Income Tax Officer, Tiptur V. M/s.Agni Transport, Tiptur

ITA 2210/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5543 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 15-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P DINESHA
• Keywords: Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH - SMC C BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER I.T.A. NO. 2210 /BANG/201 6 (ASSESSMENT YEAR : 200 7 - 08 ) INCOME TAX OFFICER, WARD - 1,TIPTUR. VS. M/S. AGNI TRANSPORT, B.H. ROAD, K.B.CROSS, TIPTUR T ALUK - 572 174 PAN AAOFM 1147J APPELLANT RESPONDENT. APPELLANT BY : SHRI AR.V.SREENIVASAN, JCIT (D.R) RESPONDENT BY : SHRI P.DINESHA, ADVOCATE. DATE OF H EARING : 21.02.2017. DATE OF P RONOUNCEMENT : 05 .04. 201 7 . O R D E R PER SHRI VIJAY P AL RAO, J. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DT.29.9.2016 OF COMMISSIONER OF INCOME TAX (APPEALS) - 7, BANGALORE FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED CIT (APPEALS) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT (APPEALS) WAS JUSTIFIED IN LAW IN RESTRICTING THE DISALLOWANCE TO 10% OF 2 ITA NO. 2 210 /BANG/ 2016 THE FREIGHT PORTION CLAIMED BY THE ASSESSEE FIRM AS AGAINST 20% OF THE TOTAL EXPENDITURE DISALLOWED BY THE ASSESSING OFFICER ? 3. THE CIT (APPEALS) ERRED IN APPRECIATIN G THE FACT THAT THE ASSESSING OFFICER COULD NOT CONDUCT INDEPENDENT INQUIRIES ON ACCOUNT OF THE FAILURE OF THE ASSESSEE FIRM TO PRODUCE ANY DETAILS OF THE PERSONS TO WHOM PAYMENTS WERE BEEN MADE. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIM E OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (APPEALS) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GRO UNDS MENTIONED ABOVE. 3. THE ONLY ISSUE RAISED IN THIS APPEAL OF THE ASSESSEE IS REGARDING DISALLOWANCE OF FREIGHT CHARGES BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT (APPEALS). 4. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TRANS PORTATION OF MINING MATERIAL FROM THE MINE TO NEAREST PORT. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS DOING TRANSPORT WORK FOR VARIOUS MINES BY PROVIDING LORRY ON HIRE TO THEM. THE ASSESSEE DISCLOSED GROSS RECEIP TS FROM TRANSPORT BUSINESS OF RS.2.25 CRORES AGAINST WHICH TRANSPORTATION CHARGES OF RS.2,17,26,298 WERE CLAIMED. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS OF TRANSPORTATION CHARGES WITH NAME AND ADDRESS OF THE PERSONS TO WHOM IT WAS PAID, MODE OF PAYMENT, TDS AND PANS. THE ASSESSEE EXPLAINED THAT OUT OF THE TOTAL PAYMENTS THE DIESEL COST WAS 3 ITA NO. 2 210 /BANG/ 2016 RS.1,07,93,959, FIXED WAY EXPENSES OF RS.33,74,000 AND BALANCE OF RS.75,58,339 WAS FREIGHT PORTION. THE ASSESSEE CLAIMED THAT IT IS MANDATORY TO PAY THE LORRY DRIVER RS.2,000 PER LORRY TRIP. HOWEVER NO DETAILS HAVE BEEN FURNISHED TO SUBSTANTIATE THIS CLAIM AS TO HOW THE FIXED WAY EXPENSES ARE MANDATORY. THUS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT FURNISHED ANY PROOF BY WAY OF B ILLS/VOUCHERS ETC. ACCORDINGLY, THE ASSESSING OFFICER HAS DISALLOWED 20% OF THE TOTAL TRANSPORTATION CHARGES AMOUNTING TO RS.43,45,260. 5. ON APPEAL, THE CIT (APPEALS) HAS RESTRICTED THE DISALLOWANCE TO 10% OF THE TOTAL TRANSPORTATION CHARGES FROM 20% MADE BY THE ASSESSING OFFICER. 6. BEFORE THE TRIBUNAL, THE LEARNED AUTHORISED REPRESENTATIVE HAS REITERATED ITS SUBMISSIONS AS RAISED BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HA S TRANSPORTED IRON ORE FROM MINE TO THE PORT DESTINATI ON. HE HAS FURTHER CONTENDED THAT THIS IS THE FIRST TIME WHEN THE ASSESSING OFFICER HAS DISALLOWED THESE EXPENSES EVEN ON ACCOUNT OF FIXED CHARGES PER TRIP @ RS.2,000 PER LORRY. FURTHER THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THE DIESEL EXPENSES CANNOT BE CONSIDERED AS BOGUS WITHOUT AS THE SAID EXPENDITURE THE ACTIVITY OF TRANSPORTATION IS NOT POSSIBLE. THUS THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS DOUBTED THESE TWO EXPENSES AS DIESEL COST AND FI XED WAY EXPENSES BUT THESE 4 ITA NO. 2 210 /BANG/ 2016 ARE ESSENTIAL FOR THE BUSINESS ACTIVITY OF THE ASSESSEE. HE HAS FURTHER CONTENDED THAT IT IS A PREVAILING PRACTICE IN THIS TRADE THAT FIXED AMOUNT OF RS.2,000 PER TRIP PER LORRY HAS TO BE PAID FOR WHICH THE ASSESSEE CANNOT PRODU CE ANY EVIDENCE. HENCE THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THE ADHOC DISALLOWANCE IS NOT JUSTIFIED WHEN THE ASSESSING OFFICER HAS NOT FOUND THE EXPENSES AS EXCESSIVE IN COMPARISON TO THE GENERAL GROSS PROFIT RATE IN THIS TRADE. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN SUPPORT OF THE CLAIM AND THEREFORE THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE PORTION OF THE EXPENDITURE WHICH HAS BEE N RESTRICTED BY THE CIT (APPEALS) TO 10% OF THE TOTAL TRANSPORTATION CHARGES. 8. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, IT IS NOTED THAT THE ASSESSEE HAS FURNISHED THE DETAILS OF THE EXPENSES AS TRANSPORTATI ON CHARGES/FREIGHT CHARGES AS UNDER : TOTAL PAYMENT RS.2,17,26,298 DIESEL COST RS.1,07,93,959 FIXED WAYEXPENSES RS.33,74,000 BALANCE FREIGHT PORTION RS.75,58,339 5 ITA NO. 2 210 /BANG/ 2016 THERE IS NO DISPUTE THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN RESPECT OF THES E EXPENSES. EVEN THE ASSESSEE HAS NOT PRODUCED A SINGLE BILL/VOUCHER IN RESPECT OF DIESEL COST . T HOUGH DIESEL IS AN ESSENTIAL FOR THE TRANSPORTATION ACTIVITY HOWEVER EXPENSES CLAIMED BY THE ASSESSEE IS ALWAYS REQUIRED T O BE ESTABLISHED THAT THE SAME HAS B EEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE ASSESSEE HAS CLEARLY DEFAULTED IN DISCHARGING ITS ONUS TO PROVE THAT THE EXPENSES HAVE BEEN WHOLLY AND EXCLUSIVELY INCURRE D FOR THE PURPOSE OF BUSINESS. T HE LEARNED AUTH ORISED REPRESENTATIVE HAS PL E ADED THAT SINCE THE ASSESSEE HAS NOT KEPT THE BILLS IN RESPECT OF THE DIESEL COST, THE GENUINENESS OF THE EXPENSES CANNOT BE DOUBTED. IT IS ALSO ADMITTED THAT THE DIESEL IS NOT PURCHASED ON CASH BUT IT IS PURCHASED ON CREDIT A ND THEREFORE THE PAYMENT IS MADE SUBSEQUENTLY. THUS IN VIEW OF THE FACTS AND CIRCUMSTANCES OF CASE, EVEN IF THE ASSESSEE HAS NOT MAINTAINED THE PROPER RECORD OF MAINTAINING THE BILLS AND VOUCHERS OF THE EXPENSES, THE BOOKS OF ACCOUNTS PARTICULARLY THE LED GER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE SUPPLIER OF DIESEL CAN BE VERIFIED FOR THIS PURPOSE. AS REGARDS THE EXPENSES ON ACCOUNT OF FIXED PAYMENT OF RS.2,000 TO DRIVER AT LEAST THE ASSESSEE SHOULD HAVE PRODUCED THE DRIVERS FOR VERIFICATION. THERE FORE , THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE RELEVANT RECORD I.E. THE LEDGER ACCOUNT OF THE ASSESSEE IN 6 ITA NO. 2 210 /BANG/ 2016 THE BOOKS OF THE PETROL PUMP/DIESEL SUPPLIER AND ALSO MAY VERIFY THE CLAIM OF FIXED CHARGES OF RS.2,000 PER TRIP FROM THE DRIVER. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER FOR VERIFICATION AND ADJUDICATION OF DISALLOWANCE OF 10% OF THE TRANSPORTATION CHARGES. 9. IN THE RESULT, THE ASSESSEE'S APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUN CED IN THE OPEN COURT ON 5TH DAY OF APRIL, 201 7 . SD/ - (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DT. 05 . 04 .2017. *REDDY GP COPY TO : 1 . APPELLANT 2 . RESPONDENT 3 . C.I.T. 4 . CIT(A) 5 . DR, ITAT, BANGALORE. 6 . GUARD FILE. ASSISTANT REGIS TRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE.