2020 (9) TMI 370 - AT - Income Tax

Assessment u/s 153A - disallowance of freight charges u/s 37(1) - HELD THAT - In the present case though search was conducted in the case of assessee as well as SRS Group, but, the A.O. made disallowance of freight charges because the assessee could not produce the bills and requisite vouchers in respect of the claim of the freight charges. It is, therefore, clearly apparent that the disallowance of freight charges are made in the absence of any incriminating material found during the course of search. A.O. has framed assessments u/s 153A r.w.s. 143(3). Thus, the above Judgments MEETA GUTGUTIA PROP. M/S. FERNS N PETALS 2017 (5) TMI 1224 - DELHI HIGH COURT and KABUL CHAWLA 2015 (9) TMI 80 - DELHI HIGH COURT are clearly apply in the case of assessee. Further, on identical facts in the case of assessee for the A.Y. 2009-2010 deleted the similar addition. Therefore, following the above decisions and discussion above, we are of the view that both the additions are liable to be set aside. - Decided against revenue.

Summary

Issues:
Challenging additions of freight charges under section 37(1) of the I.T. Act, 1961 for A.Ys. 2008-2009 and 2010-2011.

Analysis:
The appeals were against Orders of the Ld. CIT(A) for the A.Ys. 2008-2009 and 2010-2011, disputing additions of &8377; 1,88,803/- and &8377; 61,88,132/- for disallowance of freight charges under section 37(1) of the I.T. Act, 1961. The A.O. disallowed the freight charges due to the absence of bills and vouchers. The Ld. CIT(A) upheld the disallowance. The Assessee argued that the issue was covered by a judgment of the Hon'ble Delhi High Court in a similar case. The Revenue contended that incriminating material was found during the search, justifying the addition.

The Tribunal considered the arguments and referred to the judgment in the case of Kabul Chawla, emphasizing that completed assessments can only be interfered with based on incriminating material unearthed during the search. The Tribunal also cited a recent decision in the case of Pr. CIT vs. Meeta Gutgutia, highlighting the necessity of incriminating material for additions. It was noted that the A.O. disallowed the freight charges without any incriminating material, and assessments were made under section 153A r.w.s. 143(3) of the I.T. Act, 1961. The Tribunal observed that a similar addition was deleted in a previous year for the Assessee. Therefore, based on the legal precedents and lack of incriminating material, the Tribunal concluded that both additions should be set aside, leading to the allowance of the Assessee's appeals.

In conclusion, the Tribunal allowed the Assessee's appeals, setting aside the Orders of the lower authorities and deleting the additions of freight charges for both years under appeal.