Revenue's Appeal Partially Allowed on Lorry Hire Expenses Disallowance

The Revenue appealed against the deletion of a disallowance of lorry hire expenses for the AY 2006-07. The Assessing Officer disallowed expenses due to lack of evidence, but the CIT(A) overturned this decision, citing the nature of the transportation business. The Tribunal partially upheld the disallowance, modifying the CIT(A)'s order to sustain a disallowance of Rs.12,000 out of lorry hire expenses. The appeal of the Revenue was partly allowed, with the decision pronounced in May 2014.

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Issues: Disallowance of lorry hire expenses

Analysis:
The appeal by the Revenue was against the order of the learned CIT(A) for the AY 2006-07, specifically challenging the deletion of the disallowance of Rs.35,95,655/- made by the Assessing Officer on account of alleged bogus lorry hire expenses. The Revenue contended that the assessee failed to produce any document to substantiate the claimed expenses. The assessee, engaged in transportation business, declared a net loss and claimed expenditure of Rs.83,49,215/- on lorry hire expenses. The Assessing Officer disallowed the payment made to 36 parties due to non-responses and discrepancies. However, the CIT(A) overturned the disallowance, citing the nature of transportation business where payments are not routed through brokers. The CIT(A) found TDS receipts and lack of concrete evidence to support the disallowance. The Revenue argued that lack of replies and evidence justified the disallowance.

During the hearing, the Revenue reiterated the Assessing Officer's stance, emphasizing non-responses from brokers and lack of documentary evidence from the assessee. Conversely, the assessee's counsel highlighted the direct payment to drivers, not brokers, and provided details showing corresponding receipts. The Tribunal noted the lack of responses in most cases but emphasized the nature of the business where brokers may not be involved in financial transactions. Only two cases showed discrepancies in amounts received, which the assessee failed to explain satisfactorily. Consequently, the Tribunal partially upheld the disallowance, modifying the CIT(A)'s order to sustain a disallowance of Rs.12,000/- out of lorry hire expenses. The appeal of the Revenue was partly allowed, with the decision pronounced in May 2014.

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