Goods Transport Business cannot Prove veracity of Expenses with Documents: ITAT deletes Disallowance [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted disallowance and holds that in goods transport business it is not always possible to show veracity of expenses completely.

The appellant, Gujarat Goods Service, is engaged in the business of transportation through its own vehicles and also by hiring of other vehicles. During scrutiny assessment the assessee failed to submit the details of various expenditures such as Hamali, Road delivery charges, etc. and AO disallowed 15% of such expense and added it to total income.

Aggrieved assessee preferred appeal before CIT (A). The CIT(A) asked for the remand report by the Assessing Officer on submissions made by the assessee and after careful examination all the evidences, first appellate authority held that in goods transport business it is not always possible to show the veracity of expenses completely. After test checked and verifying the evidences CIT (A) restricted the disallowance at the rate of 5%. Aggrieved by the order the assessee preferred appeal before ITAT.

The Tribunal observed that the assessee produced complete details before CIT (A) on appeal proceedings. In the remand proceedings also assessee was able to submit confirmation of Goods Transport Labour Board where, the expenses incurred by the assessee were confirmed to the extent of ₹70,75,604/-.

The Tribunal further observed that it is not possible to show the veracity of many expenses, because such expenses are running, on continuous basis for each and every trip, unless any major infirmity or irregularity can be found and proved, expenses cannot be doubted.

The Coram of Mr. Prashant Maharishi, AM and Mr. Pavan Kumar Gadale, JM has held that “we find that the CIT (A) has incorrectly upheld the adhoc disallowance of ₹ 17,63,743/-. The disallowance confirmed by him also runs contrary to his own finding. Therefore, we direct learned Assessing Officer to delete disallowance of `17,63,643/- “.

Mr. Hoshang B. Irani appeared on behalf of the revenue.

To Read the full text of the Order CLICK HERE

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