AI Drafter 
TaxTMI 
TaxTMI 
2016 (3) TMI 1489
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....usiness'. Subsequently, notice u/s.143(2) of the Act was issued and duly served on the assessee. The Assessing Officer completed the assessment under section 143(3) of the Act, determining total income at Rs.8,99,42,090/-, inter alia, making various additions/disallowances. Being aggrieved, the assessee carried the matter in appeal before the first appellate authority, who partly allowed the appeal. Hence, both the sides are in appeal before us. 3. First we take up the assessee's appeal in ITA No.308/Ran/2014. 4. The assessee has raised the following grounds: " 1. For that the Ld. CIT(A) confirmed the addition of Rs. 4,73,89,710/- paid as hire charges. The disallowance was made by Ld. AO u/s 40(a)(ia). Evidences was produced before Ld. CIT(A) to suggest that no amount exceeding Rs. 20,000/-was paid as hire charges per trip. Even affidavit was filed in support of this fact. Ld. CIT(A) ignored the remand report and sustained the addition made by disallowance u/s 40(a)(ia). 2. For that the payment of entire Hire Charges stands paid and there was no outstanding or Hire Charges payable as on 31/03/2010. Further disallowance made u/s 40(a)(ia) amounting to Rs 7,55....
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....Amount Paid. No details was filed and the AO observed that the purpose for calling for the above information was to decide the applicability of provision of section 40(a)(ia) of the Act in respect of the hire charges amounting to Rs.4,73,89,710/- paid. The AO noticed that on perusal of clause 27a, of the Tax Audit Report, the auditor had reported that no deduction of TDS was made in this case. According to the AO, the assessee failed to discharge his onus to facilitate the AO to decide the applicability of section 40(a) (ia) of the Act. The AO noted that the assessee was engaged in the business of transportation of materials and the nature of business was of taking a venture to complete the work against the fixed amounts. When asked by the AO, why TDS was not deducted, the assessee submitted that the vehicles are placed with the transporters after hiring them from the open market and it was not possible to deduct TDS. According to the Assessing Officer, it was not understood why the assessee claimed the payments towards hire charges as vehicle on hire charges. According to the Assessing Officer, the assessee was liable ....
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....on of section 40(a)(ia) are not attracted. In any case, it was submitted that a reasonable estimate may be done if provisions of section 145(3) is invoked. It was submitted that the total profit estimated after making the disallowance is 60% of the total turnover and in the transportation business, the net profit may be around 103% only. 7. An affidavit from Shri Bhagwan Singh, partner of the firm was filed on 20.5.2014 not arised before the Notary Public, Jamshedpur, wherein, it is stated that during F.Y. 2009-2010, the total amount of freight which was paid to individual trucks in cash was below Rs.20,000/- per trip. In this connection, ld CIT(A) called a remand report from the Assessing Officer to verify whether the assessee gets Rs.250/- as commission per trucks and whether the payment paid to truck is below Rs.20,000/- per trip. The Assessing Officer in his remand report submitted as under: "As directed by your kind self, an opportunity was provided to the assessee on 16.06.2014 at 11:30 AM to represent his case by producing all materials and evidences available with him which were not produced during course of assessment. The A.R. of the assessee filed written sub....
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.... Submitted with kind regard." 8. Ld AR in his counter comments dated 11.07.2014 submitted that in the case of the assessee the entire hire charges were paid during the year and no liability was outstanding under this head. The AR submitted that in view of the SLP of the department dismissed by the Apex Court vide order dated 02.07.2014 against the order of Hon'ble Allahabad High Court in the case of M/s Vector Shipping Services (Pvt.) Ltd., no disallowance u/s 40(a)(ia) could be made. 9. Ld CIT(A) after considering the remand report of the Assessing Officer and facts and circumstances of the case, held that it is the contention of the assessee that the income is earned on commission basis in respect of which hire charges amounting to Rs.4,73,89,710/- was disallowed by the AO u/s 40(a)(ia) of the Act. The assessee also submitted an affidavit in support of the above claim. However, the assessee failed to furnish the details of hire charges paid as requisitioned by the AO . Therefore, the AO could not examine as to whether the payments as claimed to be paid less than Rs.20,000/- to each truck was correct or not to verify the applicability of the provisions of section....
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.... time prescribed under sub-section (1) of section 200: Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation. -For the purposes of this sub-clause,- (i) "commissioner or brokerage" shall have the same meaning as in clause (i) of the Explanation to section 194H; (ii) (ii) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; (iii) (iii) "professional services" shall have the same meaning as in clause(a) of the Explanation to section 194J; (iv) (iv) "work" shall have the same meaning as in Explanation III to section 194C; (v) (v) "rent" shall have the same meaning as in clause (i) to the Explanation to section 194I;(vi) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9."....
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....d vouchers could not be verified properly. As such, the disallowance was made. There is no provision to suggest that if bills and vouchers are not produced, expenses have to be disallowed. It may be mentioned that a reasonable amount of expense has to be allowed even if provision of section 145(3) are applied to make a best of judgment assessment to assess a reasonable profit. It was submitted that in transportation business, normally profit of 2-3% is reasonable. The assessee has disclosed profit at 5%, as such, even if an estimate is to be made, no addition is called for. Ld CIT(A) observed in his order that the Assessing Officer has disallowed various amounts on the ground that bills and vouchers were not produced. Ld A.R. has not denied this fact. Therefore, the disallowance of Rs.77,216/- Rs.70,750/- Rs.93,198/- and Rs.99,105/- under the various heads respectively as noted above were justified and confirmed by ld CIT(A). Upon careful consideration of the facts and circumstances of the case, we hold that the assessee has already disclosed 5%. of profit. However, for want of submission of all bills and vouchers, the ld CIT(A) restricted the disallowance, We uphold the same. 1....