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TMI Blog2017 (5) TMI 1821X X X X Extracts X X X X X X X X Extracts X X X X ..... e made on the decision of Hon'ble Karnataka High Court in case of Anil Kumar Co. Vs CIT [ 2016 (3) TMI 184 - KARNATAKA HIGH COURT] The assessee firm is not on appeal against the order of the CIT(A); keeping in view the above principle, we sustain the order of the CIT(A) and appeals filed by the revenue are dismissed. Assessment u/s 153A - Addition of speed money as illegal payment - as found during the course of search and seizure operations certain incriminating material suggesting illegal payment to the officials of port was found therefore he inferred that out of the total speed money claimed the speed money paid in excess of Rs. 26/- per tone was treated as inflated expenditure - HELD THAT:- The law is settled to the extent that the additions in the assessments u/s. 153A can be made only based on the material facts as a result of the incriminated materials found. From the perusal of the assessment order it is clear that during the course of survey and seizure operations the department had seized a loose sheet indicating payment to the certain officials of the port trust. Based on this information the AO as well as the CIT(A) has disallowed the payment to the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,70,745/-; the payments were made through self made vouchers. According to the assessee, loading and unloading operations were carried out by it by making the following payments: (a) Rs. 2,53,29,660/- through cheque to NMPT Workers' Union. (b) Rs. 2,70,70,745/- to sub-contractors who brought the workers privately to the port for the purpose of unloading the iron ore. The payments were made through cheque to the sub-contractors. (c) Cash of Rs. 1,17,59,931/- was paid by the assessee to the gang leaders who had brought the workers privately as speed money. 3. The Assessing Officer allowed the contention of the assessee insofar as it relates to payment through cheque to the NMPT Union and sub-contractors. However, the Assessing Officer has disallowed the claim of the assessee to the extent of 20% in respect of cash payment to gang leaders as mentioned supra, which means the Assessing Authority allowed the claim of the assessee to the extent of 80%. Questioning the order passed by the Assessing Authority, the assessee filed appeal No. ITA/174/CIT(A)/MNG/2006-07 before the Appellate Commissioner under Section 246 of the Income Tax Act ('the Act' for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable to the Financial Advisor and Chief Accounts Officer, NMPT, Mangalore for getting reports. The details received from NMPT, Mangalore when compared with the details which the assessee has made available before the Appellate Commissioner fully tallied with each other in terms of date, item and quantity in metric tons. In other words, the entire cargo was handled by the assessee with the help of NMPT labour, for which assessee has paid a sum of Rs. 2,53,29,660/- by cheque. Hence, it appears a genuine doubt arose in the mind of the Appellate Commissioner as to whether the actual payments were made to the subcontractors or not in the matter of engaging the workers and payment of money to them as speed money. The letter written by the assessee to the Appellate Commissioner discloses that the total cargo handled during the financial year 2003-04 was 8,00,000 tons. On verification of the details obtained from the NMPT, Mangalore vide letter dated 17.10.2007, it was found that the details furnished by the assessee tallied with the details furnished by NMPT and hence the assessee was asked to explain as to whom payment of Rs. 2,70,70,745/- had been made and for what service. It is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. Most of the cargo handling process was mechanized and therefore the requirement of labour force was minimum. On these amongst other grounds, as set out in detail in his order, the appellate Commissioner disallowed the sum of Rs. 2,70,70,745/- which was allowed by the Assessing Officer. 7. The Appellate Tribunal while deciding the appeal, has casually proceeded to sustain the order passed by the Assessing Officer. None of the major points decided by the Appellate Commissioner are answered by the Tribunal while setting aside the order passed by the Appellate Commissioner. Though the order passed by the Tribunal runs to number of pages, the crux of the matter is not adverted to by the Tribunal while arriving at the conclusion. On careful perusal of the order passed by the Tribunal, we are of the opinion that the order of the Tribunal cannot be sustained inasmuch as the Tribunal has not applied its mind judiciously to the facts and circumstances of the case. In view of the same, interest of justice requires that the matter has to be re-dealt by the Income Tax Appellate Tribunal, Bangalore. By the said process, no prejudice would be caused to either of the parties. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in jeopardy and it is normal in the type of activity carried on by the assessee. 6. On appeal the CIT(A) vide order dated 25.11.2009 had restricted the disallowance to 1.6% of the total payment following the order of the Hon'ble ITAT's order dated 30.04.2009 in ITA No. 947/Bang/08 for the assessment year 2004-05 and the same came to be confirmed by the Hon'ble Tribunal vide order dated 16.07.2010 in ITA Nos. 67 68/Bang/2010 for the assessment years 2002-03 and 2003-04. The Revenue being aggrieved by the Tribunal order carried the matter to the Hon'ble High Court. The Hon'ble High Court passed the above orders. Thus the matters came before us. 7. The only issue in all these appeals is whether the CIT(A) were justified in restricting the disallowance at 1.6% of the total wages for the assessment year 2002-03. It is not the case of the AO that the speed money is not allowable in principle. The AO had not even doubted the genuineness of the expenditure. Having regard to the nature of the evidence produced before him, the AO has come to the conclusion that a part of the expenditure was not allowable as he felt that there was no evidence available except th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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