Pradip Kumar Agarwal, Kolkata V. DCIT, Circle - 35, Kolkata, Kolkata

CO 97/KOL/2009

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8554 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 4 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-05-2013
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 07-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-12-2009
• Court: TRIBUNAL
• Department Lawyers: DILIP KUMAR RAKSHIT JCITSR DR
• Assessee Lawyers: S M SURANA
• Keywords: Business income
• Section: 69C; 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [ () . .. . . .. . , ,, , , !'# $$% &' $$% &' $$% &' $$% &', ,, , ] ]] ] [BEFORE HONBLE SRI K.K.GUPTA, AM & HONBLE SRI GEORGE MATHAN, JM] #) #) #) #) /ITA NO.1968/KOL/2009 *'+ ',-/ ASSESSMENT YEAR : 2006-07 (&/ / APPELLANT ) - '' - ( 12&/ /RESPONDENT) I.T.O., WARD-56(3), . PRADEEP KR.AGARWAL KOLKATA -VERSUS- KOLKATA (PAN:ACFPA 7816 H) 3 45 /C .O.NO.97/KOL/2009 #) #) #) #) /ITA NO.1968/KOL/2009 *'+ ',-/ ASSESSMENT YEAR : 2006-07 (&/ / CROSS OBJECTOR ) - '' - ( 12&/ /RESPONDENT) PRADEEP KR. AGARWAL . I.T.O., WARD-56(3), KOLKATA -VERSUS- KOLKATA (PAN:ACFPA 7816 H) #) #) #) #) /ITA NO.1686/KOL/2009 *'+ ',-/ ASSESSMENT YEAR : 2006-07 (&/ / APPELLANT ) - '' - ( 12&/ /RESPONDENT) PRADEEP KR. AGARWAL . I.T.O., WARD-56(3), KOLKATA -VERSUS- KOLKATA (PAN:ACFPA 7816 H) &/ 6 7 / FOR THE DEPARTMENT SHRI DILIP KUMAR RAKSHIT, JCIT,SR.DR 12&/ 6 7 / FOR THE ASSESSEE: SHRI S.M.SURANA, ADVOCATE ''8 6 9 /DATE OF HEARING : 20.05.2013 :, 6 9 /DATE OF PRONOUNCEMENT : 20.05.2013. ; / ORDER PER BENCH THE APPEALS FOR THE A.YR.2006-07 HAVE BEEN PREFERRE D BY THE ASSESSEE AS WELL AS THE REVENUE ON THE PART DELETION AND CONFIRMATIO N ON A COMMON ISSUE. THE CROSS OBJECTION HAS ALSO BEEN PREFERRED ON THE GROUND RAI SED BY THE REVENUE IN THE ITA.NO.1968/KOL/2009 & C.O.97/KOL/2009 & ITA NO.1686/KOL/2009 ITO,WARD-56(3) VS PRADEEP K R.AGARWAL ASSESSM ENT YEAR : 2006-07 2 IMPUGNED APPEAL IN SO FAR AS SUSTENANCE OF DISALLOW ANCE OF EXPENDITURE AT 5% OF THE TOTAL CLAIMED HAS BEEN AGITATED BY THE ASSESSEE APP ELLANT IN SO FAR AS PER THE FACTUAL ASPECTS THE ASSESSEE SUPPORTS THE ORDER OF THE LD. CITA) ON THE FACTS FOR DELETION BY THE LD. CIT(A). 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD A RE THAT THE ASSESEE FILED RETURN OF INCOME AT RS.2,00,010/- AND IS ENGAGED IN THE BU SINESS OF CAR HIRE IN THE NAME AND STYLE OF M/S. ROUND INDIA ROADWAYS PROPRIETOR PRADE EP KR.AGARWAL. THE GROSS RECEIPTS AS LORRY HIRE RECEIPTS WERE DECLARED AT RS .3,00,55,088/- THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT DULY AUDITED HAS ALSO SHOWN LORRY HIRE CHARGES PAID AMOUNTING TO RS.2,92,33,128/-. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS U/S 143(3) OF THE ACT THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE CLA IM OF EXPENSES AND DISALLOWED THE SAME U/S 69C OF THE ACT RS.2,92,33,128/- IN THE RET URN OF INCOME BY THE ASSESSEE. HE ALSO DISALLOWED A SUM OF RS.1,26,882/- UNDER THE PR OVISION OF SECTION 40(A)(IA) OF THE I.T.ACT IN SO FAR AS, HE DID NOT ACCEDE TO THE SUBM ISSION OF THE ASSESSEE THAT THE RECEIPIENTS OF THE INTEREST HAD SUBMITTED FORM NO. 15G FOR NON DEDUCTION OF TAX AT SOURCE ON THE INTEREST PAID TO THEM. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHO CONSIDERED THE C ASE OF THE ASSESSEE APPELLANT BEFORE IT AND NOTED THAT THE ASSESSEE DOES NOT OWN ANY LOR RY OR MOTOR CAR IN SO FAR AS HE WAS TO UNDERTAKE TRANSPORT OF THE GOODS WHEN THE AMOUN TS PAID TO THE LORRY OWNERS BEING DRIVERS WERE CLAIMED AS EXPENDITURE AMOUNTING TO 97 % OF THE GROSS HIRE CHARGES RECEIVED. HE HELD THAT THERE WAS NO BASIS FOR THE A O TO DISALLOW THE WHOLE OF THE EXPENDITURE U/S 69C IN SO FAR AS HE HAD ACCEPTED TH E INCOME BEING LORRY HIRE RECEIPTS WHEN THE ASSESSEE DOES NOT OWN ANY LORRY FOR EARNIN G SUCH INCOME. HOWEVER, HE DID CONSIDER THAT DISALLOWANCE OF 5% OF THESE EXPENSES COMPUTED AT RS.14,61,656/- CAN BE REASONABLE IN SO FAR AS HE COMPUTED THAT 1% GROSS M ARGIN WAS UNREASONABLE. HE ALSO CONSIDERED THE DELETION OF DISALLOWANCE U/S 40(A)(I A) OF THE IT ACT BEING INTEREST PAID TO THE LOAN CREDITORS AMOUNTING TO RS.1,66,882/-, I N SO FAR AS, HE VERIFIED THE COPY OF THE LETTER ENCLOSING FORM NO.15G FILED BEFORE CIT, CALCUTTA XXI. NOW BEFORE US THE REVENUE IS IN APPEAL ON THE DELETION OF ADDITION OF RS.2,92,33,128/- BY INDICATING THAT THE ASSESSEE HAS BEEN GRANTED RELIEF OF RS.2,77,71, 472/- AND AS PER THE REVISED GROUNDS THE REVENUE HAS POINTED OUT THAT THE FACT FINDING A RRIVED TO AT BY THE ITAT IN THE CASE ITA.NO.1968/KOL/2009 & C.O.97/KOL/2009 & ITA NO.1686/KOL/2009 ITO,WARD-56(3) VS PRADEEP K R.AGARWAL ASSESSM ENT YEAR : 2006-07 3 OF M/S.GREYHOUND CARRIERS VS ITO,WARD-56(3), KOLKAT A VIDE ITA NO.787/KOL/2007 FOR A.YR.2002-03 RELIED UPON BY THE LD. CIT(A) ON S IMILAR FACTS WAS BY IMPROPERLY REJECTING THE FACTS AVAILABLE ON RECORD AND ON DIST ORTION OF FACTS BEFORE JUDICIAL AUTHORITIES WAS BAD IN LAW IN VIEW OF THE CASE LAW IN THE CASE OF CIT VS BIJU PATNAIK [1986] 160 ITR 674 (SC). THE REVENUE IS IN APPEAL W ITH RESPECT TO THE DELETION OF THE INTEREST DISALLOWED U/S 40(A)(IA) OF THE IT ACT QUO TING RULE 46A OF THE IT RULES. THE ASSESSEE IN THEIR APPEAL HAS HIGHLIGHTED THAT HAVIN G ACCEPTED THE FACT THAT 97% OF THE RECEIPTS ARE ON ACCOUNT OF LORRY HIRE CHARGES WERE EXPENDITURE INCURRED WHICH HE HAS ALLOWED AS PER THE FACTS BROUGHT ON RECORD BY THE A O AND IT WAS NOT THE CASE OF THE LD. CIT(A) TO CONSIDER 5% TO BE DISALLOWED, IN SO FAR A S, IT CANNOT BE THE CASE OF THE LD.CIT(A) TO HAVE BROUGHT TO TAX INCOME WHICH HAS A LREADY BEEN SUBJECTED TO TAX AND RETURNED BY THE ASSESSEE BEING EXPENDITURE ALLOWABL E U/S 30 TO 38 OF THE INCOME TAX ACT, 1961, THE 3% DIFFERENCE BETWEEN THE LORRY HIRE CHARGES RECEIPTS AND LORRY HIRE CHARGES PAID WERE THEREAFTER INCIDENTAL TO THE BUSI NESS OF THE ASSESEE AND WAS CONSIDERED BY THE LD. CIT(A) BEING 1% AS LOW GROSS MARGIN. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE INCLINED TO HOLD THAT THE FACT FINDING BY THE LD. CIT(A) WAS NOT DEVIATED FROM THE FINDING AS PER THE LD.AO FOR THE SIMPLE RE ASON THAT THE ASSESSEE DOES NOT OWN ANY LORRY WHICH ASSET WOULD HAVE UNDISCLOSED INCOME WHICH MAY HAVE BEEN CLAIMED HERE AGAIN AS PAYMENT FOR LORRY HIRE CHARGES WHICH WAS ONLY ON THE BASIS OF THE VERY FACT THAT THE GOODS HAVE BEEN TRANSPORTED AND LORRY HIRE CHARGES ARE BEING RECEIVED AS LORRY HIRE CHARGES ON THE BASIS OF THE BILLS RAISED BY THE ASSESSEE. THE ASSESEE BEING A TRANSPORTER WAS TO INCUR THOSE EXPENSES WHEN THE DI FFERENCE BETWEEN THE TWO HAS BEEN CONSIDERED AS BUSINESS INCOME FOR INCURRING CERTAIN EXPENSES. THE LD. CIT(A) THEREFORE CONSIDERED THAT BY NO STRETCH OF IMAGINAT ION IT WAS THE CASE OF THE AO TO COMPUTE THE EXPENDITURE U/S 69C OF THE ACT, IN SO F AR AS, THE AO HIMSELF CONTRADICTING HIS FINDING THAT THE INCOME RENDERED WAS FROM DISCL OSED BUSINESS SOURCES WHICH HE HAD ACCEPTED AS PER THE FINANCIAL STATEMENTS PRODU CED BEFORE IT. IN ANY CASE WE ARE OF THE CONSIDERED VIEW THAT THE EXPENDITURE CANNOT BE INCURRED UNLESS CORRESPONDING INCOME IS MADE, THE SAID INCOME THE SAID INCOME REM AINING DISCLOSED. THE ITA.NO.1968/KOL/2009 & C.O.97/KOL/2009 & ITA NO.1686/KOL/2009 ITO,WARD-56(3) VS PRADEEP K R.AGARWAL ASSESSM ENT YEAR : 2006-07 4 DISALLOWANCE THEREFORE CANNOT BE MADE U/S 69C OF TH E ACT WAS CONSIDERED JUDICIOUSLY BY THE LD. CIT(A) WHO CONSIDERED DISALLOWANCE OF 5% AMOUNTING TO RS.14,61,656/- . IN THIS VIEW OF THE MATTER WE ARE OF THE CONSIDERE D VIEW THAT THE DISALLOWANCE OF EXPENDITURE COULD NOT BE EQUATED TO LOW MARGIN. THE DEFECTS TO BE CONSIDERED FOR THE PURPOSE OF DISALLOWANCE OF EXPENDITURE HAS NOT BEEN ADDRESSED BY THE LD. CIT(A) ON THE BASIS OF HIS OWN UNDERSTANDING OF THE ISSUE, TH EREFORE REQUIRES CLARIFICATION TO THE EXTENT THAT WHEN THE SURPLUS AVAILABLE TO THE ASSES SEE WAS ONLY 3% AGAINST WHICH CERTAIN EXPENDITURES HAVE BEEN INCURRED THAT ARE D IRECTLY RELATED TO THE BUSINESS OF THE ASSESSEE, THE DISALLOWANCE TO 3% OF THE GROSS RECEI PT COULD BE THE MAXIMUM IN SO FAR AS THE DISALLOWANCES OF THE EXPENDITURE CLAIMED BY THE ASSESEE HAVE NOT BEEN CONTROVERTED BY THE AO OR THE LD. CIT(A). THEREFORE WE RESTRICT THE DISALLOWANCE TO 3% OF THE LORRY HIRE CHARGES PAID VIS--VIS AS 5% D IRECTED BY THE LD. CITA) WHICH WAS AGREED TO BY THE PARTIES HERE BEFORE US. 4. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE CROSS OBJECT ION FILED BY THE ASSESEE BECOMES INFRACTUOUS AND IS DISPOSED OFF ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 20.05.2013. SD/- SD/- [ .$$% &' , ] [ .., ,, , ] [GEORGE MATHAN ] [K.K.GUPTA] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (9 9 9 9) )) ) DATE: 20 .05.2013. R.G.(.P.S.) ; 6 1**4 >4,?- COPY OF THE ORDER FORWARDED TO: 1. PRADEEP KUMAR AGARWAL, 43, ZAKARIA STREET, KOLKATA- 700073. 2 I.T.O., WARD-56(3), KOLKATA 3 . CIT KOLKATA 4 . CIT(A)-XXXVI, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 24 1*/ TRUE COPY, ;'/ BY ORDER, ITA.NO.1968/KOL/2009 & C.O.97/KOL/2009 & ITA NO.1686/KOL/2009 ITO,WARD-56(3) VS PRADEEP K R.AGARWAL ASSESSM ENT YEAR : 2006-07 5 DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES