TMI Blog2020 (1) TMI 1341X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account have rejected by the Assessing Officer and confirmed by the CIT(A), then, it was incumbent upon both the lower authorities i.e., AO as well as the CIT(A) to physically verify the bills/vouchers of the expenditure and specify the expenditure which in the estimation of both the authorities were excessive or was not related to the business of the assessee or was bogus. Needful was not done by the Ld. CIT(A) and he had reduced the disallowance from ₹ 1 Crore to ₹ 5 Lakhs - we are of the opinion that this issue is required to be remanded back to the file of Ld. CIT(A) with a direction to verify the bills/vouchers and give a categorical finding as to the nature of expenditure incurred by the assessee, which were found to be excessive/bogus etc. While examining the bills/vouchers, pertaining to freight and track running expenses, if the Ld. CIT(A) comes to the conclusion that the expenditure were more than ₹ 1 Crore, then, he will not enhance the disallowance from ₹ 1 Crore to any other amount. In the converse if the Ld. CIT(A) comes to the conclusion that the expenditure (bills/vouchers) pertaining to freight and truck running expenditure were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the A.Y. 2010-11, raising the following Grounds: 1. Whether on the facts and circumstance of the case the CIT(A) justified in law in deleting addition of ₹ 33,25,633/- made on account of disallowance u/s. 40(a)(ia) of the Income Tax Act, 1961 in view of SLP Granted by the Hon'ble Supreme court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd. taxmann. Com 63 (SC). 2. Whether on the facts and circumstances of the case, Rule 31ACA of the IT Rules 1962, and Board's circular No. 10 on 16.12.2013 binding upon the CIT(A). 3. Whether on the facts and circumstances of the case the CIT(A) justified in law in shifting onus of burden of proof upon the AO in deleting addition of ₹ 95,00,000/- made on account of disallowance of ₹ 1,00,00,000/- from Fright Truck Running expenses. 4. Whether on the facts and circumstances of the case the CIT(A) justified in law in shifting onus of burden of proof upon the AO in deleting addition of ₹ 24,00,000/- made on account of disallowance of ₹ 25,00,000/- from Freight and Truck Repair Maintenance expenses. 5. Whether on the facts and circumstances of the case the CIT(A) justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on decision of New Alignment vs. ITO (2016) 69 Taxmann.com 122 (Kol) wherein it was held that Second Proviso inserted in Section 40(a)(ia) of the Act by Finance Act 2012 should be given retrospective effect from 01.04.2005. I have perused the case law relied upon by the asses see and found that courts have been almost unanimous in holding that second proviso to Section 40(a)(ia) should be given retrospective effect. Hon'ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township (P) Ltd. 347 ITR 647 (Del) and Hon'ble ITAT, Agra in the case of Rajeev Kumar Agarwal vs. Add. CIT, Mathura in ITA No. 337/Agra/2013 have held the said amendment as retrospective in nature. With regard to difference in amount paid to M/s. Tata Motor Finance Ltd., it has been clarified that Ld. A.O. has made disallowance of ₹ 33,25,633/- for non-deduction of IDS for interest paid to Tata Motor Finance Ltd. and thus, there was no discrepancy in both the figures. After due consideration, I find significant force in the argument of the appellant that there is no discrepancy in the figure mentioned in Ledger A/c and amount disallowed by A.O. Even if the recipient has shown more amount, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate of Form 26A was not filed before the Assessing Officer. In our view, the objections of Assessing Officer before the CIT(A) and before the Ld. DR is technical in nature and once the content of Form-26A were not disputed, then the assessee is entitled to the benefit of proviso to Section 40(a)(ia) of the Act, for that purpose we may fruitfully rely upon the decision of the Hon'ble Supreme Court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd., [73 taxmann.com 63] (SC) (supra). Accordingly, Ground Nos. 1 2 raised by Revenue are dismissed. Ground No. 3: 5. With respect to Ground No. 3, Ld. DR had submitted that the Ld. CIT(A) had upheld the rejection of books of account. For that purposes he has drawn our attention to the findings recorded by the Ld. CIT(A) at Pgs. 19-20 to the following effect: Ground# 1: Rejection of book results u/s. 145: 8. Adverting to ground wise discussion, it is seen that by raising ground# 1 appellant has challenged the assessment order as unsustainable in law because income was not computed in accordance with the audited books of accounts wherein no defects were found in maintenance of books of accounts by Ld. AO. Bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments were made. The said details were provided by the assessee. The Ld. DR had submitted that contrary to the above such observations, Ld. CIT(A) at Pg. 31 has mentioned that the bills/vouchers for expenses were not produced during the appellate proceedings as well as in the assessment proceedings. However, thereafter the Ld. CIT(A) had deleted the addition of ₹ 95 Lakhs and had confirmed the ad hoc disallowance of ₹ 5 Lakhs. It was submitted that the Ld. DR had not himself verified that books of account and bills/vouchers for the purpose of deleting the additions. He had submitted that once the CIT(A) had upheld the rejection of books of account, then, some guess work is required to be done and without verification of the books of account, more particularly, the bills/vouchers, it was not appropriate for the Ld. CIT(A) to reduce the ad hoc disallowed made by the Assessing Officer to only ₹ 5 Lakhs instead of ₹ 1 Crore. 5.2. Per contra, Ld. AR had submitted that the expenses of the assessee drastically have reduced from 76.64% to 73.56% in the assessment year under consideration and further it was submitted that the Revenue cannot be given a second h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue is treated as allowed for statistical purposes. Ground No. 4: 6. This Ground is relating to shifting onus of burden of proof upon the Assessing Officer in deleting the addition of ₹ 24 Lakhs made on account of disallowance of ₹ 25 Lakhs from Freight and Truck Repair Maintenance Expenses. In this regard, Ld. DR has drawn our attention to the order of Ld. CIT(A), which is as under: 11. It has been observed in the assessment order that the assessee has claimed a sum of ₹ 2.59 crores towards Truck repair maintenance expenses. Ld. A.O. has observed in para 3 of assessment order that because assessee failed to produce supporting bills and vouchers relating to truck repair maintenance expenses he could not verify the veracity of genuineness of the claim of the said expenses. Although he has very fairly accepted that expenditure incurred in relation to repair maintenance is a normal business expenditure but since the assessee failed to discharge his onus to prove he genuineness of expenses a lump sum disallowance of ₹ 25 lacs was made out of the said expenses. On the other hand, the appellant has contended that an ad-hoc disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000). Hence, ground #4 of appeal is partly allowed . 6.1. The Ld. DR submitted that the finding recorded by the Ld. CIT(A) was incorrect and was not in accordance with law. He had submitted that this issue is also remanded back to the file of the CIT(A) for factual verification. 6.2. Per contra, the ld. DR relied upon the para 11 of the CIT(A)'s order and our attention was drawn to the verification of the case record done by the CIT(A). Further, the payments were made through the banking channels for the purchase of tyres, spares and petrol/oil. It was submitted that no interference is called in this regard. 6.3. We have heard the rival contentions and perused the material available on record. The Ld. CIT(A) had passed a detailed order, after verifying the case record and thereafter had restricted the disallowance to ₹ 1 Lakh instead of ₹ 25 Lakhs. Since the Ld. CIT(A) had verified the record and nothing had been pointed by the Ld. DR that the record which was verified was not sufficient to come to the conclusion or the finding recorded by the Ld. CIT(A) in para 11 was incorrect or contrary to the facts. In the light of the above, we do not find any re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation in respect of Trucks and not in relation to any other assets. As far as allegation of AO with regard to 16 trucks (in fact 15 trucks-one duplicate entry) is concerned same has been satisfactorily explained by submitting history of ownership [Annex C11 to C-60] retrieved from website of MP State Transport Deptt. On the basis of this proof, it is established beyond doubt that appellant was the owner of these 15 trucks during the relevant period and doubt expressed by ld. AO is found untenable because Ld. AO failed to appreciate the facts in true perspective. Ld. AO, in remand report has expressed is objection that photocopy of original RC have not been produced as evidence. In my considered view, approach of AO is hyper-technical venial and has no merits because there should not be any doubt about the data available on official website of MP State Govt. AO has simply driven by mere suspicion. It is evident from Depreciation Chart (Annx A) enclosed with Return of Income that during the year, appellant has claimed depreciation @50% on the Trucks worth ₹ 6,30,22,810/- purchased before 30.09.2009 and @15% (for half year) on the Trucks worth ₹ 4,28,87,927/- purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation which proves bona fides about claim of depreciation made by the appellant. One should not forget very vital fact that books of accounts of the appellant have been subjected to Audit u/s. 44AB and the Auditors have not raised any doubt about correctness of claim of depreciation. Ld. AO has made a huge disallowance of depreciation to the tune of ₹ 1 Crore simply on the basis of surmises, conjectures and on suspicion basis. It has been held in the case of Ashokpal Daga (HUF) vs. CIT by MP High Court dated 12.01.1996 (MP HC) and Hon'ble Supreme Court in the case of Dhirajlal Girdharilal vs. CIT 26 ITR 736 (SC) holding that suspicion however strong cannot take place of proof. In view of above discussion, I find that ad hoc disallowance of ₹ 1 Crore out of depreciation claimed by the assessee has no proper basis and disallowance was made in arbitrary manner without bringing any positive evidence on record. On the other hand, the appellant by furnishing evidence could satisfactorily justify the allowability of entire claim of depreciation. So, in view of factual matrix of the case, I am of considered view that no disallowance is required to be made out of claim of d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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