Vestro Solvents Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-3(3), Hyderabad, Hyderabad

ITA 248/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2353 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: S RAMA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA NO. 248/HYD/2016 ASSESSMENT YEAR: 2009-10 & ITA NO. 249/HYD/2016 ASSESSMENT YEAR: 2010-11 M/S VESTRO SOLVENTS PVT. LTD, HYDERABAD. PAN AABCV5324J VS. DY COMMISSIONER OF INCOME TAX, CIRCLE-3(3) HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SMT. N. SWAPNA DATE OF HEARING : 04-07-2017 DATE OF PRONOUNCEMENT : 07-07-2017 ORDER PER D.S. SUNDER SINGH, A.M: ALL THE GROUNDS IN THIS APPEAL ARE RELATED TO THE DISALLOWANCE OF VEHICLE MAINTENANCE TO THE EXTENT OF RS. 10,05,075/- FOR THE A.Y 2009-10 AND RS. 12,25,227/- FOR THE A.Y 2010-11. THE ASSESSE IS ENGAGED IN THE BUSINESS OF TRADING IN SOLVENTS, CHEMICALS AND TRANSPORT. FOR THE A.Y 2009-10, THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 2,01,01,497/- AND FOR THE A.Y. RS.2010-11 RS. 2,45,04,534/- UNDER THE HEAD VEHICLE MAINTENANCE. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED BILLS AND VOUCHERS FOR THE EXPENSES, PART OF WHICH WERE SELF-MADE VOUCHERS AND PARTLY PUCCA VOUCHERS. THE A.O, 2 ITA NOS. 248 & 249/HYD/2016 M/S VESTRO SOLVENTS PVT LTD., HYDERABAD. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, DISALLOWED 5% OF EXPENSES AS UNVERIFIABLE EXPENSES, WHICH WORKED OUT TO RS. 10,05,075/- FOR THE A.Y 2009-10 AND RS. 12,25,225/- FOR THE A.Y 2010-11. AGGRIEVED BY THE ORDER OF THE A.O, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) 2. THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE A.O AND DISMISSED THE APPEAL OF THE ASSESSEE. THE CIT(A) OBSERVED THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING IN CHEMICALS AND TRANSPORTATION. AS PER THE PROFIT AND LOSS ACCOUNT FOR THE A.Y.2009-10, SCHEDULE NO. 14. TRANSPORT CHARGERS RECEIVED WAS RS. 1,85,88,126/- AND THE REST OF THE RECEIPTS WERE FOR SALE OF GOODS. THUS, AGAINST THE RECEIPT OF TRANSPORTATION CHARGES OF RS. 1.85 CRORES, THE VEHICLE MAINTENANCE EXPENDITURE WAS RS. 2.01 CRORES. AND THE MAJORITY OF THE EXPENSES WERE PAID BY SELF-MADE VOUCHERS AND PAID IN CASH. HENCE, LD. CIT(A) HELD THAT THE DISALLOWANCE OF EXPENDITURE MADE BY THE A.O IS JUSTIFIED AND ACCORDINGLY, CONFIRMED. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 3. DURING THE APPEAL HEARING, THE LD. AR ARGUED THAT THE ASSESSEE HAS REGULARLY MAINTAINED THE BOOKS OF ACCOUNTS AND THE EXPENSES ARE SUPPORTED BY THE VOUCHERS. THOUGH THE EXPENSES WERE PAID IN CASH PARTLY WITH SELF-MADE VOUCHERS THE EXPENSES WERE GENUINE. HE SUBMITTED TWO PAPER BOOKS SUPPORTING THE VEHICLE MAINTENANCE EXPENSES. THE LD. AR FURTHER ARGUED THAT THE ASSESSEE IS IN THE TRANSPORTATION BUSINESS WHEREIN THE EXPENSES ARE INCURRED BY LORRY DRIVERS FOR THE VEHICLE MAINTENANCE. THE LORRY DRIVERS INCUR THE EXPENDITURE ENROOT TO THE DESTINATION AND 3 ITA NOS. 248 & 249/HYD/2016 M/S VESTRO SOLVENTS PVT LTD., HYDERABAD. GETTING PACCA VOUCHERS FORM THE UNORGANIZED BUSINESS PEOPLE IS IMPOSSIBLE AND WHEREVER POSSIBLE, THE ASSESSEE OBTAINED THE PACCA VOUCHERS AND PLACED BEFORE THE A.O. ACCORDINGLY, THE LD. AR SUBMITTED THAT THE EXPENDITURE WAS GENUINE AND THE ADDITION IS UNJUSTIFIED. ON THE OTHER HAND THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE HAS SUBMITTED EVIDENCES FOR THE VEHICLE MAINTENANCE EXPENSES PARTLY SELF-MADE VOUCHERS, PARTLY PACCA VOUCHERS. THE ENTIRE EXPENDITURE MET ON SELF-MADE VOUCHERS WAS INCURRED IN CASH. AS OBSERVED BY THE LD. CIT(A), THE TOTAL TRANSPORTATION INCOME WAS 1.85 CRORES AND THE VEHICLE MAINTENANCE EXPENDITURE WAS 2.01 CRORES FOR THE A.YS 2009-10.FOR THE A.Y 2010-11 NO TRANSPORTATION CHARGES WERE RECEIVED AND THE VEHICLE MAINTENANCE EXPENDITURE HAS GONE UP TO RS. 2.45 CRORES. THE PAYMENT FOR THE EXPENSES ON SELF-MADE VOUCHERS WAS INCURRED IN CASH . COMPARED TO THE TRANSPORTATION INCOME THE EXPENDITURE WAS VERY HIGH AND NO PLAUSIBLE EXPLANATION WAS OFFERED BY THE ASSESSEE FOR INCURRING SUCH HUGE EXPENDITURE. IN THE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT THE INFLATION OF EXPENDITURE IS NOT RULED OUT AND THE ASSESSEE ALSO COULD NOT ESTABLISH THAT THE EXPENSES MET OUT OF SELF-MADE VOUCHERS IS VERIFIABLE. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE DISALLOWANCE OF RS. 5 LAKHS FOR THE A.Y 2009-10 AND RS. 6.00 LAKHS FOR THE A.Y 2010-11 WOULD BE REASONABLE AND ACCORDINGLY WE DIRECT THE AO TO 4 ITA NOS. 248 & 249/HYD/2016 M/S VESTRO SOLVENTS PVT LTD., HYDERABAD. RESTRICT THE DISALLOWANCE. THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 5. IN THE RESULT, BOTH THE APPEALS FOR THE A.YS 2009-10 AND 2010-11OF THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 07 TH JULY, 2017. SD/- SD/- (V. DURGA RAO) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 07 TH JULY, 2017. KRK 1 M/S VESTRO SOLVENTS PVT LTD. C/O SRI S RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYATNAGAR, HYDERABAD 500029. 2 DY CIT, CIRCLE -3(3), HYDERABAD. 3 CIT(A)-5, HYDERABAD. 4 THE PR. COMMISSIONER OF INCOME TAX, RANGE-5, HYDERABAD. 5 THE DR, ITAT HYDERABAD 6 GUARD FILE