The ACIT,GNR Circle,, Gandhinagar v. M/s. Horn Ok Please Transport Ltd.,, Gandhinagar

ITA 3223/AHD/2009 | 2006-2007
Pronouncement Date: 29-07-2011 | Result: Dismissed

Appeal Details

RSA Number 322320514 RSA 2009
Assessee PAN AAACV6344H
Bench Ahmedabad
Appeal Number ITA 3223/AHD/2009
Duration Of Justice 1 year(s) 7 month(s) 28 day(s)
Appellant The ACIT,GNR Circle,, Gandhinagar
Respondent M/s. Horn Ok Please Transport Ltd.,, Gandhinagar
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 29-07-2011
Date Of Final Hearing 21-07-2011
Next Hearing Date 21-07-2011
Assessment Year 2006-2007
Appeal Filed On 01-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI T.K.SHARMA JUDICIAL MEMBER AND SHRI A.N. PAHUJA ACCOUNTANT MEMBER DATE OF HEARING : 21/7/2011 DRAFTED ON: 22/07/ 2011 ITA NOS.3223 &3344/AHD/2009 A.Y. 2006-07 1. ASST.CIT GANDINAGAR CIRCLE BLOCK NO. 14 4 TH FLOOR UDHYOG BHAVAN SECTOR-11 GANDHINAGAR 2. OK PLEASE TRANSPORT LTD. 80/394 GUJARAT HOUSING BOARD IOC ROAD CHANDKHEDA GANDHINAGAR VS. M/S OK PLEASE TRANSPORT LTD. 80/394 GUJARAT HOUSING BOARD IOC ROAD CHANDKHEDA GANDHINAGAR 2. ACIT GANDHINAGAR CIRCLE GANDHINAGAR PAN : AAACV 6344 H ( A PPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI SAKAR SHARMA AR REVENUE BY: SHRI SANJAY DHARIWAL D.R. O R D E R A.N. PAHUJA: THESE CROSS-APPEALS AGAINST AN ORDER DATED 11/09/2009 OF THE LD. CIT(APPEALS)-GANDHINAGAR FOR THE ASSESSMENT YEAR 2006-07 RAISE THE FOLLOWING GROUNDS: ITA NO.3223/AHD/2009[REVENUE] 1. THE LD. CIT(A) WAS NOT JUSTIFIED IN ALLOWING RELI EF OF RS.19 33 048/- ON ACCOUNT OF TANKER DIESEL EXPENSES. 2. THE LD. CIT(A) WAS NOT JUSTIFIED IN ALLOWING RELIE F OF RS.15 00 000/- ON ACCOUNT OF TRANSPORT EXPENSES. 3. THE LD. CIT(A) WAS NOT JUSTIFIED IN ALLOWING RELIE F OF RS.1 95 786/- ON ACCOUNT OF TRUCK RUNNING AND MAINTENANCE EXPENSES. ITA NOS.3223 &3344/AHD/2009 - 2 - 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT( A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARN ED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE A BOVE EXTENT . ITA NO.3344/AHD/2009[ASSESSEE] 1. LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMI NG DISALLOWANCE OF SHORTAGE CLAIMED OF RS.64 257/-. 2. LD. CIT(A) ERRED IN FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF TANKER DIESEL EXPENSES TO THE EXTENT OF RS.5 82 679/-. 3. LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF TRANSPORT EXPENSES TO THE EXTENT OF RS.10 00 000/-. 4. LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF RS.3 04 621/- OUT OF TRUCK RUNNING AND MAINTENANCE C HARGES. YOUR APPELLANT CRAVES LEAVE TO ADD ALTER AND/OR AMEND ALL OR ANY OF GROUNDS BEFORE THE FINAL HEARING OF APPEAL. 2. APROPOS GROUND NO.1 IN THE APPEAL OF THE ASSESSEE RE LATING TO SHORTAGE FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING LOSS OF RS.10 09 465/- FILED ON 30/12/2006 BY THE ASSESSEE P ROVIDING TANKER HIRING SERVICES FOR IOC LTD. ONGC LTD. & OTHERS AFTER BEING PROCESSED U/S.143(1) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S.143( 2) OF THE ACT ON 24/10/2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER[AO IN SHORT] NOTICED ON PERUSAL OF THE SCHEDULE -12 TO THE PROFIT & LOSS ACCOUNT THAT THE ASSESSEE CLAIMED SHORTAGE EXPENSES OF RS.1 28 514/-. TO A QUERY BY THE AO THE ASSESSEE REPLIED THAT THE ASSESSEE L IFTED THE MATERIAL FROM A SPECIFIC PLACE AND CARRIED TO THE DESTINATION OF THE BENEFICIARY AS PER INSTRUCTIONS. THE WORK WAS UNDERTAKEN THROUGH ITS OWN V EHICLES AND OUTSIDE VEHICLES TAKEN ON JOB-WORK. IF ANY SHORTAGE WAS FOUND ON THE DESTINATION OF THE BENEFICIARY THE SAID SHORTAGE WAS DEDUCTED FROM THE HIRE CHARGES BILL WHILE THE UNCOLLECTED SHORTAGE WAS TO BE BORNE BY THE A SSESSEE. SINCE THE NATURE OF EXPENDITURE WAS NON-FULFILLMENT OF CONTRACT UAL OBLIGATION THE SAME WAS ALLOWABLE THE ASSESSEE PLEADED. HOWEVER THE AO D ID NOT ACCEPT THESE SUBMISSIONS THE ASSESSEE HAVING NOT FURNISHED ANY DOCUMENTA RY EVIDENCE ITA NOS.3223 &3344/AHD/2009 - 3 - IN SUPPORT OF ITS CONTENTION NOR ANY DETAILS CONTAININ G THE NAME OF THE MATERIAL DATE OF TRANSPORT TANKER NUMBER VOLUME OF THE MATERIAL TRANSPORTED VOLUME OF SHORTAGE PERCENTAGE OF SHORTAGE AND PRICE OF MATERIAL THESE DETAILS HAVING BEEN ADMITTEDLY NOT MAINTAINED. ACC ORDINGLY THE AO DISALLOWED 50% OF THE EXPENSES RESULTING IN AN ADDITI ON OF RS.64 257/-. 3. ON APPEAL THE ASSESSEE REITERATED THEIR SUBMISSIONS B EFORE THE AO AND FURTHER POINTED OUT THAT THE SHORTAGE IN THE YEA R UNDER CONSIDERATION WAS DEBITED UNDER THE FOLLOWING TWO HEADS OF ACCOUNTS:- (A) SHORTAGE REMAINED NET OF RECOVERY MADE AS PER SHORTAGE A/C RS. 43 899.67 (B) RECOVERIES NOT MADE FROM TRUCK DRIVERS RS. 84614.48 ----------------- RS.128514.15 3.1. IT WAS STATED THAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEE MADE SUBSTANTIAL RECOVERY AGAINST GROSS SHORTAGE OF RS.4 49 611 .48 AND THERE WAS NO JUSTIFICATION FOR THE ADDITION. 4. IN THE LIGHT OF AFORESAID SUBMISSIONS THE LD. CIT(APPEALS) FOLLOWING HIS OWN DECISION FOR THE AY 2005-06 UPHELD THE ADDITION HOLDING AS UNDER:- 2.3. THE ISSUE HAS BEEN CONSIDERED. WHILE DEALING WIT H THE SIMILAR ISSUE FOR THE ASSESSMENT YEAR 2005-06 IN THE APPELLATE O RDER DATED 08/04/2009 THE MATTER HAS BEEN DISCUSSED IN DETAILS. A S STATED IN THE APPELLANTS EXPLANATION THE SHORTAGES ARE PRIMARILY ON TWO GROUNDS (I) RECOVERY BY THE END-USERS AND (II) WRITE OFF OF AMO UNT OR NON- RECOVERY FOR THE ADVANCES GIVEN TO THE TRUCK DRIVERS. 2.3.1. AS I HAVE HAD HELD FOR ASSESSMENT YEAR 2005-06 AS FA R AS THE RECOVERY BY THE END-USERS FROM THE APPELLANT IS CONCERNED UNDER NORMAL CIRCUMSTANCES THE SAME CANNOT BE TREATED AS BUSINESS L OSS OR AN EXPENSE BECAUSE SUCH LOSSES ARE NOT STIPULATED BY CONTR ACTS. AS FAR AS THE RECOVERIES FROM DRIVERS ARE CONCERNED OBVIOUSLY T HE APPELLANT HAS BEEN UNABLE TO COMPLETELY DISCHARGE ITS ON US BECAUSE TO START WITH INITIALLY IT HAS NOT BEEN ABLE TO PUT FORTH THE DETAILS OF THE CONTRACTS IN WHICH THE ADVANCES HAS BEEN MADE. SIMILAR DISALLOWANCES HAVE BEEN CONFIRMED IN THE APPELLATE PROCE EDINGS IN THE EARLIER YEARS ALSO. THEREFORE KEEPING ALL THE FACTS IN MIND I THINK THE ITA NOS.3223 &3344/AHD/2009 - 4 - ASSESSING OFFICERS ACTION OF DISALLOWING 50% OF SUCH LOSSES AP PEARS TO BE JUSTIFIED AND IS CONFIRMED. 5. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AF ORESAID FINDINGS OF THE LD. CIT(APPEALS) IN UPHOLDING THE ADDITION OF RS.64 257/-. THE LD. AR ON BEHALF OF THE ASSESSEE WHILE REITERATING THEIR SUBMISSI ONS BEFORE THE LD. CIT(APPEALS) SUBMITTED THAT THIS YEAR THEY TRANSPORTED ONLY FURNACE OIL HAVING LOW RATE OF EVAPORATION WHILE IN THE PRECEDING YEAR PETROL AND DIESEL WERE TRANSPORTED HAVING HIGHER RATE OF EVAPORATION. THE REFORE THE DECISION OF THE PRECEDING YEAR WAS NOT APPLICABLE IN THE YEAR UNDER CON SIDERATION. ON THE OTHER HAND THE LD. DR WHILE INVITING OUR ATTENTION TO THE ASSESSMENT ORDER CONTENDED THAT WHEN THE ASSESSEE ITSELF DID NOT SUBMIT TH E DETAILS REQUIRED BY THE AO THE SUBMISSIONS OF THE LD. AR WERE NOT TENAB LE . SINCE THE ASSESSEE DID NOT FURNISH ANY EVIDENCE IN SUPPORT OF THE SAID SHORTAGE THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE ADDITION T HE LD. DR ADDED. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH T HE FACTS OF THE CASE. AS IS APPARENT FROM THE AFORESAID FACTS THE ASSESSEE DID NOT FURNISH DETAILS CONTAINING THE NAME OF THE MATERIAL DATE OF TRANSPORT TANKER NUMBER VOLUME OF THE MATERIAL TRANSPORTED VOLUME OF SHORTA GE PERCENTAGE OF SHORTAGE AND PRICE OF MATERIAL BEFORE THE AO THESE D ETAILS HAVING BEEN ADMITTEDLY NOT MAINTAINED. EVEN BEFORE THE LD. CIT (A) OR BEFORE US NO SUCH DETAILS HAVE BEEN FURNISHED NOR ANY BASIS FOR WORKING O UT SHORTAGE IN THE CASE OF ANY OF THE PARTIES IS EVIDENT FROM THE DETAILS P LACED IN THE PAPER BOOK ON PAGE 9-14. WE FIND THAT THE LD. CIT(APPEALS) FOL LOWED HIS OWN ORDER IN THE PRECEDING ASSESSMENT YEAR AND UPHELD THE DISALLOWANCE. I N THE PRECEDING YEAR WHILE ADJUDICATING A SIMILAR ISSUE THE ITAT BENCH C AHMEDABAD IN THEIR ORDER DATED 19.5.2011 IN ITA NOS.1977 AND 2212 /AHD/2009 HELD AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH T HE FACTS OF THE CASE. INDISPUTABLY THE ASSESSEE DID NOT FURNISH THE DETAILS SOUGHT BY THE AO VIDE ORDER-SHEET ENTRY DATED 12/10/2007 VIZ. T HE NAME OF THE MATERIAL DATE OF TRANSPORT TANKER NUMBER VOLUME OF THE MATERIAL TRANSPORTED VOLUME OF SHORTAGE PERCENTAGE OF SHORTAGE AND PRICE OF ITA NOS.3223 &3344/AHD/2009 - 5 - MATERIAL ETC. THESE DETAILS WERE NEITHER FURNISHED BEF ORE THE LD. CIT(A) FOUND THAT THE ASSESSEE CLAIMED THE SHORTAGE ON TH E BASIS OF THE DEDUCTIONS MADE BY THE PARTIES ON WHOSE BEHALF THE MATERIAL WAS CARRIED AND THAT TOO WITHOUT ANY CONTRACT EXCEPT FOR IND IAN OIL CORPORATION. THE SAID CONTRACT WITH IOC ALSO DID NOT PROVIDE ANY SCOPE FOR SHORTAGE AND CLAUSE-9 LAID DOWN THE DETAILED PROCEDURE FOR RECOVERIES IN CASE OF SHORTAGES. WE FIND THAT IN THE CASE OF HIMALYA TRANSPORT AGAINST HIRE CHARGES OF RS.3 05 082 DEDUCTION OF RS.75 105/- IS CLAIMED. IN THE CASE OF NAYMEEL CHEMICAL S AGAINST HIRE CHARGES OF RS.14 364/- SHORTAGE HAS BEEN CLAIMED O F RS.3 040/-. LIKEWISE IN RESPECT OF OTHER PARTIES. HOWEVER THE BASIS F OR WORKING OUT SHORTAGE IN THE CASE OF ANY OF THE PARTIES IS NOT EVID ENT FROM THE DETAILS PLACED IN THE PAPER BOOK. IN THESE CIRCUMSTANCES ESPECIALLY WHEN THE ASSESSEE DID NOT FURNISH THE RELEVANT DETAILS SO UGHT BY THE AO NOR EVEN BEFORE US WHILE THERE IS NOTHING TO SUGG EST THE CLAIM OF SUCH SHORTAGE WAS BASED UPON ANY CONTRACT OR PRACTICE NOR THE LD. AR ADDUCED ANY REASONS FOR INCREASE IN SHORTAGE IN THE YEAR UNDER CONSIDERATION VIS--VIS PRECEDING YEARS THERE IS NO BASIS TO INTERFERE. SINCE THE LD. AR DID NOT PLACE ANY MATERIAL BEFORE US SO AS TO ENABLE US TO MAKE A DIFFERENT VIEW IN THE MATTER WE HAVE NO HESITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT(A). THEREFORE GROUND NO.1 IN THE APPEAL OF THE ASSESSEE IS DISMISSED. 6.1. IN THE LIGHT OF VIEW TAKEN BY THE ITAT IN THE P RECEDING YEAR AND THE ASSESSEE HAVING NOT FURNISHED THE DETAILS IN RESPECT OF NAM E OF THE MATERIAL DATE OF TRANSPORT TANKER NUMBER VOLUME OF THE MATE RIAL TRANSPORTED VOLUME OF SHORTAGE PERCENTAGE OF SHORTAGE AND PRICE OF MATERI AL NOR ANY BASIS FOR WORKING OUT SHORTAGE IN THE CASE OF ANY OF THE PARTIES WHILE THERE IS NOTHING TO SUGGEST THE CLAIM OF SUCH SHORTAGE WAS BASED UP ON ANY CONTRACT OR PRACTICE THERE IS NO BASIS TO INTERFERE. SINCE THE LD. AR DID NOT PLACE ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFF ERENT VIEW IN THE MATTER WE HAVE NO HESITATION IN UPHOLDING THE FINDINGS OF TH E LD. CIT(A). THEREFORE GROUND NO.1 IN THE APPEAL OF THE ASSESSEE IS DISMISSED. 7. GROUND NO.2 IN THE APPEAL OF THE ASSESSEE AND GRO UND NO.1 IN THE APPEAL OF THE REVENUE RELATE TO DISALLOWANCE OUT OF TANKER DIESEL EXPENSES. THE AO NOTICED ON PERUSAL OF THE SCHEDULE 12 TO THE PRO FIT & LOSS ACCOUNT THAT THE ASSESSEE CLAIMED TANKER DIESEL EXPENSES OF RS.58 2 6 796/-. TO A QUERY BY THE AO SEEKING DETAILS REGARDING TANKER-WISE CO NSUMPTION OF DIESEL THE ASSESSEE SUBMITTED THAT SUCH DETAILS WERE NOT MAINTAINED. EVEN ITA NOS.3223 &3344/AHD/2009 - 6 - THE BILLS FOR PURCHASE OF DIESEL WERE NOT PRODUCED ON THE GROUND THAT THESE WERE VOLUMINOUS. IN THE LIGHT OF THESE FACTS THE AO FOLLOWING HIS OWN FINDINGS IN THE PRECEDING YEAR DISALLOWED THE EXPENSE S OF RS.25 15 727/-. 8. ON APPEAL THE ASSESSEE CONTENDED THAT MAJORITY OF TRANSPORTATION ACTIVITY HAD BEEN CARRIED THROUGH OWN TANKERS AND THERE FORE DIESEL EXPENSES REMAINED ALMOST UNCHANGED DURING THE YEAR INSPITE OF SU BSTANTIAL REDUCTION IN GROSS RECEIPTS. DURING THE YEAR DIESEL PRICES REMAINED HIGHLY VOLATILE LEADING TO HIGHER INCURRING OF EXPENSES AND AVERAGE PRICE OF D IESEL IN IMMEDIATE PRECEDING YEAR WAS ABOUT RS.27/- PER LITRE WHICH INCREAS ED TO RS.34/- PER LITRE DURING THE YEAR THE ASSEESSEE ADDED. IN THE LIGHT OF THESE SUBMISSIONS THE LD. CIT(APPEALS) REDUCED THE DISALLOWANCE IN THE FOLLO WING TERMS:- 3.3. THE MATTER HAS BEEN GIVEN DUE CONSIDERATION. IT APPEARS THAT THE ASSESSING OFFICER WHILE DECIDING THE ISSUE HAS OVERLO OKED SOME OF THE FACTS AS POINTED OUT BY THE AUTHORISED REPRESENTA TIVE NAMELY THAT THERE HAVE BEEN PRACTICALLY NO HIRING OF TANKERS FR OM OUTSIDE AND THEREFORE THE LESSENING OF THE HIRING RECEIPTS DO NOT NECESSARILY MEAN EQUIVALENT AMOUNT OF LESSER USE OF APPELLANTS OWN FLEET . FURTHER THE FACT OF INCREASE IN RATES OF DIESEL AS DOCUMENTED BY THE AUTHORISED REPRESENTATIVE CANNOT ALSO BE IGNORED. HOWEVER ON TH E OTHER SIDE THE FACT REMAINS THAT THE ASSESSEE IS UNABLE TO CORRELATE THE CONSUMPTION WITH EITHER THE TANKERS OR THE TRIPS. THER E ARE ALSO REASONABLE NUMBERS OF CASH ENTRIES. AS PER THE APPELLA NTS OWN VERSION AS ABOVE THE ASSESSEE REDUCED ITS NUMBER OF TANKERS FR OM 27 TO 17 WHICH COULD HAVE AFFECTED THE CONSUMPTION SUBSTANT IALLY. A SIMILAR ISSUE HAD COME UP IN THE PRECEDING YEAR WHEN IT HAS BEEN HELD THAT DIESEL BEING THE PRIMARY MATERIAL OF THE APPEL LANT THE ONUS WAS COMPLETELY ON THE ASSESSEE TO EXPLAIN THE CONSUMPTION. AFT ER DUE CONSIDERATION THE DISALLOWANCE HAD BEEN RESTRICTED TO 10% OF THE TOTAL EXPENSES CLAIMED. IN MY VIEW THE FACTS AND CIRCUMSTANCES ARE ALMOST SIMILAR AND THEREFORE IN THE PRESENT SCENARIO ALS O IT WOULD BE FAIR IF THE DISALLOWANCE IS RESTRICTED TO 1/10 TH OF THE TOTAL CLAIM. THEREFORE THE ADDITION OF RS.5 82 679/- IS CONFIRMED. THE APPELLANT WILL GET THE BALANCE RELIEF. 9. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AF ORESAID FINDINGS OF THE LD. CIT(APPEALS) IN UPHOLDING DISALLOWANCE TO THE EXTENT OF RS.5 82 679/- WHILE THE REVENUE IS IN APPEAL FOR REDU CING THE DISALLOWANCE BY RS.19 33 048/-. THE LD. AR REITERATED THEIR SUBMISSIO NS BEFORE THE LD. ITA NOS.3223 &3344/AHD/2009 - 7 - CIT(APPEALS) WHILE THE LD. DR SUPPORTED THE FINDING S OF THE ASSESSING OFFICER. 10. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE. INDISPUTABLY THE ASSESSEE DID NOT PRODUCE EVEN THE BI LLS FOR PURCHASE OF DIESEL BEFORE THE AO. CONSIDERING THE FACTS AND CIRCUMSTA NCES OF THE CASE THE LD. CIT(A) REDUCED THE DISALLOWANCE TO 10% ON THE BASIS OF HIS FINDINGS IN THE PRECEDING ASSESSMENT YEAR. WE FIND THAT WHILE ADJUD ICATING A SIMILAR ISSUE IN THE PRECEDING ASSESSMENT YEAR THE ITAT IN THE IR ORDER DATED 19.5.2011 IN ITA NOS.1977 & 2212/AHD/2009 HELD AS UND ER: 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH T HE FACTS OF THE CASE. INDISPUTABLY AND AS POINTED OUT BY THE LD . CIT(A) ALL THE NEW TRUCKS IN QUESTION WERE BROUGHT INTO THE COMPANYS BOOKS ON 31/12/2004 AND THEREFORE THE SAVINGS ON ACCOUNT OF TAN KER HIRE CHARGES COULD NOT BE FOR THE WHOLE YEAR. MOREOVER AT LEAST FIVE TANKERS WERE OLD BEING OF THE VALUE OF RS.50 000/- EACH. THE LD. CIT(A) FURTHER OBSERVED THAT THE COPY OF ACCOUNT OF TAN KER DIESEL EXPENSES REVEALED A NUMBER OF CASH ENTRIES WITHOUT ANY R EFERENCE TO THE TRUCK OR THE TANKER AND THE ONUS WAS COMPLETELY ON TH E ASSESSEE TO ESTABLISH ITS CONSUMPTION PARTICULARLY WHEN THE EXPEN DITURE WAS AS HIGH AS RS.60 16 771/- IN THIS YEAR AS COMPARED TO RS.33 97 190/- IN THE PRECEDING YEAR. INTER ALIA SINCE THE ASSESSEE DID NO T PRODUCE BILLS BEFORE THE AO THE LD. CIT(A) UPHELD THE DISALLOWANC E TO ABOUT 10% OF THE TOTAL EXPENSES CLAIMED. THE LD.AR APPEARING BEFORE US DID NOT PLACE ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER AND MERELY REITERATED THEIR SUBMISSIONS BE FORE THE LD. CIT(A). CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCE S OF THE CASE ESPECIALLY WHEN THE ASSESSEE DID NOT PRODUCE THE RELE VANT BILLS BEFORE THE LOWER AUTHORITIES WE ARE OF THE OPINION THAT DISALLOWANCE SUSTAINED BY THE LD.CIT(A) IS REASONABLE. CONSEQUENTLY W E REJECT THE GROUND NO.2 IN THE APPEAL OF THE ASSESSEE AND GROUND N O.1 IN THE APPEAL OF THE REVENUE. 10.1. IN THE LIGHT OF VIEW TAKEN BY THE ITAT IN THEI R AFORESAID DECISION ESPECIALLY WHEN THE ASSESSEE DID NOT PRODUCE THE RELEVANT BILLS BEFORE THE LOWER AUTHORITIES IN THE YEAR UNDER CONSIDERATION WHI LE NEITHER THE LD.AR NOR THE LD. DR PLACED ANY MATERIAL BEFORE US SO AS TO ENABL E US TO TAKE A DIFFERENT VIEW IN THE MATTER THERE IS NO BASIS TO INTERFERE WIT H THE FINDINGS OF THE LD. ITA NOS.3223 &3344/AHD/2009 - 8 - CIT(A). IN VIEW THEREOF WE HAVE NO ALTERNATIVE BUT TO DISMISS GROUND NO.2 IN THE APPEAL OF THE ASSESSEE AND GROUND NO.1 IN THE APPE AL OF THE REVENUE . 11. GROUND NO.3 IN THE APPEAL OF THE ASSESSEE AND GR OUND NO.2 IN THE APPEAL OF THE REVENUE RELATE TO DISALLOWANCE OF TRANSP ORT EXPENSES .DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THA T THE ASSESSEE CLAIMED TRANSPORT EXPENSES OF RS.29 31 168/- IN THE YEA R UNDER CONSIDERATION AS AGAINST RS.3 76 089/- IN THE PRECEDING ASSESSMENT YEAR. TO A QUERY BY THE AO SEEKING NATURE OF SUCH EXPENSES AND THE REASONS F OR INCREASE IN THE YEAR UNDER CONSIDERATION THE ASSESSEE FURNISHED MERELY MONTH-WISE SUMMARY AND DID NOT FURNISH TANKER-WISE TRANSPORT EXPENSE S NOR PRODUCED RELEVANT VOUCHERS/BILLS ON THE GROUND THAT THE RECORD W AS VOLUMINOUS. ACCORDINGLY THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS.25 00 000/- IN THE YEAR UNDER CONSIDERATION. 12. ON APPEAL THE ASSESSEE SUBMITTED THAT FLEET AND USE OF OWN TANKERS REMAINED UNCHANGED DURING THE YEAR THERE BEING NO E FFECTIVE HIRING OF OUTSIDE TANKERS .THE TRANSPORT EXPENSES IN IMMEDIATE PRE CEDING YEAR STOOD AT RS.31 59 107/- AS AGAINST EXPENSES INCURRED DURING TH E YEAR AT RS.29 31 168/-. SINCE TRANSPORT EXPENSE INCLUDE SALARY AND ALLOWANCES PAID TO THE DRIVER AND HELPER FOOD AND OTHER ALLOWANCES ON TRIP MINOR REPAIRS SUCH AS PUNCTURE ETC. WHICH DO OCCUR ON REGULAR BASIS WHEN VEHICL E IS ON ROAD WHILE THE RATIO OF TRANSPORT EXPENSES PER COST CENTRE RE MAINED SAME NO DISALLOWANCE SHOULD BE MADE. IN THE LIGHT OF THESE SUBM ISSIONS THE LD. CIT(APPEALS) ADJUDICATED THE ISSUE IN THE FOLLOWING MA NNER:- 4.3. THE ISSUE HAS BEEN CONSIDERED. IN THE ASSESSMENT ORD ER THE ASSESSING OFFICER HAS COMPARED THE FIGURES UNDER THE HEAD FOR THE PRESENT YEAR AGAINST THE FIGURES FOR ASSESSMENT YEAR 2004- 05 AND HAS NOT TALKED ABOUT THE INTERVENING ASSESSMENT YEAR 2005-06. TO PUT THE RECORDS STRAIGHT DURING THE ASSESSMENT YEAR 2005-06 THE TRANSPORT EXPENSES CLAIMED WERE OF RS.31 51 107/- OUT OF WHICH THE ASSESSING OFFICER HAD DISALLOWED THE SIMILAR AMOUNT OF RS.25 00 0 00/- BY THE CIT(A). HOWEVER VIDE APPELLATE ORDER DATED 08/04/20 09 THE ADDITION WAS RESTRICTED TO RS.10 00 000/- BY THE CIT(A). AS STATED BY THE AUTHORISED REPRESENTATIVE ABOVE THE EXPENSES UNDER THI S HEAD ITA NOS.3223 &3344/AHD/2009 - 9 - INCLUDE SALARY AND ALLOWANCE PAID TO DRIVER AND HELPER FOOD AND OTHER ALLOWANCES ON THE TRIP MINOR REPAIRS PAYMENT OF R.T.O . CHECK POST ETC. BEING SUCH A HUGE AMOUNT OF THE TOTAL EXPENSES CL AIMED OBVIOUSLY THE ONUS IS ON THE ASSESSEE TO ESTABLISH ITS CLAIM TH ROUGH WHATEVER BOOKS DOCUMENTS IT HAS. NEITHER BEFORE THE A SSESSING OFFICER NOR BEFORE ME THE APPELLANT HAS COME FORTH TO EXPLAIN THE EXPENSES. IF ONE WERE TO LOOK AT THE EXPENSES IT WOULD BE SEEN THAT PRACTICALLY THE ENTIRE EXPENSES ARE IN CASH. IN THIS SITUA TION ONE CAN ALWAYS HAVE THE APPREHENSION AS TO WHETHER THE EXPENSES CLA IMED ARE FOR BUSINESS PURPOSES OR THE PAYMENTS WHICH ARE LEGALLY PERMISSIBLE. THEREFORE THERE IS NO WAY THE APPELLANT S CLAIM CAN BE ALLOWED AS SUCH. RELIANCE OF THE AUTHORISED REPRESENTAT IVE ON THE MANAGERIAL TOOL OF PROFIT CENTER-WISE ANALYSIS CANNOT OVER SHADOW THE BASIC CONSIDERATION OF ALLOWABILITY OF LEGITIMATE BUSINESS EXPENSES AS PER THE ACT. IN SUCH SITUATION THE ONLY WAY OF ALLOWIN G OR DISALLOWING THE EXPENSE IS THE PAST HISTORY. KEEPING IN VIEW THE EXP ENSES CLAIMED THIS YEAR AT RS.29 31 168/- WHICH IS QUITE COMPAR ABLE TO RS.31 59 107/- OF THE PRECEDING YEAR CONSISTENT TO WHAT HAD BEEN HELD FOR ASSESSMENT YEAR 2005-06 FOR THIS YEAR ALSO IT IS THOUG HT FAIR IF THE DISALLOWANCE IS RESTRICTED TO RS.10 00 000/-. 13.. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(APPEALS) IN UPHOLDING DISALLOWANCE TO THE EXTENT OF RS.10 00 000/- WHILE THE REVENUE IS IN APPEAL FOR RED UCING THE DISALLOWANCE BY RS.15 00 000/-. THE LD. AR REITERATED THEIR SUBM ISSIONS BEFORE THE LD. CIT(APPEALS) WHILE THE LD. DR SUPPORTED THE FINDING S OF THE ASSESSING OFFICER. 14. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. INDISPUTABLY THE EXPENSES CLAIMED IN THE YEAR UNDER CON SIDERATION OF RS.29 31 168/- ARE MORE OR LESS SAME AS WERE INCURRED I N THE PRECEDING ASSESSMENT YEAR I.E. RS.31 59 107/-. AS IN THE PRECEDING YEAR THIS YEAR ALSO THE ASSESSEE DID NOT PRODUCE EVEN THE BILLS FOR THESE EX PENSES . THE LD. CIT(A) FOUND THAT ALMOST ALL THE EXPENSES WERE IN CASH AND THE ASSESSEE DID NOT DISCHARGE THEIR OWN ONUS LAID DOWN UPON THEM THAT THESE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINE SS. ACCORDINGLY FOLLOWING HIS ORDER FOR THE PRECEDING ASSESSMENT YEAR T HE LD. CIT(A) UPHELD DISALLOWANCE OF RS. 10 LACS. WE FIND THAT WHILE ADJUDICAT ING A SIMILAR ISSUE IN ITA NOS.3223 &3344/AHD/2009 - 10 - THE PRECEDING ASSESSMENT YEAR THE ITAT IN THEIR ORDE R DATED 19.5.2011 IN ITA NOS.1977 & 2212/AHD/2009 HELD AS UNDER: 13. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. INDISPUTABLY AND AS POINTED OUT BY THE LD. CIT(A) ALMOST ALL EXPENSES WERE INCURRED IN CASH. BEFORE THE AO THE ASSESSE E DID NOT FURNISH ANY EXPLANATION UNTIL COMPLETION OF THE ASSESSMENT . BEFORE THE LD.CIT(A) THE ASSESSEE CLAIMED THESE WERE INCURRED IN CON NECTION WITH RUNNING OF THEIR OWN TANKERS. THERE WAS NO EXPLA NATION FOR THE ABNORMAL INCREASE IN EXPENSES TO RS.31 51 107/- IN THE YE AR UNDER CONSIDERATION VIS--VIS RS.3 76 089/- IN THE PRECEDING YEAR. THE LD. CIT(A) FOUND THAT THE ASSESSEE HAD 16 TRUCKS OF ITS OWN IN THE PRECEDING YEAR WHILE ONLY 7 NEW VEHICLES (11 BOUGHT IN M INUS 4 SOLD) WERE ADDED AND THAT TOO NOT FOR THE ENTIRE YEAR. IN THESE CIRCUMSTANCES THE LD. CIT(A) CONCLUDED THAT THE ASSESSEE DID NOT DISCHARGE ONUS OF PROVING THEIR CLAIM OF EXPENSES WITH RESPE CT TO ITS ACCURACY AND ITS NEXUS WITH THE BUSINESS. INTER ALIA SINCE THE ASSESSEE DID NOT PRODUCE ANY BILLS OR EXPLANATION BEFORE TH E AO THE LD. CIT(A) KEEPING IN VIEW OVERALL BUSINESS INCREASE OF TH E ASSESSEE UPHELD THE DISALLOWANCE TO THE EXTENT OF RS.10 00 000/ -. THE LD. AR APPEARING BEFORE US DID NOT PLACE ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER AND M ERELY REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A). CONSIDERING TH E TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE ESPECIALLY WHEN THE ASSESSEE DID NOT PRODUCE THE RELEVANT BILLS OR ANY COGENT EXPLANATION BEFORE THE LOWER AUTHORITIES WE ARE OF THE OPINION THAT DISALLO WANCE SUSTAINED BY THE LD. CIT(A) IS REASONABLE. CONSEQUENTLY WE REJECT T HE GROUND NO.3 IN THE APPEAL OF THE ASSESSEE AND GROUND NO.2 IN THE AP PEAL OF THE REVENUE. 15. IN THE LIGHT OF VIEW TAKEN BY THE ITAT IN THEIR AFORESAID DECISION AND CONSIDERING THE FACT THAT THE ENTIRE EXPENSES HAVE BEEN INCURRED IN CASH WHILE THE ASSESSEE DID NOT PRODUCE BILLS/VOUCHERS FOR THESE EXPENSES AND NEITHER THE LD.AR NOR THE LD. DR PLACED ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER THERE IS NO BASIS TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) . CONSEQUENTLY WE HAVE NO ALTERNATIVE BUT TO DISMISS GROUND NO.3 IN THE APPEAL OF THE ASSESSEE AND GROU ND NO.2 IN THE APPEAL OF THE REVENUE . 16. GROUND NO.4 IN THE APPEAL ASSESSEE AND GROUND NO. 3 IN THE APPEAL OF THE REVENUE RELATE TO DISALLOWANCE ON ACCOUNT OF TRUCK R UNNING AND ITA NOS.3223 &3344/AHD/2009 - 11 - MAINTENANCE CHARGES. THE AO NOTICED ON PERUSAL OF SCHEDULE -12 TO THE PROFIT & LOSS ACCOUNT THAT THE ASSESSEE CLAIMED A SUM OF RS.15 23 1 07/- ON ACCOUNT OF TRUCK RUNNING AND MAINTENANCE EXPENSES AS COMPAR ED TO RS.13 57 910/- IN THE PRECEDING YEAR. TO A QUERY BY TH E AO THE ASSESSEE SUBMITTED MONTH-WISE DETAILS OF EXPENSES. HOWEVER RELE VANT BILLS/VOUCHERS WERE NOT PRODUCED FOR VERIFICATION. SINCE THE ASSESSEE SOL D 10 TRUCKS IN THE YEAR UNDER CONSIDERATION AND PURCHASED 5 NEW TRUCKS OUT OF A TOTAL 24 WITH THE ASSESSEE FOLLOWING HIS OWN ORDER FOR THE PRECEDING YEAR THE AO DISALLOWED AN AMOUNT OF RS.5 LACS. 17. ON APPEAL THE LD. CIT(APPEALS) RESTRICTED THE D ISALLOWANCE TO 20% OF THE EXPENDITURE IN THE FOLLOWING TERMS:- 5.3. THE MATTER HAS BEEN CONSIDERED. WHILE REPAIRING AND MAINTENANCE EXPENSES OF A TRANSPORT COMPANY ARE BOUND TO BE QUITE SIGNIFICANT AND BY ITS VERY NATURE MAY NOT INVOLVE BILLS FOR EACH AND EVERY EXPENSES MADE YET THE MANNER OF DETAILS MAINTAINED AND ITS CORRELATION WITH THE FLEET IN HAND AND COMPARISON WITH THE PRECEDING YEARS EXPENSES WOULD BE IMPERATIVE TO JUSTIFY THE CLAIM. FROM THE COPY OF ACCOUNTS FILED BY THE AUTHORISED REPRESENTATIVE AS E XPECTED THERE ARE VERY LARGE NUMBERS OF ITEMS WHERE CASH PAYMENT I S INVOLVED OR WHERE THERE IS VERY PERFUNCTORY DESCRIPTION. THE APPE LLANT INCURRED AN EXPENDITURE OF RS.13 57 910/- IN THE PRECEDING YE AR BUT AS POINTED OUT BY THE ASSESSING OFFICER DURING THE PRESENT YEAR INCURR ED A HIGHER EXPENDITURE WITH A BETTER AND LEANER FLEET OF TANKERS. THESE CONSIDERATIONS ARE MATERIAL IN THE CONTEXT OF THE MANNER OF BOOKS MAINTAINED BY THE APPELLANT. THEREFORE THERE IS A CA SE FOR DISALLOWANCE. THE ASSESSING OFFICERS DISALLOWANCE COMES TO ALMOST 1/3 RD OF THE EXPENSES. IN MY VIEW THE ENDS OF THE JUSTICE WILL BE MET IF THESE EXPENSES ARE RESTRICTED TO 20% OF THE TOTAL CLAIM. THE ASSESSING OFFICER MAY DO THE CONSEQUENT COMPUTATION AND PROVI DE THE APPROPRIATE RELIEF. 18. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE A FORESAID FINDINGS OF THE LD. CIT(APPEALS) IN UPHOLDING DISALLOWANCE TO THE EXTENT OF RS.3 04 621/- WHILE THE REVENUE IS IN APPEAL FOR REDU CING THE DISALLOWANCE BY RS.1 95 786/- . THE LD. AR REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(APPEALS) WHILE THE LD. DR SUPPORTED THE FINDING S OF THE ASSESSING OFFICER. ITA NOS.3223 &3344/AHD/2009 - 12 - 19. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. INDISPUTABLY THE ASSESSEE DID NOT PRODUCE EVEN THE BI LLS FOR THESE EXPENSES. THE LD. CIT(A) FOUND THAT IN VERY LARGE NUM BERS OF ITEMS CASH PAYMENT WAS INVOLVED OR THERE WAS VERY PERFUNCTORY DE SCRIPTION. IN THESE CIRCUMSTANCES CONSIDERING THE INCREASE IN EXPENDITURE IN T HE YEAR UNDER CONSIDERATION VIS--VIS PRECEDING YEAR THE LD. CIT(A) DISALLOWED 20% OF THE EXPENSES. SINCE MOST OF THE EXPENDITURE INCURRED ON REPAIRS IS IN CASH AND THE DETAILS DID NOT REVEAL EVEN THE NATURE OF REPAIR S WHILE THE DR OR THE AR APPEARING BEFORE US DID NOT PLACE ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER WE HAVE NO ALTERNATE BUT TO UPHOLD THE FINDINGS OF THE LD. CIT(APPEALS) RESTRICTING THE DISALLOWANCE TO 20 % OF THE TOTAL CLAIM. IN VIEW THEREOF GROUND NO.4 OF THE ASSESSEE AND GROUND NO.3 OF THE REVENUE ARE ALSO DISMISSED. 20. GROUND NOS.4 & 5 IN THE APPEAL OF THE REVENUE BEING GENERAL IN NATURE DO NOT REQUIRE ANY SEPARATE ADJUDICATION WHI LE NO ADDITIONAL GROUND HAS BEEN RAISED BEFORE IN TERMS OF RESIDUARY GROUND IN THE APPEAL OF THE ASSESSEE THEREFORE ALL THESE GROUNDS ARE DISMISSED. 21. IN THE RESULT BOTH THE APPEAL OF THE ASSESSEE AS ALSO THAT OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 29/07/20 11 SD/- SD/- ( T.K. SHARMA ) ( A.N. PAHUJA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 29 / 07 /2011 T.C. NAIR SR. PS COPY OF THE ORDER FORWARDED TO : 1. HORN OK PLEASE TRANSPORT LTD. 80/394 GUJA RAT HOUSING BOARD IOC ROAD CHANDKHEDA GANDHINAGAR. ITA NOS.3223 &3344/AHD/2009 - 13 - 2. ASST.CIT GANDINAGAR CIRCLE BLOCK NO. 14 4TH FLO OR UDHYOG BHAVAN SECTOR-11 GANDHINAGAR 3. THE CIT CONCERNED 4. CIT(APPEALS)-GANDHIANGAR 5. THE DR AHMEDABAD BENCH C 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD