TMI Blog2019 (9) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... sed 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) - - - Dated:- 6-9-2019 - Shri A. D. Jain, Vice President And Shri T. S. Kapoor, Accountant Member For the Assessee : Shri Rakesh Garg, Advocate For the Revenue : Smt. Alka Singh, D.R. ORDER PER T. S. KAPOOR, A.M. These two appeals have been filed by the Revenue against the separate orders of learned CIT(A) dated 24/01/2018 and 28/09/2018 respectively. The assessee has also filed cross objections in I.T.A. No.249/Lkw/2015. These appeals involve similar issues which were heard together therefore, for the sake of convenience, a common and consolidated order is being passed. The grounds of appeal, taken by the Revenue, in both the appeals are reproduced below: I.T.A. No.249/Lkw/2018 1. The Ld. CIT(A)-2, Lucknow has erred in law and on facts in deleting the addition made by Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, there was substantial increase in expenses whereas he has not made any finding to the fact that such expenditure was not incurred for the purpose of business. 3.1 As regards the argument of Learned D. R. regarding acceptance of fresh evidence, Learned A. R. submitted that no fresh evidence was filed by the assessee and in this respect our attention was invited to the order of learned CIT(A) wherein he has recorded the detailed findings and nowhere he has mentioned that the assessee had filed any fresh evidence. Our attention was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Addition in respect of toll plaza payments Regarding toll plaza payments to National Highway Authority through RTGS, it is observed that as per ledger account toll tax collection ₹ 1,27,07,644/- has been shown payable on 31.03.2014, but assessee claimed it without any evidence that it was incurred in F.Y.2013-14 through the actual payment is made in April, 2014, hence the same s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1065 September, 2013 878 198 4 1080 October, 2013 852 195 3 1050 November, 2013 805 191 3 999 December, 2013 786 190 3 979 January, 2014 789 202 3 994 February, 2014 797 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the findings recorded by learned CIT(A), are reproduced below: Regarding First addition: 4. I have examined the facts and circumstances 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 assessee is engaged in the business of Automobile and shown income from Automobile and toll collection. In A.Y. 2013-14 appellant had shown NP from Motor trade and toll Plaza at 1.28% and 4.25% respectively and overall 1.58% while for A.Y. 2014-15, appellant has shown Net Loss at 5.02% from toll collection. It was noticed that the toll collection during the year have increased as compared to the preceding year but 'operational expenses' have increased by 6.56% in proportion to toll collection. Therefore operating expenses have been allowed on the basis of A.Y. 2013-14 percentage i.e. 5.47% which comes to ₹ 3,18,09,054/- and the remaining amount of ₹ 62,70,485/- has been disallowed. 5. The appellant has contended that the reasons for increase in operating expenses is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire amount of security would have been forfeited. Thus after incurring a loss of ₹ 2,91,96,108/- the Company was able to save its security amount of ₹ 10,25,84,085/-. 6. It is observed that in the immediately preceding year the assessee was managing two Toll collection centres situated in UP, where it had its Registered and business operation. Whereas this year the assessee had three Toll Collection Centres, all of them situated in South India. The Toll Plaza Collection itself has increased from ₹ 33,85,66,892/- to ₹ 58,15,18,366/- in the year under consideration. 7. On examination, I find that the AO has taken the percentage of' Operating Cost' to total Toll Collection for the earlier year and applied the same ratio to the current year Toll Collection and disallowed the operating expenses on ad hoc basis. If the AO was not convinced of a particular expenses he could have made necessary verification before making the disallowance. The onus is on the AO to establish that expenses incurred by the assessee were excessive or unreasonable. In the case of DCIT vs. Lab India Instruments Pvt. Ltd. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 payable by the appellant, on the basis of contract entered into with NHAI dated 31-05- 2013, which states that ' Toll Plaza Fee' is to be paid by the appellant every Tuesday of the coming week. It is observed that the appellant has Toll Collection of ₹ 1,10,81,005/- for the last week of March, 2014, commencing on Monday 24-03-2014 upto 31-03-2014. Against this total amount of Toll Plaza Fee payable is @15,88,455.57/- per day and for the week is ₹ 1,11,19,188.99, and for Monday 31-03-2014 it is ₹ 15,88,455.57, thus the total amount payable as Toll Plaza Fee by the appellant is ₹ 1,27,07,644.56. 5. In this connection, it is observed that while considering deduction of expenditure for income tax purpose, it is one which is either actually paid or, if the accounts are on mercantile basis, provided for towards a liability actually existing at the time. Thus expenditure is not necessarily confined to the money, which has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a is ₹ 1,33,56,036/-. This, amount of ₹ 1,33,56,036/- has been included by the appellant in the 'Operating Expenses', debited in the P L account. The AO has disallowed part of the 'Operating Expenses' claimed in the P L account in para 7 of the assessment order and further disallowed 20% of the total salary and wages paid. 5. On examination, I find that the AO has not examined the facts of the case properly and merely made the disallowance on conjectures and surmises. The AO has disallowed ₹ 2,21,02,473/- being 20% of the expenses incurred under the head salary and wages. I find that the AO has not brought any material on record on the basis of which it would be said that the expenditure incurred by the appellant was excessive or not genuine, having regard to the business of the appellant. Further, it is observed that reasonableness of the expenses on account of salary and wages have to be seen from the point of view of a businessman and not from the point of view of the Revenue. The books of account of the appellant have been audited u/s 44AB of the Act and complete details of salary and wages have been submit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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