TaxTMI 
TaxTMI 
2018 (11) TMI 780
X X X X Extracts X X X X
X X X X Extracts X X X X
....e are as under:- "1. The learned CIT(A) has erred in law and on facts in upholding the disallowance of Rs. 95,00,179/- from the expense relating to freight, Trip Bhattha & diesel without properly appreciating the facts, submission of the appellant having bearing for this year. 2. On the facts no such disallowance ought to have been made. 3. The appellant craves leave to add/ to alter and/ or modify and ground of appeal." 3. The only issue raised by the assessee is that ld CIT(A) erred in confirming the disallowance of Rs. 95,00,179/- on ad-hoc basis for the expenses relating to freight, Trip Bhatta and Diesel expenses. 4. Briefly stated facts are that the assessee is a limited company and engaged in the business of transportation, generation of power, trading of auto components and coal, manufacturing of refectories bricks. The assessee during the year has claimed following expenses: Diesel Expenditure Rs. 7,81,14,791/- Trip Bhatta Rs. 3,69,10,602/- Freight payment Rs. 17,62,65,264/- 4.1 The AO during the assessment proceedings observed that in earlier years the ITAT has confirmed the disallowance of the above expenditure @3.33% amounting to Rs. 95,00,179/- only. Acc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uch diesel expenses. iii. In the year under consideration there is less number of trips in comparison to the earlier year. Accordingly, the expenses on trip bhatta should have come down substantially rather it has increased. iv. There was a great fall in the transportation income of the assessee. Accordingly the diesel expenses should have decreased. In view of above, the AO made the disallowance @3.33% of freight/ trip bhatta expenses and diesel expenses amounting to Rs. 95,00,179/- and added to the total income of the assessee. 5. Aggrieved, assessee preferred an appeal to ld. CIT(A). The assessee before the ld. CIT(A) submitted as under: i. The AO has made the disallowance on ad-hoc basis for the expenses as discussed above. The aforesaid expenses were essential for the business of transport. Therefore no disallowance of such expenses can be made without any reasonable finding or cogent material. ii. There was not provided reasonable opportunity of being heard to the assessee before making the disallowance of the expenses as discussed above. Therefore, these expenses have been disallowed without any base, cogent material and finding. As such, all these expenses were in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ITAT, after considering all the facts and circumstances, restricted the disallowance to 3.33% of the expenses. The AO has made a disallowance of 3.33% which is judicial and in accordance with the direction of honorable ITAT. The disallowance made by the AO is therefore, upheld. The ground of appeal is accordingly, dismissed." Being aggrieved by the order of ld. CIT(A) assessee is in appeal before us. 6. The ld AR before us filed a paper book which is running from pages 1-82 and submitted as under: "This issue has arisen in earlier years and every time the findings of CIT(appeals) has been upheld and appeal of the assessee and of Department has been dismissed . In A.Y. 2010-11 the CIT(appeals) has modified the disallowance from 3.3% to 1.11%. The finding of the ITAT for various years is summarized below: * AY.2001-02 and 2004-05 - ITA No. 1091/And/2005 and ITA No.4258/Ahd/2007:- In AY.2001-02 There was disallowance of Rs. 2,00,000/- out of Diesel Expenses out of Rs. 9,44,717/- out of Trip and Bhatta upheld by the CIT(A) restricted disallowance to Rs. 2,00,000/- out of total of 4,00,044/-and disallowance of Rs. 9,44,717/- @10% of total expenditure was upheld by the CIT(A) w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t discussed above. It is beyond doubt that the direct expenses in relation to transport income in terms of the ratio are decreasing on year to year basis resulting the better GP ratio to the assessee. 8.1 There is no statutory provision under the statute to make the disallowance of the expenses if these were disallowed in the earlier years. In the case before us the disallowance has been made due to following reasons. i. ITAT has confirmed the disallowance in the earlier year. ii. There was no external supporting vouchers/ evidences in support of freight/ trip bhatta expenses. iii. There was no detailed mention on the voucher of diesel expenses with regard to the number of kilometer travelled/ covered out of such diesel expenses. iv. The expenses were incurred in cash. v. In the given facts and circumstances we are of the view that on many occasion the corroborative expenses in support of the expenditure claimed by the assessee are not available, specially in the case of freight/ trip bhatta expenses. It is because these expenses include the payment made to the drivers for their foods and lodging expenses which are supposed to be incurred during the journey. In such kin....