD-HOC DISALLOW ANCE MADE OUT OF SAID EXPENSES WITHOUT ANY BASIS, CALCULATION, EVIDENCES AND PREMISES IS NOT SUSTAINABLE ESPECIALLY WHEN THE A.O DID NOT FIND ANY DEFECTS IN BOOKS OF ACCOUNTS. IT HAS BEEN ALSO CONTENDED THAT LD.A.O. NEVER POINTED OUT ANY D EFECTS IN BILLS AND VOUCHERS PRODUCED BEFORE HIM DURING THE ASSESSMENT PROCEEDIN GS ALONGWITH BOOKS OF ACCOUNTS AND AL1EGATION OF NON PRODUCTION OF SUPPOR TING BILLS AND VOUCHERS IS FACTUALLY INCORRECT STATEMENT. ON THIS ISSUE, ARGUM ENTS AND CONTENTION OF THE APPELLANT AND COMMENTS OF LD.A.O. IN REMAND REPORT REMAINED THE SAME AS MADE WITH REFERENCE TO GROUND #3 PERTAINING TO AD-HOC DI SALLOWANCE OF RS.L CRORE OUT OF FREIGHT EXPENSE AND TRUCK RUNNING EXPENSES. I HAVE PERUSED THE MATERIAL PLACED ON RECORD AND GONE THROUGH THE REMAND REPORT SUBMITTED BY LD.A.0. AND REJOINDER FI1ED BY THE APPEL1 ANT ON THIS ISSUE AND FIND THAT FACTS, CONTENTION AND FINDINGS REMAINING THE SAME, I FOLLOW MY DECISION WITH REGAR D TO GROUND NO.3 WHEREIN I I.T.A NO. 146/AGRA/2019 11 UPHELD THAT AD-HOC DISALLOWANCE WITHOUT ANY COGENT AND POSITIVE MATERIAL IS NOT SUSTAINABLE. AS FAR AS PRODUCTION OF BILLS/VOUCHERS FOR VERIFICATION BEFORE AO IS CONCERNED, IT IS SEEN THAT LDAO ANDAPPELLANT ARE MA KING CONTRARY CLAIMS WHEREAS APPELLANT HAS CATEGORICALLY DENIED THIS CHARGE AND CLAIMED THAT PROPER BILLS/ VOUCHERS WERE MAINTAINED AND DULY PRODUCED BEFORE A O DURING ASSESSMENT PROCEEDINGS. ON VERIFICATION OF CASE RECORDS, IT IS SEEN THAT ASSESSEE FURNISHED LEDGER A/C CONTAINING DETAILS OF PAYMENTS VOUCHERS NO. MODE OF PAYMENT, AMOUNT ETC. HOWEVER, NOTHING COULD BE ASCERTAINED WHETHER ASSESSEE WAS SPECIFICALLY ASKED TO PRODUCE BILLS/ VOUCHERS AND ALSO WHETHER A SSESSEE ACTUALLY PRODUCED SUCH EVIDENCES BEFORE AO. IN MY VIEW, UNTI1 & UNLES S, ASSESSEE I S SPECIF1CAL 1 Y ASK TO COMPLY CERTAIN DIRECTION, HE CANNOT BE HELD GUILTY OF NON-COMPLIANCE. BUT ON VERIFICATION OF LEDGER A/C, IT IS SEEN THAT MAJO RITY OF EXPENSES WERE INCURRED THROUGH CHEQUES AND MEANT FOR PURCHASE OF TYRES, SP ARES, PETROL/OIL, REPAIRING ETC WHICH ARE NORMAL ROUTINE BUSINESS EXPENSES. HOWEVER , PRESUMING THAT CERTAIN BI11S AND VOUCHERS REMAINED TO BE PRODUCED BEFORE A .O AS WELL AS BEFORE UNDERSIGNED, I CONSIDER IT -FAIR AND REASONABLE AND TO MEET THE BOTH ENDS OF JUSTICE A LUMP SUM DISALLOWANCE OF RS.1,00,000/- IS HEREBY SUSTAINED AND APPELLANT WILL GET A RELIEF OF RS.24,00,000/-(RS.25,00,000 - RS.1, 00,000). HENCE, GROUND#4 OF APPEAL IS PARTLY ALLOWED. 6.1. THE LD.DR SUBMITTED THAT THE FINDING RECORDED BY THE LD.CIT(A) WAS INCORRECT AND WAS NOT IN ACCORDANCE WITH LAW. HE H AD SUBMITTED THAT THIS ISSUE IS ALSO REMANDED BACK TO THE FILE OF THE CIT( A) FOR FACTUAL VERIFICATION. 6.2. PER CONTRA, THE LD.DR RELIED UPON THE PARA 11 OF THE CIT(A)S ORDER AND OUR ATTENTION WAS DRAWN TO THE VERIFICATION OF THE CASE RECORD DONE BY THE CIT(A). FURTHER, THE PAYMENTS WERE MADE THROUG H THE BANKING CHANNELS FOR THE PURCHASE OF TYRES, SPARES AND PETROL/OIL. IT WAS SUBMITTED THAT NO INTERFERENCE IS CALLED IN THIS REGARD. I.T.A NO. 146/AGRA/2019 12 6.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE LD.CIT(A) HAD PASSED A DET AILED ORDER, AFTER VERIFYING THE CASE RECORD AND THEREAFTER HAD RESTRI CTED THE DISALLOWANCE TO RS.1 LAKH INSTEAD OF RS.25 LAKHS. SINCE THE LD.CIT (A) HAD VERIFIED THE RECORD AND NOTHING HAD BEEN POINTED BY THE LD.DR TH AT THE RECORD WHICH WAS VERIFIED WAS NOT SUFFICIENT TO COME TO THE CONC LUSION OR THE FINDING RECORDED BY THE LD.CIT(A) IN PARA 11 WAS INCORRECT OR CONTRARY TO THE FACTS. IN THE LIGHT OF THE ABOVE, WE DO NOT FIND ANY REASO N TO INTERFERE WITH THE FINDINGS GIVING BY THE LD.CIT(A). ACCORDINGLY, THE GROUND NO.4 OF THE REVENUE APPEAL IS DISMISSED. GROUND NO.5 7. THE LD.DR HAD SUBMITTED THAT THE LD.CIT(A) IN PA RA 12.2 AND 12.3 HAD DEALT WITH THIS ISSUE AND HAD BRUSH ASIDE THE O BJECTIONS OF THE AO, WHILE DELETING THE DISALLOWANCE OF RS.1 CRORE. 7.1. THE LD.AR, DRAWN OUR ATTENTION TO THE ORDER PA SSED BY THE LD.CIT(A) AND ALSO THE REMAND REPORT GIVEN BY THE AO PURSUANT TO THE DOCUMENTS FILED BY THE ASSESSEE. I.T.A NO. 146/AGRA/2019 13 7.2. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE LD.CIT(A) HAD PASSED A DET AILED ORDER AS MENTIONED IN PARA 12.2 & 12.3 TO THE FOLLOWING EFFE CT: 12.2. DURING THE APPELLATE PROCEEDINGS, ID AR OF THE ASSESSEE FURNISHED PROOF OF OWNERSHIP OF ASSETS/VEHICLES AS ANNX C-L TO C-60 WI TH REGARD TO 16 TRUCKS (IN FACT 15 TRUCKS) AL1EGED BY AO AS OWNED BY OTHER PERSONS AS PER INFORMATION SOURCED FROM WEBSITE OF M P STATE TRANSPORT DEPARTMENT. AS PER E VIDENCES FILED AS 'ADDITIONAL EVIDENCES' THESE VEHICLES WERE TRANSFERRED TO BUYER S BETWEEN 01.04.2010 TO 31.03.2013, HENCE OWNERSHIP IS SHOWN IN THE NAME OF SUCH PERSON S ON THE WEBSITE OF M.P. TRANSPORT DEPARTMENT DURING MONTH OF MARCH 2013 WHEN ENQUIRY WAS CONDUCTED BY AO. HOWEVER, FACT REMAINS THAT THESE TRUCKS WERE IN THE OWNERSHI P OF APPELLANT DURING THE PERIOD F.Y. 2009-10 AS EVIDENT FROM COPIES OF 'RC HISTORY' FILE D AS 'ADDITIONAL EVIDENCE'. THESE EVIDENCES WERE DULY FORWARDED TO AO WHO RECOMMENDED THAT DISALLOWANCE SHOULD BE SUSTAINED BECAUSE ASSESSEE FAILED TO SUBMIT PHOTOCO PY OF 'ORIGINAL RC' AND OTHER EVIDENCE TO PROVE THAT ASSESSEE WAS OWNER OF VEHICL E DURING I F.Y. 2009-10. IN REMAND REPORT, ID AO ALSO HAS STATED THAT ASSESSEE 1 FAILE D TO SUBMIT ANY EVIDENCE WITH REGARD TO OTHER DISCREPANCIES DISCUSSED IN THE ASSESSMENT ORD ER. 12.3 DUE CONSIDERATION IS GIVEN TO THE FACTS OF THI S CASE INTER ALIA SUBMISSION MADE AND EVIDENCES INCLUDING ADDITIONAL EVIDENCES BROUGHT ON RECORD. APPELLANT WAS ENGAGED IN THE BUSINESS OF TRANSPORTATION WHEREIN VEHICLES/TRU CKS WERE MAINLY USED AS PLANT & MACHINERY. DURING THE YEAR UNDER CONSIDERATION, ASS ESSEE CLAIMED DEPRECIATION TO THE TUNE OF RS.8.73 CRORES AS DETAILED BELOW (ANNEXURE A): IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT LD AO HAS EXPRESSED HIS DOUBT IN RELATION TO CLAIM OF DEPRECIATION IN RESPECT OF 'TRUCKS' AND NO T IN RELATION TO ANY OTHER ASSETS. AS FAR I.T.A NO. 146/AGRA/2019 14 AS ALLEGATION OF AO WITH REGARD TO 16 TRUCKS (IN FA CT 15 TRUCKS-ONE DUPLICATE ENTRY) IS CONCERNED SAME HAS BEEN SATISFACTORILY EXPLAINED BY SUBMITTING HISTORY OF OWNHIP [ANNEX C1L TO C-60] RETRIEVED FROM WEBSITE OF MP STATE TRA NSPORT DEPTT. ON THE BASIS OF THIS PROOF, IT IS ESTABLISHED BEYOND DOUBT THAT APPELLAN T WAS THE OWNER OF THESE 15 TRUCKS DURING THE RELEVANT PERIOD AND DOUBT EXPRESSED BY I D AO IS FOUND UNTENABLE BECAUSE LD AO FAILED TO APPRECIATE THE FACTS IN TRUE PERSPECTI VE. LD AO, IN REMAND REPORT HAS EXPRESSED IS OBJECTION THAT PHOTOCOPY OF 'ORIGINAL RC' HAVE NOT BEEN PRODUCED AS EVIDENCE. IN MY CONSIDERED VIEW, APPROACH OF AO IS HYPER-TECHNICAL & VENIAL AND HAS NO MERITS BECAUSE THERE SHOULD NOT BE ANY DOUBT ABOUT THE DATA AVAILABLE ON OFFICIAL WEBSITE OF MP STATE GOVT. AO HAS SIMPLY DRIVEN BY MERE SUSP ICION. IT IS EVIDENT FROM 'DEPRECIATION CHART' (ANNX A) ENCLOSED WITH RETURN OF INCOME THAT DURING THE YEAR, APPELLANT HAS CLAIMED DEPRECIATION @50% ON THE TRUC KS WORTH RS.6,30,22,810/- PURCHASED BEFORE 30.09.2009 AND @15% (FOR HALF YEAR ) ON THE TRUCKS WORTH RS.4,28,87,9277- PURCHASED AFTER 30.09.2009. LD AO HAS THOUGH IN PRINCIPLE AGREED THAT AS PER PROVISION INSERTED BY IT (THIRD AMENDMENT) R ULES 2009 W.E.F. 01.04.2009 ASSESSEE IS ELIGIBLE TO CLAIM DEPRECIATION @50% ON NEW COMME RCIAL VEHICLES PURCHASED/ ACQUIRED BETWEEN 01.01.2009 TO 01.10.2009. THUS, THERE IS NO DISPUTE THAT RATE OF DEPRECIATION CLAIMED @50% WAS AS PER THE PROVISION OF RELEVANT R ULES. ALTHOUGH, DURING ASSESSMENT PROCEEDINGS, ASSESSEE PROVIDED THE DETAILS OF PURCH ASE OF NEW COMMERCIAL VEHICLES (TRUCKS) WITH TRUCK NO. REGISTRATI ON NO./ CHESIS N O., DATE OF REGI STRATI ON AND AMOUNT CAPITALIZED. ON BEI NG ASKED, THE APPEL 1 ANT HAS A LSO SUPPLI ED THE COPIES OF PURCHASE INVOICE, OWNERSHIP TRACK RECORD (SHOWING CHESIS NO & REGISTRATION DATE ETC.) AND COPY OF RC (CERTIFICATE OF REGISTRATION) IN RESPECT OF T RUCKS PURCHASED DURING THE YEAR IN MAJORITY OF CASES. I CAN UNDERSTAND THE PREDICAMENT OF THE APPELLANT IN COLLECTING THE DETAILS WHICH IS ROUGHLY 10 YEARS OLD. IN MY CONSID ERED VIEW, THESE DETAILS/ DOCUMENTS ARE SUFFICIENT TO PROVE THE CLAIM OF DEPRECIATION @ 50% ON THE VEHICLES PURCHASED BEFORE 01.10.2009. APPELLANT HAS ALSO CONTENDED THAT COMPA NY USED TO PURCHASE NEW CHESIS WITH DRIVER CABIN FROM TATA MOTOR DEALERS AND THEN INSTALLED PUFF PANELED, HEAT RESISTENCE CONTAINER ON IT. INTEGRATED UNIT WAS THE N MOUNTED ON THE CONTAINER WITH AIR CONDITIONER UNIT WHICH TAKES 10 TO 15 DAYS. THE REG ISTRATION OF VEHICLE ONLY HAPPENS ONCE THE TRUCK IS READY IN ALL RESEPCT I.E. CHESIS, DRIVER CABIN, CONTAINER & AC ARE INSTALLED. ON THE BASIS OF INFORMATION MADE AVAILAB LE, IT IS SEEN THAT BY LATEST 29.09.2009, ALL THE TRUCKS WERE REGISTERED WITH M.P. STATE TRAN SPORT DEPTT. SO, AS FAR AS TEST OF 'PUT TO USE' IS CONCERNED, SAME CAN BE TAKEN AS SATISFIED B ECAUSE LD AO HAS NOT POINTED OUT ANY DISCREPANCY IN THE CLAIM THAT VEHICLES WERE 'NOT PU T TO USE'. LD AO HAS SIMPLY MADE NEGATIVE OBSERVATION ABOUT 'PUT TO USE' ASPECT WITH OUT POINTING OUT ANY SPECIFIC INSTANCE WHERE CONDITION OF PUT TO USE WAS VIOLATED BY THE A PPELLANT. IT WOULD ALSO BE PERTINENT TO MENTION THAT IN THE IMMEDIATE PRECEEDINGS YEAR, APP ELLANT HAS SHOWN VEHICLES IN THE BLOCK ,50% DEPRECIATION RATE AND SHOWN OPENING WDV AT RS.70,73,007/- (AS ON 01.04.2009). RELEVANT A.Y.2009-10 WAS UNDER SCRUTIN Y AND ID AO WHILE PASSING ORDER U/S 143(3) OF THE ACT DID NOT MAKE ANY DISALLOWANCE IN RESPECT OF CLAIM OF DEPRECIATION WHICH PROVES BONAFIDES ABOUT CLAIM OF DEPRECIATION MADE BY THE APPEL1ANT. ONE SHOULD NOT FORGET VERY VITAL FACT THAT BOOKS OF ACCOUNTS O F THE APPELLANT HAVE BEEN SUBJECTED TO AUDIT U/S 44AB AND THE AUDITORS HAVE NOT RAISED ANY DOUBT ABOUT CORRECTNESS OF CLAIM OF I.T.A NO. 146/AGRA/2019 15 DEPRECIATION. LD AO HAS MADE A HUGE DISALLOWANCE OF DEPRECIATION TO THE TUNE OF RS.1 CRORE SIMPLY ON THE BASIS OF SURMISES, CONJUTURES A ND ON SUSPICION BASIS. IT HAS BEEN HELD IN THE CASE OF ASHOKPAL DAGA (HUF) V/S CIT BY MP HI GH COURT DATED 12.01.1996 (MP HC) AND HON'BLE SUPREME COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT 26 ITR 736 (SC) HOLDING THAT SUSPICION HOWEVER STRONG CANNOT T AKE PLACE OF PROOF. IN VIEW OF ABOVE DISCUSSION, I FIND THAT ADHOC DISALLOWANCE OF RS.1 CRORE OUT OF DEPRECIATION CLAIMED BY THE ASSESSEE HAS NO PROPER BASIS AND DISALLOWANCE W AS MADE IN ARBITRARY MANNER WITHOUT BRINGING ANY POSITIVE EVIDENCE ON RECORD. O N THE OTHER HAND, THE APPELLANT BY FURNISHING EVIDENCE COULD SATISFACTORILY JUSTIFY TH E ALLOWABILITY OF ENTIRE CLAIM OF DEPRECIATION. SO, IN VIEW OF FACTUAL MATRIX OF THE CASE, I AM OF CONSIDERED VIEW THAT NO DISALLOWANCE IS REQUIRED TO BE MADE OUT OF CLAIM OF DEPRECIATION. HENCE, DISALLOWANCE OF RS.1 CRORE MADE BY LD AO IS HEREBY ORDERED TO BE DE LETED. 7.3. IN FACT IN THE ORDER PASSED BY THE CIT(A), IT IS CATEGORICALLY MENTIONED THAT THE CASE OF THE ASSESSEE WAS DECIDED ON SCRUTI NY U/S.143(3) OF THE ACT AND NO DOUBT BY THE AO IN THE AY.2009-10 IN RESPECT OF CLAIM OF DEPRECIATION . THE RECORD FURTHER SHOWS THAT THE ASSESSEE HAS GIV EN THE DETAILS OF THE TRUCKS ALONG WITH CHASSIS NUMBER, WHICH WERE PUT TO USE AFTER BEING REGISTERED WITH MP STATE TRANSPORT DEPARTMENT. THI S INFORMATION WAS ALSO AVAILABLE ON THE WEBSITE OF THE MP STATE TRANSPORT DEPARTMENT. IN OUR VIEW, FOR THE PURPOSE OF CLAIMING THE DEPRECIATION, THE A SSESSEE WAS REQUIRED TO PROVE THAT THE ASSET WAS PUT TO USE IN THE YEAR UND ER CONSIDERATION. FOR THE PURPOSES OF CLAIMING THE DEPRECIATION FOR THE TRUCK S, IT WOULD BE SUFFICIENT IF THE TRUCKS WERE REGISTERED WITH THE TRANSPORT AUTHO RITIES BEFORE THE CUT-OFF DATE AND HAVE A VALID PETROL/OIL RECEIPT SHOWING TH E CONSUMPTION OF FUEL. I.T.A NO. 146/AGRA/2019 16 THIS HAD SUFFICIENTLY BEEN DEMONSTRATED BY THE ASSE SSEE BEFORE THE AUTHORITIES BELOW. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY DISCREPANCY IN THE ORDER OF THE LD.CIT(A) AND ACCORDINGLY, THE GRO UND NO.5 RAISED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09-01-2020 SD/- SD/- (DR. M.L. MEENA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER TNMM COPY FORWARDED TO: 1. ASSESSEE 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT SR. PRI VATE SECRETARY ITAT AGRA