Horn Ok Please Transport Ltd., Gandhinagar V. The ACIT.,GNR Circle, Gandhinagar

ITA 1977/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6663 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 17-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJIB JAIN
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI D K TYAGI,JM & SHRI A N PAHUJA, AM ITA NO.1977/AHD/2009 (ASSESSMENT YEAR:-2005-06) HORN OK PLEASE TRANSPORT LTD., 80/394, GUJARAT HOUSING BOARD, IOC ROAD, CHANDKHEDA, GANDHINAGAR V/S ASSISTANT COMMISSIONER OF INCOME-TAX, GANDHINAGAR CIRCLE, GANDHINAGAR PAN: AAACV 6344 H [APPELLANT] [RESPONDENT] ITA NO.2212/AHD/2009 (ASSESSMENT YEAR:-2005-06) ASSISTANT COMMISSIONER OF INCOME-TAX, GANDHINAGAR CIRCLE, GANDHINAGAR V/S HORN OK PLEASE TRANSPORT LTD., 80/394, GUJARAT HOUSING BOARD, IOC ROAD, CHANDKHEDA, GANDHINAGAR [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI SAKAR SHARMA, AR REVENUE BY:- SHRI RAJIB JAIN, DR O R D E R A N PAHUJA: THESE CROSS APPEALS AGAINST AN ORDER DATED 08-04- 2009 OF THE LD. CIT(APPEALS), GANDHINAGAR, FOR THE ASSESSMENT 2005-06, RAISE THE FOLLOWING GROUNDS:- ITA NO.1977/AHD/2009[ ASSESSEE] 1 LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF SHORTAGE CLAIMED OF RS.3,39,078/-. 2 LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMIN G DISALLOWANCE OF TANKER DIESEL EXPENSES TO THE EXTENT OF RS.6,00,000 /-. 3 LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMIN G TRANSPORT EXPENSES TO THE EXTENT OF RS.10,00,000/-. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER AND / OR AMEND ALL OR ANY OF GROUNDS BEFORE THE FINAL HEARING OF APPEAL. ITA NOS.1977 & 2212/AHD/09 2 ITA NO.2212/AHD/2009[REVENUE] 1 THE LD. CIT(A) WAS NOT JUSTIFIED IN ALLOWING RELIEF IN TANKER DIESEL EXPENSES OF RS.4,00,000/-. 2 THE LD. CIT(A) WAS NOT JUSTIFIED IN ALLOWING TRAN SPORT EXPENSES OF RS.15,00,000/-. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 4 IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEAR NED CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABO VE EXTENT . 2. ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL OF THE ASSESSEE, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT R ETURN DECLARING LOSS OF RS.22,00,502/- FILED ON 31-10-2005 BY THE ASSESS EE, ENGAGED IN TANKER HIRING SERVICES WORKING FOR IOC LTD., ONGC L TD. AND OTHERS, , AFTER BEING PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], WAS SELECTE D FOR SCRUTINY WITH THE SERVICE OF NOTICE U/S 143(2) OF THE ACT ON 27-1 0-2006.DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER[AO IN SHORT] NOTICED ON PERUSAL OF THE SCHEDULE-11 TO THE P&L ACCOUNT THAT THE ASSESSEE CLAIMED SHORTAGE EXPENSES OF RS.6,78,1 56/-. TO A QUERY BY THE AO, THE ASSESSEE REPLIED THAT THE COM PANY LIFTS THE MATERIAL FROM A SPECIFIC PLACE AND CARRIES TO THE DESTINATIO N OF BENEFICIARY THROUGH THEIR OWN VEHICLES AS ALSO THROUGH HIRED VEHICLES. IF AN Y SHORTAGE IS FOUND ON REACHING THE DESTINATION OF BENEFICIARY, THE SAID SHORTAGE I S DEDUCTED FROM THE HIRE CHARGES. THOUGH THE ASSESSEE COLLECTED THE SHORTAG E FROM THE RESPECTIVE PARTY, THE UNCOLLECTED SHORTAGE IS BORNE BY THEM. SINCE T HE NATURE OF THE EXPENDITURE WAS NON FULFILLMENT OF CONTRACTUAL OBLIGATION AND NOT IN THE NATURE OF PENALTY FOR VIOLATION OF LAW, THE SAME IS ALLOWABLE EXPENDITURE , THE ASSESSEE SUBMITTED. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF T HE ASSESSEE ON THE GROUND THAT DESPITE REQUEST MADE VIDE ORDER SH EET ENTRY DATED 12/10/2007 TO FURNISH THE DETAILS CONTAINING THE NA ME OF THE MATERIAL, DATE OF TRANSPORT, TANKER NUMBER, VOLUME OF THE MATERIAL TR ANSPORTED, VOLUME OF SHORTAGE, PERCENTAGE OF SHORTAGE AND PRICE OF MATERIAL, THE A SSESSEE DID NOT FURNISH THESE ITA NOS.1977 & 2212/AHD/09 3 DETAILS AND INSTEAD FURNISHED PARTY-WISE AND MONTH WISE DETAILS OF SHORTAGE. SINCE IT WAS NOT POSSIBLE TO WORK OUT THE ACTUAL S HORTAGE FROM THE DETAILS FURNISHED BY THE ASSESSEE WHILE ADMITTEDLY FURNACE OIL WHICH HAD A VERY LOW RATE OF EVAPORATION WAS TRANSPORTED AND IN THE PRECEDING YEAR SHORTAGE WAS ONLY OF RS. 2,37,760/- ONLY, THE AO DISALLOWED 50% OF THE EXPENSES, RESULTING IN ADDITION OF RS.3,39,078/-. 3. ON APPEAL, THE LEARNED CIT(A) UPHELD THE DISALLO WANCE IN THE FOLLOWING TERMS:- 3.3. THE MATTER HAS BEEN GIVEN DUE CONSIDERATION. FROM THE PAPERS FILED BEFORE ME, IT COMES OUT THAT THE APPELLANT HAS ACCO UNTED FOR THE SHORTAGES ON THE BASIS OF THE DEDUCTIONS MADE BY THE PARTIES ON WHOSE BEHALF IT CARRIED THE MATERIALS. CONSEQUENTLY, THE BILLS RAIS ED HAVE BEEN ACCOUNTED FOR IN GROSS TERMS FOR RECEIPTS AND THE DEDUCTIONS MADE BY THE PARTIES CLAIMED AS AN EXPENSE. ON QUERY FROM THE UNDERSIGNE D, THE APPELLANT HAS GIVEN IN WRITING THAT IT HAD NO WRITTEN CONTRACT WI TH ANY PARTY FOR WHICH IT CARRIED THE GOODS, EXCEPT FOR INDIAN OIL CORPORATIO N, FOR WHICH A COPY OF THE CONTRACT WAS FILED. A PERUSAL OF THE CONTRACT S HOWS THAT IT DOES NOT PROVIDE FOR ANY SCOPE FOR SHORTAGES AND CLAUSE-9 LA YS DOWN THE DETAILED PROCEDURES FOR RECOVERIES IN CASE OF SHORTAGES. HEN CE THE POSITION AS IT COMES OUT IS THAT SHORTAGES HAVE NOT BEEN TREATED A S PART OF A COMMERCIAL TRANSACTION BETWEEN THE ASSESSEE AND THE PARTIES ON WHOSE BEHALF IT CARRIED OUT THE WORK. NORMALLY, IT IS A STANDARD PR ACTICE IN HANDLING OF LIQUID CHEMICALS THAT SOME KIND OF MARGINS ON ACCOUNT OF S PILLING, EVAPORATION ETC IS ALWAYS AGREED TO. SURPRISINGLY, IN THE APPEL LANT'S CASE, IT IS NOT THERE. THEREFORE, IT CAN BE FAIRLY CONCLUDED THAT THE MATE RIALS THE APPELLANT WAS DEALING IN NORMALLY DID NOT HAVE AN ISSUE CONCERNIN G EVAPORATION, SPILLING OR SHORTAGES AND THE DEDUCTIONS UNDERTAKEN BY THE P ARTIES RECEIVING THE GOODS IS FOR NON-DELIVERY OF THE GOODS WHICH WERE H ANDLED BY THE APPELLANT. THE POINT IS THAT IN CASE ANY ASSESSEE I N THE BUSINESS OF CARRYING GOODS FAILS TO DELIVER THE GOODS TO THE PA RTY AT THE OTHER END, CAN HE CLAIM IT AS BUSINESS EXPENDITURE OR LOSS, WITHOU T BRINGING ANY MATERIAL ON RECORD, ON THE BASIS OF GENERALIZATION. IN MY VI EW SUCH IS NOT A COMMERCIAL EXPENSE. 3.3.1. IN THE LIGHT OF ABOVE, SINCE THE ASSESSEE HA S BEEN ALLOWED SUCH EXPENDITURE IN EARLIER YEARS, THE PERCENTAGE OF SUC H LOSSES WOULD APPEAR TO BE A REASONABLE BENCHMARK, TO KEEP THE PAST HIST ORY INTACT.. SINCE IN THAT CONTEXT, AGAINST THE PRECEDING YEAR'S FIGURE, THE PRESENT CLAIM OF RS.6,78,156/- IS POSITIVELY EXORBITANT AND UNPROVED . IN THE CIRCUMSTANCES, THE DISALLOWANCE OF RS.3,39,078/- APPEARS TO BE JUS TIFIED AND IS CONFIRMED. ITA NOS.1977 & 2212/AHD/09 4 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE REITERATED THEIR SUBMISSIONS BEFORE THE L EARNED CIT(A). ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE FIN DINGS OF THE AO/ THE LD. CIT(A) WHILE CONTENDING THAT DESPITE SPECIF IC REQUEST , THE ASSESSEE DID NOT FURNISH THE DETAILS DESIRED BY THE AO NOR ANY EVIDENCE THAT CLAIM WAS DUE TO SHORTAGE AGREED BETW EEN THE RESPECTIVE PARTIES. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, THE ASSESSEE DID NOT FURNIS H THE DETAILS SOUGHT BY THE AO VIDE ORDERSHEET ENTRY DATED 12/10/ 2007 VIZ. THE NAME OF THE MATERIAL, DATE OF TRANSPORT, TANKER NUMBER, VOLUME OF THE MATERIAL TRANSPORTED, VOLUME OF SHORTAGE, PERCENTAGE OF SHOR TAGE AND PRICE OF MATERIAL ETC. THESE DETAILS WERE NEITHER FURNISHED BEFORE TH E LD. CIT(A) NOR EVEN BEFORE US. THE LD. CIT(A) FOUND THAT THE ASSESSEE CLAIM ED THE SHORTAGE ON THE BASIS OF THE DEDUCTIONS MADE BY THE PARTIES ON WHOSE BEHALF THE MATERIAL WAS CARRIED AND THAT TOO WITHOUT ANY CONTRACT EXCEPT F OR INDIAN OIL CORPORATION. THE SAID CONTRACT WITH IOC ALSO DID NOT PROVIDE ANY SC OPE FOR SHORTAGE AND CLAUSE-9 LAID DOWN THE DETAILED PROCEDURE FOR RECOVERIES IN CASE OF SHORTAGES. WE FIND THAT IN THE CASE OF HIMALYA TRANSPORT , AGAINST HIRE CHA RGES OF RS.3,05,082 DEDUCTION OF RS.75,105/- IS CLAIMED. IN THE CASE OF NAYMEEL C HEMICALS , AGAINST HIRE CHARGES OF RS.14,364/- ,SHORTAGE HAS BEEN CLAIMED O F RS. 3.040/-. LIKEWISE IN RESPECT OF OTHER PARTIES. HOWEVER, THE BASIS FOR WO RKING OUT SHORTAGE IN THE CASE OF ANY OF THE PARTIES IS NOT EVIDENT FROM THE DETAI LS PLACED IN THE PAPER BOOK. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE ASSESSEE D ID NOT FURNISH THE RELEVANT DETAILS SOUGHT BY THE AO NOR EVEN BEFORE US WHILE THERE IS NOTHING TO SUGGEST THE CLAIM OF SUCH SHORTAGE WAS BASED UPON ANY CONTR ACT OR PRACTICE NOR THE LD. AR ADDUCED ANY REASONS FOR INCREASE IN SHORTAGE IN THE YEAR UNDER CONSIDERATION VIS--VIS PRECEDING YEARS, THERE IS NO BASIS TO I NTERFERE. SINCE THE LD. AR DID NOT PLACE ANY MATERIAL BEFORE US, SO AS TO ENABLE US T O TAKE A DIFFERENT VIEW IN THE MATTER, WE HAVE NO HESITATION IN UPHOLDING THE FIND INGS OF THE LD. CIT(A). THEREFORE, GROUND NO.1 IN THE APPEAL OF THE ASSESSE E IS DISMISSED. ITA NOS.1977 & 2212/AHD/09 5 6. GROUND NO.2 IN THE APPEAL OF THE ASSESSEE AND GROUND NO.1 IN THE APPEAL OF THE REVENUE RELATE TO DISALLOWANC E OF TANKER DIESEL EXPENSES. THE AO NOTICED THAT THE ASSESSEE CLAIME D TANKER DIESEL EXPENSES OF RS.60,16,771/- IN THE YEAR UNDER CONSID ERATION VIS-A-VIS RS.33,97,190/- IN THE PRECEDING YEAR. TO A QUERY BY THE AO, SEEKING TANKER-WISE CONSUMPTION OF DIESEL, THE ASSESSEE SUB MITTED THAT EARLIER THEY WERE AVAILING TANKER FROM OUTSIDERS A ND DURING THE YEAR UNDER SCRUTINY, THEY PURCHASED 11 TANKERS. AS A RES ULT, THE DEPENDENCE ON OUTSIDERS FOR THE AVAILABILITY OF TAN KERS HAD REDUCED AND CONSEQUENTLY, COST WENT DOWN. HOWEVER, THE AO D ID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND DISALLOWED AN A MOUNT OF RS.10,00,000/- ON THE GROUND THAT THE ASSESSEE D ID NOT PRODUCE THE BILLS FOR PURCHASE OF DIESEL ON THE PRETEXT THAT TH ESE WERE VOLUMINOUS. CONSIDERING THE CLAIM OF THE ASSESSEE THAT THE P RICE OF THE DIESEL DURING THE YEAR HAD GONE UP BY ABOUT 31% AS COMPARED TO THE LA ST YEAR AND 11 TANKERS WERE PURCHASED DURING THE YEAR, THE AO DISALLOWED AN AMOUNT OF RS.10,00,000/- , KEEPING IN VIEW EXPENSES CLAIMED I N THE PRECEDING YEAR. 7. ON APPEAL, THE LD. CIT(A) RESTRICTED THE DISALLO WANCE TO RS.6,00,000/- BEING ABOUT 10% OF THE TOTAL EXPENSES , IN THE FOLLOWING TERMS:- 4.3. THE MATTER HAS BEEN CONSIDERED. AS FAR AS T HE APPELLANT'S STAND IN THE ARGUMENTS REPRODUCED ABOVE , REGARDING THE ASSESSING OFFICER HAVING NOT CONSIDER ED HIS ARGUMENTS DATED 4/12/2007 IS CONCERNED, THE SAME SE EMS TO BE MISPLACED. THE ASSESSING OFFICER HAS VERY CATEGO RICALLY MENTIONED THAT THE ORDER IS PASSED ON 23/11/2007. T HE SAME WAS RECEIVED BY THE APPELLANT ON 8/12/2007. OBVIOUS LY, THE DEPARTMENT DOES NOT HAVE A SINGLE WINDOW DELIVERY S YSTEM OF ASSESSMENT ORDER AND ONCE IT IS PASSED BY THE OFFIC ER, IT HAS TO GO THROUGH A CERTAIN PROCEDURES AND THE SUBSEQUENT PERIOD IN POSTAL TRANSIT BEFORE IT REACHES THE ASSESSEE. JUST BECAUSE ONE LETTER HAS BEEN DROPPED IN AN OFFICE IN THE INT ERMEDIATE PERIOD, THE SAME WOULD NOT BECOME VALID ENOUGH A DO CUMENT TO HAVE BEEN PRESENTED DURING THE ASSESSMENT PERIOD . ITA NOS.1977 & 2212/AHD/09 6 UNFORTUNATELY, THE APPELLANT'S CREDENTIAL OF PROVID ING COMPLETE DETAILS IN THE DEPARTMENT STANDS FURTHER DILUTED WH EN IN ITS CONDUCT DURING THE FIRST ROUND OF APPELLATE PROCEED INGS IS CONSIDERED. HENCE, IT IS TO BE ASSUMED THAT ON BOTH THESE ISSUES, HARDLY ANY DETAILS WERE FURNISHED TO THE AS SESSING OFFICER AND POSITIVELY NOT IN THE MANNER IN WHICH T HE ASSESSING OFFICER WANTED. 4.3.1. TAKING UP THE DISALLOWANCE OF DIESEL EXPENSE S, TO START WITH, THE APPELLANT'S WORKING OF PERCENTAGE I S UNRELIABLE BECAUSE - (I) ALL THE NEW TRUCKS IN QUESTION HAVE BEEN BROUGH T INTO THE COMPANY'S BOOKS ON 31/12/2004 (REFERENCE - THE DETA ILS OF FIXED ASSETS - SCHEDULE 5 OF THE BALANCE SHEET) AND THEREFORE, THE SAVINGS, TANKER HIRE CHARGES, IF ANY , CANNOT BE ATTRIBUTABLE FOR THE WHOLE YEAR. (II) IT HAS NOT BEEN CLARIFIED WHETHER THE TRUCKS/T ANKERS BROUGHT ON 31/03/2004 WERE NEW OR SECOND HAND BECAUSE THE VALUE OF MOST OF THEM IS SO LOW THAT TH EY CANNOT CALLED NEW TANKERS. E.G., FIVE OF THEM COST JUST RS.50,000/-EACH, (III) ALTHOUGH MAIN STAND OF INCREASE IN RATE OF D IESEL HAS BEEN TAKEN, THE SAME HAS NOT BEEN DISCOUNTED FOR IN COMPUTING THE PERCENTAGE, IN MAKING THE TWO FACTORS COMPARABLE, A STANDARD PROCEDURE FOLLOWED FOR ANY FINANCIAL COMPARISON. 4.3.2. FURTHER MORE, I HAVE ALSO GONE THROUGH THE C OPY OF ACCOUNT OF 'TANKER DIESEL EXPENSES'. BESIDES THE FA CT THAT THERE ARE REASONABLE NUMBER OF CASH ENTRIES, THE EX PENSES DEBITED ARE QUITE CLEARLY WITHOUT ANY REFERENCE TO THE TRUCK OR THE TANKER. FOR RAW MATERIAL, WHICH IS AN ASSESSEE' S PRIMARY CONSUMABLE, THE ONUS IS COMPLETELY ON THE ASSESSEE TO EXPLAIN ITS CONSUMPTION, PARTICULARLY- WHEN THE DIFFERENCE IS AS HIGH AS IN THIS YEAR I.E, RS.60,16,771/-COMPARED TO RS.33,9 7,190/-. 4.3.3. THEREFORE, CONSIDERING ALL THE FACTS OF THE CASE, IN MY VIEW, THE CLAIM AS MADE CANNOT BE ACCEPTED IN TO TALITY BUT THE ENDS OF THE JUSTICE SHALL BE SERVED IN CASE THE DISALLOWANCE IS RESTRICTED TO RS.6,00,000/- BEING A BOUT 10% OF THE TOTAL EXPENSES CLAIMED. 8. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINS T THE AFORESAID FINDINGS OF THE LEARNED CIT(A) IN UPHOLDI NG THE ADDITION OF ITA NOS.1977 & 2212/AHD/09 7 RS. 6 LACS WHILE THE REVENUE IS IN APPEAL FOR REDUC ING THE ADDITION BY RS. 4 LACS. THE LEARNED AR ON BEHALF OF THE ASSE SSEE REITERATED THEIR SUBMISSIONS BEFORE THE LEARNED CIT(A). THE LE ARNED DR, ON THE OTHER HAND, SUPPORTED THE FINDINGS OF THE AO ON THE GROUND THAT THE ASSESSEE DID NOT PRODUCE THE RELEVANT BILLS BEFORE THE AO OR THE LD. CIT(A).ACCORDINGLY, IT WAS PLEADED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN GIVING THE RELIEF. 9. WE HAVE HEARD BOTH THE PARTIES AND GON E THROUGH THE FACTS OF THE CASE. INDISPUTABLY AND AS POINTED OUT BY THE LD. CIT(A), ALL THE NEW TRUCKS IN QUESTION WERE BROUGHT INTO THE COMPAN Y'S BOOKS ON 31/12/2004 AND THEREFORE, THE SAVINGS ON ACCOUNT OF TANKER HIRE CHARGES COULD NOT BE FOR THE WHOLE YEAR. MOREOVER, AT LEAST FIVE TANKERS WERE OLD BEING OF THE VALUE OF RS.50,000/-E ACH. THE LD. CIT(A) FURTHER OBSERVED THAT THE COPY OF ACCOUNT OF 'TANKER DIESEL EXPENSES' REVEALED A NUMBER OF CASH ENTRIES WITHOU T ANY REFERENCE TO THE TRUCK OR THE TANKER AND THE ONUS WAS COMPLET ELY ON THE ASSESSEE TO ESTABLISH ITS CONSUMPTION, PARTICULARL Y WHEN THE EXPENDITURE WAS AS HIGH AS RS.60,16,771/- IN THIS YEAR AS COMPARED TO RS.33,97,190/- IN THE PRECEDING YEAR. INTER ALIA , SINCE THE ASSESSEE DID NOT PRODUCE BILLS BEFORE THE AO, THE L D. CIT(A) UPHELD THE DISALLOWANCE TO ABOUT 10% OF THE TOTAL EXPENSE S CLAIMED. THE LD. AR APPEARING BEFORE US DID NOT PLACE ANY MATER IAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MAT TER AND MERELY REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A). CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, ES PECIALLY WHEN THE ASSESSEE DID NOT PRODUCE THE RELEVANT BILLS BEFORE THE LOWER AUTHORITIES, WE ARE OF THE OPINION THAT DISALLOWANC E SUSTAINED BY THE LD. CIT(A) IS REASONABLE. CONSEQUENTLY, WE REJECT T HE GROUND NO.2 IN THE APPEAL OF THE ASSESSEE AND GROUND NO.1 IN THE A PPEAL OF THE REVENUE. ITA NOS.1977 & 2212/AHD/09 8 10. GROUND NO.3 IN THE APPEAL OF THE ASSESSEE AND GROUND NO.2 IN THE APPEAL OF THE REVENUE RELATE TO DISALLOWANCE O F TRANSPORT EXPENSES. THE AO NOTICED THAT THE ASSESSEE CLAIMED TRANSPORT EXPENSES OF RS.31,51,107/- AS AGAINST RS.3,76,089/- IN THE PRECEDING YEAR. TO A QUERY BY THE AO, SEEKING THE N ATURE OF SUCH EXPENSES AND REASONS FOR DISPROPORTIONATE INCREA SE, THE ASSESSEE DID NOT FURNISH ANY EXPLANATION. CONSEQUENTLY, VID E ORDER SHEET ENTRY DATED 12/10/2007, THE ASSESSEE WAS REQUESTED TO FURNISH TANKER-WISE DETAILS OF TRANSPORT EXPENSES AND EXPLA IN THE REASONS FOR ABNORMAL INCREASE IN THE YEAR UNDER CONSIDERATI ON. EVEN THEN THE ASSESSEE DID NOT FURNISH ANY EXPLANATION NOR PRODU CED RELEVANT BILLS/VOUCHERS ON THE PRETEXT THAT THE RECORD WAS V ERY VOLUMINOUS. THEREFORE, CONSIDERING THE FACT THAT SUCH EXPENSES WERE MERELY RS.3,76,089/- IN THE PRECEDING YEAR, THE AO DISALLO WED AN ESTIMATED SUM OF RS.25,00,000/- IN THE YEAR UNDER CONSIDERATI ON. 11. ON APPEAL, THE LEARNED CIT(A) ADJUDICATED THE I SSUE IN THE FOLLOWING TERMS:- 4.3.4. AS FAR AS THE ISSUE REGARDING THE TRANSPORT EXPENSES IS CONCERNED, THE APPELLANT'S RELIANCE ON ITS PERCENTAGE COMPUTAT ION, AS REPRODUCED IN ITS SUBMISSION, CANNOT BE ACCEPTED AS ALREADY STATE D. AS PER DETAILS OF LEDGER ACCOUNT PRODUCED, ALMOST ALL EXPENSES INCURR ED ARE IN CASH, PRESUMABLY AS CLAIMED BY THE ASSESSEE IN CONNECTION WITH RUNNING OF ITS OWN TANKERS. BUT IT REMAINS INCOMPREHENDIBLE HOW CA N SUCH EXPENSES GO TO RS.31,51,107/-FOR THIS YEAR FROM RS.3,76,089/- F OR THE PRECEDING YEAR. THE APPELLANT HAD 16 TRUCKS OF ITS OWN IN THE PRECE DING YEAR AND THERE WERE ONLY AN ADDITION OF 7 NEW VEHICLES (11 BOUGHT IN MINUS 4 SOLD) AND THAT TOO NOT FOR THE ENTIRE YEAR. IT ONCE AGAIN NEE DS TO BE EMPHASIZED THAT THE ONUS OF PROVING A CLAIM OF EXPENSES WITH RESPEC T TO ITS ACCURACY AND ITS NEXUS WITH THE BUSINESS REMAINS ENTIRELY ON AN ASSE SSEE AND IF THAT HAS NOT BEEN DISCHARGED, THE ASSESSING OFFICER COULD BE WELL BE JUSTIFIED IN TAKING ADVERSE VIEW. 4.3.5. IN VIEW OF ABOVE FACTS, IN MY VIEW, THE POSS IBILITY OF LEAKAGE, NON- BUSINESS EXPENSES AND UNRELATED EXPENSES BEING DEBI TED UNDER THE HEAD IS VERY HIGH. GIVEN THE INCREASE IN QUANTUM OF THE EXPENSES COMPARED TO THE PRECEDING YEAR AND KEEPING IN VIEW OVERALL BUSI NESS INCREASE OF THE ASSESSEE. IN MY VIEW, THE ENDS OF THE JUSTICE SHALL BE MET IN CASE THE DISALLOWANCE IS RESTRICTED TO RS.10,00,000/-. ITA NOS.1977 & 2212/AHD/09 9 12 THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINS T THE AFORESAID FINDINGS OF THE LEARNED CIT(A) IN UPHOLDI NG THE ADDITION OF RS. 10 LACS WHILE THE REVENUE IS IN APPEAL FOR REDU CING THE ADDITION BY RS. 15 LACS. THE LEARNED AR ON BEHALF OF THE ASS ESSEE REITERATED THEIR SUBMISSIONS BEFORE THE LEARNED CIT(A). THE LE ARNED DR, ON THE OTHER HAND, SUPPORTED THE FINDINGS OF THE AO ON THE GROUND THAT THE ASSESSEE DID NOT PRODUCE THE RELEVANT BILLS BEFORE THE AO OR THE LD. CIT(A).ACCORDINGLY, IT WAS PLEADED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN REDUCING THE DISALLOWANCE. 13. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. INDISPUTABLY AND AS POINTED OUT BY THE LD . CIT(A), ALMOST ALL EXPENSES WERE INCURRED IN CASH. BEFORE THE AO , THE ASSESSEE DID NOT FURNISH ANY EXPLANATION UNTIL COMPLETION OF THE ASSESSMENT. BEF ORE THE LD.CIT(A), THE ASSESSEE CLAIMED THESE WERE INCURRED IN CONNECTION WITH RUNNING OF THEIR OWN TANKERS. THERE WAS NO EXPLANATION FOR THE ABNORMAL INCREASE IN EXPENSES TO RS.31,51,107/- IN THE YEAR UNDER CONSIDERATION VIS- A-VIS RS.3,76,089/- IN THE PRECEDING YEAR. THE LD. CIT(A) FOUND THAT THE ASSE SSEE HAD 16 TRUCKS OF ITS OWN IN THE PRECEDING YEAR WHILE ONLY 7 NEW VEHICLES (11 BOUGHT IN MINUS 4 SOLD) WERE ADDED AND THAT TOO NOT FOR THE ENTIRE YEAR. IN THE SE CIRCUMSTANCES, THE LD. CIT(A) CONCLUDED THAT THE ASSEESSEE DID NOT DISCHARGE ONUS OF PROVING THEIR CLAIM OF EXPENSES WITH RESPECT TO ITS ACCURACY AND ITS NEXUS WITH THE BUSINESS. INTER ALIA, SINCE THE ASSESSEE DID NOT PRODUCE ANY BILLS OR EXPLANATION BEFORE THE AO, THE LD. CIT(A) ,KEEPING IN VIEW OVE RALL BUSINESS INCREASE OF THE ASSESSEE UPHELD THE DISALLOWANCE TO THE EXTENT OF RS.10,00,000/-. THE LD. AR APPEARING BEFORE US DID NOT PLACE ANY MATERIAL BEF ORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER AN D MERELY REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A).CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, ESPECIALLY WHE N THE ASSESSEE DID NOT PRODUCE THE RELEVANT BILLS OR ANY COGENT EX PLANATION BEFORE THE LOWER AUTHORITIES, WE ARE OF THE OPINION THAT D ISALLOWANCE SUSTAINED BY THE LD. CIT(A) IS REASONABLE. CONSEQUE NTLY, WE REJECT ITA NOS.1977 & 2212/AHD/09 10 THE GROUND NO.3 IN THE APPEAL OF THE ASSESSEE AND G ROUND NO.2 IN THE APPEAL OF THE REVENUE. 14. GROUND NOS. 3 & 4 IN THE APPEAL OF THE REVEN UE, BEING MERE PRAYER AND NO SUBMISSIONS HAVING BEEN MADE ON THESE GROUNDS, DO NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDI TIONAL GROUND HAVING BEEN RAISED IN TERMS OF RESIDUARY GROUND IN THE APPEAL OF THE ASSESSEE, THESE GROUNDS ARE DISMISSED. 15.. IN THE RESULT, BOTH THESE APPEALS ARE DISMISS ED. ORDER PRONOUNCED IN THE COURT TODAY ON 19-05-2011 SD/- SD/- (D K TYAGI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 19-05-2011 COPY OF THE ORDER FORWARDED TO: 1. HORN OK PLEASE TRANSPORT LTD., 80/394, GUJARAT H OUSING BOARD, IOC ROAD, CHANDKHEDA, GANDHINAGAR 2. ASSISTANT COMMISSIONER OF INCOME-TAX, GANDHINAG AR CIRCLE, GANDHINAGAR 3. CIT CONCERNED 4. CIT(A), GANDHINAGAR 5. DR, ITAT, AHMEDABAD BENCH-C, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD