M/s Gunthikonda Mohana Rao, Vijayawada v. The Addl. CIT, Range-2, Vijayawada

ITA 346/VIZ/2009 | 2006-2007
Pronouncement Date: 02-12-2010 | Result: Dismissed

Appeal Details

RSA Number 34625314 RSA 2009
Assessee PAN ADXPG4203F
Bench Visakhapatnam
Appeal Number ITA 346/VIZ/2009
Duration Of Justice 1 year(s) 5 month(s) 17 day(s)
Appellant M/s Gunthikonda Mohana Rao, Vijayawada
Respondent The Addl. CIT, Range-2, Vijayawada
Appeal Type Income Tax Appeal
Pronouncement Date 02-12-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 02-12-2010
Date Of Final Hearing 09-11-2010
Next Hearing Date 09-11-2010
Assessment Year 2006-2007
Appeal Filed On 15-06-2009
Judgment Text
ITA NO.346 OF 2009 GUNTHIKONDA MOHANA RAO VIJAYAWADA PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.346/VIZAG/2009 ASSESSMENT YEAR: 2006 - 07 GUNTHIKONDA MOHANA RAO VIJAYAWADA VS. AD. CIT RANGE-2 VIJAYAWADA (APPELLANT) PAN NO: ADXPG 4203 F (RESPONDENT) APPELLANT BY: SMT. K. NEERAJA ADVOCATE RESPONDENT BY: SHRI J. SIRI KUMAR DR ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.3.2009 PASSED BY LEARNED CIT(A) VIJAYAWADA AND IT RELATES TO THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE IS IN APPEAL BEFORE US IN RESPECT O F THE FOLLOWING TWO ISSUES: A) ADDITION OF RS.4.00 LAKHS OUT OF TRIP SHEET EXPE NSES B) ADDITION OF RS.17.06 LAKHS UNDER SECTION 40(A)(I A) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE ON THE FINANCE C HARGES PAID TO THE FINANCE COMPANY. 3. THE FACTS RELATING TO THESE ISSUES ARE STATED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORT CONTRACT. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT THE ASSESSEE HAD CLAIMED A SUM OF RS.7.80 CRORES TOWARDS TRIP SHEET EXPENSES. THE ASSESSING OFFICER NOTICED THAT THE SAID EXPENSES CONSISTED OF RS.6.13 CRORES INCURRED TOWARDS DIESEL FOR PLYING LORRIES AND THE REMAINING AMOUNTS HAD BEEN INCURRED TOWARDS UNLOADING CHARGES COMMISSION PAID TO DRIVERS REPAIRS AND SERVICING CLEANING AND WASHING BATTAS TO DRIV ERS ETC. ON EXAMINATION OF THE RELEVANT VOUCHERS IT WAS NOTICED THAT EXCEP T FOR DIESEL EXPENSES ALL OTHER EXPENSES WERE EVIDENCED ONLY BY SELF MADE VOU CHERS. HENCE THE ITA NO.346 OF 2009 GUNTHIKONDA MOHANA RAO VIJAYAWADA PAGE 2 OF 4 ASSESSING OFFICER PROPOSED TO DISALLOW A ROUND SUM OF RS.4 LAKHS ON ESTIMATED BASIS FOR THE DEFICIENCIES IN THE MAINTEN ANCE OF VOUCHERS. IT HAS BEEN STATED BY THE A.O THAT THE THEN AUTHORISED REP RESENTATIVE OF THE ASSESSEE HAD AGREED TO THE SAID DISALLOWANCE. ACCOR DINGLY THE ASSESSING OFFICER DISALLOWED A SUM OF RS.4 LAKHS FROM OUT OF TRIP SHEET EXPENSES. THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE HA D PAID A SUM OF RS.17 04 043/- AS FINANCE CHARGES TO THE NON BANKIN G FINANCE COMPANIES ON WHICH THE TDS WAS NOT DEDUCTED AS PER THE PROVISION S OF SEC.194A. ACCORDINGLY THE ASSESSING OFFICER DISALLOWED THE FI NANCE CHARGES AMOUNT CITED ABOVE UNDER SECTION 40(A)(IA) OF THE ACT. TH E ASSESSEE CONTESTED THESE ADDITIONS BEFORE THE LEARNED CIT (A) BUT COUL D NOT SUCCEED. HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE FIRST ISSUE RELATES TO THE ROUND SUM DISALLO WANCE OF RS.4 LAKHS FROM OUT OF TRIP SHEET EXPENSES. THE LEARNED AUTHOR ISED REPRESENTATIVE SUBMITTED THAT THE THEN A.R DID NOT AGREE TO THE AD DITION OF RS.4 LAKHS. SHE FURTHER SUBMITTED THAT THE SAID DISALLOWANCE HA S BEEN MADE ON AN AD HOC BASIS WITHOUT ANY MATERIAL. ACCORDINGLY SHE PRA YED FOR THE DELETION OF THE IMPUGNED ADDITION OR ALTERNATIVELY FOR REDUCTIO N OF THE SAME. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE THEN AUTHORISED REPRESENTATIVE HAD AGREED TO THE DI SALLOWANCE OF NOT ONLY TO THE IMPUGNED AMOUNT OF RS.4.00 LAKHS BUT ALSO T O THE DISALLOWANCE OF DEPRECIATION AND DISALLOWANCE UNDER SECTION 40(A)(3 ) OF THE ACT. ACCORDINGLY THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE PRESENT SUBMISSION OF LEARNED AUTHORISED REPRESENTA TIVE IS AN AFTER THOUGHT. HE FURTHER SUBMITTED THAT THE EXPENDITURE CLAIMED UNDER TRIP SHEET EXPENSES TO THE EXTENT OF RS.1.67 CRORES ARE SUPPOR TED BY ONLY SELF MADE VOUCHERS AND HENCE THE ESTIMATED DISALLOWANCE OF RS .4 LAKHS MADE BY THE ASSESSING OFFICER IS QUITE REASONABLE AND THE SAME HAS TO BE SUSTAINED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PER USED THE RECORD. THE ASSESSING OFFICER HAS STATED THAT THE THEN A.R. HAD AGREED FOR DISALLOWANCE OF NOT ONLY THE IMPUGNED AMOUNT OF RS. 4 LAKHS BUT ALSO TO OTHER TWO DISALLOWANCES WHICH WERE POINTED OUT BY THE LEARNED D.R. WITH ITA NO.346 OF 2009 GUNTHIKONDA MOHANA RAO VIJAYAWADA PAGE 3 OF 4 REGARD TO THE MERITS OF DISALLOWANCE THE LEARNED CIT(A) HAS OBSERVED AS UNDER: ASSESSEE DOES NOT HAVE ANY VOUCHERS EXCEPT DIESEL EXPENSES AND SUCH EXPENSES HAVE BEEN INCURRED IN CASH. THESE TRIP SHEETS ARE PREPARED BY DRIVERS AND ALSO CONTAIN THE IR SIGNATURES. THESE SELF MADE VOUCHERS DO NOT CONTAIN NAME AND ADDRESS OF THE PAYEES. THE ASSESSING OFFICER WA NTED TO VERIFY THE REASONABLENESS AND GENUINENESS OF SUCH E XPENSES BUT IN ABSENCE OF NAMES AND ADDRESSES OF THE PAYEES HE COULD NOT CARRY OUT VERIFICATION. THE ONUS IS ON TH E ASSESSEE TO PROVE THE GENUINENESS OF THE EXPENSES. WHEN THESE F ACTS WERE BROUGHT TO THE NOTICE OF THE A.R HE HAS AGREED FOR THE PROPOSED ADDITION OF RS.4 LAKHS. THE A.R ATTENDED T HE ASSESSMENT PROCEEDINGS REPRESENTING THE ASSESSEE. T HE A.R. WAS OF THE OPINION THAT IN CASE OF VERIFICATION TH E CLAIM OF THE ASSESSEE ON THE BASIS OF SELF MADE VOUCHERS CANNO T BE PROVED. THE ASSESSING OFFICER WAS HELPLESS TO VERIF Y THE GENUINENESS OF THE EXPENSES SINCE SELF MADE VOUCHER S DO NOT CONTAIN NAMES AND ADDRESS OF THE PAYEES. APPELLANT HAS SHOWN THEM PAID IN CASH. THUS IDENTIFY OF THE PAYE ES AND GENUINENESS OF THE EXPENSES HAVE NOT BEEN ESTABLISH ED. WHEN THE A.R WAS CONFRONTED WITH THESE FACTS HE IMMEDIA TELY AGREED FOR THIS DISALLOWANCE. IN VIEW OF THE ABOVE D ISCUSSION THIS DISALLOWANCE IS HEREBY SUSTAINED. 6. EXCEPT THE VERBAL CONTENTION MADE BEFORE US THE ASSESSEE HAS NOT FILED ANY MATERIAL IN SUPPORT OF HIS CONTENTIONS TH AT THE THEN AUTHORISED REPRESENTATIVE DID NOT AGREE TO THE IMPUGNED ADDITI ON OF RS.4 LAKHS. WE ALSO NOTICE THAT THE THEN AUTHORISED REPRESENTATIVE HAD AGREED TO THE ADDITION OF TWO OTHER ITEMS WHICH WERE NOT CONTESTE D IN APPEAL. HENCE BASED ON THE SURROUNDING CIRCUMSTANCES OF THE ISSUE WE ARE OF THE VIEW THAT THE THEN AUTHORISED REPRESENTATIVE HAD AGREED TO THE IMPUGNED ADDITION. WITH REGARD TO THE MERITS WE NOTICE THA T THE LEARNED CIT (A) HAS GIVEN A REASONABLE DECISION AND HENCE WE DO NOT FIN D IT NECESSARY TO INTERFERE WITH THE SAME. WITH REGARD TO THE ALTERN ATIVE CONTENTION OF THE ASSESSEE FOR THE REDUCTION OF DISALLOWANCE NO MATE RIAL WAS PLACED BEFORE US TO COMPEL US TO INTERFERE WITH THE DECISION OF T AX AUTHORITIES. ACCORDINGLY WE CONFIRM THE ORDER OF THE LEARNED CIT (A) ON THIS ISSUE. 7. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF FI NANCE CHARGES PAID TO THE NON-BANKING FINANCIAL COMPANIES. DURING THE COU RSE OF HEARING THE ITA NO.346 OF 2009 GUNTHIKONDA MOHANA RAO VIJAYAWADA PAGE 4 OF 4 LEARNED AUTHORISED REPRESENTATIVE COULD NOT CLARIFY THE QUERY RAISED FROM THE BENCH WITH REGARD TO THE NATURE OF LOAN AVAILED FROM THE FINANCE COMPANIES I.E. WHETHER THE IMPUGNED LOANS WERE HIRE PURCHASE LOANS OR PURE FINANCE LOAN. WE NOTICE THAT THE ASSESSEE HAD SUBMITTED BEFORE THE LEARNED CIT (A) THAT THESE LOANS WERE TAKEN FOR PUR CHASE OF VEHICLE BY HYPOTHECATING THE ASSETS AS SECURITY AND THE SAID S UBMISSION ALSO LACKS CLARITY. WITH REGARD TO THE NATURE OF FINANCE CHARG ES PAID UNDER HIRE PURCHASE AGREEMENT THE ASSESSING OFFICER HAS DISCU SSED ABOUT THE CBDTS INSTRUCTION NO.760 DATED 13.01.1998 WHICH CLARIFIED THAT THE HIRE CHARGES PAID IN THE CASE OF TRANSACTIONS WHICH ARE IN THE N ATURE OF HIRE PURCHASE TRANSACTIONS WOULD NOT BE IN THE NATURE OF INTEREST . THUS IT IS NOTICED THAT THE ASSESSEE COULD NOT CLARIFY THE EXACT NATURE OF LOAN EVEN BEFORE THE ASSESSING OFFICER. IN VIEW OF THE ABOVE WE HAVE NO OTHER OPTION BUT TO CONFIRM THE ORDER OF THE LEARNED CIT (A) ON THIS IS SUE ALSO. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 2 ND DECEMBER 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 02-12- 2010 COPY TO 1 SHRI GUTHIKONDA MOHAN RAO 40-9-84 SAI NAGAR VI JAYAWADA 520 008 2 THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2 VIJAYAWADA 3 4. THE CIT VIJAYAWADA THE CIT(A) VIJAYAWADA 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM