BABAN GENBHAU DANGAT, MUMBAI V. DCIT-17(2), PANVEL

ITA 2386/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4840 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 18-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S ABI RAMA KARTHIKEYAN
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2386/M/2018 ASSESSMENT YEAR: 2014-15 M/S. BABAN G. DANGAT, B-513, STEEL CHAMBERS, KALAMBOLI, NAVI MUMBAI - 410218 PAN: AAHPD5936H VS. DCIT -17(2), 3 RD FLOOR, TRIFED TOWER, SECTOR -7, NEW PANVEL, PANVEL (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : MS. KINJAL BHUTA, A.R. REVENUE BY : S. ABI RAMA KARTHIKEYAN, D.R. DATE OF HEARING : 09.07.2019 DATE OF PRONOUNCEMENT : 09.08.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 20.12.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2014-15. 2. THE ASSESSEE FILED THE REVISED GROUNDS OF APPEAL WHICH ARE AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE; 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)ERR ED IN CONFIRMING THE ADDITION OF RS, 26,62,061/- BEING 10% OF TRUCK HIRE CHARGES EXPENSESON THE PRESUMPTION THAT NET PROFIT WAS LOWERED AND EXPENSES HAVE BEEN INFLATED.YOUR APPELLANT SUBMITS THAT THE DISALLOWANCE OF EXPENDITURE IS ADH OC AND THE EXPENSES OUGHT TO BE ALLOWED AS CLAIMED. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ADDITION OF RS. 1,06,6027- BEING 10% IN RESPECT OF CONTAINER MOVEMENT EXPENSES ON THE PRESUMPTION THAT NET PROFIT WAS LOWERED AND EXPENSE S HAVE BEEN INFLATED. YOUR ITA NO.2386/M/2018 M/S. BABAN G. DANGAT 2 APPELLANT SUBMITS THAT THE DISALLOWANCE OF EXPENDIT URE IS ADHOC AND THE EXPENSES OUGHT TO BE ALLOWED AS CLAIMED. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ADDITION OF RS.9,32,523/- BEING 10% OF TRIP EXPENSESON THE P RESUMPTION THAT NET PROFIT WAS LOWERED AND EXPENSES HAVE BEEN INFLATED. YOUR APPEL LANT SUBMITS THAT THE DISALLOWANCE OF EXPENDITURE IS ADHOC AND THE EXPENS ES OUGHT TO BE ALLOWED AS CLAIMED. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ADDITION OF RS.7,63,596/-BEINGLO% OF TOLL TAX AND PARKING EX PENSESON THE PRESUMPTION THAT NET PROFIT WAS LOWERED AND EXPENSES HAVE BEEN INFLA TED. YOUR APPELLANT SUBMITS THAT THE DISALLOWANCE OF EXPENDITURE IS ADHOC AND T HE EXPENSES OUGHT TO BE ALLOWED AS CLAIMED. 5. THE APPELLANT PRAYS: I) THAT THE DECREASED NET PROFIT IN THE ASS ESSMENT YEAR HAS NO NEXUS WITH THE DISALLOWANCE OF EXPENSES. II) THAT THE EXPENSES CANNOT BE DISALLOWED J UST BASED ON PRESUMPTION THAT EXPENSES ARE INFLATED AND SUCH ACTION OF THE C OMMISSIONER OF INCOME TAX (APPEALS) IS VOID AND BAD IN LAW. III) THAT THE ALLEGED ADHOC DISALLOWANCES MAD E BY THE LD.AO AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) BE DELETED. IV) ANY OTHER RELIEF YOUR HONORS MAY DEEM FIT . 6. THE APPELLANT CRAVES TO LEAVE, ADD, AMEND OR AL TER THE GROUNDS OF APPEAL. 3. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE C ONFIRMATION OF ADDITION TO THE TUNE OF RS.26,62,061/- BY LD. CI T(A) @ 10% OF THE TRUCK HIRE CHARGES THEREBY UPHOLDING THE ORDER OF AO. 4. THE FACTS IN BRIEF ARE THAT THE AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE HAS D EBITED A SUM OF RS.2,66,20,610/- AS HIRE CHARGES UNDER THE H EAD TRUCK HIRE CHARGES WHICH INCLUDED AN AMOUNT OF RS.10,46, 020/-. ACCORDINGLY, THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE DETAILS OF THE HIRE CHARGES ALONG WITH THE DETAILS OF TRANSPORTATION CHARGES WITH BILLS, VOUCHERS, INVOIC ES ETC. THE ASSESSEE FURNISHED THE MONTHLY SUMMARY OF THE HIRE CHARGES AND LEDGER FOR THE MONTH OF AUGUST 2013. THE ASSES SEE ITA NO.2386/M/2018 M/S. BABAN G. DANGAT 3 SUBMITTED VIDE LETTER DATED 23.12.2016 THAT PARTY-W ISE DETAILS ALONG WITH PAN WERE ALREADY FURNISHED VIDE SUBMISSI ON DATED 08.09.2016 AND WITH RESPECT TO ADDITIONAL INFORMATI ON SUCH AS CONTAINER NUMBERS, WEIGHT ETC. WERE NOT CAPTURED IN THE ACCOUNTING SYSTEM AND COULD NOT BE FURNISHED IN A SHORT TIME GIVEN TO THE ASSESSEE. AS REGARDS THE BILLS AND I NVOICES OF HIRE CHARGES PAID, THE ASSESSEE SUBMITTED THAT SAME WERE FILED ON 26.08.2016 AND REQUESTED THE AO TO ALLOW SOME TIME FOR FURNISHING THE ADDITIONAL INFORMATION. HOWEVER, TH E AO DISALLOWED RS.26,62,061/- BEING 10% OF THE TOTAL HI RE CHARGES ON THE GROUND THAT ASSESSEE FAILED TO DISCHARGE THE PRIMARY ONUS TO SUBSTANTIATE AND SUPPORT THE CLAIM OF EXPEN SES IN THE BOOKS OF ACCOUNTS. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AFF IRMED THE ADDITION BY OBSERVING AND HOLDING AS UNDER: 4.2 I HAVE PERUSED THE RELEVANT FACTS OF THE CA SE AS MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AS WELL A S ARGUMENTS TAKEN ON BEHALF OF THE APPELLANT. THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER HAS CLEARLY MENTIONED THAT THE ASSESSEE FAILED TO FURNISH SUPPORTING BILL S AND VOUCHERS. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT WAS DIRECTED T O FURNISH NET PROFIT RATE AND ON A PERUSAL OF THE SAME, IT IS SEEN THAT THERE IS CON SIDERABLE DECREASE IN THE NET PROFIT SHOWN DURING THE YEAR AS COMPARED TO THE PRECEDING TWO YEARS. IN THE A.Y. 2012-13 AND 2013-14, THE NP HAS BEEN SHOWN AT 4.46% AND 3.2 4% RESPECTIVELY. HOWEVER, IN THE PRESENT YEAR, THE NP SHOWN IS ONLY 2.76%. THE A PPELLANT IS RUNNING A PROPRIETARY CONCERN AND THEREFORE, INFLATION OF EXP ENSES FOR THE PURPOSE OF REDUCING TAXABLE INCOME CANNOT BE RULED OUT PARTICU LARLY KEEPING IN VIEW OF THE FACT THAT THERE IS CONSIDERABLE REDUCTION IN THE NET PRO FIT SHOWN DURING THE YEAR. I THEREFORE HOLD THAT THE ASSESSING OFFICER WAS ALREA DY VERY FAIR AND REASONABLE IN RESTRICTING THE DISALLOWANCE TO THE EXTENT OF 10% O F THE CLAIM AND THEREFORE, THE DISALLOWANCE MADE BY HIM AT RS. 26,62,061/- IS CONF IRMED. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE HAS FURNISHED THE BILLS, VOUCHERS AND BOOKS OF ACCOUNTS IN SUPPORT OF HIS CL AIM. HOWEVER, THE AO FURTHER SOUGHT THE DETAIL OF WEIGHT , CONTAINER ITA NO.2386/M/2018 M/S. BABAN G. DANGAT 4 NUMBER ETC. WHICH COULD NOT BE FURNISHED BY THE ASS ESSEE DUE TO THE SHORT PERIOD ALLOWED BY THE AO TO THE ASSESS EE. 7. BEFORE US THE LD. A.R. ARGUED THAT THE SAID INFO RMATION WAS NOT READILY AVAILABLE WITH THE ASSESSEE AS THE SAME WAS NOT CAPTURED IN THE BOOKS OF ACCOUNTS AND THE BILLS AN D WHICH WERE VERY DIFFICULT TO COMPILE IN A SHORT PERIOD. THE L D. A.R. ALSO SUBMITTED THAT THE AUTHORITIES BELOW HAVE NOT DOUBT ED THE EXPENSES, HOWEVER, DISALLOWED THE EXPENSES TO THE T UNE OF 10% WHICH COMES TO RS.26,62,061/- FOR THE REASON THAT T HE ASSESSEE HAS NOT FURNISHED THE DETAILS WHICH WERE ASKED FOR BY THE AO. THE LD. CIT(A) REJECTED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT THE NET PROFIT DURING THE CURRENT YEAR HAS FAL LEN CONSIDERABLY VIS--VIS THE TWO PRECEDING YEARS. TH E NET PROFIT DURING THE YEAR WAS 2.76% WHEREAS IN THE PRECEDING TWO YEARS THE NP WAS 4.46% AND 3.24%. THE LD. CIT(A) HELD TH AT THE ASSESSEE IS RUNNING A PROPRIETARY CONCERN AND THE I NFLATION OF EXPENSES CAN NOT BE RULED OUT AND THUS JUSTIFIED TH E DISALLOWANCE TO THE EXTENT OF 10%. IN OUR OPINION, THE DISALLOWANCE IS MERELY BASED ON ESTIMATION SURMISES AND PRESUMPTIONS WHICH IS NOT CORRECT AND CAN NOT BE SU STAINED. UNDER THESE CIRCUMSTANCES, WE ARE INCLINED TO SET A SIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE DIS ALLOWANCE. 8. GROUND NO.1 IS ALLOWED. 9. THE ISSUE RAISED IN GROUND NO.2, 3 & 4 OF THE AP PEAL IS AGAINST THE CONFIRMATION OF ADDITION ON ACCOUNT OF CONTAINER MOVEMENT EXPENSES, TRIP EXPENSES AND TOLL TAXES AND PARKING EXPENSES TO THE TUNE OF 10% OF THE TOTAL EXPENSES C LAIMED UNDER ITA NO.2386/M/2018 M/S. BABAN G. DANGAT 5 THESE THREE HEADS BY CIT(A) AS AGAINST THE 20% OF T HE TOTAL EXPENSES DISALLOWED BY THE AO. 10. THE FACTS IN BRIEF ARE THAT THE AO DURING THE C OURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE HAS C HARGED TO THE PROFIT & LOSS ACCOUNT UNDER THE HEAD TRUCK HIR E CHARGES RS.10,46,020/- AS CONTAINER MOVEMENT EXPENSES. THE AO, AFTER OBSERVING THAT THE VOUCHERS WERE SELF MADE, DISAL LOWED 20% OF THE EXPENSES WHICH COMES TO RS.2,09,204/-. SIMILAR LY, THE ASSESSEE HAS DEBITED TRIP EXPENSES OF RS.93,25,322/ - UNDER THE HEAD FUEL, OIL AND OPERATING EXPENSES. ACCORDING T O THE AO THESE EXPENSES WERE INCURRED IN CASH AND ASSESSEE C OULD NOT SUBMIT THE BILLS AND VOUCHERS IN SUPPORT OF HIS CLA IM AND ACCORDINGLY DISALLOWED A SUM OF RS.13,98,784/- BEIN G 50% OF THE SAID EXPENSES. LIKEWISE, UNDER THE HEAD OF TOL L TAXES AND PARKING EXPENSES, THE ASSESSEE HAS DEBITED RS.76,35 ,962/- AS TOLL TAX AND PARKING EXPENSES. THE AO DISALLOWED RS.11,45,394/- BEING 50% OF THE SAID EXPENDITURE ON THE ESTIMATED BASIS BY HOLDING THAT ASSESSEE COULD NOT PRODUCE THE BILLS, VOUCHERS IN RESPECT OF THESE EXPENSES WHICH WERE INCURRED IN CASH AND FINALLY ADDED ALL THESE DISALLOWANCES T O THE INCOME OF THE ASSESSEE. 11. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) BY COMPARING THE NET PROFIT IN THE CURRENT YEAR WHICH WAS 2.76% WITH THE EARLIER TWO ASSESSMENT YEARS NAMELY 2012-13 AND 201 3-14 WHICH WAS 4.46% AND 3.24% RESPECTIVELY UPHELD THE DISALLOWANCE PARTLY ON THE SUSPICION ON THAT ASSESS EE MIGHT HAVE SUPPRESSED THE PROFIT. THE LD. CIT(A) SUSTAIN ED THE ADDITION TO THE EXTENT OF 10% IN RESPECT OF CONTAIN ER MOVEMENT ITA NO.2386/M/2018 M/S. BABAN G. DANGAT 6 EXPENSES, TRIP EXPENSES, SUNDRY AND TOLL TAX AND PA RKING EXPENSES THEREBY CONFIRMING ADDITIONS UNDER THESE HEADS TO THE TUNE OF RS.1,04,602/-, RS.9,32,523/- AND RS.7,63,59 6/-. WE OBSERVED THAT THE DISALLOWANCE WAS PURELY MADE ON ADHOC BASIS ON THE PRESUMPTION THAT ASSESSEE MIGHT HAVE INFLATE D THE EXPENSES IN ORDER TO SUPPRESS THE INCOME. IN OUR O PINION, SUCH A PRESUMPTION IS NOT CORRECT ON THE PART OF THE REV ENUE AUTHORITIES AS NO CONCRETE FINDINGS AS TO SUPPRESS OF INCOME BY THE ASSESSEE HAS BEEN BROUGHT ON RECORD. UNDER THE SE FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO SET ASIDE THE ORD ER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE DISALLOWANCE . 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.08.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 09.08.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.