9911796707
TMI Blog2025 (1) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... ssailed the impugned order on the following grounds of appeal: "1. The learned Addl. Commissioner of Income Tax (Appeals) erred in partially confirming the disallowance of transportation expenses amounting to Rs. 2,19,981 which is excessive and unjustified in light of the past history of the appellant's business and the evidence provided. 2. The disallowance of expenses was made on an ad-hoc basis without proper reasoning or justification, which is against the principles of natural justice. 3. No show-cause notice was issued by the learned Assessing Officer before making the disallowance, violating the procedural fairness required under the Income Tax Act, 1961, and the learned Addl. Commissioner of Income Tax (Appeals) has also i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,940/-. As the assessee had failed to substantiate its claim for deduction of expenses based on supporting bills and vouchers to the satisfaction of the A.O, therefore, the latter had on an ad-hoc basis disallowed 15% of the total expenses i.e. Rs. 6,69,683/- (15% of Rs. 44,64,558/-). Accordingly, the A.O vide his order passed u/s. 143(3) of the Act, dated 21.12.2019 after making the aforesaid addition determined income of the assessee firm at Rs. 23,95,353/-. 4. Aggrieved the assessee firm carried the matter in appeal before the ADDL/JCIT(A), Mumbai. In so far the disallowance of the assessee's claim for deduction of merchant share of Rs. 64,940/- was concerned, the CIT(Appeals) found favour with the contentions advanced by the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce any supporting though the parties were from the family members of the partners. According to the AO, the disallowance of 15% is reasonable and fair considering non-cooperation from the appellant. The appellant submitted that the merchant shares expense is being paid every year and the appellant is required to provide the services to the customers. These services are provided under the programme of BPCL and payment is made to BPCL only. Considering these facts, no disallowance of 15% should be made on ad hoc basis. The explanation given by the appellant is reasonable and it is held that no disallowance of 15% is to be made on Merchant Share Expenses of Rs. 64,940/-. In respect of expenses incurred on transport payments, it is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on supporting bills and vouchers etc., therefore, I am of the view that the A.O had rightly observed that its claim for deduction could not be summarily accepted on the very face of it. At the same time, I cannot remain oblivion of the fact that there was no justification for the A.O to have disallowed a part of the aforesaid expenses on an ad-hoc basis, i.e. @ 15% of the total "tanker transport expenses" of Rs. 43,99,618/- which had, thus, resulted to a consequential disallowance of Rs. 6,69,683/-. I, say so, for the reason that neither the quantification of the disallowance by the A.O @15% of the tanker expenses, nor the scaling down of the said disallowance by the CIT(Appeal) @5% has any logical reasoning. 9. As is discernible fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction of transport expenses that was raised by the assessee firm. 10. Apart from that, I find that the CIT(Appeals) without any justifiable reason had sustained the aforesaid ad-hoc disallowance of Rs. 2,19,981/- (i.e. 5% of Rs. 43,99,618/-). In my view the aforesaid ad-hoc disallowance of Rs. 6,69,683/- (supra) made by the A.O was merely haunted by his general observations and not on the basis of reference to any specific instance of an expenditure which as per him was for cogent reasons liable to disallowed. In the backdrop of the aforesaid facts, I find substantial force in the claim of the assessee that in absence of pointing out of any specific infirmity qua the assessee's claim for deduction of the aforesaid expenditure by the low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had either raised a bogus claim of expenditure; or that the said expenditure was not incurred wholly and exclusively for the purpose of business; or that the expenditure so claimed as a deduction did not fall within the four parameters of Section 37 of the Act, therefore, I am unable to persuade myself to subscribe to the summarily disallowance to the said effect so carried out by the A.O. My aforesaid conviction is all the more fortified by the fact that a similar claim for deduction as was raised by the assessee firm in the preceding year had been allowed by the department, but also the fact that the GP/NP rates of the assessee firm are progressive as in comparison to the preceding year. I, thus, in terms of my aforesaid observations vac ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
