M/s. Harsh Transport Pvt. Ltd.,, Bhopal v. The Addl. CIT, Bhopal

ITA 529/IND/2009 | 2005-2006
Pronouncement Date: 31-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 52922714 RSA 2009
Assessee PAN AAACH3738B
Bench Indore
Appeal Number ITA 529/IND/2009
Duration Of Justice 6 month(s) 13 day(s)
Appellant M/s. Harsh Transport Pvt. Ltd.,, Bhopal
Respondent The Addl. CIT, Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 31-05-2010
Assessment Year 2005-2006
Appeal Filed On 17-11-2009
Judgment Text
PAGE 1 OF 4 -. I.T.A.NO. 529/IND/2009 M/S. HARSH TRANSPORT PRIVATE LIMITED BHOPAL. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : AAACH3738B I.T.A.NO. 529/IND/2009 A.Y. : 2005-06 M/S.HARSH TRANSPORT PVT.LTD. ADDL. CIT 542 NEW KABADKHANA VS BHOPAL. CATEGORISED MARKET BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI S.S.DESHPANDE C. A. RESPONDENT BY : SMT. APARNA KARAN SR. DR DATE OF HEARING : 31.05.2010 O R D E R PER V.K. GUPTA A.M. THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF ORD ER OF THE LD. CIT(A)-I BHOPAL DATED 14.09.2009 FOR THE ASSESSM ENT YEAR 2005-06. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED BY THE DE CISION OF THE LD. CIT(A) CONFIRMING THE DISALLOWANCE OF RS. 5 LAK HS MADE BY THE ASSESSING OFFICER OUT OF CASH EXPENSES INCURRED IN SEVERAL HEADS SUCH AS FREIGHT LABOUR RENT CARTAGE AND TRUCK AND RUNNING & MAINTENANCE. PAGE 2 OF 4 -. I.T.A.NO. 529/IND/2009 M/S. HARSH TRANSPORT PRIVATE LIMITED BHOPAL. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAG ED IN TRANSPORT BUSINESS. THE TOTAL RECEIPTS ARE TO THE TUNE OF RS. 9.45 CRORES FROM TRANSPORT BUSINESS. THE PROFIT FOR THE YEAR UNDER C ONSIDERATION WAS SHOWN AT RS. 28.74 APPROXIMATELY @2.92 % AS COMPARED TO 1 .72 % IN THE PRECEDING YEAR. THE AO THEREAFTER ANALYZED THE BO OKS OF ACCOUNT AND FOUND THAT EXPENDITURE IN CASH HAD BEEN INCURRED IN THE HEADS AS STATED ABOVE WHICH WERE NOT COMPLETELY VERIFIABLE AND THE NET PROFIT RATE SHOULD HAVE BEEN TO THE TUNE OF 6 TO 8 % IN THIS LINE OF B USINESS WHEREAS THE RATE OF NET PROFIT SHOWN BY THE ASSESSEE WAS MUCH LOWER THAN THAT. ACCORDINGLY HE MADE AN AD HOC DISALLOWANCE OF RS. 5 LAKHS OUT OF CASH EXPENSES FOR THESE REASONS. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO ALSO CONFIRMED TH E DECISION OF THE AO. STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE U S. 5. THE LEARNED COUNSEL NARRATED THE FACTS AND SUBMIT TED THAT TRADING RESULTS WERE BETTER IN THIS YEAR AS COMPARE D TO EARLIER YEARS. IT WAS ALSO SUBMITTED THAT IT WAS A CASE OF PRIVATE LIMITE D COMPANY WHOSE ACCOUNTS WERE DULY AUDITED AND NO SPECIFIC DEFECTS WERE POINTED OUT BY THE TAX AUDITORS. HENCE THERE WAS NO CASE FOR ANY DISALLOWANCE. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE AO HAD NOT MADE ANY DISALLOWANCE BY INVOKING PROVISIONS OF SECTION 40A( 3) OF THE ACT. HENCE THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) WERE AL SO INCORRECT. PAGE 3 OF 4 -. I.T.A.NO. 529/IND/2009 M/S. HARSH TRANSPORT PRIVATE LIMITED BHOPAL. 6. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND CONTENDED THAT HAVING REGARD TO THE NATURE OF BUSINESS ACTIVITIES AS WELL AS CONSIDERING THE FACT THAT EXPENSES WERE AN INCORRECT IN CASH TO SUBSTANTIAL EXPENDITURE THE POSSIBILITY OF INFLATI ON COULD NOT BE RULED OUT AND HENCE THE ACTION OF THE AO FOR DISALLOWING EXP ENSES JUST TO THE EXTENT OF RS. 5 LAKHS OUT OF TOTAL EXPENSES UNDER T HESE HEADS WAS QUITE REASONABLE. 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 8. IT IS NOTED THAT THE TRADING RESULTS ARE BETTER AS COMPARED TO THE EARLIER YEARS. THE MAJOR REASON FOR SUCH DISALLOWAN CE IS THAT THE EXPENSES HAVE BEEN INCURRED IN CASH ON SELF MADE VOUCHERS. H OWEVER THIS REASONING CANNOT SUSTAIN THE ADDITION IN ITS ENTIRE TY BECAUSE THE RECIPIENTS HAVE NOT BEEN EXAMINED NOR ANY SPECIFIC INSTANCE OF ANY INFLATED OR BOGUS EXPENDITURE HAS BEEN BROUGHT ON R ECORD. HAVING STATED SO HOWEVER THE POSSIBILITY OF INFLATION OF EXPENS ES CANNOT BE RULED OUT AND THE OTHER FACT IS THAT THE ASSESSEE HAS ALSO NO T BEEN ABLE TO SUBSTANTIATE ITS CLAIM IN THE REQUIRED MANNER. THUS TAKING INTO CONSIDERATION OVER ALL FACTS IN OUR OPINION THE I NTERESTS OF JUSTICE WOULD BE MET IF THE DISALLOWANCE IS RESTRICTED TO RS. 2. 50 LAKHS. WE ORDER ACCORDINGLY. THUS THIS APPEAL OF THE ASSESSEE STAN DS PARTLY ALLOWED. PAGE 4 OF 4 -. I.T.A.NO. 529/IND/2009 M/S. HARSH TRANSPORT PRIVATE LIMITED BHOPAL. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST MAY 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST MAY 2010. CPU* 315