Dabwali Transport Co. vs Commissioner of Income Tax and Another

M.M. Kumar, J.—This order shall dispose of two appeals being I. T. A. Nos. 175 and 176 of 2007.

The assessee has filed the instant appeal u/s 260A of the Income Tax Act, 1961, against the order dated 31-10-2006, passed by the Income Tax Appellate Tribunal Chandigarh (for brevity "the Tribunal") in I. T. A. No. 398/Chandi/2004 in respect of the assessment year 2000-01. It has been claimed that the following substantial questions of law would arise for the determination of this Court:

(i) Whether, on the facts and circumstances of the case the orders annexure P-l, annexure P-2, and annexure P-3 are legally sustainable ?

(ii) Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal is right in law in sustaining an addition of Rs. 15,00,000 out of the labour charges and Rs. 3,98,670 out of the labour charges payable as the closing of the books of account and paid subsequently in the financial year relevant to the assessment year 2001-02 ? and

(iii) Whether, in the facts and in the circumstances of the case, the order of the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, annexure P-l sustaining the addition of Rs. 15,00,000 and Rs. 3,98,670 is legally sustainable the same being based on mere presumptions and surmises ?

Brief facts of the case are that the assessee-firm is deriving its income from transportation contracts. In the year 1999-2000, a year prior to the relevant assessment year 2000-01, it disclosed transportation receipts of Rs. 1,88,54,650 but declared a net profit of Rs. 78,160 only after debiting expenses on account of transportation, labour, interest, etc. It was noticed by the assessing officer that the assessee had claimed expenditure of Rs. 37,79,920 as labour expenses in respect of loading and unloading of wheat bags. It was further noticed that a sum of Rs. 2,44,555 had been shown as outstanding loading charges at Rs. 2.50 per bag. The assessee was asked to substantiate the claim of Rs. 37,79,920. It was found by the assessing officer that the assessee had not maintained complete records and even the particulars of the drivers to whom the payments were made had not been maintained. The assessee failed to produce any of the persons to whom payments were either claimed to have been made or were shown outstanding. On enquiry from HAFED by the assessing officer it was found that HAFED had paid to other contractors loading and unloading charges at 56.2 paise and 86.5 paise per bag for loading and unloading of wheat bags of 50 kg. weight. The assessing officer further found that the assessee is claimed to have paid the labourers at the rates more than the market rates. A show-cause notice was issued to the assessee to which no reply was furnished. The assessing officer accordingly recorded a finding that the assessee had inflated the labour expenses and disallowance of Rs. 20,00,000 was made by the assessing officer. On appeal filed by the assessee, the Commissioner (Appeals) reduced the addition by a sum of Rs. 1,22,520 and sustained the addition of Rs. 18,77,480. On a further appeal the Tribunal reduced the addition by an amount of Rs. 1,32,925 sustained by the Commissioner (Appeals) but sustained an addition of Rs. 15,00,000 out of the labour charges debited by the appellant to the profit and loss account amounting to Rs. 37,79,920.

After hearing learned Counsel for the assessee, we find that the question of expenditure on labour charges is a pure question of fact. In an appeal filed u/s 260A of the Act, this Court cannot reappreciate the evidence to record a. conclusion contrary to the one recorded by the Tribunal. There is no standard method or chart available which may constitute the basis for us to say that the norm has been violated and according to the principles of law the addition sustained by the Tribunal suffers from an error of law or jurisdiction. There is thus no substantial question of law which would arise for determination of this Court. Therefore, the appeals are wholly devoid of merit and the same are accordingly dismissed.

Copy of this order be placed on the file of I. T. A. No. 176 of 2007.