Case Law Details
ACIT Vs Assam Kerala Roadways Pvt. Ltd. (ITAT Kolkata)
Assessee is a goods carrier /transporter operating huge fleet of good carriers by hiring from the market during the year and during the year it had incurred expenditure of Rs. 34,11,35,804/- under the head lorry hire charges. The assessee has furnished complete details comprising challan no, truck no, load from destination and lorry hire amount etc. in respect of 9068 vehicles before the AO . The AO test checked some of the vehicles on this web portal VAHAN, Ministry of Road, Transport & Highways and came to the conclusion that some of these vehicles were either maxi cab, or motor cycle or tractor and finally disallowed a sum of Rs. 4,09,36,296/- @ 12% of the entire lorry hire expenses.
The Ld. CIT(A) allowed the appeal of the assessee by passing a detailed and speaking order by holding that all the vehicles as test checked by the AO were duly registered as goods carriers on the web portal of VAHAN, Ministry of Road Transport & highways and in couple of cases the data were not available due to non-digitization of data.
The Ld. CIT(A) examined the expenses claimed by the assessee comprising bills, vouchers and came to the conclusion that the order passed by the AO is just on extrapolation and on presumption basis without any verification of details/information as filed by the assessee.
The Ld. CIT(A) has given some example of vehicles registration status on VAHAN portal which duly explained the nature of the vehicles. We have examined the same and found no infirmity or any deficiency in the observations of Ld. CIT(A). Moreover we find merit in the contention of the Ld. Counsel for the assessee that the addition has been made as unexplained expenditure u/s 69C of the Act which is incorrect and against the provision of Act as the said explanation deals with the disallowance and addition of expenditure the source whereof is not explained by the assessee.
In the present case the source is not in dispute as the assessee has duly accounted for the expenses in the books of accounts and there is no dispute as to the source of this expenditure as added u/s 69C of the Act. The AO has made disallowance by extrapolation and on presumption and surmises which was rightly reversed by the Ld. CIT(A). Accordingly we uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal preferred by the revenue against the order of the Commissioner of Income Tax(Appeals)-10, Kolkata [hereinafter referred to as ‘CIT(A)’] dated 24.01.2019 for the assessment year 2014-15.
2. The only issue raised by the revenue is against the deletion of addition of Rs. 4,09,36,296/- as made by the AO u/s 69 of the Income Tax Act, 1961 (hereinafter referred to as the Act) on account of unexplained expenditure @ 12% of the entire expenditure on Lorry Hire Charges.
3. Facts in brief are that the assessee is engaged in the business of transportation of goods. During the course of assessment proceedings, the AO observed from the details filed by the assessee that the assessee has claimed Rs. 36,00,22,353/- as vehicle operating and maintenance expenses under the head other expenses. Accordingly, the assessee was called upon to furnish the bifurcation of said expenditure which was duly furnished by the assessee. The ld AO randomly checked and verified some of the hired vehicle from the website of VAHAN national registered e-portal, Ministry of Road, Transport & Highways, Govt. of India and found that the assessee was hiring vehicle like motor cycle, Maxy Cab, tractors etc which are not possible to be used for transportation of goods. The AO also noted that some of the vehicles even not registered or were not appearing in the website. Accordingly the AO came to the conclusion that the expenses claimed by the assessee were not genuine and reliable and called upon the assessee to furnish the details/bills of these expenses which were not furnished by the assessee citing the reasons of records being very voluminous and huge. Ultimately , the AO calculated the disallowance at Rs. 4,09,36,296/- by applying 12% on the amount of lorry hire charges of Rs. 34,1,35,804/- by observing as under:
“Accordingly, in terms of principle of natural justice, after offering ample opportunity to assessee and depending on the data analyzed as mentioned above, treating 79 cases-capable of heavy carriage as vehicle for transportation – out of 90 cases, (90-79)/90 x 100= 12.22 i.e. 12% (ROI) of Rs. 34,11,35,804/- i.e. Rs. 4,09,36,296/- (ROI) is disallowed in the ratio of percentage, u/s 69C as unexplained expenditure and added back to the total income of the assessee. I am also satisfied that this case is a fit case for initiation of penalty proceeding u/s 271(1)(c ) for concealment or not furnishing of accurate particulars of income.”
4. The Ld. CIT(A) allowed the appeal of the assessee ,after referring to the website VAHAN which was also referred by the AO while passing the order, came to the conclusion that most of the vehicles which have been stated to be either motor cycles or motor cars and tractors were in fact not so but the goods carrier and only in few cases there was no information available on the website of the Ministry. The Ld. CIT(A) while deleting the disallowance gave a number of examples from page no.16 to page no. 21 in the appellate order giving details of vehicles registration with the Ministry of Road Transport & Highways, Govt. of India and categorically noted that all these vehicles were good carriers and not as observed by the AO. Finally the Ld. CIT(A) observed that all vehicles as referred to by the AO were quite active and duly registered on e-portal VAHAN and most of the vehicles were good carriers and in some cases data pertaining to the vehicles appeared to be not digitized and thus not available on the website. The Ld. CIT(A) also observed that despite all the evidences filed by the assessee, the AO has not bothered to verify the same and resorted to extrapolation and estimation of unexplained expenditure on the entire payments relating to 9068 vehicles. The Ld. CIT(A) while allowing the appeal of the assessee observed that ad hoc disallowance without pointing out any specific defect is not permissible and cannot be allowed.
5. The Ld. D.R. submitted before the Bench that the AO has given his observations on the basis of information contained in the Website of Ministry of Road Transport & Highways, Govt. of India and only on that basis calculated the disallowance at 12% of the entire expenditure relating to 9068 vehicles as these vehicles were found to be not goods carriers. The Ld. D.R. submitted that the assessee could not submit any plausible explanation to the show cause notice issued by the AO as to these vehicles which were stated to be transport carriers which were found to be maxi cabs, tractors and motor cycles etc. The Ld. D.R. submitted that the Ld. CIT(A) having co-extensive powers with that of the AO has not tried to go to the root of the matter if at all the AO has failed to carry out any meaningful enquiry and given a cursory finding that these vehicles were good carriers and thereby treating the findings of the AO as wrong. The Ld. D.R. submitted that if at all there was any fault in the manner of verification carried out by the AO, the Ld. CIT(A) would have very well verified the facts/details as filed by the assessee and came to an independent conclusion on the issue. The Ld. D.R. therefore prayed the order of Ld. CIT(A) may kindly be quashed and that of the AO kindly be upheld or alternatively if there is no fault in the manner of conducting the assessment the same may kindly be restored to the file of the AO to frame new de novo assessment.
6. The Ld. A.R. of the assessee strongly opposed the contention of the Ld. D.R. by submitting that the assessee is a big goods transporter for which it hired vehicles from market. During the year approximately 9068 vehicles were hired by the assessee from market from the market for the purpose of its business . The Ld. A.R. submitted that the assessee has filed all the details relating to these vehicles with the AO and the AO after doing wrong verifying the vehicles details in the website VAHAN of Ministry of Road Transport & Highways, came to the conclusion that some vehicle as noted in the assessment order were not goods transporters and were in fact motor cycles, tractors and maxi cabs etc. which have been controverted by the Ld. CIT(A) by referring to the same website and finally recorded a finding that the observations by the AO were incorrect. As a matter of fact that these vehicles were duly registered on the portal as goods carriers. Only in a couple of cases, there was no registration or details available in the website which probably may have happened due to non-registration of the vehicles in the website VAHAN. The ld. A.R submitted that the assessee has filed all the documents but no verification has been carried out by the AO except referring to this website Ministry of Road, Transport & Highways. The Ld. A.R. also referred to the finding of the Ld. CIT(A) on the issue and submitted that the order passed by the Ld. CIT(A) being very detailed and speaking and therefore deserved to be upheld. The Ld. A.R. also submitted that in the appellate proceedings the assessee has not filed any new evidences and Ld. CIT(A) on the basis of same records/evidences , has come to the conclusion that all these expenses were fully vouched. The Ld. A.R. also submitted that the Ld. CIT(A) has given finding that all the vehicles as pointed out by the AO were duly registered as transport good carriers on the Website and only in a couple of cases there was no national registration available of non-digitization of data. The Ld. A.R. also submitted that the AO has just extrapolated the disallowance on all the expenditure as claimed by the assessee in respect of 9068 vehicles which was totally fallacious and wrong and no extrapolation or estimation is permissible on the entire expenditure pointing out defects in one or two cases which was also wrong as has been negated by the Ld. CIT(A) in the appellate order. The Ld. A.R. also submitted that the disallowance has been made by the AO as unexplained expenditure u/s 69C of the Act which is also incorrect and against the provisions of Act as the provisions of Section 69C of the Act contemplates that where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. The Ld. A.R submitted that the source of expenditure is not in dispute as the assessee has shown all the expenditure in the books of accounts and therefore the source of the expenditure is fully explained and addition made by the AO is also incorrect and under wrong provision of Act. Finally the Ld. A.R. submitted that the order of Ld. CIT(A) may kindly be upheld by dismissing the appeal of the revenue.
7. We have heard rival contentions and perused the material on record. We note from the facts of the case as placed before us that the assessee is a goods carrier /transporter operating huge fleet of good carriers by hiring from the market during the year and during the year it had incurred expenditure of Rs. 34,11,35,804/- under the head lorry hire charges. The assessee has furnished complete details comprising challan no, truck no, load from destination and lorry hire amount etc. in respect of 9068 vehicles before the AO . The AO test checked some of the vehicles on this web portal VAHAN, Ministry of Road, Transport & Highways and came to the conclusion that some of these vehicles were either maxi cab, or motor cycle or tractor and finally disallowed a sum of Rs. 4,09,36,296/- @ 12%of the entire lorry hire expenses. The Ld. CIT(A) allowed the appeal of the assessee by passing a detailed and speaking order by holding that all the vehicles as test checked by the AO were duly registered as goods carriers on the web portal of VAHAN, Ministry of Road Transport & highways and in couple of cases the data were not available due to non-digitization of data. The Ld. CIT(A) examined the expenses claimed by the assessee comprising bills, vouchers and came to the conclusion that the order passed by the AO is just on extrapolation and on presumption basis without any verification of details/information as filed by the assessee. The Ld. CIT(A) has given some example of vehicles registration status on VAHAN portal which duly explained the nature of the vehicles. We have examined the same and found no infirmity or any deficiency in the observations of Ld. CIT(A). Moreover we find merit in the contention of the Ld. Counsel for the assessee that the addition has been made as unexplained expenditure u/s 69C of the Act which is incorrect and against the provision of Act as the said explanation deals with the disallowance and addition of expenditure the source whereof is not explained by the assessee. In the present case the source is not in dispute as the assessee has duly accounted for the expenses in the books of accounts and there is no dispute as to the source of this expenditure as added u/s 69C of the Act. The AO has made disallowance by extrapolation and on presumption and surmises which was rightly reversed by the Ld. CIT(A). Accordingly we uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.
8. In the result, the appeal of the revenue is dismissed.
Order is pronounced in the open court on 28th March,2023
