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2024 Supreme(Online)(ITAT) 2431
INCOME TAX APPELLATE TRIBUNAL (JODHPUR BENCH)
Dr. S. Seethalakshmi, JM, Shri Rathod Kamlesh Jayantbhai, AM
DCIT CIRCLE-1 BIKANER – Appellant
Versus
M/S. ADHUNIK KHANAN & PARIVAHAN SAHAKARI SAMITI LTD. BIKANER – Respondent
I.T.A. No. 509/Jodh/2018
For the Appellants/Petitioners:
Assessing officers must provide substantial evidence to disallow claimed expenses; mere suspicion or general allegations of fraud do not suffice to invalidate genuine transactions.
Headnote:(A) Income Tax Act, 1961 - Section 143(3) - Disallowance of expenses - The CIT(A) restricted disallowance from Rs.1,22,45,308/- to Rs.10,00,000/- based on absence of comparison with preceding year's expenses - Appeal against the CIT(A)'s decision by revenue on grounds of inadequacy in establishing creditworthiness, the genuineness of transaction and lack of remand report - Assessee incurred expenses related to transportation and mining, but failed to substantiate claims with verifiable documents, affecting the validation of cash payments and bills produced - The findings indicated that the assessee partially complied with tax obligations on payments but not sufficiently for all claims. (Paras 2-8)
Findings of Court:
The tribunal upheld the CIT(A)'s decision to reduce disallowance, acknowledging significant compliance efforts by the assessee and inadequate justification from the revenue's side for their disallowance. (Paras 7-9)
Issues: The primary issues included the justification for the revenue's disallowance and the authenticity of payments made by the assessee in context to the services claimed.
Ratio Decidendi: The tribunal emphasized that the assessing officer must substantiate claims of alleged bogus transactions with tangible evidence, noting that general allegations without specific proof do not satisfy the burden of proof required against the assessed party. The onus of proof lies with the department to demonstrate that the transactions were not bona fide.
Result: Appeal dismissed.
ORDER
Per:DR. S. Seethalakshmi, JM:
This appeal filed byrevenue is arising out of the order of the Commissioner of Income Tax (Appeal), Bikaner dated 21.08.2018 [here in after ‘CIT(A)’ ] for assessment year 2015-16, which in turn arise from the order dated 29.12.2017 passed under section 143(3) of the Income Tax Act , by ACIT, Circle-01, Bikaner.
2. In this appeal, the revenue has raised following grounds:
(i) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in restricting the disallowance of Rs.1,22,45,308/- to Rs. 10,00,000/- by merely holding that the AO did not compare the amount of expenses with immediate preceding year nor give any justification thereof.
(ii) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in restricting the disallowance of Rs.1,22,45,308/- to Rs. 10,00,000/- without calling for a remand report from the Assessing Officer.
(iii) Whether on the facts and in the circumstances of the case, the Ld. CTT(A) was justified in restricting the disallowance of Rs 1,22,45,308/- to Rs. 10,00,000/- without appreciating the fact that there was a disproportionate increase in expenses vis-à-vis the income in percentage terms.
(iv) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in restricting the disallowance of Rs.1,16,37,500/- on account of payment made to M / s Bajrang VintradePvt. Ltd. to Rs. 10,00,000/-especially when the addition was made on account of the non establishment of creditworthiness and the genuineness of the transaction which was held not to be genuine.
(v) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in restricting the disallowance of Rs.1,16,37,500/- on account of payment made to M/s Bajrang VintradePvt. Ltd. to Rs. 10,00,000/-especially when the addition was made on account of the non establishment of creditworthiness and the genuineness of the transaction which was held to be not genuine as there were independent enquiries which were made by the Investigation Directorate, Kolkata.
(vi) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in restricting the disallowance of Rs.1,16,37,500/- on account of commission payment to M / s Bajrang VintradePvt. Ltd. to Rs. 10,00,000/- without calling for remand report from the Assessing Officer.
3. Succinctly, the fact as culled out from the records is that the assessee is a co-operative society engaged in the transportationand also derives income from mining contracts. The assessee has filed his return on 15.09.2015 declaring his total income of Rs.25,10,880/-. The case of the assessee was selected under Computer Aided Scrutiny selection for Complete Scrutiny. Accordingly notice u/s 143(2) was issued on 26.07.2016, which was duly served upon the assessee. After that, a notice u/s 142(1) calling for relevant documents was issued to the assessee for compliance on 15.02.2017. Submission was received in response to above notice in dak on 13.02.2017. Again a notice u/s 142(1) along with a detail questionnaire was issued on 05.06.2017 fixing the date of hearing/submission on 12.06.2017. In view of submission made by the assessee, certain further queries were raised on 25.08.2017 requesting for reply on or before 04.09.2017. Partial reply was submitted in dak on 06.09.2017. In view of non compliance of remaining reply a show cause was issued on 24.10.2017 for reply/submission on or before 02.11.2017.
3.1 During the assessment proceedings, the assessee was required to corroborate its claim of having incurred expenses under the head of ‘Direct expenses and indirect expenses’ direct expenses total being Rs. 24,24,51,733/- and indirect expenses total Rs. 24,54,434/- totalling to Rs. 24,49,06,167/- in its ITR. The breakup of the above mentioned expenses was analyzed and the corroborating bills, vouchers of the same were also test checked. During verification of books of account, the follo
