Dharmendra Prasad More, Balasore V. Income Tax Officer, ward-1, , Balasore

ITA 215/CTK/2022

AI Insights

The case involves an appeal by Dharmendra Prasad More, an individual deriving income as a clearing and forwarding agent for Lafarge India Pvt Ltd, against the order of the CIT(A), NFAC, Delhi. The appeal contested an adhoc disallowance of 5% on labor and transportation charges made by the Assessing Officer (AO) during the assessment year 2011-12. The AO's disallowance was based on the grounds that the vouchers for these expenses were self-made and lacked complete details of the laborers and vehicles used for transportation. The CIT(A) upheld the AO's decision due to non-representation by the assessee. The Tribunal, however, found the adhoc disallowance unjustified as the books of account were not rejected and no specific defects in the vouchers were identified.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300274 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-02-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 26-12-2022
• Other Referred Cases: Pr. CIT vs. R.G.Buildwell Engineers Ltd., Bhikari Charan Meher vs DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND ARUN KHODPIA, ACCOUNTANT MEMBER Dharmendra Prasad More, Nil, Sahadev Khunta, PO: Sahadev Khunta, Dist: Balasore PAN/GIR No. (Appellant Per Bench This is an appeal filed by the assessee against the order of the ld CIT(A), NFAC, Delhi, ITBA/NFAC/S/250/2022 12. 2. Shri P.K.Mishra, ld AR appeared for the assessee and Shri S.C.Mohanty, ld Sr DR appeared for the revenue. 3. It was submitted by ld AR that the assessee is an individual, who is deriving income as a clearing & forwarding agent of Lafarge India Pvt Ltd.. IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI GEORGE MATHAN, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.215/CTK/2022 Assessment Year : 2011-12 Dharmendra Prasad More, Nil, Sahadev Khunta, PO: Sahadev Khunta, Dist: Vs. Income Tax Officer, Ward Balasore PAN/GIR No.AGFPM 2413 A (Appellant) .. ( Respondent Assessee by : Shri P.K.Mishra, AR Revenue by : Shri S.C.Mohanty Date of Hearing : 28/0 Date of Pronouncement : 28/0 O R D E R This is an appeal filed by the assessee against the order of the ld , NFAC, Delhi, dated 5.9.2022 ITBA/NFAC/S/250/2022-23/1045172764(1) for the assessment year Shri P.K.Mishra, ld AR appeared for the assessee and Shri S.C.Mohanty, ld Sr DR appeared for the revenue. It was submitted by ld AR that the assessee is an individual, who is iving income as a clearing & forwarding agent of Lafarge India Pvt Ltd.. Page1 | 4 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER Income Tax Officer, Ward-1, Respondent) P.K.Mishra, AR S.C.Mohanty, Sr DR 02/2023 /02/2023 This is an appeal filed by the assessee against the order of the ld in Appeal No. for the assessment year 2011- Shri P.K.Mishra, ld AR appeared for the assessee and Shri It was submitted by ld AR that the assessee is an individual, who is iving income as a clearing & forwarding agent of Lafarge India Pvt Ltd.. ITA No.215/CTK/2022 Assessment Year : 2011-12 Page2 | 4 It was the submission that in the course of assessment, the Assessing Officer had disallowed 5% out of labour charges and transportation charges on the ground that the vouchers were self made vouchers and complete details of the labourers as also the vehicles used for transportation was not available. It was the submission that this was nothing but adhoc disallowance. It was the submission that the ld CIT(A) has admittedly dismissed the assessee’s appeal on account of non-representation. It was the submission that the addition involved in the appeal is meager and restoring the issue to the file of the ld CIT(A) would just prolong the issue. It was the prayer that the addition as made by the AO and confirmed by the ld CIT(A) is liable to be deleted in view of the decision of the Hon’ble Supreme Court in the case of Pr. CIT vs. R.G.Buildwell Engineers Ltd., (2018) 99 taxmann.com 284 (SC), wherein, the Hon’ble Supreme Court has upheld the action in deleting the adhoc disallowance by the Tribunal on the ground that there was omission to reject the books of account of the assessee and historical treatment of such expenses cannot be termed as unreasonable. Ld AR has also placed reliance on the decision of the Co- ordinate Bench of this Tribunal in the case of Bhikari Charan Meher vs DCIT in ITA No.111/CTK/2022 for A.Y. 2017-18 order dated 17.11.2022, wherein, the Co-ordinate Bench in para 6, under similar circumstances, has held as under: ITA No.215/CTK/2022 Assessment Year : 2011-12 Page3 | 4 “6. We have considered the rival submissions. The fact in the present case clearly shows that the disallowance out of land development expenses is clearly on adhoc basis. Admittedly, the books of account have not been rejected. Once this is so, adhoc disallowance is not permissible. If any disallowance is called for, specific identifiable disallowance could have been made. This has not been done in the present case. This being so, the addition made by the AO and confirmed by the ld CIT(A) stands deleted.” 4. It was the prayer that the addition as made by the AO and confirmed by the ld CIT(A) may be deleted. 5. In reply, ld Sr DR vehemently supported the order of the AO and ld CIT(A). It was the submission that the assessee has not produced all the details before the AO, which has compelled the AO to make the adhoc disallowance. It was the prayer that the addition as made by the AO and confirmed by the ld CIT(A) be upheld. 6. We have considered the rival submissions. A perusal of the facts in the present case shows that the disallowance as made by the AO at 5% out of labour charges and transportation expenses are clearly on adhoc basis. If the AO had found that there was discrepancy in the vouchers produced, it was very much open to the AO to identity the defect and disallows the same. This has not been done. Also the books of account of the assessee have not been rejected. The assessee is in the business of clearing & forwarding agent in respect of cement. This admittedly involves substantial labour charges and transportation charges. Considering these facts, we are of the view that the adhoc disallowance made by the AO is uncalled for. ITA No.215/CTK/2022 Assessment Year : 2011-12 Page4 | 4 Consequence, adhoc disallowance as made by the AO and confirmed by the ld CIT(A) stands deleted. 7. In the result, appeal filed by the assessee stands allowed. Order dictated and pronounced in the open court on 28/02/2023. Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 28/02/2023 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : Dharmendra Prasad More, Nil, Sahadev Khunta, PO: Sahadev Khunta, Dist: Balasore 2. The Respondent: Income Tax Officer, Ward- 1, Balasore 3. The CIT(A)-, NFAC, Delhi 4. Pr.CIT-, Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//