Unique Rail Road Consultants Private Limited Vs DCIT (ITAT Hyderabad)
Amalgamation Not Informed to AO Sustains Assessment; Mechanical 10% Expense Disallowance Fails – Applying Mahagun Realtors (SC) and Distinguishing Maruti Suzuki (SC)
The ITAT Hyderabad adjudicated both jurisdictional validity of assessment and sustainability of ad-hoc disallowances. On the issue of assessment framed in the name of a non-existent entity, the Tribunal held that though amalgamation had occurred, the assessee failed to formally intimate the Assessing Officer during assessment proceedings and also filed the return in the name of the amalgamating company. Applying the ratio of PCIT v. Mahagun Realtors Pvt. Ltd. (SC) and distinguishing Maruti Suzuki India Ltd. (SC), the ITAT upheld the assessment and rejected the jurisdictional challenge.
On ad-hoc disallowance of Travel & Tour expenses and Vehicle Hire Charges, the Tribunal found that the AO made a mechanical 10% disallowance without rejecting books of account, without pointing out specific defects, and without doubting the genuineness of expenditure. The mere fact that some bills were in the name of the amalgamated company was held insufficient. Accordingly, the disallowances were deleted in full.
With respect to disallowance of ₹19.43 lakh towards Site & Other Expenses, the Tribunal observed that the AO alleged double claim under “Other Expenses” and “Cost of Execution” without establishing duplication or proper factual verification. In view of contradictory findings, the issue was set aside and remanded to the AO for fresh examination after due opportunity to the assessee.
Outcome: Jurisdictional ground rejected; ad-hoc expense disallowances deleted; site-expense issue restored. Appeal partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
