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2019 (9) TMI 498

..... HELD THAT:- AO has not brought out anything on record to demonstrate that the expenses were not incurred for the purpose of business neither he has brought on record anything for the proposition that the expenses claimed were not supported with bills and vouchers. CIT(A) has allowed relief to the assessee by recording his elaborate findings CIT(A) are quite exhaustive wherein we do not find any infirmity. As regards the arguments of D. R. regarding fresh evidence accepted in violation of Rule 46A of the I.T. Rules, we find that CIT(A) has noted that on perusal of toll collection statement submitted by the assessee, in the last week in the month of March, 2014, there were total amount of toll plaza fee payable and he has also noted that total amount payable as toll plaza fee comes out. These findings are based upon a letter dated 06/12/2016 and this letter was addressed to AO during assessment proceedings. Therefore, the learned CIT(A) has not relied upon any additional evidence while giving relief to the assessee. Appeal filed by the Revenue is dismissed - ITA Nos.249 & 672/Lkw/2018, C.O.No.10/Lkw/2018 (in ITA No.249/Lkw/2018) - 6-9-2019 - Shri A. D. Jain, Vice President And Shri T .....

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..... ; 1,75,96,862/- made by Assessing Officer on account of disallowance of salary and wages without giving any opportunity to the Assessing Officer to examine the evidences/submissions in this regard submitted by the assessee before the Ld. CIT(A). 2. Learned D. R., at the outset, stated that the Assessing Officer had rightly made the disallowances as the assessee had declared substantially high expenses in operating the toll plaza as compared to earlier year. Learned D. R. further submitted that learned CIT(A) has admitted fresh evidence without confronting the same to the Assessing Officer, which is in contravention of Rule 46A of the I.T. Rules. Learned D. R. further submitted that assessee had failed to prove the genuineness and identity of the employees and, therefore, the Assessing Officer had rightly made the disallowance out of salary and wages expenses and which the learned CIT(A) has wrongly allowed. 3. Learned A. R., on the other hand, submitted that the Assessing Officer had made the addition without rejection of books of account and without any basis. It was submitted that the Assessing Officer merely made the disallowances by holding that as compared to earlier year, the .....

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..... but due to the expenses debited it resulted to loss. Assessee had debited operational expenses of ₹ 3,80,79,539/- against toll collection ₹ 5,67,11,409/- while in previous year it was ₹ 1,85,43,386/- which comes to 5.47% in proportion to toll collection ₹ 33,85,66,892/-. During the relevant year operating expenses increased 6.56% in proportion to toll collection without any reasons. However policies & collection process was same. Moreover assessee had not produced any evidential proof in support of that. Therefore operating expenses should be allowed on the basis of A.Y.2013-14 percentage i.e. 5.47% which comes to ₹ 3,18,09,054/-(581518366x5.47%) and remaining amount ₹ 62,70,485/- (38079539-31808054) is added back to the income of the assesses. The circumstances and documents leading to this addition are already discussed as above and therefore no further discussion on the issue is needed. The difference of ₹ 62,70,485/- (38079539-31808054) is thus added to the total income of assessee company. Penalty proceeding is initiated and notice u/s 271(1)(c) is being issued separately for furnishing of inaccurate of particulars of income. Addi .....

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..... ,000/- should be covered thus it can be concluded that either the assessee is violating the EPF provisions or he has not employed as many employees as shown in the chart and fabricated the accounts to claim the excessive salary. After giving the assessee leverage on all accounts it would be quite reasonable to disallow 20O% of the salary paid (₹ 11,05,12,366/-X20%) i.e. ₹ 2,21,02,473/- and add back to the income of the assessee." The circumstances and documents leading to this addition are already discussed as above and therefore no further discussion on the issue is needed. The amount of ₹ 2,21,02.473/- is thus added to the total income of assessee company. Penalty proceedings is initiated and notice u/s 271(1)(c) is being issued separately for furnishing of inaccurate particulars of income. 4.1 The above findings of the Assessing Officer clearly demonstrate that Assessing Officer has made the addition on the basis of directions of Addl. CIT, Range-5, Lucknow and has not examined anything at his own. The Assessing Officer has not brought out anything on record to demonstrate that the expenses were not incurred for the purpose of business neither he has broug .....

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..... ffic, the vehicles were allowed to move without Toll. Any efforts on the part of the assessee to restrict and regulate the traffic would result in chaos of traffic and public both resulting into unsolicited scenes. Moreover, the assessee being an outsider, there was always resistance in carrying on smooth business and there was hardly any cooperation coming forth from the local authorities. All the above reasons resulted in lower collection of Toll. It was further stated that for the current year and the preceding year the total collection of Toll cannot be compared with the expenses, the reason being that irrespective of the amount of Toll Collection, the expenses have to be incurred. The Total bid done in respect of all the three tolls based in Southern India was ₹ 10,25,84,085/- whereas, the total collection in respect of the said Tolls was only ₹ 58,15,18,366/- out of which ₹ 56,71,14,091/- being the minimum amount payable as Toll Plaza fee was paid to NHAI, and it was only out of the balance that after meeting the expenses, the company could earn. However, this resulted in a loss of ₹ 2,91,96,108/-. Had the Company not operated the Tolls so bid for, the .....

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..... mstances of the case. I have considered the findings of the AO in the assessment order and the submissions of the appellant made during the course of appellate proceedings. The AO has noted that as per the ledger account toll tax collection of ₹ 1,27,07,644/- has been shown as payable on 31-03-2014, but assessee has claimed it without any evidence that it was incurred in F.Y. 2013-14 though the actual payment is made in April 2014. Hence, the same was disallowed. The appellant has contended that total amount received as Toll Collection for the last week of week is ₹ 1,10,81,005/- and the total Toll Plaza fee payable is ₹ 1,27,07,644/-. The receipt has been Accounted for in this accounting year and the corresponding expenditure relating to the income has to be claimed as liability accrued and due to be paid as scheduled. 4. On perusal of the Toll collection statement submitted by the appellant, it is noted that total collection made for the month of March 2014 is ₹ 5,08,34,405/-, wherein the collection of the last week of March 2014 is appearing. It is against this collection of the last week of March for the month of March, 2014, that Toll Plaza Fee is payab .....

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..... 05,12,366/-) ₹ 2,21,02,473/- has been disallowed. It is observed that the appellant has furnished a comparative details of salary and wages paid during the preceding year and the current year which is given herein below: Premier Car Sales Limited Comparative Details of Salary and Wages Particulars FY 2013-14 FY 2012-13 Hyundai Showroom - Shahnajaf Road 27,804,261.00 27,754,896.00 Honda Showroom - Shahnajaf Road 8,474,333.00 9,145,695.00 Hyundai Workshop - Mahanagar 11,426,751.00 11 ,290,020.00 Piaggio Workshop - Mahanagar 1 ,390,554.00 1,155,194.00 Hyundai Showqroom - Mahnagar 7,131,810.00 8,691,415.00 Piaggio Showroom - Mahanagar 872,216.00 811,873.00 Hyundai Workshop - Chinhat 17,583,770.00 16,306,915.00 Hyundai Parts Suply Centre - Dhdrsania Barabanki 12,901,206.00 11,056,435.00 Honda Workshop - Ashok Marg 7,020,116.00 6,037,348.00 Honda Showroom - Station Road 687,870.00 - Hyundai Showroom - Gorakhpur 4,855,500.00 4,041,048.00 Hyundai Workshop - Gorakhpur 3,975,647.00 3,166,408.00 Hyundai Workshop Sultanpur 971,447.00 788,107.00 Hyundai Workshop Sitapur 724,747.00 3,805.00 Hyundai Showroom - Balrampur 9,000.00 - Total 105,829,228.00 100,249,159.00 Toll Plaza Particulars F .....

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..... ion statement submitted by the assessee, in the last week in the month of March, 2014, there were total amount of toll plaza fee payable to the tune of ₹ 1,11,19,188/- and he has also noted that total amount payable as toll plaza fee comes out to be ₹ 1,27,07,644.56. We find that these findings are based upon a letter dated 06/12/2016, placed in paper book pages 16 & 17, and this letter was addressed to Assessing Officer during assessment proceedings. Therefore, the learned CIT(A) has not relied upon any additional evidence while giving relief to the assessee. 5. In view of the above, the appeal filed by the Revenue in I.T.A. No.249/Lkw/2018 is dismissed. The Cross Objections in this appeal are supportive only therefore, the cross objections are also dismissed. 6. Now coming to appeal in I.T.A. No.672, we find that in this appeal the Revenue has taken only two issues relating to expenses of toll plaza business and disallowance of salary & wages and which are similar to grounds of appeal taken in I.T.A. No.249. Since we have dismissed these grounds of appeal in I.T.A. No.249 therefore, following the same, we dismiss these grounds in I.T.A. No.672. 7. In the resul .....

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