ITAT Amritsar: Appeal Partially Allowed, Travelling Expenses Disallowance Overturned, Assessment Reopened

The Appellate Tribunal ITAT Amritsar partially allowed the appeal by overturning the 20% disallowance of travelling expenses but upheld the reopening of the assessment under section 148. The appellant's challenge regarding the disallowance was successful, while the jurisdiction of the notice for reopening the assessment was upheld. The Tribunal's decision was based on the lack of specific findings for the additional disallowance and the necessity to verify the genuineness of the expenditure claim.

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Issues:
1. Disallowance of 20% of travelling expenses by the Assessing Officer.
2. Challenge of jurisdiction of notice u/s 148 for reopening of assessment.

Analysis:
1. The appellant contested the adhoc addition of Rs. 9,53,484 made by the Assessing Officer, representing 20% of claimed travelling expenses of Rs. 42,70,275 for A.Y. 2012-13. The appellant argued that a 10% disallowance was already made in the original assessment order, and the 20% addition was unjustified. The Commissioner of Income Tax (Appeals) upheld the 20% disallowance, citing the unusually high expenses in relation to turnover and lack of satisfactory rationale for the claim. The Tribunal found no specific finding for the additional 10% disallowance and ruled in favor of the appellant, allowing Ground no-1 and partially allowing the appeal.

2. The appellant also challenged the jurisdiction of the notice u/s 148 for reopening the assessment. The Tribunal referred to the decision in the case of Raymond Woollen Mills Ltd. vs Income-Tax Officer, emphasizing that sufficiency or correctness of material is not a consideration for reopening an assessment. The Tribunal upheld the reopening of the assessment to verify the genuineness of the expenditure claim, dismissing Ground no-2 and ultimately dismissing the appeal.

In conclusion, the Tribunal partially allowed the appeal by overturning the 20% disallowance of travelling expenses but upheld the reopening of the assessment under section 148. The legal grounds were thoroughly analyzed, and the judgment was delivered on 30.09.2022 by the Appellate Tribunal ITAT Amritsar.

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