S P C INFRASTRUCTURES PRIVATE LIMITED,JAIPUR V. ACIT, CIRCLE - 4, JAIPUR, JAIPUR

ITA 411/JPR/2025

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SPC Infrastructures Pvt. Ltd., engaged in road construction and toll collection, appealed against the order of the Learned Addl./JCIT(A) which partly allowed their appeal against the assessment order for the year 2017-18. The Assessing Officer had disallowed non-verifiable expenses and added income from interest on IT refund, leading to a total income assessment of Rs. 1,14,75,328. The Tribunal examined the disallowance of expenses claimed by the assessee, which were partly incurred in cash and lacked proper documentation due to the nature of business operations in remote areas. The Tribunal noted the absence of specific deficiencies pointed out by the Assessing Officer in the assessment order and found the reduction of disallowance to 5% insufficient, leading to the setting aside of the disallowance.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712364 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Rajendra Kumar Sahoo v. ACIT, Circle-1(11), Cuttak, Deputy Commissioner of Income-tax, Central Circle-5, New Delhi vs. Mother’s Pride Education persona (P.) Ltd., G. Raja Gopala Rao v. Deputy Commissioner of Income-tax, Circle- 4(1), Visakhapatnam
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANITA R
• Assessee Lawyers: MUKESH KHANDELWAL
• Keywords: Set aside; Corroborative evidences; TDS
• Section: 142(1); 37

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A-Bench” JAIPUR Jh xxu xks;y] ys[kk lnL; ,oa Jh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 411/JPR/2025 fu/kZkj.k o\"kZ@Assessment Year : 2017-18 S P C Infrastructures Private Limited C-74, Amba Bari, Jaipur. cuke V. The ACIT, Circle-4, Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.:AAFCS8079K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri Mukesh Khandelwal, C.A. jktLo dh vksjls@Revenue by: Mrs. Anita R, JCIT, Sr.-DR lquokbZ dh rkjh[k@Date of Hearing : 28/07/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 30/07/2025 vkns'k@ORDER Per: NARINDER KUMAR, JUDICIAL MEMBER . Appellant-assessee, engaged in the business of road construction and Toll collection, has challenged order dated 07.03.2025, passed by Learned Addl/JCIT(A), u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) whereby appeal filed by the assessee challenging the assessment order dated 31.05.2019, relating to the assessment year 2017-18, has been partly allowed. Printed from counselvise.com 2 ITA No. 411/JPR/2025 SPC Infrastructures Pvt. Ltd., Jaipur. Vide assessment order dated 31.05.2019, the Assessing Officer computed the total income of the assessee at Rs. 1,14,75,328/-, by disallowing non verifiable expenses to the tune of Rs. 6,53,456/- and by making another addition of Rs. 16,172/- on the income of interest on IT refund. 2. Arguments heard. File perused. 3. Case of the department is that the assessee company declared its income for the assessment year 2017-18 as Rs. 1,08,05,700/- but, its case was selected for scrutiny, which led to issuance of notices u/s 143(2) and 142(1) of the Act, as it was found that the assessee company, claimed various expenses under different heads in the Profit and Loss Account, but, on verification of the vouchers/bills prepared by the assessee company in response to the said notices, it was found that the same had various defects, and that some of the vouchers/bills were even not available with the assessee company, and also that some payments were made by the assessee company in cash. It led to issuance of show cause notice dated 21.05.2019, calling upon the assessee to explain as to why disallowance to the extent of 10% of the total expenses of Rs. 6,53,456/- be not made and added to its total income for the year under consideration. Printed from counselvise.com 3 ITA No. 411/JPR/2025 SPC Infrastructures Pvt. Ltd., Jaipur. In reply, the assessee submitted as under:_ \"1. The assessee has produced s produced complete bills and following expenses as vouchers of per your directions:- i. Travelling Expenses ii. Vehicle running & Maintenance Expenses iii. Mess Expenses iv. Printing and Stationery Expenses V. Telephone & Mobile Expenses vi. Repairs & Maintenance Expenses vii. Staff Welfare Expenses vili. Vehicle Hire Charges ix. Building Rent-Toll Booths X. Computer Expenses xi. Toll Operating Expeneses 2. In the case of travelling expenses, printing and stationery expenses, repairs and maintenance expenses, site expenses, telephone and mobile expenses the expenses are not fully incurred in cash. In the case of printing & stationery expenses, out of total expenditure of Rs. 1280119/-, Rs. 950000/- are incurred though cheque even tax is deducted (TDS) from the expenses incurred through bank on repairs & maintenance. In case of vehicle running & maintenance expenses, out of total expenditure of Rs. 1203428/-, Rs. 611728/- are incurred through cheque, whereas in case of other heads part expenses have been incurred in cash and part have been incurred through bank. 3. The assessee has to incur these expenses in cash as the toll activities of the assessee are in remote areas wherein proper facilities are not available and the seller/service provider decline to accept payment through mode other than cash. Therefore the payment in cash is made due to practical difficulty faced by the assessee. However mere incurring of an expenditure through cash cannot be a measure to disallow any expenditure. 4. There are handmade bills and vouchers also on the basis of which payment has been made. The assessee due to practical difficulty cannot insist for proper voucher as the persons working with the assessee purchase goods/services from near parties to the toll booths situated in remote areas and such small traders/service providers are not registered under any act and hence they do not agree for giving a proper voucher. Even they sometimes decline to put signature on the vouchers also. Printed from counselvise.com 4 ITA No. 411/JPR/2025 SPC Infrastructures Pvt. Ltd., Jaipur. 5. Considering the volume of receipts from toll activities declared by the assessee, all such expenses are absolutely reasonable and hence do not deserves to be part disallowed on account of payment in cash and handmade bills, and vouchers\" 4. Having considered the response given by the assessee, the Assessing Officer was of the view that the assessee had inflated the above said expenses, and failed to explain the same, and as such, he was constrained to make an addition of Rs. 6,53,456/-. 5. In appellate proceedings, Learned CIT(A) restricted the above said addition to 5% of the expenses and accordingly, partly allowed the appeal of the assessee. 6. It may be mentioned here that the aforesaid restriction of disallowances to 5% of the expenses came to be made, keeping in view that the Assessing Officer had not pointed out any specific deficiency in the expenses. To arrive at this conclusion, Ld. Addl./JCIT(A) relied on following decisions:-  Rajendra Kumar Sahoo v. ACIT, Circle-1(11), Cuttak (2021) Taxmann.com 1312 (Cuttak-Trib.)  Deputy Commissioner of Income-tax, Central Circle-5, New Delhi vs. Mother’s Pride Education persona (P.) Ltd. (2011) 14 taxmann.com 177 (Delhi). Printed from counselvise.com 5 ITA No. 411/JPR/2025 SPC Infrastructures Pvt. Ltd., Jaipur.  G. Raja Gopala Rao v. Deputy Commissioner of Income-tax, Circle- 4(1), Visakhapatnam (2017) 78 tamann.com 61 (Visakhapatnam- Trib.) 7. Ld. AR for the appellant has submitted that having regard to the nature of business of the assessee i.e. road construction and Toll collection, carried out in remote area, it is not possible to obtain proper vouchers/bills for which and every expenditure. It has also been submitted that 50% of the expenses, in case of repairs and maintenance of vehicle, were made through cheques. Further, it has been submitted that as regards the other expenses, some payments were made through cheques as well as cash. 8. As noticed above, while reducing the percentage of the disallowances from 10% to 5% of the disputed expenses, Learned Addl./JCIT(A) himself observed that the Assessing Officer had not pointed out in the assessment order any specific instance of deficiency in the expenses incurred. A perusal of the assessment order would reveal that after referring to the provisions of section 37 of the Act, and that one of the requirements is that expenditure should have been incurred wholly and exclusively for the purpose of business, the Assessing Officer did not specify in the assessment order as to in respect of which of the expenses Printed from counselvise.com 6 ITA No. 411/JPR/2025 SPC Infrastructures Pvt. Ltd., Jaipur. deficiency was observed and in respect of which of the expenses supporting evidence was not produced. In the given situation, we are of the considered view that instead of restricting the disallowance to 5% Learned Addl./JCIT(A) should have set aside the said addition made by the Assessing Officer by way of said disallowance of Rs. 3,26,728/-. No other argument has been advanced before us. Result 9. As a result, the appeal is partly allowed, while setting aside the impugned order as regards disallowance of Rs. 3,26,728/-. File be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 30/07/2025. Sd/- Sd/- ¼xxu xks;y½ ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 30/07/2025 *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- S P C Infrastructures Pvt. Ltd., Jaipur. 2. izR;FkhZ@ The Respondent- ACIT, Circle-4, Jaipur. 3. vk;dj vk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur Printed from counselvise.com 7 ITA No. 411/JPR/2025 SPC Infrastructures Pvt. Ltd., Jaipur. 5. xkMZ QkbZy@ Guard File ITA No.411/JPR/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar Printed from counselvise.com "