Sh. Vinod Sagar Sood Prop., Guna V. I.T.O., Guna

ITA 1/AGR/2011

• Counselvise Citation: 120314 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: AMIT SOGANI
• Section: 234B; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI A. L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 01/AGRA/2011 ASST. YEAR : 2007-08 SHRI VINOD SAGAR SOOD, VS. INCOME-TAX OFFICER, PROP. M/S. KAMLA FILL & FLY GUNA. A.B. ROAD, GUNA. (PAN : AHWPS 9340 L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT SOGANI, ADVOCATE RESPONDENT BY : SHRI A.K. SHARMA, JR. D.R. DATE OF HEARING : 19.03.2012 DATE OF PRONOUNCEMENT : 23.03.2012 ORDER PER BHAVNESH SAINI, J.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A), GWALIOR DATED 27.10.2010 FOR THE ASSESSMENT YEAR 20 07-08 ON THE FOLLOWING GROUNDS :- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED A.O. ACCEPTED THE BOOKS OF ACCOUNTS BUT ENHANCED THE BUS RECEIPTS BY RS.4,27,437/- WITHOUT INVOKING THE PROVISIONS OF SE C. 145 OF I.T. ACT THIS BEING ILLEGAL DESERVES TO BE QUASHED. THE NET PROFIT RATE ADOPTED BY LEARNED CIT(A) IS ALSO NOT BASED ON FACTS. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED A.O. ERRED IN MAKING FOLLOWING ADDITION IN THE TOTAL INC OME : 2 A RS.19936/- 5% OF THE TOTAL EXPENDITURE CLAIMED AS REPAIRING & MAINTENANCE AND TYRE, TUBE CONSUMPTION ACCOUNT. B RS. 7800/- BEING 10% OF TYRE REMOLDING EXPENSES CLAIMED AT RS. 78001/- FURTHER RESTRICTED TO 5%. C RS. 8915/- BEING 10% OUT OF GENERAL MAINTENANCE EXPENSES CLAIMED AT RS.89515/- FURTHER RESTRICTED TO 5%. D RS.29266/- BEING 5% OF DIESEL EXPENSE CLAIMED AT RS.5853276/-. 3. THAT THE ENTIRE ORDER IS ILLEGAL AND DESERVES TO BE CANCELLED. 4. THAT THE LEARNED A.O. WRONGLY LEVIED PENAL INTER EST OF RS.51486/- U/S. 234B OF I.T. ACT WITHOUT RECORDING ANY FINDINGS FOR THE SAME. THE LEARNED CIT(A) ERRED IN CONFIRMING THE SAME. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE FINDINGS OF AUTHORITIES BELOW. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING T HE YEAR UNDER CONSIDERATION, THE ASSESSEE DERIVED INCOME FROM PLYING OF BUSES AND RU NNING OF PETROL PUMP. THE RECEIPTS FROM 15 BUSES HAVE BEEN SHOWN AT RS.1,10,7 2,563/-. IN THIS REGARD, THE DETAILS OF BUS-WISE RECEIPTS WERE ASKED FOR, WHICH WERE NOT PRODUCED BY THE ASSESSEE. AGAINST THESE RECEIPTS, THE ASSESSEE HAS CLAIMED EXPENDITURE TO THE TUNE OF RS.1,09,40,953/- WHICH WERE FOUND TO BE ON A VER Y HIGHER SIDE. THE ASSESSEE WAS ASKED SPECIFICALLY TO FURNISH BUS-WISE EXPENDIT URE INCURRED AND BUS-WISE DETAILS OF PROFIT AND LOSS INCURRED TO SUBSTANTIATE THE NET PROFIT SHOWN BY THE ASSESSEE AT RS.1,31,610/-, BUT THE ASSESSEE DID NOT PRODUCE THE DETAILS. IT WAS ALSO 3 SUBMITTED THAT THE DAILY RECEIPT-SHEETS ARE NOT AVA ILABLE WITH THE ASSESSEE AND CONDUCTOR-SHEET IS NOT KEPT. THE AUDITORS ALSO IN T HE NOTES OF ACCOUNTS MENTIONED EARNING FROM BUSES ARE NOT SUPPORTED BY ANY RECEIP TS. THE ASSESSING OFFICER, THEREFORE, FOUND THAT BUS RECEIPTS ARE NOT VERIFIAB LE AND NOT SUPPORTED BY RECORDS/DOCUMENTS. IN THE ABSENCE OF ANY DOCUMENTAR Y EVIDENCE, RECEIPTS FROM BUSES WERE TAKEN AT RS.1,15,00,000/- AS AGAINST RS. 1,10,72,563/- SHOWN BY THE ASSESSEE. ADDITION OF RS.4,27,437/- WAS MADE, WHICH IS 3.71% OF THE RECEIPTS SHOWN BY THE ASSESSEE. THE LD. CIT(A) GRANTED PART RELIEF TO THE ASSESSEE IN A SUM OF RS.19,337/- AND CONFIRMED THE ADDITION OF RS.4,0 8,100/-. THE LD. CIT(A) FOUND THAT THE ASSESSEE PRODUCED RECEIPT REGISTER, WHICH IS MAINTAINED FOR EACH BUS. THIS REGISTER IS FOUND TO BE MAINTAINED ON THE BASIS OF CONDUCTOR-SHEETS, WHICH IS VERIFIED BY THE SUPERVISOR AND CONCERNED OFFICER OF THE ASSESSEE. HOWEVER, THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY CONDUCTOR SHEET ON THE BASIS OF WHICH THE SAID REGISTER WAS MAINTAINED. THE LD. CIT(A), T HEREFORE, FOUND THE ADDITION TO BE JUSTIFIED. AFTER GRANTING MINOR RELIEF, SUBSTANT IVE ADDITION WAS CONFIRMED, ON WHICH THE ASSESSEE RAISED GROUND NO. 1 ABOVE. FURTH ER, THE ASSESSEE CLAIMED SEVERAL EXPENSES LIKE REPAIRS AND MAINTENANCE, TYRE TUBE CONSUMPTION ACCOUNT, TYRE REMOLDING EXPENSES, GENERAL EXPENSES AND DIESEL EXP ENSES. THE AO NOTED THAT THE ASSESSEE HAS NOT MAINTAINED BILLS AND VOUCHERS FULL Y AND THE EXPENDITURES ARE NOT VERIFIABLE. THEREFORE, 5 TO 10% OF THE EXPENDITURES NOTED IN THE GROUNDS OF APPEAL 4 WERE DISALLOWED OUT OF THESE EXPENDITURES. IT WAS S UBMITTED BEFORE THE LD. CIT(A) THAT THE ADDITION IS MADE ON GUESS WORK WITHOUT BRI NGING ANY MATERIAL ON RECORD. THE LD. CIT(A) FOUND THAT EXPENDITURE ARE NOT FULLY VERIFIABLE, BUT THE BOOKS HAVE NOT BEEN REJECTED. EXPENSES HAVE NOT BEEN COMPARED WITH THE EARLIER YEARS AND NOTHING IS BROUGHT ON RECORD IF THE SAME ARE EXCESS IVE IN NATURE. THE LD. CIT(A), HOWEVER, CONFIRMED THE ADDITION OF RS.57,577/- AND GRANTED PART RELIEF TO THE ASSESSEE IN A SUM OF RS.8376 (ACTUALLY RS.8340/-). THE ASSESSEE RAISED GROUND NO. 2 & 3 ON THIS ISSUE. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AG REE IN PRINCIPLE THAT THE AO WAS JUSTIFIED IN MAKING THE ADDITION ON ACCOUNT OF BUS RECEIPTS NOT FULLY VERIFIABLE. HOWEVER, WE FIND THAT THE ADDITION ON GROUND NO. 1 & 2 IS ON EXCESSIVE SIDE. THE AO NOTED THAT THE ASSESSEE HAS NOT PRODUCED RELEVAN T RECORDS AND EVIDENCES IN SUPPORT OF BUS-WISE RECEIPTS. AUDITORS ALSO NOTED T HAT EARNING FROM BUSES ARE NOT SUPPORTED BY ANY RECEIPTS. THE ASSESSEE, HOWEVER, P RODUCED THE RECEIPT REGISTER, WHICH IS MAINTAINED FOR EACH BUS SEPARATELY BEFORE THE LD. CIT(A). THIS REGISTER WAS FOUND TO BE MAINTAINED ON THE BASIS OF CONDUCTO R SHEETS VERIFIED BY THE SUPERVISORS AND OTHERS BUT THE ASSESSEE WAS NOT ABL E TO PRODUCE ANY CONDUCTOR SHEET, ON THE BASIS OF WHICH THE SAID REGISTER WAS PREPARED. THE LD. COUNSEL FOR THE 5 ASSESSEE FILED COMPARATIVE CHART OF BUS RECEIPTS FO R LAST THREE YEARS INCLUDING THE ASSESSMENT YEAR UNDER APPEAL, WHICH IS AS UNDER : YEAR RECEIPTS 2005 1,20,95,956/- 2006 1,78,45,843/- 2007(UNDER APPEAL) 1,10,72,563/- THE HISTORY OF THE ASSESSEE, NOTED ABOVE, CLEARLY S UGGESTS THAT THERE IS FALL IN THE BUS RECEIPTS IN THE YEAR UNDER CONSIDERATION. NO RE ASONS HAVE BEEN EXPLAINED BEFORE THE AUTHORITIES BELOW FOR FALL IN THE RECEIP TS. THE EXPENDITURE WAS ALSO FOUND TO BE EXCESSIVE AS COMPARED WITH THE BUS-WISE DETAI LS OF THE PROFITS. SINCE RELEVANT DOCUMENTS WERE NOT PRODUCED BEFORE THE AUTHORITIES BELOW, THEREFORE, THE ESTIMATE OF PROFIT/BUS-RECEIPTS IS JUSTIFIED IN THE MATTER. MAY BE PROVISIONS OF SECTION 145 OF THE IT ACT HAVE NOT BEEN SPECIFICALLY INVOKED IN TH IS CASE, BUT THE CRUX OF THE FINDINGS OF THE AO CLEARLY SHOWS THAT THE BOOK RESU LTS OF THE ASSESSEE ARE NOT VERIFIABLE AND NOTHING WAS PRODUCED BEFORE THE AO T O HIS SATISFACTION ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. THEREFORE, THE RECEIPTS HAVE BEEN RIGHTLY ESTIMATED IN THE MATTER. HOWEVER, CONSIDERING THE INCOME SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME AT RS.59,63 0/-, WE ARE OF THE VIEW THAT THE ADDITION OF RS.4,27,437/- IS ON EXCESSIVE SIDE. THE AUTHORITIES BELOW ALSO EQUALLY NOTED THAT THE ESTIMATE OF THE RECEIPTS FROM BUSES IS ABOUT 3.71% OF THE TOTAL RECEIPTS. CONSIDERING THE TOTALITY OF FACTS AND CIR CUMSTANCES, WE ARE OF THE VIEW THAT ENDS OF JUSTICE WOULD MEET IF THE ADDITION BE RESTRICTED TO RS.2,50,000/- IN ALL 6 AS AGAINST THE ADDITION CONFIRMED BY THE LD. CIT(A) IN A SUM OF RS.4,08,100/-. IN THE RESULT, GROUND NO. 1 OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. AS REGARDS GROUND NO. 2 REGARDING DISALLOWANCE OF EXPENDITURE BY THE LD. CIT(A) IN PART, WE ARE OF THE VIEW THAT SINCE THE PROFIT IS ESTIMATED BY THE AUTHORITIES BELOW AND ADDITION IS MADE ON ACCOUNT OF SUPPRESSION OF PROFI T, THEREFORE, NO FURTHER DISALLOWANCE OUT OF EXPENDITURE SHOULD BE MADE, WHI CH IS CONNECTED WITH THE RUNNING OF BUSES ONLY. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSHIDHAR, 229 ITR 229 (ALL) HELD THAT WHEN THE GROSS PROFIT RATE WAS APPLIED, THAT WOULD TAKE CARE OF EVERYTHING AND THERE WAS NO NEED FOR THE ASSESSING OFFICER TO MAKE SCRUTINY OF THE AMOUNT IN CURRED ON THE PURCHASES MADE BY THE ASSESSEE. CONSIDERING THE ABOVE OBSERVATION, WE ARE OF THE VIEW THAT NO SEPARATE ADDITION ON ACCOUNT OF DISALLOWANCE OF EXP ENDITURE SHOULD BE MADE. OTHERWISE ALSO, ONCE THE ADDITION IS MADE TO THE PR OFIT EARNED FROM PLYING OF BUSES, THE SAME INCOME WOULD BE AVAILABLE TO THE ASSESSEE ON TELESCOPING BASIS FOR INCURRING THE EXPENDITURE. WE ACCORDINGLY, SET ASID E THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE DISALLOWANCE OF EXPENSES SEPAR ATELY. IN THE RESULT, GROUNDS NOS. 2 & 3 OF APPEAL OF THE ASSESSEE ARE ALLOWED. 5. CHARGING OF INTEREST U/S. 234B IS MANDATORY AND COMPENSATORY TO THE REVENUE DEPARTMENT. WE RELY UPON THE DECISION OF HO NBLE SUPREME COURT IN THE 7 CASE OF CIT VS. ANJUM M.H. GHASWALA, 252 ITR 1 (SC) . ACCORDINGLY, GROUND NO. 4 OF APPEAL OF THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. 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