2022 (10) TMI 81 - AT - Income Tax

Disallowance of 20% on travelling expenses - HELD THAT - As considering the order of the revenue authorities the related to disallowance of the travelling expenses the disallowance of 20% of total expenses not supported any such documentary evidence. The assessee submitted the advisory of the CBDT to AO F. No. 225/303/2014/IT not to make high pitched scrutiny assessment in Jammu Kashmir due to destruction of record, Books of Accounts during flood. The assessee was unable to submit the documentary evidence before the revenue authorities to substantiate his claim. Assesssee s claim was that during original assessment U/s 143(3) dated 27/03/2015 the disallowance of expenses under same head was made by the ld. AO @10%. There is no such any proper finding of lacuna for disallowance of the expenses @ 20%. Considering this there is no such any specific finding for addition, the same addition amount of Rs.953,484/- is liable to be deleted. Reopening of assessment u/s 147 - We find there is no infirmity in the order of the ld. CIT(A). The reopening of assessment u/s 148 is proper and as per the law. In the result the appeal of the assessee is dismissed.

Summary

Issues:
1. Disallowance of 20% of travelling expenses by the Assessing Officer.
2. Challenge of jurisdiction of notice u/s 148 for reopening of assessment.

Analysis:
1. The appellant contested the adhoc addition of Rs. 9,53,484 made by the Assessing Officer, representing 20% of claimed travelling expenses of Rs. 42,70,275 for A.Y. 2012-13. The appellant argued that a 10% disallowance was already made in the original assessment order, and the 20% addition was unjustified. The Commissioner of Income Tax (Appeals) upheld the 20% disallowance, citing the unusually high expenses in relation to turnover and lack of satisfactory rationale for the claim. The Tribunal found no specific finding for the additional 10% disallowance and ruled in favor of the appellant, allowing Ground no-1 and partially allowing the appeal.

2. The appellant also challenged the jurisdiction of the notice u/s 148 for reopening the assessment. The Tribunal referred to the decision in the case of Raymond Woollen Mills Ltd. vs Income-Tax Officer, emphasizing that sufficiency or correctness of material is not a consideration for reopening an assessment. The Tribunal upheld the reopening of the assessment to verify the genuineness of the expenditure claim, dismissing Ground no-2 and ultimately dismissing the appeal.

In conclusion, the Tribunal partially allowed the appeal by overturning the 20% disallowance of travelling expenses but upheld the reopening of the assessment under section 148. The legal grounds were thoroughly analyzed, and the judgment was delivered on 30.09.2022 by the Appellate Tribunal ITAT Amritsar.