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TMI Blog2015 (6) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of transportation of goods. For the AY under consideration, assessee filed its return of income on 30/09/2008 declaring total income of Rs. 12,610. As mentioned by AO in assessment order, though several notices u/s 142(1) and 142(3) were issued to assessee, but, there was no compliance from its side. Therefore, a show cause notice was issued to assessee on 12/11/2010 stating that assessment would be completed u/s 144 of the Act to the best of judgment. Since the said notice returned back unserved, summons u/s 131 were issued to the directors of the company fixing the date of appearance on 13/12/2010. On the said date both the directors of the company appeared before AO and the AO also handed over copies of the notices issued u/s 142(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of remand, assessee's AR furnished freight invoices, LRs, challans and hire slips for an amount of Rs. 38,90,325. She further observed that assessee produced hire slips for an amount of Rs. 13,95,820 without corresponding LRs. As far as the balance freight expenditure is concerned, assessee could not produce any details or evidences with regard to the same. AO observed that freight expenditure included amounts paid/credited exceeding Rs. 20,000 which attract the provisions of section 194C. However, she stated that assessee's explanation that there is no element of contract for such payments is acceptable. AO also observed that assessee has made cash payments above the prescribed limit which attracts the provisions of section 40A(3). In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that out of the total amount of Rs. 52,86,145, for an amount of Rs. 34,29,875, payments above Rs. 20,000 were made in a single transaction and though the AO stated that the appellant's explanation was acceptable, the Addl. CIT stated that even for a single hire transaction of a truck, TDS had to be deducted u/s 194 and issues like rate, period or quantity are immaterial in a single transaction truck hiring of payment above Rs. 20,000. The Addl. CIT further stated that for an amount of Rs. 14,92,500, payments were made above Rs. 20,000 in cash in violation of section 40A(3), which is included in the amount of Rs. 34,29,875 and stated that the appellant was entitled for freight expenditure of only Rs. 18,56,270. 5.1 I totally agree wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of M/s Hycons Infrastructure (India) Ltd. vs. DCIT, ITA No. 1787/Hyd/2011, dated 23/10/2011. As far as the disallowance u/s 40(a)(ia) is concerned, ld. AR submitted, since the entire expenditure was paid during the relevant PY and nothing remained payable, no disallowance could be made u/s 40(a)(ia) of the Act. In this regard, he relied upon the special bench decision of ITAT, Vizag in case of M/s Merlyn Shipping Transport & Others, 136 ITD 23(SB)(Vizag). Ld. AR submitted, out of turnover of Rs. 1.17 crore, assessee cannot be expected to earn profit of Rs. 87,89,666, which has happened due to disallowance of the expenditure. He, therefore, submitted, Assessing Officer may be directed to estimate the income of assessee by applying reasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from the assessment order, Assessing Officer has not expressed any opinion with regard to the books of account of assessee. However, as can be seen, before ld. CIT(A), assessee produced cash book and ledger which was forwarded to Assessing Officer for verification. Assessing Officer while verifying the same when called upon assessee to produce supporting evidence towards the freight expenditure claimed, assessee could produce supporting evidence to the extent of Rs. 56,86,145. Further, it was found that out of this amount of Rs. 56,86,145, payments of Rs. 34,29,875 have been made in violation of section 40A(3) and 40(a)(ia) of the Act. Accordingly, expenditure to the extent of Rs. 18,56,270 was found allowable to assessee. From the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re business activity could not have been carried out through his own vehicles but he must have engaged vehicles of third parties payment of freight charges is believable. However, since the expenditure is not supported by bills and vouchers and since possibility of inflating the expenditure cannot be totally ruled out, it will be reasonable to allow 80% of the freight expenditure in respect of which assessee could not produce any evidence, subject to condition that such expenditure is not hit by section 40(a)(ia) and 40A(3) of the Act. As far as balance freight expenditure of Rs. 52,86,145 is concerned, though, it is supported by bills and vouchers but ld. CIT(A) on the basis of remand report of Addl. CIT disallowed an amount of Rs. 34,29,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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