T.C. FUELS, ,ALAPPUZHA V. ITO, WARD-5, ALAPPUZHA

ITA 599/COCH/2024

AI Insights

The case involves T.C. Fuels, a partnership firm engaged in dealing petroleum products, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, for the Assessment Year 2014-15. The firm had filed its return declaring an income of Rs. 4,84,490, which was subjected to various disallowances by the AO, including a 10% disallowance on expenses supported by self-made vouchers, disallowance of sales commission expenditure for non-deduction of TDS, and disallowance for delayed remittance of ESI & PF contributions. The CIT(A) granted partial relief by removing the disallowance on bad debts but confirmed other additions. The Tribunal found that the AO's disallowances were unjustified in the absence of evidence proving the expenditures were bogus and ruled in favor of the appellant.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474708 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: R. KRISHNAN
• Keywords: Bad and doubtful debts; Salary income; TDS; Bogus
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA No. 599/Coch/2024 Assessment Year: 2014-15 T.C. Fuels .......... Appellant The Trading Co. Building, N.H. 47 M.O. Ward, Alappuza 688001 [PAN: AADFT6335N] vs. Income Tax Officer, Ward-V .......... Respondent Aayakar Bhavan, Beach Road Alappuzha 688001 Appellant by: Shri R. Krishnan, CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 05.02.2025 Date of Pronouncement: 12.02.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 04.06.2024 for Assessment Year (AY) 2014-15. 2. The appellant is a partnership firm engaged in the business of dealing the petroleum products of Indian Oil Corporation Ltd. The return of income for AY 2014-15 was filed on 29.09.2014 declaring income of Rs. 4,84,490/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-V, Alappuzha (hereinafter called \"the AO\") vie order dated 28.12.2016 passed u/s. 143(3) of the 2 ITA No. 599/Coch/2024 T.C. Fuels Income Tax Act, 1961 (the Act). While doing so, the AO disallowed 10% of the expenses claimed by appellant by holding that the expenses are supported only by self-made vouchers. The AO also disallowed the sales commission expenditure of Rs. 1,29,384/- by holding that the appellant failed to deduct TDS on sales commission u/s. 194H of the Act. The AO also made disallowance of Rs. 2,27,464/- on account of delayed remittance of ESI & PF contributions. 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order, while granting relief on bad debts of Rs. 1,11,353/- confirmed other additions. 4. Being aggrieved, the appellant is in appeal before us in the present appeal. 5. The learned A.R. submitted before me that having regard to the nature of expenditure no adhoc disallowance of the expenditure can be made. Further, as regard to the disallowance of sales promotion expenditure, it is submitted that this commission was paid to the employees which partake the character of salary income. In the absence of taxable income the question of TDS does not arise. 6. On the other hand, the learned Sr. DR relying on the orders of the lower authorities submitted that no interference is called for. 7. I heard the rival contentions of both the parties and perused the material available on record. As regards the disallowance of adhoc expenditure, the AO has disallowed 10% of the expenditure by holding that the expenditures are supported by self-made vouchers. Having regard 3 ITA No. 599/Coch/2024 T.C. Fuels to the nature of expenditure, I am of the considered opinion that in the absence of evidence to show that the expenditure is bogus, the AO is not justified in making the adhoc disallowance. Accordingly, I direct the AO to delete the disallowances on R.F.T., sales promotion, generator exp, repairs-material and repairs and maintenance. Similarly, with regard to disallowance of sales promotion expenditure, in the absence of taxable income, the question of deducting tax at source does not arise. Therefore, I direct the AO to delete the addition on account of sales promotion. 8. In the result, the appeal filed by the assessee stands allowed. 9. Order pronounced in the open court on 12th February, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 12th February, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order Assistant Registrar ITAT, Cochin "