TMI Blog2010 (3) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The Ld.CIT(Appeals) has erred in law and on fact s in confirming the disallowance of ₹ 100000/- from the expenses incurred for staff welfare. 3. The Ld.CIT (Appeals) has erred in law and on fac ts in confirming the disallowance of ₹ 200000/- from the expenses incurred for Diesel. 4. The Ld.CIT(Appeals) has erred in law and on fact s in confirming the disallowances of ₹ 944717/- from th e expenses incurred for Trip Bhattha in regular course of Business. 5. On the facts no interest u/s 234B, 234C and 234D ought to have been levied. 6. The appellant craves leave to add, alter and/or modify any ground of appeal. 3. Adverting first to ground no.1, facts ,in brief, as per relevant orders are that return declaring income of ₹ 51,36,860/- filed on 31-12-2001 by the assesse, engaged in the business of transportation and trading in auto parts, after being processed on 15-04-2002 u/s 143(1) of the Income-ta x act,1961[hereinafter referred to as the Act ] ,was taken up for scrutiny with the issue of notice u/s 143(2) of the Act on 28-10-2002. During the course of assessment proceedings, the Assessing officer[AO in short] no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t receipts of ₹ 26.80 crores restricted the disallowance to ₹ 1 lakh . 7. The assessee is now in appeal before us. The ld. AR merely reiterated their submissions before the ld. CIT(A) while the ld. DR supported the findings of the ld. CIT(A). 8. We have heard both the parties and gone through the facts of the case. If an assessee claims the expenditure, the onus squarely rested upon him to satisfy the revenue authorities in respect of the purpose for which the expenditure concerned was incurred. In the instant case, the assessee did not furnish the relevant details or breakup and nature of expenditure before the AO nor any evidence in support thereof even before the ld. CIT(A).However, the ld. CIT(A) reduced the disallowance to ₹ 1 lac ,keeping in view the freight receipts of the assessee. We find from page 47 to 54 of the paper book station wise break up of expenditure of ₹ 4,25,437/- . The nature of expenditure or the reasons for increase vis- -vis expenditure is nowhere evident from the stationwise break up. Besides a copy of ledger account reveals details of expenditure of ₹ 74,860/-. Still , the assessee has not cared to furnish even the det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable and fair. 11. The assessee is now in appeal before us. The ld. AR merely reiterated their submissions before the ld. CIT(A) .On the other hand ,the ld. DR supported the findings of the ld. CIT(A) and pleaded that the onus having not been discharged, there is no ground for any relief. 12. We have heard both the parties and gone through the facts of the case. As already pointed out If an assessee claims the expenditure, the onus squarely rested upon him to satisfy the revenue authorities in respect of the purpose for which the expenditure concerned was incurred. In the instant case, the assessee did not produce truck-wise income and expenses account nor the tripregister, logbook or trip-wise account of the said trucks either before the AO /ld. CIT(A) and even before us while there is no justification for disproportionate increase in expenditure vis- -vis expenditure incurred in the preceding year. We find that the ld. CIT(A) restricted the disallowance to ₹ 2 lacs out of total of ₹ 4,00,044/-considering the facts of the case. In these circumstances, especially when there is no material before us to take a different view in the matter, we are not inclined to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ld. AR did not refer us to any material so as to enable us to take a different view in the matter, we are not inclined to interfere. Therefore, ground no.4 is also dismissed. ITA No.4329/Ahd/2007[Assessee] ITA No.4258/Ahd/2007[Revenue] 17. In this appeal the assessee raised the following grounds : 1. The Ld.CIT(Appeals) has erred in law and on facts in upholding the addition on adhoc basis to the extent of 1/3rd of the total disallowance of trip and bhatta expense amounting to ₹ 18,84,000/- without appreciating the facts of the appellant. 2. The Ld.CIT(Appeals) has erred in law and on facts in upholding the addition on adhoc basis to the extent of of the total disallowance of RTO penalty expenses amounting to ₹ 1,00,000/- without appreciating the facts of the appellant. 3. The Ld.CIT(Appeals) has erred in law and on facts in upholding the addition pertaining to write off of advance given to supplier of machine under the head bad debts written off amounting to ₹ 1,50,000/- without appreciating the facts of the appellant. 4. On the facts interest u/s 234B, 234C and 234D ought not to have been levied. The Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng his own order for the AY 2001-02, the AO disallowed 10% of the total expenditure of ₹ 5,65,17,506/- amounting to ₹ 56,51,750. 20. On appeal, the assessee reiterated their submissions before the AO. Accordingly, the ld. CIT(A) restricted the disallowance to ₹ 18.84 lakhs, being 1/3 of the total disallowance in the following terms: 4.2 I have considered the submissions of the ld.A.R. carefully. I have perused the relevant portion of the assessment order and also considered the written explanations of the appellant. The AO after considering the increase in fuel cost and mixed nature of accounts disallowed 10% of total expenses claimed on trip and bhatta charges and diesel expenses thereby making total addition of ₹ 56,51,750/-. Admittedly, there were more truck operations during the year and diesel price also shot up substantially. In the preceding assessment year similar disallowances were made. However, the facts remain that the trip expenses and diesel expenses were on the basis of self-vouchers signed by the drivers and cleaners. In a business like this where other expenses are not verifiable it is only a reasonable appreciation of over all f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lel to the facts and circumstances in the instant case, especially when the assessee did not discharge onus laid down upon them before any of the authorities and even before us. In these circumstances, especially when neither the ld. AR nor ld. DR referred us to any material so as to enable us to take a different view in the matter while undisputedly facts relating to the year under consideration are different from the facts obtaining in the preceding years as noted by the ld. CIT(A), we are not inclined to interfere. Thus, ground no.1 in the appeal of the assessee ground no 1 in the appeal of the Revenue are dismissed 23. Next ground No.2 in the appeal of the assessee and ground no. 3 in the appeal of the Revenue relate to disallowance of penalty or fine imposed by transport regulatory authority. The AO asked the assessee to furnish the details of any penalty or fine imposed by Transport Regulatory Authority. In response, the assessee replied as under: .. In view of the voluminous transaction of the transport business, it is not possible for the assessee company to find out the exact amount of penalty or fine paid to RTO authorities In the light of this reply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been placed before us either on behalf of the assessee or the Revenue for taking a different view in the matter, we do not find any infirmity in the findings of the ld. CIT(A) in upholding disallowance to the extent of ₹ 1 lac, in terms of explanation to section 37(1) of the Act. Therefore, ground no.2 in the appeal of the assessee and ground no. 3 in the appeal of the Revenue are dismissed. 27. Next ground no. 2 in the appeal of the Revenue relates to disallowance of ₹ 1,78,682/- on account of interest on capital advances. During the course of assessment proceedings, the AO noticed that the assessee made interest free advances to the following parties: (In Rs.) India Telecom Ltd. 10,00,000/- WGF Financial Services 14,25,000/- Gordhanbhai Manohare 32,500/- IFFCO 84,200/- COD 10,000 According to the AO, since interest bearing funds had been utilized for giving aforesaid interest free advances while these had not been given dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. In the light of view taken in the aforesaid decision by the Hon ble Apex Court, especially when the Revenue have not placed before us any material contrary to the findings of the ld. CIT(A) that the advances were for business purposes, we do not find any merit in the ground raised by the Revenue. Therefore, ground no.2 in the appeal of the Revenue is dismissed. 31. Ground no.4 in the appeal of the Revenue relates to deletion of disallowance of bad debts. The AO noticed that the assessee claimed deduction of ₹ 16,42,359/- on account of bad debts. To a query by the AO, the assessee replied that the amount had been reflected as income or sales in the preceding years while these amounts had been written off in the books of accounts. However, the AO did not accept the contentions of the assessee on the ground that the assessee did not mention about recovery measures taken against the parties and thus, it could not be said that debts have become actually bad, relying, inter alia on the decisions in the case of CIT Vs. Khem Chand Bahadur Chand,134 ITR 65(Punj),TSPLP Chidam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the assessee. 34.1. However, we find that recently Hon ble Supreme Court in their decision dated 9.2.2010 in the case of TRF Ltd. Vs. CIT, in Civil Appeal nO.5293 Of 2003 held that This position in law is well-settled. After 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. However, in the present case, the Assessing Officer has not examined whether the debt has, in fact, been written off in accounts of the assessee. When bad debt occurs, the bad debt account is debited and the customer's account is credited, thus, closing the account of the customer. In the case of Companies, the provision is deducted from Sundry Debtors. As stated above, the Assessing Officer has not examined whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. This exercise has not been undertaken by the Assessing Officer. Hence, the matter is remitted to the Assessing Officer for de novo consideration of the above-mentioned aspect only and that too only to the extent of the write off. 34.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds are dismissed. ITA No.3451/Ahd/2007[Revenue] 37. Adverting now to the appeal of the Revenue for the AY 2001-02 against an order dated 29.5.2007 of the ld. CIT(A)-VI, Ahmedabad, cancelling the penalty of ₹ 5,02,599/- levied u/s 271(1)(c) of the Act ,facts in brief, as per relevant orders are that the AO in the assessment proceedings disallowed claim of the assessee for deduction of i) sundry balances written off ₹ 26,079/-; (ii) staff welfare expenses ₹ 1,00,000/-; (iii) Diesel expenses ₹ 2,00,000/- and (iv) trip bhattha expenses ₹ 9,44,717/-.Inter alia, penalty proceedings u/s 271(1)(c) of the Act were also initiated. On appeal, these additions were upheld by the ld. CIT(A) vide his order dated 16.2.2005. On further appeal by the assesse, we have also upheld these additions. Thereafter, in response to a showcause notice before levy of penalty u/s 271(1)(c) of the Act, the assessee, inter alia, replied that disallowance of expenses per se did not amount to furnishing of inaccurate particulars of income and relied upon decisions in the case of CIT Vs. Ajaib Singh Co,253 ITR 630 (Punjab Haryana),Guru Home Industries V. CIT(2003)SOT 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igopal Singh vs. CIT (2003) 32 DTC 626 (P H-HC)(2002 258 ITR 85. (c) It was held in Laxmi Petrol Pump vs. DCIT, 19 DTC 220 (Jod-Trib), no penalty can be validly levied in relation to an estimated addition made on account of alleged excessive shortage claimed in petrol and diesel account, therefore, same was cancelled. (d) It was held that CIT vs. K.R. Chinni Krishna Chetty (2001) 19 DTC 457 (Mad-HC), 246 ITR 121 (Mad), that mere revision of the income to a higher figure by assessing authority does not automatically warrant on inference of concealment of the expenditure on the construction, therefore, cancellation of penalty was justified as the addition to the income of the assessee based on the report of valuer was rightly regarded by the Tribunal as being insufficient for recording a finding of concealment of income. (e) In CIT vs. M.M. Rice Mills (2002) 26 DTC 1065 (P H-HC): 253 ITR 17 (P H) it was held that merely because addition had been made on estimate basis under section 145(1) and assessing officer had not brought on record any document or material to show that assessee was guilty of concealing particulars of income, addition could not be made the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he act of concealment of particulars for the purpose of levy of penalty. The penalty u/s 271(1) (c) of the Act is leviable if the AO is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. It is well settled that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon'ble Supreme Court in the case of Ananthraman Veerasinghaiah Co. Vs. CIT - 123 ITR 457; the finding in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in sec. 271(1 )(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. Explanation 1 to sect ion 271(1) (c) in respect of any fact relating to the computation of total income states that the amount added or disallowed in computing the total income of an assessee shall be deemed to be the income in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere disallowance of expenses per se cannot mean that assessee has furnished inaccurate particulars of its income. In CIT vs. Harshvardhan Chemicals Minerals Ltd. (259 ITR 212) (Raj),Hon ble Rajasthan High Court upheld the finding of the Tribunal that when the assessee has claimed some amount though that is debatable, in such cases, it cannot be said that the assessee has concealed any income or furnished inaccurate particulars for evasion of the tax. 40.2 In view of the foregoing and having regard to the totality of the facts and circumstances of the instant case as mentioned above, we are of view that the Revenue was unable to make out a case on which it could be held that the omission to add back the aforesaid amounts on account of sundry balances written off, staff welfare ,diesel and trip bhattha expenses was a design on the part of the assessee to conceal the particulars of income or furnish inaccurate particulars thereof. In view thereof, we uphold the findings of the ld. CIT(A) that the assessee had not concealed the particulars of income nor furnished inaccurate particulars thereof. Therefore, ground no.1 in the appeal is dismissed. 41. Ground nos.2 3 in the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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