Saumya Infraventures Pvt. Ltd. v. Income-tax Officer, Ward-9(3), Kolkata
[Citation -2019-LL-0828-2]

Citation 2019-LL-0828-2
Appellant Name Saumya Infraventures Pvt. Ltd.
Respondent Name Income-tax Officer, Ward-9(3), Kolkata
Court ITAT-Kolkata
Relevant Act Income-tax
Date of Order 28/08/2019
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags prejudicial to the interest • claim of expenditure • supporting documents • books of accounts • expenses incurred • cost incurred • ad hoc basis • other income
Bot Summary: Now the question further arises about the huge expenses incurred on diesel and lubricants for running these vehicles when the assessee is not the owner of these vehicles. Therefore the assessee must have made an arrangement or used the trucks of its parent company to carry out the contract and thereby incurred diesel and lubricants expenses. In the absence of any material evidence like log book, bills vouchers there is ample scope for inflation of expenses and the assessee has already faulted once in claiming 2 I.T.A. No. 913/Kol/2018 Assessment Year: 2011-12 M/s. Saumya Infraventures Pvt. Ltd. incorrect depreciation therefore accepting the entire claim of the assessee would -be prejudicial to the interest of revenue. Ld. CIT(A) confirmed the addition by holding as follows: Ground No. 2 3: As regards the addition of 20 of Rs. 15,17,96,459/- as diesel and lubricants expenses , the assessee company was asked to produce proper log book for claiming such a huge expense failing which, the A.O. has added back the same to the total income of the assessee company. In the present case, no log book or bills and vouchers were produced even during remand proceedings or appellate proceedings and thus it was not possible to verify the claim of assessee for expenditure on diesel and lubricants. AR pointed out before us that he requested the AO to pin point any defects if any from the books produced and requested the AO to call for any bills/voucher of any expenditure on which AO has doubts regarding the genuineness of the claim of expenditure so that the assessee could produce it. No such disallowance have been made in the earlier assessment years, in the case of the assessee, i.e. for the assessment year 2009-10 and 2010-11.


IN INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH, KOLKATA (Before Sri J. Sudhakar Reddy, Accountant Member & Sri S.S. Viswanethra Ravi, Judicial Member) I.T.A. No. 913/Kol/2018 Assessment Year 2011-12 M/s. Saumya Infraventures Pvt. Ltd. Appellant [PAN AABCR2220B] Vs. Income Tax Officer, Ward-9(3), Kolkata Respondent Appearances by Shri V.N. Purohit, FCA, appeared on behalf of Assessee. Shri Sandeep Lakra, JCIT, appeared on behalf of Revenue. Date of concluding hearing August 21st, 2019 Date of pronouncing order August 28th, 2019 ORDER Per J. Sudhakar Reddy, AM This is appeal filed by assessee directed against order of Commissioner of Income Tax (Appeals)-17, Kolkata, dated 08.03.2018 for Assessment Year 2011-12 on following only ground. 2. Hearing rival contentions we find that Assessing Officer ( AO ) has disallowed amount in question on ad hoc basis by upholding as follows: 5. Addition on Diesel and Lubricant Expense. Now question further arises about huge expenses incurred on diesel and lubricants for running these vehicles when assessee is not owner of these vehicles. In this regard assessee was requested through A/R to produce log books maintained for running of these vehicles. Here too assessee expressed his inability to produce log books citing different reasons. fact remains that main contractor of Eastern Coalfields Limited M/s Saumya Mining Ltd had sub- contracted job of excavation of Burden at Eastern Coalfields Limited to M/s Saumya Infraventures Pvt. Ltd. Now to carry out this job use of equipments and trucks cannot be ignored. Therefore assessee must have made arrangement or used trucks of its parent company to carry out contract and thereby incurred diesel and lubricants expenses. However cost incurred on diesel and lubricants seems to be very high. It is more than 50% of his receipts which is unacceptable. In absence of any material evidence like log book, bills & vouchers there is ample scope for inflation of expenses and assessee has already faulted once in claiming 2 I.T.A. No. 913/Kol/2018 Assessment Year: 2011-12 M/s. Saumya Infraventures Pvt. Ltd. incorrect depreciation therefore accepting entire claim of assessee would -be prejudicial to interest of revenue. Hence being fair on both sides 20% of alleged expended amount i.e Rs 3,03,59,292 is disallowed and added to total income of assessee. 3. Ld. CIT(A) confirmed addition by holding as follows: Ground No. 2 & 3: As regards addition of 20% of Rs. 15,17,96,459/- as diesel and lubricants expenses , assessee company was asked to produce proper log book for claiming such huge expense failing which, A.O. has added back same to total income of assessee company. A/R relied on decision of M/s. Logisis India ltd. (ITA No. 843/Kol/2016), which relates to company engaged in plying trucks and trailers and where A.O. had asked to produce all bills and vouchers and because of time constraint, same were not produced. In present case, no log book or bills and vouchers were produced even during remand proceedings or appellate proceedings and thus it was not possible to verify claim of assessee for expenditure on diesel and lubricants. I am of opinion that A.O. has rightly disallowed 20% of expenses amounting to Rs. 3,03,59,292/- on estimate basis in absence of log book & other supporting documents and appeal of assessee in this regard is hereby disallowed. 4. We have heard rival contentions. On careful consideration of facts and circumstances of case, perusal of papers on record, orders of authorities below as well as case law cited, we hold as follows: 5. assessee relies on judgement of Hon ble High Court of Delhi in case of Pr. CIT v. R.G. Buildwell Engineers Ltd. [2018] 99 taxmann.com 283 (Delhi) wherein it was held as follows: 3. In respect of first item, i.e. expenses for bricks, machinery repair, cartage etc., A.O. concluded that insufficient evidence was adduced. He, therefore, disallowed 10% of claim. This was reduced by half by C.I.T.(Appeals). ITAT gave two reasons to set aside findings of A.O. - C.I.T.(Appeals). Firstly, that books of account were not rejected and secondly, that in past, consistently such expenses were allowed in scrutiny assessments. Likewise, in case of labour cases too, identical reasons were adduced by A.O. to bring to tax sum of Rs.2.2 crores. same were set aside ultimately by ITAT. 4. This Court is of opinion that principal reasoning of ITAT, i.e. omission to reject books of account, in which event adhoc disallowance could have been adjusted and also historical treatment of such expenses, cannot be termed as unreasonable; in support of its ultimate conclusion. 6. He also relied on decision of Kolkata D Bench of Tribunal in ITA No.843/Kol/2006 Assessment Year: 2010-11 order dated 11.01.2017 wherein it was held as follows: 3 I.T.A. No. 913/Kol/2018 Assessment Year: 2011-12 M/s. Saumya Infraventures Pvt. Ltd. ld. AR pointed out before us that he requested AO to pin point any defects if any from books produced and requested AO to call for any bills/voucher of any expenditure on which AO has doubts regarding genuineness of claim of expenditure so that assessee could produce it. However AO insisted that assessee produce all bills and vouchers and because of time constraint and lots of logistics involved, AR expressed difficulty to produce entire bills. We take note that assessee has been in business of transportation for very long time and freight and other income has increased steadily from A.Y.2007-08 onwards. From last year increase was 49%, when income has been accepted expenditure if doubted without rejecting books of accounts and without pin pointing any bills item wise defects, AO ought not to have made adhoc disallowances which amounts to arbitrary exercise of power and we are inclined to delete addition. We order accordingly. 7. Applying proposition of law in above case laws facts of case, we hold that ad-hoc disallowance in question cannot be upheld for reasons given by AO. In our view non-maintenance of log books of heavy machinery and non-producing of same before AO cannot be basis to come to conclusion that expenditure is inflated. There is no basis on which AO has come to conclusion that 20% ad-hoc disallowance is justified. This was arbitrary decision. No such disallowance have been made in earlier assessment years, in case of assessee, i.e. for assessment year 2009-10 and 2010-11. For subsequent assessment year 2012-13 and 2013-14 also, no disallowance of such claim of expenditure was made by AO even in order passed u/s 143(3) of Act. purchase of diesel and lubricants is evidenced by bills, vouchers. historical data shows that expenditure in question and percentage to turnover is consistent. Under circumstances we delete disallowance in question and allow this ground of assessee. 8. In result, appeal of assessee is allowed. Kolkata, 28th August, 2019. Sd/- Sd/- [S.S. Viswanethra Ravi] [J. Sudhakar Reddy] Judicial Member Accountant Member Date 28.08.2019 Bidhan 4 I.T.A. No. 913/Kol/2018 Assessment Year 2011-12 M/s. Saumya Infraventures Pvt. Ltd. Copy of order forwarded to 1. M/s. Saumya Infraventures Pvt. Ltd., AL-62, Saltlake City, Sector-II, Kolkata- 700 091. 2. Income Tax Officer, Ward-9(3), Aayakar Bhawan, 5th Floor, Kolkata-700 069. 3. CIT(A)-17, Kolkata. (sent through mail) 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata.(sent through mail) True copy By order Assistant Registrar ITAT, Kolkata Benches Saumya Infraventures Pvt. Ltd. v. Income-tax Officer, Ward-9(3), Kolkata
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