YOGESH TRANSPORT PVT LTD,RAIPUR V. INCOME TAX OFFICER, WD-1(1), KOLKATA, KOLKATA

ITA 1326/KOL/2025

AI Insights

Yogesh Transport Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre, which confirmed the addition of transport expenses amounting to \\u20b94,75,92,207 as unexplained expenditure under section 69C of the Income Tax Act. The expenses were initially disallowed by the Assessing Officer due to discrepancies in vehicle registrations on the 'VAHAN' portal. The Tribunal examined the evidence provided by the assessee, including transport receipts and certificates from truck unions, and found that the expenses were incurred in the normal course of business. The Tribunal also noted that the books of account were not rejected under section 145(3) and that the estimation of additions was unjustified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782402 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 18-06-2025
• Other Referred Cases: Mahajan Fabrics (P.) Ltd. vs. Commissioner, Central Goods and Services Tax, Maa Mangala Transport Vs. ITO, Sri Raghavendra Lorry Services Vs. DCIT, Sahani Transport Corpn. Vs. DCIT, CIT Vs. Sandeep Bus services Pvt. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S.B. CHAKRABORTHY
• Assessee Lawyers: PRAKASH JHUNJHUNWALA
• Keywords: Set aside; Unexplained expenditure; Depreciation; TDS; Initiation of penalty proceedings
• Section: 271(1)(c); 69C; 234B; 40(a)(ia); 194C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No. 1326/KOL/2025 (Assessment Year: 2014-15) Yogesh Transport Pvt. Ltd. Munish Shah, Shri nagar Road, Mahesh Colony, gudiyari Mahesh Colony, Gudiyari, Raipur, Chhatisgarh, Raipur-492009 West Bengal Vs. Income Tax Officer, Wd-(1), Aaykar Bhawan, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AAACY3662M Assessee by : Shri Prakash Jhunjhunwala, AR Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 09.10.2025 Date of pronouncement: 27.10.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 20.05.2025 for the AY 2014-15. 02. The grounds raised by the assessee are as under: - “The appellant company prefers an appeal against an order passed u/s.250 dated 20/05/2025 by the Commissioner of Income Tax, National Faceless Appeal Centre, Delhi on following amongst other grounds, each of which are without prejudice to any other: - 1.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition u/s.69C of transport expenses of Rs.4,75,92,207/- made on adhoc estimation basis @ 88% of expense disclosed in audited P&L account of Rs.5,40,82,053/-; 2.0 On facts and circumstances of the case and in law, Ld. CIT(A), in alternate manner, erred in making the disallowance of transport expense u/s 40(a)(ia) of Printed from counselvise.com Page | 2 ITA No. 1326/KOL/2025 Yogesh Transport Pvt. ltd; A.Y. 2014-15 Rs.4,75,92,207/- for non-fulfilment of obligation to deduct TDS, though the provision of Sec.194C does not apply on such transaction and such disallowance was not made in the assessment order; 3.0 The Ld. CIT(A), before confirming the addition of transport expense of Rs.4,75,92,207/-, ought to have considered the understated vital facts, being; a) The entire transport expense had been incurred in normal course of business and correctness of supporting documentary evidences had not been disputed in the assessment, remand and appeal proceeding; b) The confirmations of transport receipts from Chhattisgarh State Government and payments made by appellant through truck union association, etc are filed on record; c) The mere non-reflection of vehicle number in the 'VAHAN' Portal due to non-digitization of old vehicles would not disprove the bonafide transactions of the appellant; d) The Ld. AO had not conducted any independent enquiries and had not any notices u/s.133(6)/131 to verify the transactions and had brought any contrary material/evidence on record to disprove the transactions; e) The audited books of account had not been rejected u/s.145(3), thus the estimation of additions/disallowance is unjustified; 4.0 Without prejudice, the addition/disallowance of transport expense ought to have been estimated reasonably on adopting the concept of real income utmost to the extent of 5% of expense disclosed in audited P & L account of Rs.27,04,103/- (@5% of Rs.5,40,82,053/-); The appellant craves leave to add, amend, alter and/or withdraw any of the grounds of appeal at the time of hearing.” 03. The issue raised in ground no.1 is against the order of learned CIT (A) confirming the addition u/s 69C of the Act in respect of transport expenses of ₹4,75,92,207/- as made by the learned AO by adhoc estimation at the rate of 88% of the expenses claimed in the Profit and Loss account of ₹5,40,82,053/- and issue in ground no.2 is against the order of learned CIT (A) alternatively making the disallowance of transport expenses u/s 40(a)(ia) of the Act of ₹4,75,92,207/- for non- deduction of tax at source in terms of provisions of Section 194C of the Act which in fact do not apply to the transactions entered into by the assessee. The ground no.3 is in support of ground no.1 and 2. Printed from counselvise.com Page | 3 ITA No. 1326/KOL/2025 Yogesh Transport Pvt. ltd; A.Y. 2014-15 04. The facts in brief are that the assessee filed the return of income electronically on 07.11.2014, declaring total income at ₹1,29,120/-. The case of the assessee was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) and statutory notices along with questionnaire were duly issued and served upon the assessee. The assessee is engaged in the business of transportation of goods from railway racks to PDS centers. Thus, the assessee rendering transportation services to the Central Government for transporting goods from railway racks to the PDS centers. During the course of assessment proceedings, the assessee filed before the learned AO all the details qua these expenses comprising copies of accounts, balance sheet, profit and loss account, relevant bills and vouchers and same were checked by the learned AO on sample basis. The learned AO from the perusal of the profit and loss account observed that during the year ended 31st March, 2014, the assessee company claimed lorry expenses of ₹5,40,82,053/-under the head other expenses. The learned AO observed on the basis of information / details filed by the assessee that certain trucks which were stated to be used by the assessee for transporting the goods from railway racks to the PDS centers, were not appearing in the internet site, ‘VAHAN’ national Register E-services, Ministry of Road, Transport & Highways, Government of India. The AO noted some instances in Para No.2.2 of the assessment order. The learned AO also noted that certain trucks were appearing repeatedly in the details submitted by the assessee. The learned AO also noted that the vehicle numbers mentioned by the assessee were wrong and consequently disallowed 88% of the total lorry expenses which comes to ₹4,75,92,207/- as unexplained expenditure u/s 69C of the Act and added the same to the income of the assessee. Printed from counselvise.com Page | 4 ITA No. 1326/KOL/2025 Yogesh Transport Pvt. ltd; A.Y. 2014-15 05. In the appellate proceedings, the learned CIT (A) also upheld the order of the learned AO by observing and hand holding as under: - “6.7 Final Conclusion: Yogesh Transport Private Limited (A.Y. 2014-15) In conclusion, the appeal of the appellant is dismissed. The addition of Rs. 4,77,21,330/- as unexplained expenditure (Section 69C) and the related addition of 88% of lorry expenses as income are upheld due to the appellant's failure to provide credible evidence, including valid> bills, vouchers, and proof of genuine transportation expenses. The disallowance of Iprry expenses due to non- deduction of TDS under Section 1940 is also upheld, as the appellant failed to produce declarations from transporters, violating the TDS provisions. The levy of interest under Sections 234B and 234C is valid as it is mandatory for default in advance tax payment. The initiation of penalty proceedings under Section 271(1)(c) is justified due to the appellant's inability to substantiate the claimed expenses. The appeal is dismissed in full.” 06. After hearing the rival contentions and perusing the materials available on record, we find that the assessee is a government contractor for transporting of goods from the railway rack to the PDS centers. We note that the assessee is hiring trucks / lorries from the truck unions and transporting goods as such. During the year, the assessee claimed lorry expenses of ₹5,40,82,053/- against the revenue from operation of ₹5,50,35,367/- as per audited balance sheet filed by the assessee. During the year the assessee declared net profit of ₹1.09% vis-a-vis the profit of 3.2 % in A.Y. 2013-14 vis-a-vis 0.84 % in A.Y. 2015-16, wherein the learned AO observed from the details furnished by the assessee in respect of transport lorries/ trucks that certain trucks were not appearing in the site (vahan.nic.in) and made adhoc disallowance by estimating the addition at the rate of 88% of the total expenses claimed which worked out to ₹4,75,92,207/-. The learned AO made disallowance on the ground that the trucks were not appearing in the in portal “vahan.nic”. and therefore, treated the expenses to the tune of ₹4,75,92,207/- as unexplained expenditure u/s 69C of the Act and added to the total income of the assessee. It was submitted before us that the trucks were in fact hired and used for the Printed from counselvise.com Page | 5 ITA No. 1326/KOL/2025 Yogesh Transport Pvt. ltd; A.Y. 2014-15 transportation of goods from the railway racks to the PDS centers. We also observed from the paper book filed before us that assessee filed the confirmation of goods received under PDS scheme by Government depos from page no.96 to 170 giving the details such as date, delivery challan, truck number, destination, godown and other details qua the quantitative, transport gate pass number and receipt by the depos. For the sake of ready reference, the sample copy is extracted below: Printed from counselvise.com Page | 6 ITA No. 1326/KOL/2025 Yogesh Transport Pvt. ltd; A.Y. 2014-15 07. Similarly on page no.15, the assessee furnished the date wise and depo wise transportation expenses paid by the assessee during the year, a sample copy is extracted below: - Printed from counselvise.com Page | 7 ITA No. 1326/KOL/2025 Yogesh Transport Pvt. ltd; A.Y. 2014-15 08. We have also examined the vehicle wise details of vehicles hired by the assessee and amount paid by the depo a copy of which is extracted below on sample basis: - 09. We also note that assessee furnished truck union certificate, certifying that lorries were hired from the truck unions, the copies of such certificate are available from page no.170 to 183. The assessee has also filed the details of these vehicles as per transport department which are available at page nos. 184 to 195. Therefore, in view of the above evidences placed by the assessee before the learned AO as well as the learned CIT (A) and before us also, we observe that the transport Printed from counselvise.com Page | 8 ITA No. 1326/KOL/2025 Yogesh Transport Pvt. ltd; A.Y. 2014-15 expenses were genuine. We also note that these expenses were not infact doubted by the learned AO but the learned AO has doubted that these trucks were not shown in the ‘VAHAN’ national Register E- services, Ministry of Road Transport & Highways, Government of India and therefore disallowance was made. We find merit in the contention of the learned Authorized Representative that this is a problem of updation of vehicle data’s in the Vahan portal in respect of various trucks/ lorries which were not updated and therefore, the said fault/anomaly cannot be attributed to the assessee. The assessee in fact transported goods and received income which were duly shown in the profit and loss and account and the corresponding expenses incurred on the hire of trucks were also claimed as expenses. In view of these facts, the addition made by the learned AO on adhoc basis cannot be sustained. 010. In our opinion the disallowance of expenses cannot be made on the sole ground that the vehicles are not appearing in the Vahan portal of Govt of India. In coming to the above conclusion, we are also supported the decision of Hon'ble Delhi High Court in case of Mahajan Fabrics (P.) Ltd. vs. Commissioner, Central Goods and Services Tax [2023] 147 taxmann.com 460 (Delhi), wherein the Hon'ble Court has held that where the assessee has claimed refund of ITC, necessary details required under section 16 were given, refund claim could not be denied on ground that details of all vehicles mentioned in invoices were not given or their registration with e-vahan portal were not established, though the decision was rendered in the context of Central goods and service tax Act, 2017, however, the ratio laid down is squarely applicable to the case at hand. 011. Moreover, we note that the books were not rejected u/s 145(3) of the Act which is mandatorily to be done for estimating the income/ Printed from counselvise.com Page | 9 ITA No. 1326/KOL/2025 Yogesh Transport Pvt. ltd; A.Y. 2014-15 expenses of the assessee. Besides the basis of estimation was also very unfair and fallacious. The learned CIT (A) has gone a step ahead by giving further observations in the appellate order that the provisions of Section 194C were not complied and therefore, the disallowance was also to be made in terms of Section 40a(ia) of the Act. In our opinion, the learned CIT (A) has grossly erred in holding that disallowance was to be made alternatively u/s 40(a)(ia) of the Act which is not applicable in case of estimation of income. We also note that the individual payments made to the trucks on account of hire charges were below the limit specified under the Act. Therefore, we find merit in the contention of the ld. AR that if at all estimation of income has to be made that estimation has to be made on reasonable basis. The ld. AR relied on the following decisions: - “1. Maa Mangala Transport Vs. ITO Ita No. 313/Ctk/2012 dated 24.08.2012. 2. Sri Raghavendra Lorry Services Vs. DCIT in ITA No. 41/Viz.2020 dated 22.08.2022 3. Sahani Transport Corpn. Vs. DCIT 58 taxmann.com 297 (ITAT Cuttack) 4. CIT Vs. Sandeep Bus services Pvt. Ltd. 316 ITR 244 (HC-Punjab & Haryana)” 012. We note that in the case of Maa Mangala Transport Vs. ITI (supra), the estimation made by the co-ordinate Bench at the rate of 4% by observing and holding as under: - “6. We have heard the rival contentions and perused the impugned orders of the authorities below and the material available on record. The learned Counsel for the assessee relied on the decision of this Bench of ITAT in the case of M/s.Bhukta Transport v. Income-tax Officer (supra) when 3% Net profit was held to be accepted further relying on the decision of this Bench of ITAT in the case of M/s.Parida Transport for the Assessment Year 2001- 02. We are inclined to hold that the transport business as contractor could not result in a 5% margin being a service provider. The value of service could not be computed in money valuing insofar as the direct expenses have been claimed by the assessee when the assessee himself has own trucks claim depreciation thereon. On such types of business, the incomes charged by the assessees are known to the payees. Therefore, we do not find that the case laws cited at the Bar do have a meaning Printed from counselvise.com Page | 10 ITA No. 1326/KOL/2025 Yogesh Transport Pvt. ltd; A.Y. 2014-15 insofar as 3% net income from transport contract business has been directed to be accepted. However, in the view of the facts and circumstances brought on record by the authorities below, we are inclined to hold 4% profit reasonable before allowing salary and interest to the partners this being the first year of assessee’s business as pointed out by the learned Counsel for the assessee at the time of hearing. In view of the above, the impugned order of the learned CIT(A) is set aside and the Assessing Officer is directed to estimate the profit @4% and thereafter allow salary and interest paid to the partners and re-do the assessment accordingly.” Similarly, in case of Sri Raghavendra Lorry Services (supra), the estimation was made at the rate of 3%. In the present case, we note that the NP declared by the assessee was 1.09%, whereas the NP in A.Y. 2013-14 was 3.52% and in A.Y. 2015-16, it was .84%. Therefore, taking into account the average of all these three figures of NP (net profit) , the average NP comes to 2.75%. Since, the assessee has already declared NP of 1.07 %, it would be reasonable if the income is estimated by making disallowance of 2% of the total expenses towards any possible mistake / anomalies. Accordingly, we set aside the order of ld. CIT (A) and direct the ld. AO to make the addition at the rate of 2% of the expenses claimed in respect of lorry expenses which comes to Rs. 11,01,641/- and delete the remaining amount of Rs. 4,64,90,566/-.(4,75,92,207/- -11,01,641/-). The appeal of the assessee is partly allowed. 013. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 27.10.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 27.10.2025 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 11 ITA No. 1326/KOL/2025 Yogesh Transport Pvt. ltd; A.Y. 2014-15 Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "