2016 (4) TMI 1089

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....d its return of income for the assessment year 2009-10 on 25.9.2009 declaring total income of Rs.  96,20,226/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act'). The case was selected for scrutiny as per CBDT instructions for manual selection of cases and accordingly, notices u/s 143(2) & 142(1) of the Act were issued. In response to the notices, the authorized representative of the assessee appeared from time to time and furnished books of accounts and other information called for. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed an amount of Rs.  42,30,354/- towards freight and carriage outwards. On verification of th....

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.... claimed. The assessee further submitted that the firm has hired the vehicles to transport goods to various destinations and paid lorry hire charges. It has produced way bills, bills & vouchers duly reconciling the lorry numbers, destination, quantity transported to prove the genuineness of the payments and also explained the facts and circumstances under which such payments are made. The Assessing Officer without appreciating the proper facts made adhoc disallowance, which is not correct. Similarly, as regards the depreciation on motor cycles, the assessee submitted that it has bills for purchase of motor cycles. However, while submitting the said information, the assessee could not produce the invoices for two motor cycles, which happened....

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....rading in fertilizers, which requires huge number of vehicles for transportation of goods. The assessee has hired Lorries for transportation of goods from one place to another place and paid the hire charges and furnished supporting evidences in the form of way bills and other details. The assessee has proved the expenditure by production of way bills, quantity of goods transported, corresponding sale to dealers, etc. Under these circumstances, the Assessing Officer was not correct in making adhoc disallowance. The Authorised Representative further submitted that adhoc disallowance of expenditure, on estimation basis by holding that expenditure is supported by self made vouchers is not correct, unless proved otherwise as was held in the cas....

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....e bulky and which needs to be transported to various places. Considering the nature and size of business, we are of the opinion that the disallowance made by the Assessing Officer is at higher side. During the course of hearing, the Authorised Representative of the assessee requested for scale down the disallowance made by the Assessing Officer. The Ld. D.R. on the other hand did not object for the proposal. Therefore, to meet the ends of justice, we direct the Assessing Officer to disallow 5% of carriage inward expenditure. Accordingly, we direct the Assessing Officer to disallow 5% of expenditure under the head carriage inwards. 6. The next issue came up for our consideration is disallowance of depreciation on motor cycles. During the co....