Dr. O.K Narayanan, V.P:— This appeal is filed by the Revenue. The relevant assessment year is 2005–2006. The appeal is directed against the order of the Commissioner of Income-tax(A)-I at Bangalore, dated. 01.01.2010 and arises out of the assessment completed u/s. 144 of the Income-tax Act, 1961.
2. The assessee firm filed its return of income for the impugned assessment year 2005–2006 on an income of Rs. 16,72,277/-. The Assessing Officer has made an addition of Rs. 5,01,968/- towards gross profit on unaccounted sales and another addition of Rs. 11,33,920/-, u/s. 40(a)(ia) for failure to deduct tax at source.
3. When the matter was taken in first appeal, the Commissioner of Income-tax(A) confirmed the addition of Rs. 5,01,968/- and deleted the addition of Rs. 11,33,920/-.
4. In the above scenario the only grievance raised by the Revenue in this appeal is that the Commissioner of Income-tax(A) has erred in deleting the addition made by the Assessing Officer u/s. 40(a)(ia), amounting to Rs. 11,33,920/-.
5. When this matter was called for hearing, nobody was present for the respondent assessee in spite of notice. At the time of previous posting also the assessee was not present and the Income-tax Department was directed to serve the notice on the assessee. Accordingly notice has been served on the assessee by the department and the acknowledgement is placed in the file. In these circumstances, we proceed to dispose of the matter ex-parte, qua the assessee.
6. We heard Smt. Jacinta Zimik Vashai, the learned Additional Commissioner of Income-tax appearing for the Revenue.
7. It is clear in the assessment order that in the course of assessment proceedings the assessee was directed a number of times to produce some credible details to support its arguments regarding the nature of hiring of vehicles, but the assessee expressed before the assessing authority that it was not in a position to file such details as requisitioned by the assessing authority. It clearly shows that the assessee was raising only assertions, but no materials were produced to prove those assertions.
8. In first appeal the Commissioner of Income-tax(A) has deleted the addition on the basis of a general proposition that truck drivers were part of an unorganized sector of economy and therefore no element of contract could be involved in such payments. Apart from the above general proposition, the Commissioner of Income-tax(A) has not examined this issue on merit. The assessee's case may be a good one, but that is a different issue. It is only a general statement that truck drivers formed part of unorganized sector of economy. If decisions are taken on the basis of such general propositions, it will lead to undesirable consequences. Only on the basis of an alibi that truck drivers are part of unorganized sector, it is not possible to allow the claim of an assessee towards deduction of expenditure. Such a proposition will have persuasive value; but it does not substitute for reasonable explanation and evidence. Therefore, we find that the order of the Commissioner of Income-tax(A) on this point is not sustainable in law. It is set aside.
9. The issue is sent back to the assessing authority for reexamining the issue after taking into consideration the propositions made out by the Commissioner of Income-tax(A) as well. The assessee shall be heard before passing any consequential order.
10. In result, this appeal filed by the Revenue is allowed for statistical purposes.