Tribunal upholds CIT(A)'s decision on lorry hire charges disallowance under Income Tax Act The Tribunal upheld the CIT(A)'s decision to reverse the AO's disallowance of Rs. 4,09,36,296/- as unexplained expenditure on lorry hire charges under ...
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Tribunal upholds CIT(A)'s decision on lorry hire charges disallowance under Income Tax Act
The Tribunal upheld the CIT(A)'s decision to reverse the AO's disallowance of Rs. 4,09,36,296/- as unexplained expenditure on lorry hire charges under section 69 of the Income Tax Act, 1961. The CIT(A) pointed out that most vehicles were registered as goods carriers on the VAHAN portal, with exceptions due to data issues, and criticized the AO for lack of proper verification. The Tribunal agreed that the expenditure source was accounted for in the books, rendering the disallowance under section 69C incorrect.
Issues involved: The only issue raised by the revenue is against the deletion of addition of Rs. 4,09,36,296/- as made by the AO u/s 69 of the Income Tax Act, 1961 on account of unexplained expenditure @12% of the entire expenditure on Lorry Hire Charges.
Summary:
Issue 1: Deletion of addition of unexplained expenditure by AO
The AO disallowed Rs. 4,09,36,296/- as unexplained expenditure on lorry hire charges, based on a 12% calculation of the total expenditure. The CIT(A) reversed this decision, citing that the vehicles were registered as goods carriers on the VAHAN portal, with only a few exceptions due to data non-digitization. The CIT(A) emphasized that the AO's conclusion was based on extrapolation and lacked proper verification. The Tribunal upheld the CIT(A)'s decision, noting that the source of expenditure was not in dispute as it was accounted for in the books, and the disallowance under section 69C was incorrect.
The AO observed discrepancies in the claimed vehicle operating and maintenance expenses by the assessee, leading to the disallowance of Rs. 4,09,36,296/- under section 69 of the Income Tax Act, 1961. The AO based this disallowance on a 12% calculation of the lorry hire charges. The CIT(A) overturned this decision, highlighting that most vehicles were registered as goods carriers on the VAHAN portal, except for a few cases due to data non-digitization. The CIT(A) criticized the AO for lack of proper verification and reliance on extrapolation. The Tribunal upheld the CIT(A)'s decision, emphasizing that the source of expenditure was explained in the books, making the disallowance under section 69C incorrect.
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