ITO, Bhawanipatna Ward, Bhawanipatna V. M/s. Jai Krishna Mishra, Nuapada

ITA 60/CTK/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3854 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 29-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P K MISHRA
• Keywords: Rejection of books of accounts; Business expenditure; Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND KULDIP SINGH JUDICIAL MEMBER ITA NO.54 /CTK/2016 ASSESSMENT YEAR : 2011 - 12 SRI JAIKRISHNA MISHRA, AT/PO: KOMNA, DIST: NUAPADA. VS. ITO, BHAWANIPATANA, THROUGH COMMERCIAL OF INCOME TAX, AAYAKAR BHAVAN, SAM B BLPUR PAN/GIR NO. ABZPM 1393 C (APPELLANT ) .. ( RESPONDENT ) ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 ITO, BHAWANIPATANA, THROUGH COMMERCIAL OF INCOME TAX, AAYAKAR BHAVAN, SAM B A LPUR VS. SRI JAIKRISHNA MISHRA, AT/PO: KOMNA, DIST: NUAPADA. PAN/GIR NO. ABZPM 1393 C (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K.MISHRA, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 17 /04/ 2017 DATE OF PRONOUNCEMENT : 21 /04/ 2017 O R D E R PER N.S.SAINI, AM: THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 30.11.2015 , FOR THE ASSESSMENT YEAR 2011 - 12 . 2. GROUND NOS.1,6 & 7 OF THE APPEAL OF THE ASSESSEE ARE GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATION BY US. 2 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ 3. GROUND NOS.3 AND 5 OF THE APPEAL OF THE ASSESSEE READ AS UNDER: 3. FOR THAT, THE AO AS WELL AS THE CIT(A) SHOULD NOT HAVE DISALLOWED THE COMMIS SION PAID TO THE TUNE OF RS.5,36,115.00 BY APPLYING SECTION 40(A)(IA) OF THE ACT. 5. FOR THAT THE AO AS WELL AS CIT(A) SHOULD NOT HAVE CONSIDERED THE AMOUNT OF RS.85,668.00 AS INCOME FROM OTHER SOURCES WHICH IS ILLEGAL AND NOT SUSTAINABLE IN THE EYE OF LAW . HENCE, IT IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 4. AT THE TIME OF HEARING, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THESE GROUNDS OF APPEAL AND HENCE, THEY ARE DISMISSED FOR WANT OF PROSECUTION. 5. IN GROUND NOS.2 AND 4 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OUT OF TRANSPORTATION INWARD EXPENSES AND H E MALI CHARGES TO 10 % CLAIMED BY THE ASSESSEE. 6. IN REVENUES APPEAL, GROUND NOS.2 & 3 AR E DIRECTED AGAINST THE ORDER OF THE CIT(A) RESTRICTING THE DISALLOWANCE UNDER THE HEAD TRANSPORTATION INWARD EXPENSES TO RS.11,7 4,800/ - IN PLACE OF RS.49,39,856 / - MADE BY THE ASSESSING OFFICER AND THAT THE CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE UNDER THE HEAD HEMALI CHARGES TO RS RS.1,15,860/ - IN PLACE OF RS.7,53,075/ - . 7. THE FACTS AND ISSUE INVOLVED IN GROUND NOS.2 & 4 OF THE APPEAL OF THE ASSESSEE AND IN GROUND NOS. 2 & 3 OF THE APPEAL OF THE REVENUE ARE COMMON, THEREFORE, THEY ARE BEING DISPOSED OF TOGETHER FOR THE SAKE OF CONVENIENCE AS UNDER: 3 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED RS. 1 17 47,976/ - TOWARDS TRANSP ORTATION INWARD EXPENSES. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE PRODUCED DEBIT VOUCHERS IN SUPPORT OF TRANSPORTATION INWARD BUT NO WAYBILL COPY OR MONEY RECEIPT OF THE TRANSPORTERS TOWARDS RECEIPT OF FREIGHT BY CASH BY THEM HAVE BEEN FILED/ PRODUCED BY THE ASSESSEE FOR VERIFICATION. THE REASON FOR PAYMENT OF TRANSPORTATION CHARGES BY CASH HA S NOT BEEN FURNISHED. T HE DETAILS OF TRANSPORTATION CHARGES SUCH AS QUANTITY OF D AL/SOYA TRANSPORTED, RATE PER QUI INTAL/KILOMETER, COPY OF BILLS RAISED BY THE TRANSPORTERS ETC. HAVE NOT BEEN PRODUCED FOR VERIFICATION. THE ASSESSEE ONLY PRODUCED AFFIDAVITS FROM THE TRANSPORTERS REGARDING RECEIPT OF THE AMOUNT ALONGWITH COPY OF LEDGER ACCOUNTS AS EVIDENCE. THE ASSESSING OFFICER I N THE A BSENC E OF PROPER SUPPORTING EVIDENCE HELD THAT IT WAS NOT POSSIBLE TO ALLOW SUCH A HUGE CLAIM OF EXPENSES BY CASH UNDER TRANSPORTATION INWARD. THE ASSESSING OFFICER CALCULATED THE DISTANCES FROM NAGPUR, RAIPUR TO JEYPORE AND RAYAGADA, ODISHA AND ESTIMATED THE INWARD TRANSPORTATION RATE @ RS.400/ - PER QUINTAL IN CASE OF PURCHASES MADE FROM NAGPUR AND TRANSPORTATION AT RATE OF RS.300/ - PER QUINTAL, IN CASE OF PURCHASE S MADE FROM RAIPUR TO CHHATISGARH. THE ASSESSING OFFICER FOUND OUT THAT THE TRANSPORTATION I NWARD EXPENSES ACCORDING TO HIS ESTIMATION SHOULD BE RS.68,09,120/ - BUT THE ASSESSEE HAS CLAIME D AN AMOUNT OF RS.1,17,47,976/ - . THEREFORE, THE ASSESSING OFFICER TREATED THE DIFFERENCE 4 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ OF RS.49,39,856/ - AS THE EXCESS CLAIM OF EXPENDITURE UNDER TRANSPORTATION INWARD CLAIMED BY THE ASSESSEE AND DISALLOWED THE SAME. 9 . ON APPEAL BEFORE THE CIT( A), THE ASSESSEE SUBMITTED THAT IN REPLY TO THE SHOW CAUSE NOTICE OF THE ASSESSING OFFICER, THE ASSESSEE PRODUCED BOOKS OF ACCOUNT AND COPY OF AGREEMENT. IT WAS SUBMITTED THAT AS PER CLAUSE 7 OF THE AGREEMENT EXECUTED WITH DSWO, THE PAYMENT COST OF ARHAR DAL AND ARHAR LOCAL KANDUL DAL WAS FIXED AT RS.7,500/ - PER QUINTAL INCLUDING ALL TAXES AND TRANSPORTATION CHARGES UPTO MDM SCHOOL POINT AND ETF CENTRE POINT AND SIMILARLY, IN THE CASE OF OCCF, RS.6900,00 PER QUINTAL INCLUSIVE OF ALL COST INCLUDING COST OF GUNNY BAG AND TRANSPORTATION CHARGES UP TO SCHOOL - POINT . IT WAS SUBMITTED THAT THE NET SALE S OF THE ASSESSEE VERIFIED AND ACCEPTED WAS AT RS.12,93,37,507.00 AND THE NET PURCHASES VERIFIED AND ACCEPTED BY THE ASSESSING OFFICER WAS AT RS.10,79,27,455.00. IT WAS FURTHER SUBMITTED THAT THE EXPENSES IN BETWEE N THE PURCHASES AND SALES WERE THE DIRECT EXPENSES AND OPENING STOCK. IF THE OPENING STOCK WAS DEDUCTED, THEN THE REMAINING DIRECT EXPENSES WAS RS.1,29,06,555,73. IT WAS ARGUED THAT THE DIRECT EXPENSES AS PER SCHEDULE - F OF THE AUDIT REPORT WA S THE TRA NSPORTATION INWARDS AND HAMALI CHARGES. THE ASSESSING OFFICER HAS DISPUTED THE TRANSPORTATION INWARDS AND THE HAMALI CHARGES. WHEN THE ASSESSING OFFICER HAS ACCEPTED THE PU RCHA SES, SALES, OPENING STOCK AS WELL AS THE GROSS PROFIT, HOW CAN HE REDUCE THE TRANSPORTATION INWARDS EXPENSES BY ADOPTING AN ABSURD PROCESS, PARTICULARLY WHEN THE BILLS AND VOUCHERS 5 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ PRODUCED BEFORE THE ASSESSING OFFICER CLEARLY JUSTIFIES THE FACT OF TRA NSPORTATION INWARD EXPENSES. IT WAS FURTHER SUBMITTED THAT IN ADDITION TO PRODUC TION OF BOOKS OF ACCOUNTS, THE A SSESSEE ALSO PRODUCED LEDGER ACCOUNT COPIES CONFIRMED BY EACH OF THE TRANSPORTERS AND COPIES OF THE AFFIDAVIT SWORN BY EACH OF THE TRANSPORTERS . WHE N THE BOOKS OF ACCOUNTS OF THE A SSESSEE AS WELL AS THE CONFIRMATION AND AFFIDAVIT OF THE TRANSPORTER CLEARLY JUSTIFIES THE TRANSPORTATI ON EXPENSES, THE ASSESSING OFFICER, IF AT ALL, HAD ANY DOUBT, HE COULD HAVE CALLED THESE TRANSPORTERS FOR EXAMINATIO N OR ELSE COULD HAVE COLLECTED ANY INFORMATION FROM THEM TO REBUT THE CLAIM OF THE A SSESSEE. WITHOUT EXAMINING THE BOOKS OF ACCOUNTS AND CORROBORATING SUPPOR TING EVIDENCES, THE ASSESSING OFFICER SHOULD NOT HAV E IGNORED THE SAME SIMPLY AND SHOULD NOT HAVE P ROCEEDED TO DETERMINE THE TRANSPORTATION EXPENSES BY APPLYING THE TRANSPORTATION RATE OF RS.300.00 PER QUINTAL FROM RAIPUR AND RS.400.00 PER QUINTAL FROM NAGPUR. BEFOR E ADOPTING ANY OTHER MODE, IT WAS THE DUTY OF THE ASSESSING OFFICER TO REJECT THE CLAIM O F THE ASSESSEE AND THE EVIDENCE PRODUCED BEFORE HIM. WITHOUT HAVING ANY CONCRETE NEGATIVE EVIDENCE IN HIS HAND AND WITHOUT EXAMINING THE CORRECTNESS OF THE EVIDENCES, THE ASSESSING OFFICER CANNOT REJECT THE SAME. THEREFORE, IT WAS PRAYED THAT THE ADDITIO N MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE IN LAW AND HENCE, SHOULD BE DELETED. 10 . THE CIT( A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE OBSERVED THAT THE ASSESSEE DURING THE APPEAL HEARING SUBMITTED THAT THE PAYMENTS WERE MADE TO THE TRUCK DRIVERS AT REMOTE AREAS WITHOUT ANY BANKING FACILITY 6 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ AND THAT THE TRUCK DRIVERS INSISTED ON CASH PAY MENT ALSO LEADS TO THE PERCEPTION THAT ALL THE BILLS AND VOUCHERS COULD NOT HAVE BEEN MAINTAINED PROPERLY BY THE ASSESSEE TO GIVE A TRUE AND CORRECT PICTURE OF THE TRANSPORTATION CHARGES PAID. THEREFORE, THE CIT(A) THOUGHT IT FIT TO DISALLOW10% OF THE TOT AL TRANSPORTATION INWARD CHARGES CLAIMED BY THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO ADD RS.11,74,800/ - ON THIS ACCOUNT. 11 . LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS IN ESTIMATION OF TRANSPORTATION CHARGES OF DAL FROM NAGPUR AND RAIPUR TO THE DESTINATION OF SCHOOLS IN KORAPUT, JEYPORE AND RAYAGADA AT RS.400/ - PER QUINTAL FROM NAGPUR AND RS.300/ - PER QUINTAL FROM RAIPU R. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND NEITHER POINTED OUT ANY DEFECTS THEREON. THEREFORE, HE WAS NOT JUSTIFIED IN ESTIMATING THE TRANSPORTATION EXPENSES. IT WAS ARGUED THAT THE CIT(A) HAS ASSUMED THAT SINCE THE PAYMENT OF TRANSPORTATION CHARGES TO THE TRUCK DRIVERS WAS MADE IN CASH WHO INSISTED CASH PAYMENT, THEREFORE, BILLS AND VOUCHERS COULD NOT HAVE BEEN MAINTAINED PROPERLY BY THE ASSESSEE TO GIVE TRUE AND CORRECT PICTURE OF TRANSPO RTATION CHARGES PAID AND THE ADDITION WAS MADE BASED ON ASSUMPTION AND SURMISE OF THE CIT(A). HENCE, IT WAS HIS PRAYER THAT THE ADDITION MADE SHOULD BE DELETED. 7 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ 12 . IN THE ALTERNATIVE, THE ARGUMENT OF LD A.R. OF THE ASSESSEE WAS THAT THE DISALLOWANCE SUS TAINED AT 10% OF THE TRANSPORTATION INWARD EXPENSES WAS ON HIGHER SIDE AND, THEREFORE, SAME SHOULD BE APPROPRIATELY REDUCED. 13 . LD DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND ARGUED THAT THE CIT(A) WAS NOT JUSTIFIED IN REDUCING THE DISALLOWANCE TO RS.1 1,74,800/ - AS AGAINST THE DISALLOWANCE OF RS.49,39,856/ - MADE BY THE ASSESSING OFFICER. 14 . WE FIND THAT THE UNDISPUTED FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CLAIMED TO HAVE PAID TRANSPORTATION INWARD EXPENSES OF RS.1,17,47,976/ - . OUT OF THE SAME, RS.92,62,000/ - WAS OUTSTANDING AND PAYABLE AS AT THE END OF THE YEAR AND ONLY PAYMENT OF RS.39,34,525/ - WAS MADE DURING THE YEAR, OUT OF WHICH, RS.8,96,000/ - WAS PAID THROUGH THE SELLERS FROM WHOM THE ASSESSEE PURCHASED DAL AND SOYA AND REST OF THE AMOUNT OF RS.30,38,525/ - WAS PAID TO THE TRANSPORTERS INDEPENDENTLY ON DIFFERENT OCCASIONS IN CASH. THEREFORE, THE ASSESSING OFFICER AS WELL AS THE CIT(A) WERE NOT JUSTIFIED IN ESTIMATING THE DISALLOWANCE BASING ON THE TOTAL TRANSPORTATION INWARD EXPENSES OF RS.1,17,47,976/ - ON THE GROUND THAT THE PAYMENTS WERE MADE IN CASH BY THE ASSESSEE TO THE TRANSPORTERS. FURTHER, WE FIND THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT REJECTED BY THE ASSESSING OFFICER AND WITHOUT DOI NG THE SAME, HE IS NOT EMPOWERED IN LAW TO MAKE ESTIMATED 8 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ DISALLOWANCE OUT OF THE LEGITIMATE AND GENUINE BUSINESS EXPENDITURE OF THE ASSESSEE. STILL FURTHER, IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS CLAIMED BOGUS EXPENSES IN ORDER TO REDUCE ITS INCOME. FURTHER, NO DETAILS HAVE BEEN PROVIDED EITHER BY THE ASSESSING OFFICER OR BY THE CIT(A) AS TO WHICH OF THE TRANSPORTATION EXPENSES IS NOT VERIFIABLE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT NO ESTIMATED DISALLOWANCE OUT OF TOTAL TRANSP ORTATION INWARD EXPENSES OF RS.1,17,47,976/ - CAN BE MADE BY THE ASSESSING OFFICER IN LAW. HENCE, WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.11, 74,800/ - SUSTAINED BY THE CIT(A) . 15 . AS REGARDS THE HE MALI CHARGES OF RS.11,58,580/ - , THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE PURCHASED 17,573 QUINTALS OF DAL AND SOYA AND ACCORDING TO THE ASSESSEE, THE COST OF LOADING AND UNLOADING PER QUINTAL COMES TO AROUND RS.66/ - WHICH WAS UNREASONABLE HIGH. THE AS SESSING OFFICER DID NOT ACCEPT THE DEBIT VOUCHERS PRODUCED BY THE ASSESSEE DURING SCRUTINY PROCEEDINGS AS THE NAME OF THE RECIPIENTS ETC., WERE NOT MENTIONED IN SUCH RECEIPTS. THE ASSESSING OFFICER THEN APPLIED A MAXIMUM RATE OF RS.14/ - PER QUINTAL OF GOO DS DEALT BY THE ASSESSEE AND CONSIDERED IT REASONABLE TO ALLOW 25% OF EXPENSES CLAIMED AND DISALLOWED BALANCE 75% AMOUNTING TO RS.8,68,935/ - . 16 . BEFORE THE CIT(A), THE ASSESSEE SUBMITT ED THAT ALL THE VOUCHERS FOR HE MALI CHARGES CLAIMED WERE DULY PRESENT ED BEFORE THE ASSESSING OFFICER 9 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ AND THE ASSESSING OFFICER HAS NOT SPECIFICALLY POINTED OUT ANY MISTAKE IN THE BILLS AND VOUCHERS SUBMITTED BY THE ASSESSEE. WHILE DISALLOWING 75% OF THE EXPENSES, THE ASSESSING OFFICER HAS NOT CONSIDERED THE NATURE OF WORK UNDERTAKEN BY THE ASSESSEE AND AS TO WHETHER EXPENSES DETERMINED BY HIM WAS SUFFICIENT TO CARRY OUT SUCH A HIGH VALUE SUPPLY. 17 . THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HELD THAT SINCE HEMALI CHARGES, WHICH WAS AN IMPORTANT PART OF PR OCUREMENT AND SUPPLY OF DAL HAD NOT BEEN VOUCHED PROPERLY, THERE MAY BE AN ELEMENT OF EXCESS CLAIM OF SUCH EXPENSES. HOWEVER, ESTIMATION BY THE ASSESSING OFFICER ON HEMALI CHARGES @ RS.14/ - PER QUINTAL AS AGAINST SHOWN BY THE ASSESSEE AT RS.65/ - PER QUINT AL WAS NOT TENABLE. THEREFORE, HE DIRECTED THE ASSESSING OFFICER TO ALLOW 10% OF THE CLAIM AND MADE ADDITION OF RS.1,15,860/ - TO THE TOTAL INCOME OF THE ASSESSEE. 18 . BEFORE US, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE ARGUED THAT THE BOOKS OF ACCOUN T OF THE ASSESSEE HAVE NOT BEEN REJECTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WITHOUT ANY BASIS ESTIMATED THE HEMALI CHARGES FOR PURCHASE OF DAL AND SOYA AT RS.14/ - PER QUINTAL AND CONSIDERED IT REASONABLE TO ALLOW 25% OF THE EXPENSES CLAIMED A ND DISALLOWED BALANCE 75% AMOUNTING TO RS.8,68,935/ - . ON APPEAL, THE CIT(A) HAS RESTRICTED THE DISALLOWANCE TO 10% OF THE EXPENSES CLAIMED BY THE ASSESSEE. HE ARGUED THAT NO BASIS HAS BEEN GIVEN BY THE ASSESSING OFFICER 10 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ FOR MA KING ESTIMATED DISALLOWANCE A T 75 % OUT OF HEMALI EXPENSES. HE ARGUED THAT NO SPECIFIC INSTA NCE HAS BEEN POINTED OUT WHERE THE EXPENSES OF HEMALI CHARGES ARE NOT VERIFIABLE OR THAT THE ASSESSEE FAILED TO PRODUCED ANY VOUCHERS OR BILLS FOR THE SAME. IT WAS ARGUED THAT WITHOUT BRINGING ANY SUCH MATERIAL, THERE CAN BE NO ESTIMATED DISALLOWANCE OUT OF GENUINE BUSINESS EXPENSES CLAIMED BY THE ASSESSEE. HENCE, HE SUBMITTED THAT THE DISALLOWANCE SHOULD BE DELETED. 19 . ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 20 . WE FIND THAT THE ASSESSEE HAD CLAIMED HEMALI CHARGES OF RS.11,58,580/ - FOR PURCHASE OF 17,573 QUINTALS OF DAL AND SOYA. THE ASSESSING OFFICER OBSERVED THAT THE COST OF THE LOADING/UNLOADING CHARGES PER QUINTAL @ RS.66/ - IS VERY HIGH AND ESTIMATED THE SAME @ 14/ - PER QUINTAL WITHOUT GIVING ANY BASIS IN HIS ORDER. THE ASSESSING OFFICER THEREAFTER ALLOWED 25% OF THE EXPENSES CLAIMED BY THE ASSESSEE AND DISALLOWED BALANCE 75% OF THE EXPENSES OF RS.8,68,935/. THE CIT (((A) WITHOUT GIVING ANY BASIS HAS ESTIMATED THE DISALLOWANCE TO 10% OF RS.11,58,580/ - AND SUSTAINED THE DISALLOWANCE AT RS.1,15,860/ - . THE CONTENTION OF THE A.R. OF THE ASSESSEE IS THAT WITHOUT POINTING OUT ANY SPECIFIC INSTANCE WHE R E THE ASSESSEE HAS FAILED TO PRODUCE THE BILLS AND VOUCH ERS FOR HEMALI CHARGES CLAIMED BY THE ASSESSEE, ADHOC DISALLOWANCE 11 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ OUT OF GENUINE BUSINESS EXPENDITURE OF THE ASSESSEE CANNOT BE SUSTAINED IN LAW. WE FIND THAT NO POSITIVE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE HEMALI CHARGES CLAIMED BY THE ASSESSEE HAS BEEN INFLATED IN ORDER TO REDUCE ITS INCOME. NO SPECIFIC INSTANCE HAS BEEN BROUGHT ON RECORD BY THE REVENUE WHERE THE ASSESSEE FAILED TO PRODUCE BILLS AND VOUCHERS FOR HEMALI CHARGES. IN OUR CONSIDERED VIEW, IN ABSENCE OF ANY S UCH MATERIAL BEING BROUGHT ON RECORD, THE DISALLOWANCE MADE CANNOT BE SUSTAINED IN LAW. WE, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE DISALLOWANCE OF RS.1,15,860/ - . 20. IN EFFECT, WE ALLOW THE GROUND NOS.2 & 4 OF THE ASSESSEE AND REJECT THE GROUND NOS.2 & 3 OF THE REVENUE. 21. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.3,32,270/ - TOWARDS TRANSPORT OUTWARD EXPENSES BY ADMITTING THE ADDITIONAL EV IDENCE IN THE FORM OF LEDGER ACCOUNT IN VIOLATION OF RULE 46A. 22. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE RECEIVED FREIGHT OF RS.3,32,270/ - FROM THREE PARTIES TOWARDS TRANSPORTATION OUTWARD. SINCE THE AMOUNT WAS NOT DISCLOSED IN THE TRADING AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AND 12 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ AS THE ASSESSEE COULD NOT FURNISH ANY PROPER EXPLANATION REGARDING THE SAME, THE ASSESSING OFFICER ADDED RS.3,32,270/ - TO THE INCOME OF THE ASSESSEE AS UNDISCLOSED GROSS RECEIPTS. 23. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE FILED COPIES OF AUDIT REPORT AND TRANSPORTATION OUTWARD LEDGER FROM WHERE, HE POINTED OUT THAT THE ASSESSEE HAD INCURRED THE EXPENDITURE ON TRANSPORTATION OUTWARD AMOUNTING TO RS.42,57,580/ - AND RECEIVED RS.3,32,270/ - AS CARRIAGE OUTWARD EXPENSES. FROM THE SCHEDULE TO THE PROFIT AND LOSS ACCOUNT AS A PART OF THE AUDIT REPORT, IT WAS EVIDENT THAT TRANSPORTATION OUTWARD WAS CLAIMED AT RS.39,25,310/ - BY THE ASSESSEE. 24. THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE OBSERVED THAT SINCE THE ACCOUNTS HAVE BEEN FINALISED MUCH BEFORE THE SCRUTINY PROCEEDINGS AND THAT THE ASSESSING OFFICER HAD NOT BROUGHT INTO RECORD ANYTHING CONTRARY TO THE TRANSPORTATION OUTWARDS CLAIMED BY THE ASSESSEE, THE ADDITION MADE WAS NOT SUSTAINABLE AND, ACCORDINGLY, DELETED THE SAME. 25. BEFORE US, LD DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE FILED LEDGER COPY OF THE TRANSPORTATION OUTWARD CHARGES BEFORE THE CIT(A), WHICH WAS NOT FILED BEFORE THE ASSESSING OFFICER AND HENCE, THERE WAS VIOLATION OF RULE 46A. 13 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ 26. ON THE OTHER HAND, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE ARGUED THAT THE ASSESSEE HAD FILED AUDITED STATEMENT OF ACCOUNTS ALONGWITH RETURN OF INCOME, WHICH WAS BEFORE THE ASSESSING OFFICER. FROM THIS ACCOUNT, IT WAS CLEAR THAT THE TRANSPORTATION OUTWARD EXPENSES WAS CLAIMED AT RS.39,25,310/ - . THE SAM E WAS EXPLAINED BY THE ASSESSEE WITH THE HELP OF THE LEDGER ACCOUNT WHICH WAS PART OF THE BOOKS OF ACCOUNT OF THE ASSESSEE AND PRODUCED BEFORE THE ASSESSING OFFICER THAT THE TRANSPORTATION OUTWARD EXPENSES INCURRED BY THE ASSESSEE WAS RS.42,57,580/ - AND TR ANSPORTATION OUTWARD RECEIVED BY THE ASSESSE WAS RS.3,32,270/ - AND ONLY NET AMOUNT OF RS.39,25,310/ - WAS CLAIMED BY THE ASSESSEE. HENCE, IT WAS HIS ARGUMENT THAT NO ADDITIONAL EVIDENCE WAS FILED BEFORE THE CIT(A). HE, THEREFORE, SUBMITTED THAT THE GROUND OF APPEAL OF THE REVENUE IS TO BE REJECTED. 27. WE FIND THAT LD D.R. HAS ARGUED THAT THE ASSESSEE FILED ADDITIONAL EVIDENCE IN THE FORM OF COPIES OF LEDGER ACCOUNT OF CARRIAGE OUTWARD EXPENSES. LD A.R. HAS CONTENDED BEFORE US THAT DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED BOOKS OF ACCOUNT AND COPY OF LEDGER ACCOUNT FILED BEFORE THE CIT(A) WAS PART OF THE BOOKS OF ACCOUNT PRODUCED BEFORE THE ASSESSING OFFICER. IT WAS SUBMITTED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE AUDITE D AND THE AUDIT REPORT TOGETHER WITH STATEMENT OF ACCOUNT WERE FILED WITH THE RETURN OF INCOME BY THE ASSESSEE. WITH THE HELP OF COPY OF LEDGER ACCOUNT OF OUTWARD EXPENSES, THE ASSESSEE 14 ITA NO.54/CTK/2016 ITA NO.60/CTK/2016 ASSESSMENT YEAR :2011 - 12 \ EXPLAINED THAT RS.3,32,270/ - WAS CREDITED IN THE CARRIAGE OUTWARD EXP ENSES THEREBY THE NET CARRIAGE OUTWARD OF RS.39,25,310/ - WAS CLAIMED AS DEDUCTION IN THE PROFIT AND LOSS ACCOUNT. IN THE ABOVE CIRCUMSTANCES OF THE CASE, AS THE CONTENTION OF LD A.R. OF THE ASSESSEE REMAINED UNCONTROVERTED BY LD D.R., WE FIND NO GOOD REAS ON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND, ACCORDINGLY, DISMISS GROUND NO.1 OF THE APPEAL OF THE REVENUE. 28 . IN THE RESULT, THE APPEAL F ILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 21 /04/2017 IN THE PRESENCE OF PARTIES. SD/ - SD/ - (KULDIP SINGH) ( N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER CUTTACK; DATED 21 /04/2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE ASSESSEE: SRI JAIKRISHNA MISHRA, AT/PO: KOMNA, DIST: NUAPADA. 2. THE REVENUE: ITO, BHAWANIPATANA, THROUGH COMMERCIAL OF INCOME TAX, AAYAKAR BHAVAN, SAMBALPUR 3. CIT(A) CUTTACK 4. PR.CIT , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//