Case Law Details
Gujarat Goods Service Vs ITO (ITAT Mumbai)
We find that assessee is in the business of goods transport operator and has incurred various expenditure. The learned Assessing Officer noted that total ₹4,23,53,462/- has been incurred by the assessee on various transportation expenditure such as Hamali, Road delivery charges, etc. He disallowed 15% of such expenditure. On appeal before the learned CIT (A), the complete details were produced. In the remand proceedings before learned Assessing Officer, assessee could also submit confirmation of Goods Transport Labour Board where, the expenses incurred by the assessee were confirmed to the extent of ₹70,75,604/-. The learned CIT (A) also noted that in the nature of business being carried out by the assessee, it is not possible to show the veracity of many expenses, because such expenses are running, on continuous basis for each and every trip. He further held that unless any major infirmity or irregularity can be found and proved, expenses cannot be doubted. He further held that many such expenditure are only on self made vouchers. He further test checked and verified the original documentation and evidences of various expenditures. Despite this, he upheld the disallowance at the rate of 5% of ₹3,52,74,858/-. On careful reading of paragraph no.5.6, where the learned CIT (A) has categorically held that the expenses cannot be doubted on general plane, as there are no major infirmity or irregularity shown by the lower authorities, even sustaining disallowance at the rate of 5% is not proper. In the result, we find that the learned CIT (A) has incorrectly upheld the adhoc disallowance of ₹ 17,63,743/-. The disallowance confirmed by him also runs contrary to his own finding. Therefore, we direct learned Assessing Officer to delete disallowance of `17,63,643/–.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
01. This appeal is filed by Gujarat Goods Services (the assessee/ appellant) against the order passed by learned Commissioner of Income-tax (Appeals)-28, Mumbai for A.Y. 2014-15 on 9th December, 2019. The assessee has raised solitary ground in the appeal with respect to the confirmation of disallowance of ₹17,63,743/- of various expenditure on adhoc basis at the rate of 5% of disputed expenditure of ₹ 3,52,74,858/-.
02. Assessee has raised following ground of appeal:-
“1.Considering the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) 28, Mumbai, [hereinafter, for the sake of brevity, referred to as ‘CIT(A)’ ] erred in not considering the Assessment order passed as bad in law and void abinitio since adequate opportunity was not afforded to the appellant. erred in confirming addition of Rs. 17,63,743, calculated on adhoc basis of 5% of the disputed expenditure of Rs. 3,52,74,858, and the same ought to be deleted.
02. Considering the facts and circumstances of the case an in law CIT(A) erred in confirming addition of Rs. 17,63,743, calculated on adhoc basis of 5% of the disputed expenditure of Rs. 3,52,74,858, and the same ought to be deleted.
03. Considering the facts and circumstances of the cases, the appellant be granted such other and further reliefs as may be considered fit and proper”
03. Brief fact of the case shows that assessee is a partnership firm, who filed its return of income on 28th November, 2014 declared income of ₹16,03,920/-. Assessee is engaged in the business of transportation through its own vehicles and also by hiring of other vehicles. The case of the assessee was picked up for scrutiny. The assessee was asked to submit the details of various expenditures such as Hamali, road delivery charges, unloading, local tempo, repair expenses, office expenses, office rent and Trip expenses. Assessee did not appear in response to show cause notice dated 23rd December, 2016 and therefore, the learned Assessing Officer assumed that assessee cannot justify completely the liability of expenses with documentary evidences. Hence, he disallowed 15% of such expenditure amounting to ₹ 4,23,50,462/- and disallowance was worked out of ₹ 63,52,570/-. The income was assessed under Section 143(3) of the Act on 29th December, 2016 at a total income of ₹ 79,56,490/-.
04. Assessee aggrieved with that order preferred an appeal before the learned CIT (A). The learned CIT (A) asked for the remand report by the learned Assessing Officer on submissions made by the assessee. During the course of remand proceedings, assessee submitted the ledger account along with sample bills and vouchers. In the remand report, the learned Assessing Officer submitted that most of the expenses are made in cash and on self made vouchers. During the remand proceedings, the assessee was asked to produce the details of parties along with complete addressand Permanent Account Number. The assessee submitted that the expenses are very small in nature and no further details can be provided. However, the expense incurred through Goods Transport Labour Board was confirmed under Section 133(6) of the Act. Such expenditure are to the tune of ₹70,75,604/-. Therefore, the learned Assessing Officer stated that 15% of the balance expenditure i.e. ₹4,23,50,462/- – (minus) ₹75,70,604/- may be confirmed. The assessee submitted that considering the nature of expenses which are generally incurred in cash, invoices of the same are not available. Assessee explained the details of each and every expenditure and manner of incurring those expenditure. The learned CIT(A) after careful examination held that in goods transport business it is not always possible to show the veracity of expenses completely. He is also test checked and verified the evidences. Thereafter, he restricted the disallowance at the rate of 5% of ₹3,52,74,858/- at ₹ 17,63,743/- deleting the disallowance to the extent of ₹45,88,827/-.
05. Assessee is still aggrieved with the above order and has preferred the above appeal.
06. When this matter was called for hearing on 25th March, 2022, none appeared on behalf of the assessee. Same is the status in earlier hearings on 27th January, 2022, and 2nd December, 2021. Therefore, it is seen that despite the issue of notice by Registered AD, the assessee has chosen to not to represent its case. Therefore, the issue is decided on the merits of the case as per information available.
07. The learned Departmental Representative supported the orders of the lower authorities.
08. We have carefully considered the rival contentions and perused the orders of the lower authorities. We find that assessee is in the business of goods transport operator and has incurred various expenditure. The learned Assessing Officer noted that total ₹4,23,53,462/- has been incurred by the assessee on various transportation expenditure such as Hamali, Road delivery charges, etc. He disallowed 15% of such expenditure. On appeal before the learned CIT (A), the complete details were produced. In the remand proceedings before learned Assessing Officer, assessee could also submit confirmation of Goods Transport Labour Board where, the expenses incurred by the assessee were confirmed to the extent of ₹70,75,604/-. The learned CIT (A) also noted that in the nature of business being carried out by the assessee, it is not possible to show the veracity of many expenses, because such expenses are running, on continuous basis for each and every trip. He further held that unless any major infirmity or irregularity can be found and proved, expenses cannot be doubted. He further held that many such expenditure are only on self made vouchers. He further test checked and verified the original documentation and evidences of various expenditures. Despite this, he upheld the disallowance at the rate of 5% of ₹3,52,74,858/-. On careful reading of paragraph no.5.6, where the learned CIT (A) has categorically held that the expenses cannot be doubted on general plane, as there are no major infirmity or irregularity shown by the lower authorities, even sustaining disallowance at the rate of 5% is not proper. In the result, we find that the learned CIT (A) has incorrectly upheld the adhoc disallowance of ₹ 17,63,743/-. The disallowance confirmed by him also runs contrary to his own finding. Therefore, we direct learned Assessing Officer to delete disallowance of `17,63,643/–.
In the result, ground no. 1 of the appeal of the assessee is allowed.
09. In the Result, the appeal of the assessee is allowed.
Order pronounced in the open court on 31.05.2022.
