Revenue Concerns about Genuineness of Documents: ITAT remands Disallowance of Outward Expenses in Transport Business [Read Order]

The Patna Bench of the Income Tax Appellate Tribunal (ITAT) has remanded to the Assessing Officer (AO) a dispute concerning the disallowance of “outward expenses” in a transport business, after the Revenue flagged doubts over the genuineness of vouchers and records.

The case arose from Assessment Year 2014 ‑15 and heard virtually from Kolkata, involving DCIT, Circle‑3, Darbhanga and M/s Trimurti Concern Pvt. Ltd.

In scrutiny, the AO determined the assessee’s total income at ₹1,85,91,170 and disallowed outward expenses of ₹4,68,55,195, pointing to discrepancies in the documents produced. On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] cut the disallowance to 2% of outward expenses, noting the business’s operational peculiarities and the sheer volume of transactions, about 2,553 payments spread across various heads.

The Revenue carried the matter to the Tribunal, contending that the claimed outward expenses were recorded over only 28 business days, were backed largely by self‑generated vouchers of limited evidentiary value, and that the assessee failed to produce ledgers and supporting records before the AO.

The assessee argued in cross‑objection that the CIT(A) had correctly appreciated the nature of operations and materials available, and that the Revenue’s grounds were assumption‑driven rather than fact‑based.

Weighing rival submissions, the Tribunal observed that the CIT(A)’s order was broadly well‑reasoned, having recognised transaction‑level realities and documentation constraints typical to the transport trade. Yet, it acknowledged the Revenue’s apprehensions regarding the genuineness of documents.

In the circumstances, the Bench remanded the issue to the AO for a fresh, fact‑specific examination. The AO has been directed to verify the outward‑expense details and afford the assessee a reasonable opportunity to present its case with supporting evidence.

Accordingly, the Revenue’s appeal was allowed for statistical purposes, while the assessee’s cross‑objection was dismissed, leaving the extent of disallowance to be determined in remand proceedings as directed by the Judicial Member Sonjoy Sarma and Accountant Member Sanjay Awasthi.

It was noted that, “the revenue authority raised concern about the genuineness of the documents besides this issue has been duly addressed in ld. CIT(A)’s order. In view of the above, we deem it necessary to remand back the issue to the file of the Assessing Officer for fresh examination.”

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