TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1427
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....he Ld. CIT(A) erred in deleting addition of Rs. 98,00,000/- on account of disallowance out of truck freight expenses? iii. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 48,00,000/- on account of disallowance out of crossing charges paid to branches? iv. Whether on the facts and circumstances of the case, the Ld CIT(A) erred in deleting the addition of Rs. 8,00,000/- on account of disallowance out of printing and stationery? 3. The appellant Revenue has principally contested through grounds of appeal nos.1 to 4, the deletion of disallowances of expenses made by the learned Assessing Officer, claimed by the assessee under respective heads of expenditure. Thus, ground of appeal no.1 pertains to disallowance of advertisement expenses of Rs. 75 lakhs, ground of appeal no.2 pertains to disallowance of truck freight expenses of Rs. 98 lakhs (the correct amount should be Rs. 96,50,000/- which was made by the ld. AO in his order dated 31.03.2015 as evident from para-13 on page-14 of the assessment order as well as page-7 of the appellate order), ground of appeal no.3 pertains to disallowance of crossing charges ....
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.... an ad hoc and arbitrary disallowance and that the same is not permissible in law. On page-6 of his order, he observed that the Assessing Officer had not examined the books of the assessee or pointed any defects. He also concluded that the assessee cannot be held liable if the respective parties did not respond to notices of ld. AO. Consequently, he proceeded to delete the additions with the following remarks: "......In this ground of appeal the assessee has challenged the disallowance of a sum of Rs. 96,50,000/- and Rs. 48,00,000/- out of expenditure incurred on truck freight and crossing charges claimed by the assessee. The facts of the case in brief are that the assessee company is engaged in the business of transportation of goods and also derives income from running petrol pumps and cargo handling units. The return of income for AY 2012-13 was filed on 28.09.2012 declaring a total income of Rs. 11,42,89,545/-. The case was selected for scrutiny and notice under section 143(2) was served on the assessee. The Assessing Officer observed that the G.P. ratio and the N.P. ratio for AY 2012-13 were lower in comparison with the corresponding figures for AY 2011-12. T....
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....er issued notices under section 133(6) to 31 parties. Out of these 31 notices, replies were received in 15 cases confirming the transaction and also stating that the respective truck owners were filing their Income Tax Returns under section 44AE. Out of the remaining 16 notices, 7 notices were successfully served but no reply was received and the remaining 9 notices came back unserved. Hence, out of 31 notices issued under section 133(6), 22 were served successfully. Despite this the Assessing Officer took the view that truck freight payments were inauthentic which is a conclusion not justified by the above average response to the notices under section 133(6). Further, the Assessing Officer has neither examined the ledger accounts of the truck operators or the bank accounts through which payments were made but has proceeded to make a completely arbitrary and ad hoc disallowance of Rs. 96,50,000/- which represents roughly 10% of the total truck freight expenses of Rs. 9,64,28,498/-. The Assessing Officer has further disallowed a sum of Rs. 48,00,000/- under the head 'Crossing Charges". There is no discussion of why this disallowance has been made. This is again an ad hoc disallowanc....
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.....2017 vii) 77taxmann.com 275 (JMum) ITOvsKarsanNandu viii) 176 TTJ 166 (Kol) ACITvs Bharat Hi-Tech (Cement) (P.) Ltd Hence, in conclusion, it is held that both the additions of Rs. 96,50,000/- under 'Truck Freight expenses' and of Rs. 48,00,000/- under 'Crossing Charges' have been made in an ad hoc and arbitrary manner. These additions are based on suspicious and surmises and are not supported by any concrete evidence. Accordingly, both these additions of Rs. 96,50,000/- and of Rs. 48,00,000/- are hereby deleted and the assessee's appeal is allowed. Ground no. 3 & 4: These two grounds of appeal relate to a disallowance of a sum of Rs. 75,00,000/- out of expenditure incurred on advertisement and publicly by the appellant company and to a disallowance of Rs. 8,00,000/- out of printing and stationery expenditure incurred by the appellant company. The addition relating to the disallowance of advertisement expenditure is discussed by the Assessing Officer in pages 8 to 10 of his assessment order. The method followed by the Assessing Officer is similar to that adopted by him in disallowing 'truck freight' expenses which has been discussed in G....
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.... untraceable parties are mentioned below:- S. No. Name of the Party Bill dated (as produced the assessee) Amount Item 1. Regal Diaries 12/01/2012 767130 Special diary 2. Neelkanth Enterprises 03/03/2012 126000 Art Paper 3. Sagar Corporation 10/02/2012 23/01/2012 189000 200970 Art Paper Art Paper 4. Fox Ran Trading Pvt. 20/01/2012 16/02/2012 02/03/2012 261450 250740 202860 Art Paper Art Paper Art Paper 5. Smart Forms 02/01/2012 837092 Calendar (vi) The expenses booked under this head as compared to immediate preceding assessment years are disproportionately on a higher side and no commensurate increase in business profit is noticed in the assessment year under consideration contradicting the contention of the assessee with regard to nexus of higher expenditure under this head resulting in increase business profit." Hence, the Assessing Officer has made the disallowance entirely on suspicion and guesswork. There is no discussion of the ledger accounts of these parties and no examination of the bank account of the assessee from where these payments have been ma....
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....gued that the ld. AO has made the additions as the assessee has failed to provide him requisite details with evidences. He also contested that no blame can be attached upon the ld. AO for making additions in respect of non-complying parties-existing or otherwise. 7. The ld. Counsel for the assessee reiterated its arguments made before the lower authorities. The ld. Counsel fully supported the order of the ld. First Appellate Authority and requested that the same be confirmed. 8. We have heard rival submissions in the light of material available on records. We have noted that both ld. Assessing Officer and ld. CIT(A) have drawn unilateral conclusions without placing on record sufficient evidences to support the same. The narration made by the ld. AO in the assessment order also indicates that the assessee on its part also cannot escape the blame of inadequate and insufficient compliance to the requirement of the ld. AO. We have noted that the conclusions drawn by the ld. AO though tilt towards the element of human probability yet they cannot be summarily rejected as mere piece of figment of imagination since they are based upon results of third parties enquiries conducted by t....