The Commissioner Of Income Tax – 18, Mumbai v. M/S.modern Agro Industries, Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2395 OF 2009 The Commissioner of Income Tax – 18, Mumbai..Appellant. Versus M/s.Modern Agro Industries, Mumbai ..Respondent. Ms.Padma Divakar for the appellant.Mr.Sujeet S. Karkal i/by Mr.Ajay R. Singh and Ms.P.S. Savla for the respondent. CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ. DATE : 13[th] January, 2010. P.C. : 1.In the appeal filed by the revenue against the order of the tribunal dated 14[th] October 2008, the following questions of law have been formulated. 1.Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in restricting the disallowance u/s 40A(3) to Rs.1.25 lac instead of Rs.10.5 lac disallowed by the AO ? 2.Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the order of the ld. CIT (A) on the issue of allowing relief of Rs.57.15 lac out of addition of Rs.73.89 lac made by the Assessing Officer u/s. 68 and 69 of the Act as the assessee failed to furnish any confirmations in respect of sundry creditors ? 2.In so far as the first question is concerned, the submission of the assessee before the tribunal was that he was required to supply food grains in the interior parts of the State of Maharashtra through unorganised transporters and that having regard to the nature of business, the assessee had maintained vouchers which were duly signed by the recipients of the payments. The Commissioner of Income Tax (Appeals) made a disallowance on an ad-hoc basis calculated at the rate of 20% of the expenditure aggregating to Rs.18.19 lakhs. The tribunal has held that considering the totality of the circumstances and having regard to the nature of the business of the assessee, which involved supply of food grains in different parts of the State and since the assessee had maintained vouchers for the expenses claimed, duly signed by the recipients, the disallowance would have to be restricted to an amount of Rs.1.25 lakhs. The view taken by the tribunal is a possible and reasonable view. No substantial question of law would arise. 3.In so far as the second question is concerned, the Commissioner of Income Tax (Appeals) held on the basis of evidence that the assessee had satisfactorily explained the balances in the accounts of Sundry Creditors in the total amount of Rs.57,15,588/-, but was not satisfactorily able to explain the sundry credits to the tune of Rs.39,18,611/-. This approach has been found to be correct and the tribunal found no reason to interfere with the order of the Commissioner of Income Tax (Appeals). The order of the Commissioner of Income Tax (Appeals) and of the Tribunal are both reasonable and a possible view which would not merit interference since no substantial question of law is raised. 4.The appeal is accordingly dismissed. There shall be no order as to costs. (J.P. Devadhar, J.) (Dr.D.Y. Chandrachud, J.)