Satwinder Singh Vs ITO (ITAT Kolkata)
The appeal before the ITAT Kolkata arose from the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, for Assessment Year 2018-19, affirming the Assessing Officer’s disallowance of oil and fuel expenses claimed by the assessee engaged in the transportation business.
The assessee had filed a return declaring nil income. During scrutiny assessment under Section 143(3) read with Section 144B of the Income-tax Act, the Assessing Officer observed that bills and vouchers were not produced for certain expenses. Consequently, the Assessing Officer disallowed oil and fuel expenses amounting to ₹1,94,38,909. In addition, estimated disallowances were made in respect of depreciation on additions to fixed assets of ₹14,66,437 and 10% of trip expenses amounting to ₹4,41,472, resulting in a total disallowance of ₹2,13,46,818 under Section 37 of the Act.
In appeal, the CIT(A) sustained only the disallowance relating to oil and fuel expenses while deleting the additions on account of depreciation and trip expenses.
Before the Tribunal, the assessee contended that its average net profit from the transportation business over the surrounding assessment years remained below 1%. It was argued that sustaining the oil and fuel expense disallowance would artificially increase the net profit for Assessment Year 2018-19 to approximately 9.85%, which was impractical and inconsistent with the assessee’s normal business results. The assessee therefore requested deletion of the disallowance to maintain consistency in the assessment of its business income.
