2017 (2) TMI 1189 - AT - Income Tax

Tribunal Upholds CIT(A) Decisions on Disputed Expenses and Additions

The Tribunal upheld the CIT(A)'s decisions to restrict disallowances on fuel and hammali expenses, as well as deletion of loading vehicle expenses ... Disallowance of expenses as not verifiable - Held that:- CIT(A) rightly held that the AO on estimation of 5% disallowance is not back by any logical reasoning or comparable cases. CIT(A) has also given a findings that the assessee has maintained and submitted the details of the husk puyrchaed during the year in terms of weighment slip details of farmers etc. At the same time given that certain purchases are not being properly supported with the required additional evidences he restricted the disallowance to ₹ 10,00,000/- being 26% of the total disallowance made by the AO. Similar disallowances have been made in the A.Y. 2011-12 where by following the same reasoning, AO has disallowed 5% of the expenses which were restricted to ₹ 7 lacs by the ld. CIT(A)and the revenue is apparently not in appeal against the said order of the Ld. CIT(A) and the same has attained finality. In the facts and circumstances of the case given that the addition have been made purely on adhoc basis. At the same time given the fact that some of the expenses are not supported by proper evidences. The Ld. CIT(A) has restricted the disallowance to a reasonable level. Disallowance of 5% of the Hammali expenses - Held that:- The addition has been made against on purely adhoc basis without highlighting as a specific defect in the claim of the case, we do not see any infirmity in the order of Ld. CIT(A) who has restricted a disallowance to ₹ 1 lac. Hence we hereby confirmed the order of the Ld. CIT(A). Disallowance of 5% of the loading vehicle expenses - Held that:- As in the preceding year, in the assessee’s own case have decided the same in favour of the assessee. Since it is seen that no independent verification was carried out by the AO to justify his action and his estimation is not backed by either any logical reasoning or factual verifications, the addition of the amount of ₹ 37,172/- is accordingly directed to be deleted. This ground of appeal is treated as allowed. Addition u/s 36(1)(va) on account of late payment of employees contribution to P.F. - Held that:- The decision of Hon’ble Rajasthan High court in the case of CIT vs. Udaipur Dugdh Udpadak Sahkari Sangh Ltd. [2014 (8) TMI 677 - RAJASTHAN HIGH COURT] has held that since the assessee has paid employees contribution towards PF before the due date of filing of the return the same is allowable u/s 43B of the IT Act. The Hon’ble High Court has held in its decision that whether employee and employees contribution are paid before the due date of filing of the return of income u/s 133(9) no disallowance can be made u/s 43B or u/s 36(1)(va). In the instant case it is not in dispute that the subject payments have been made before 30.09.2012 being the due date of filing of the return of income u/a 139 of the Act. Thus no disallowance could be made - Decided in favour of assessee Issues:1. Disallowance of Fuel expenses2. Disallowance of Hammali expenses3. Disallowance of Loading Vehicle expenses4. Addition made under section 36(1)(va) for late payment of employees' PF contributionDisallowance of Fuel expenses:The AO disallowed 5% of fuel expenses as unverifiable. The assessee maintained details of husk purchased, but AO found discrepancies in the vouchers. The CIT(A) restricted the disallowance to Rs. 10 lacs, citing lack of logical reasoning by AO. The CIT(A) noted the percentage of husk consumed was comparable to the previous year. The Tribunal upheld the CIT(A)'s decision, finding the disallowance reasonable due to lack of proper evidence for some expenses.Disallowance of Hammali expenses:AO disallowed 5% of Hammali expenses, similar to the fuel expenses disallowance. The CIT(A) partly allowed the claim, restricting the disallowance to Rs. 1 lac. The CIT(A) found AO's estimation lacked logical reasoning and factual verification. The Tribunal confirmed the CIT(A)'s decision, noting the adhoc nature of the addition without specific defects highlighted by the AO.Disallowance of Loading Vehicle expenses:AO disallowed 5% of loading vehicle expenses, but the CIT(A) deleted this addition based on the previous year's order. The Tribunal found the AO's action not justified, lacking logical reasoning or factual verifications. The Tribunal upheld the CIT(A)'s decision to delete the addition.Addition under section 36(1)(va) for late PF contribution:The Revenue challenged the deletion of Rs. 5,64,138 made under section 36(1)(va) for late PF contribution. Citing a High Court decision, it was held that since the contribution was paid before the due date of filing the return, it is allowable under section 43B of the IT Act. The Tribunal confirmed the CIT(A)'s order based on the High Court decision, dismissing the Revenue's ground.In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on the various disallowances and additions made by the AO.