The ITO, Ward-5(4), Baroda V. M/s. Bengal bihar Cargo Carriers, Baroda

ITA 97/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50999 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 24-11-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 09-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: S N DIVATIA

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI D.K.TYAGI, JM AND A. K. GARODIA, AM. THE INCOME TAX OFFICER, WARD 5(4), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA. VS M/S. BENGAL BIHAR CARGO CARRIERS, GUNJAN COMPLEX, HARNI CHAR RASTA, HARNI ROAD, BARODA. (APPELLANT) .. (RESPONDENT) PAN: AAGFM 1069 B APPELLANT BY :- SHRI B. L.YADAV, D.R. RESPONDENT BY:- SHRI S. N.DIVATIA. DATE OF HEARING :24 /11/2011 DATE OF PRONOUNCEMENT :30.11.11. O R D E R PER D. K. TYAGI, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF LD. CIT (A)-V, BARODA IN APPEAL NO. CAB/(A)-V/41/2006-07 DA TED 10-10-2008 FOR THE ASSESSMENT YEAR 2003-04. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS IN ITS A PPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF OF RS.9,39,638/ - OUT OF TOTAL ADDITION OF RS.12,52,851/- ON ACCOUNT OF DISALLOWAN CE OF 5% OF FREIGHT EXPENSES OF RS.2,50,57,032/-. ITA NO.97/AHD/2009 ASST. YEAR :2003-04 ITA NO. 97/AHD/2009 ASST. YEAR : 2003-04 2 2 2. THE APPELLANT CRAVES LEAVE TOAD TO, AMEND OR ALT ER THE ABOVE GROUND AS MAY BE DEEMED NECESSARY. 3. BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF I NCOME WAS FILED BY THE ASSESSEE ON30-11-2003 DECLARING TOTAL INCOME OF RS. 2,45,955/- AND THE REGULAR ASSESSMENT WAS COMPLETED UNDER SECTION143(3 ) OF THE ACT DETERMINING THE TOTAL INCOME AT RS.22,63,810/- WHER EIN THE FOLLOWING ADDITIONS WERE MADE:- 1) ADDITION ON ACCOUNT OF FREIGHT CHARGES RS.12,52,851/- 2) ADDITION ON ACCOUNT OF UNEXPLAINED LOANS/DEPOSITS U/S.68. RS. 7,50,000/- 3) ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST. RS. 15,000/- 4. FROM THE ABOVE ADDITIONS MADE BY THE AO, ONLY AD DITION IN RESPECT OF SR.NO.1 I.E. ADDITION ON ACCOUNT OF FREIGHT CHAR GES WAS CHALLENGED IN APPEAL BEFORE THE LD. CIT(A). 5. IN APPEAL, BEFORE THE LD. CIT (A) THE A.R. OF T HE ASSESSEE POINTED OUT THAT THE IN THE LINE OF TRANSPORT BUSINESS, THE DRIVERS ARE THE PERSONS WHO COLLECTED AND PAY THE CHARGES. SINCE THEY HAVE A NOMADIC TYPE OF LIFE, IT IS NOT PRACTICABLE TO MAINTAIN BANK ACCOUN T AND TRANSACT THROUGH CHEQUES OR DRAFTS. EVERY RECEIPT AND EXPENDITURE L ORRY WISE IS AVAILABLE AND PRODUCED BEFORE THE AO. THE OBSERVATION OF THE AO THAT THERE WAS A PROVISION OF EXPENSES OF RS.1,12,33,725/- FOR THE M ONTH OF MARCH,2003 IS NOT CORRECT, IN FACT IT WAS THE PROVISION FOR THE M ONTHS OF DECEMBER TO MARCH,2003.THE AR HAS ALSO PROVIDED A CHART OF FRE IGHT EXPENSES FOR THE ACCOUNTING YEARS 2001-02 TO 2004-05 WHEREIN THE FRE IGHT EXPENSES AMOUNTED TO AROUND 95%. THUS, HE HAS CONTENDED THAT FREIGHT EXPENSES INCURRED BY THE APPELLANT AROUND 95.23% ARE IN TUNE WITH THE USUAL FREIGHT EXPENSES INCURRED BY ANY TRANSPORTER AND AS SUCH AS SAILED THE ACTION OF THE AO ON FURTHER REDUCING 5% OF THESE EXPENSES. THE AO WAS NOT ITA NO. 97/AHD/2009 ASST. YEAR : 2003-04 3 3 CONVINCED WITH THE ABOVE SUBMISSIONS OF THE AR AND HE MADE THE ADDITION ON ACCOUNT OF FREIGHT CHARGES TO THE TUNE OF RS.12,52,851/-. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE AR THE LD. CIT (A) RESTRICTED THE DISALLOWANCE TO 25% AND GAVE RELIEF OF RS.9,39,638/- BY OBSERVING AS UNDER:- 5.1. I HAVE CONSIDERED THE FACTS OF THE CASE AS ALSO THE REMAND REPORT FURNISHED BY THE AO. THE MAIN GROUND IS AGAI NST DISALLOWANCE OF FREIGHT EXPENSES OF RS.12,52,851/-, I.E. 5% OF FREIGHT EXPENSES INCURRED BY THE APPELLANT. ALSO IN THE REMAND REPORT, THE AO STRUCK TO THE STAND TAKEN AT THE TIM E OF ASSESSMENT. AS NOTED ALREADY, THE AO HAS OBSERVED THAT ENTIRE P AYMENTS WERE MADE IN CASH, THAT THE VOUCHERS SIGNED BY DRIVERS W ERE HAVING DEFECTS LIKE SIMILAR SIGNATURES ON MOST OF THE VOUC HERS, WEIGHT OF THE FREIGHT NOT MENTIONED, SIMILAR DISTANCES BUT VA RIED IN AMOUNTS, MOST OF THE VOUCHERS NOT FOUND AFFIXED BY REVENUE S TAMPS ETC. AND ETC. PROVISIONS MADE DURING LAST MONTHS OF THE FINA NCIAL YEAR AND RECEIPTS DURING THOSE PERIODS, AND MISMATCH DURING THESE PERIODS WERE POINTED OUT BY THE AO. FOR THESE AND VARIOUS O THER DEFECTS, POINTED OUT BY THE AO, HE HAS DISALLOWED ROUGHLY 5% OF FREIGHT EXPENSES, WHILE FINALIZING THE ASSESSMENT PROCEEDIN GS. EVEN THOUGH THE AR HAS ARGUED THAT EXPENDITURE AND RECEIPT LORR Y WISE IS RECONCILABLE, THE SHORT COMINGS AS POINTED OUT BY T HE AO WERE NOT DENIED. BUT, HOWEVER, HAVING REGARD TO THE EXPLANAT IONS OFFERED BY THE AR, I AM OF THE VIEW THAT THE ENDS OF JUSTICE M EET, IF THE DISALLOWANCE IS RESTRICTED TO 25% OF RS.12,52,851/- I.E. RS.3,12,213/- AND APPELLANT GETS A RELIEF OF RS. 9, 39,638/- AND THUS THIS GROUND IS PARTLY ALLOWED. NOW THE REVENUE IS IN APPEAL BEFORE US. 7. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECO RDS. WE FIND THAT THE AO MADE AN ADDITION OF RS.12,52,851/- WHICH IS 5% OF THE TOTAL FREIGHT EXPENSES CLAIMED BY THE ASSESSEE ON THE GRO UND THAT ENTIRE PAYMENT WAS MADE IN CASH AND THE VOUCHERS SIGNED BY THE DRIVERS WERE HAVING DISCREPANCIES WHICH WERE POINTED OUT BY HIM TO THE ASSESSEE AND ITA NO. 97/AHD/2009 ASST. YEAR : 2003-04 4 4 WERE NOT SATISFACTORILY EXPLAINED BY THE ASSESSEE. THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE BY RESTRICTING THE ADD ITION TO 25% OF ADDITION MADE BY THE AO WITHOUT GIVING ANY REASON IN HIS ORD ER DESPITE THE FACT THAT IN HIS REMAND REPORT THE AO HAS STUCK TO HIS O RIGINAL GROUND THAT ASSESSEE HAS FAILED TO SATISFACTORILY EXPLAIN THAT THE EXPENDITURE WAS INCURRED BY HIM. AT THE SAME TIME WE FEEL THAT THE ADDITION MADE BY THE AO WAS ALSO ON HIGHER SIDE, THEREFORE, WE FEEL THAT IT WILL MEET THE ENDS OF JUSTICE IF THIS DISALLOWANCE IS RESTRICTED TO 50 % OF THE ADDITION MADE BY THE AO. WE ORDER ACCORDINGLY. THIS GROUND OF REVENU E IS PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 30.11.11. SD/- SD/- (A. K. GARODIA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD, MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ITA NO. 97/AHD/2009 ASST. YEAR : 2003-04 5 5 1.DATE OF DICTATION 24/11/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 25/11/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..