M/s. Gokhale & Associates, Pune V. Income-tax Officer, Pune

ITA 977/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4332 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 28-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y K BHASKAR
• Assessee Lawyers: NANI WADEKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 977/PN/2011 (ASSESSMENT YEAR 2007-08) GOKHALE & ASSOCIATES, 1375, BAJIRAO ROAD, SHUKRAWAR PETH, PUNE PAN NO. AABFG 0794L .. APPELLANT VS. ITO WARD-5(4), PUNE .. RESPONDENT APPELLANT BY : SHRI NANIWADEKAR RESPONDENT BY : SHRI Y.K. BHASKAR DATE OF HEARING : 16-07-2013 DATE OF PRONOUNCEMENT : 22-07-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 30-11-2010 OF THE CIT(A)-III, PUNE RELATING TO ASSE SSMENT YEAR 2007- 08. DISALLOWANCE OF DIESEL EXPENSES AMOUNTING TO R S.10,47,614/- BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) IS THE O NLY ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF TRANSPORTATION. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS RECEIVED GROSS RECEIPTS FROM TRANSPORTATION BUSINES S AMOUNTING TO RS.1,28,23,964/- WHICH COMPRISES OF RECEIPTS EARNED BY OWN VEHICLES AS WELL AS VEHICLES OF OUTSIDE PARTIES. DURING THE CO URSE OF ASSESSMENT 2 PROCEEDINGS THE ASSESSING OFFICER ASKED THE ASSESSE E TO FURNISH THE VEHICLE-WISE DETAILS OF DIESEL EXPENSES CLAIMED ALO NG WITH THE LOG BOOKS MAINTAINED IN RESPECT OF EACH VEHICLE. FROM THE VE HICLE-WISE DETAILS FURNISHED BY THE ASSESSEE THE ASSESSING OFFICER NOT ED THAT NO LOG BOOK DETAILS WERE FURNISHED ON THE GROUND THAT NO SUCH B OOKS WERE MAINTAINED. HOWEVER, IT WAS SUBSEQUENTLY CLAIMED B Y THE ASSESSEE THAT THEY DID NOT MAINTAIN VEHICLE WISE EXPENDITURE AND THAT SUCH DETAILS FURNISHED EARLIER WERE NOT PREPARED BY THE ACCOUNTA NT OF THE ASSESSEE AS PER THE BOOKS MAINTAINED. IT WAS CLARIFIED THAT MO RE THAN 90% OF THE DIESEL EXPENSES WERE INCURRED THROUGH BANKS BY WAY OF FLEET CARDS PURCHASED FROM BHARAT PETROLEUM CORPORATION LTD. T HE FLEET CARDS WERE BEING USED BY THE DRIVERS FOR PURCHASE OF FUEL AND THEY WERE NOT ALLOWED TO PURCHASE FUEL BY CASH EXCEPT UNDER EXCEPTIONAL C IRCUMSTANCES. IT WAS ASSERTED THAT THOUGH VEHICLE-WISE EXPENDITURE WAS N OT MAINTAINED THE DIESEL EXPENSES CLAIMED WERE FULLY SUPPORTED. 3. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND OBSERVED THAT THE MANIPULATION DONE BY THE ASSESSEE POINTS TO INFLATED EXPENDITURE AND ONLY ON REALISING THIS THE ASSESSEE HAS NOW CHANGED ITS PLEA THAT THE TRUCK WISE DETAILS OF EXPENDITURE FURNISHED EARLIER WERE NOT AS PER BOOKS OF ACCOUNTS. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASS ESSEE THE ASSESSING OFFICER CONCLUDED THAT 20% OF THE EXPENDITURE ON DI ESEL FOR RECEIPTS EARNED THROUGH ITS OWN TRUCKS IS A FAIR ESTIMATE. HE ACCORDINGLY DISALLOWED THE BALANCE EXPENDITURE OF RS.10,47,614/ - AS EXCESS EXPENDITURE CLAIMED WHICH IS NOT WHOLLY AND EXCLUSI VELY INCURRED BY THE 3 ASSESSEE FOR ITS BUSINESS PURPOSED. IN APPEAL THE LD. CIT(A) UPHELD SUCH DISALLOWANCE. 3.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE COMPARATIVE DIESEL CONSUMPTION CHART FOR A.YS. 2003-04 TO 2006- 07 (A COPY OF WHICH IS PLACED AT PAPER BOOK PAGE NO.61) WHICH IS AS UND ER : A.Y. DIESEL EXPENSES TOTAL TRANSPORT RECEIPTS LESS RECEIPTS BY OUTSIDE TRANSPORT OWN TRANSPORT RECEIPTS RATIO OF DIESEL EXP. TO TOTAL TRA. RECEIPTS RATIO OF DIESEL EXP. TO OWN TRA. RECEIPTS 2003-04 28,75,110.69 67,61,070.46 - 67,61,070.46 42.52 42.52 2004-05 45,09,000.63 1,25,24,827.59 15,33,163.00 1,09,91,664.59 36.00 41.02 2005-06 54,41,412.30 1,16,16,428.62 - 1,16,16,428.62 46.84 46.84 2006-07 69,82,333.85 2,06,61,734.51 64,19,256.00 1,42,42,478.51 33.79 33.79 4.1 HE SUBMITTED IN THAT IN THE SCRUTINY ASSESSMENT FOR A.Y. 2006-07 NO SUCH DISALLOWANCE UNDER THE HEAD DIESEL WAS MA DE. REFERRING TO PAGE NO.23 OF THE PAPER BOOK WHICH GIVES THE DETAIL S OF DIESEL EXPENSES FOR THE YEAR ENDING 31-03-2007 HE SUBMITTED THAT OU T OF TOTAL EXPENDITURE OF RS.22,92,775/- AN AMOUNT OF RS.20,25,510/- HAS B EEN PAID THROUGH BANK AND ONLY AN AMOUNT OF RS.2,67,265/- HAS BEEN I NCURRED IN CASH. REFERRING TO PAPER BOOK PAGES 24 TO 38 WHICH SHOWS THE LEDGER ACCOUNT OF THE DIESEL AND OIL FOR THE PERIOD FROM 01-04-200 6 TO 31-03-2007 HE SUBMITTED THAT WHEN THE PAYMENTS HAVE BEEN MADE THR OUGH BANK FOR PURCHASE OF DIESEL THERE IS NO QUESTION OF ANY PILF ERAGE OR EXPENDITURE FOR NON BUSINESS PURPOSES. HE ACCORDINGLY SUBMITTED TH AT THERE WAS NO JUSTIFICATION FOR ANY DISALLOWANCE. IN HIS ALTERNA TE SUBMISSION, HE 4 SUBMITTED THAT SINCE FACTS HAVE NOT BEEN PROPERLY A PPRECIATED BY THE AUTHORITIES BELOW, THEREFORE, HE HAS NO OBJECTION I F THE MATTER IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJU DICATION. 5. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE ASSESSING OFFICER AND TH E CIT(A). HE SUBMITTED THAT THE ASSESSEE IS GIVING CONTRADICTORY STATEMENTS BEFORE THE ASSESSING OFFICER FROM TIME TO TIME. HE WAS ALSO U NABLE TO GIVE THE FULL DETAILS OF THE DIESEL EXPENSES UTILISED FOR THE PUR POSE OF BUSINESS. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS FULLY JUSTIFIED IN UPHOLDING THE DISALLOWANCE. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. FROM T HE DETAILS FURNISHED BY THE ASSESSEE WE FIND THAT AS AGAINST THE TOTAL EXPE NDITURE OF RS.22.93 LAKHS ON ACCOUNT OF DIESEL EXPENSES FOR THE YEAR 20 06-07, AN AMOUNT OF RS.20.26 LAKHS HAS BEEN PAID THROUGH BANK BY WAY OF FLEET CARDS PURCHASED FROM BHARAT PETROLEUM CORPORATION LTD. F URTHER, THERE WAS NO SUCH DISALLOWANCE DURING THE A.Y. 2006-07 IN THE SCRUTINY ASSESSMENT. THE AUTHORITIES BELOW HAVE ALSO NOT CO NSIDERED THE DIESEL CONSUMED DURING A.YS. 2003-04 TO 2006-07 AND THE RA TIO OF SUCH EXPENSES TO TOTAL TRANSPORTATION RECEIPTS OR OWN TR ANSPORTATION RECEIPTS. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER REQUIRES FRESH ADJUDICATION AT THE LEVEL OF THE ASSESSING OFFICER, SINCE IN OUR OPINION, ALL THE AB OVE THINGS HAVE A BEARING BEFORE DISALLOWING ANY EXPENSES ON ESTIMATE BASIS. THE 5 ASSESSING OFFICER SHALL GIVE DUE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE AND DECIDE THE ISSUE AS PER LAW. WE HOLD A ND DIRECT ACCORDINGLY. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLO WED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF JULY 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA ) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED: 22 ND JULY 2013 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-III, PUNE 4. THE CIT-III, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE