ITO Ward-7(3), Hyderabad V. M/s. Andhra Road Corporation, Hyderabad

ITA 1043/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53603 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 27-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T DEWAKAR PRASAD
• Assessee Lawyers: S RAMA RAO
• Keywords: Rejection of books of accounts; Presumptive income; Depreciation
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYA RAGHAVAN, JUDICIAL MEMBER ITA NO.1043/HYD/2011 ASSESSMENT YEAR 2001-02 THE ITO, WARD 7(3), HYDERABAD VS M/S ANDHRA ROAD CORPORATION, HYDERABAD (PAN AAFFA 7429 L) APPELLANT RESPONDENT APPELLANT BY : SHRI T. DEWAKAR PRASAD RESPONDENT BY : SHRI S. RAMA RAO DATE OF HEARING : 13.9.2011 DATE OF PRONOUNCEMENT : ORDER PER CHANDRA POOJARI, A.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) VI, HYDERA BAD DATED 15.2.2011 AND PERTAINS TO THE ASSESSMENT YEAR 2001- 02. 2. THE REVENUE RAISED THE GROUND THAT THE CIT(A) ERRED IN FACTS AND IN LAW IN NOT ACCEPTING THE METHOD OF ESTIMATION OF THE INCOME CHARGEABLE TO TAX ADOPTED BY THE ASSESSING OFFICER, BY HOLDING THAT THE SAME IS UNRE ALISTIC AND NOT LOGICAL. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TRANSPORT CARRIER, FILE D THE RETURN ADMITTING AN INCOME OF RS.48,830/-. THE RET URN WAS TAKEN UP FOR SCRUTINY AND NOTICES U/S 143(2) AND 14 2(1) ITA NO.1043/HYD/2011 M/S ANDHRA ROAD CORPORATION, HYD. 2 WERE ISSUED AND SERVED ON THE ASSESSEE. IT WAS OBS ERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE IS HAVING G ROSS COLLECTIONS OF RS.2,43,09,122/- AND CLAIMED EXPENDI TURE OF RS.2.05 CRORES OUT OF THE SAME (EXCLUDING DEPRECI ATION, INTEREST ON PARTNERS CAPITAL ACCOUNT, WORKING PARTN ERS REMUNERATION ETC.). IT WAS OBSERVED BY THE ASSESS ING OFFICER THAT THE EXPENDITURE LIKE GOODS LABOUR BOAR D, PETROL, BANK INTEREST, TELEPHONE BILLS, PROPERTY TAX ETC. W ERE VERIFIABLE WHEREAS THE OTHER EXPENDITURE DEBITED TO PROFIT AND LOSS ACCOUNT . ACCORDING TO THE ASSESSEE, MOST OF THE VOUCHERS ARE AT BRANCH OFFICES AND SOME ARE AT AUTO NAGAR GODOWN. IT WAS SUBMITTED BEFORE THE ASSESSING OFFI CER THAT THE BILLS ETC. AT AUTONAGAR GODOWN ARE NOT PROPERLY PLACED AND ARE NOT ABLE TO PRODUCE THE SAME. HENCE, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS U/ S 145(3) AND PROCEEDED TO ESTIMATE THE INCOME. THE ASSESSIN G OFFICER ESTIMATED THE INCOME OF THE ASSESSEE @ RS.4 500/- PER TRUCK PER MONTH. THE ASSESSEE OWNS 32 TRUCKS A ND THUS THE ASSESSING OFFICER ARRIVED AT THE INCOME OF RS.17,28,000/-. THE INCOME ARRIVED AT WAS CLEAR OF DEPRECIATION AND OTHER ALL EXPENSES INCLUDING REMUN ERATION TO PARTNERS, INTEREST ON PARTNERS CAPITAL ETC., TO WHICH THE ASSESSEE AND HIS AR HAVE AGREED BEFORE THE ASSESSIN G OFFICER. 4. HOWEVER, THE ASSESSEE WENT IN APPEAL BEFORE TH E CIT(A) STATING THAT THE ABOVE ADDITION WAS ACCEPTED BY THE ASSESSEE IN A FIT OF DESPERATION AND A PANICKY STAT E OF MIND AS THE ASSESSMENT IS TIME BARRING AND COOPERATION F ROM OUR WORKERS AND ACCOUNT IS NOT FORTHCOMING. THERE IS A LONG STANDING AND UNJUSTIFIED DEMAND PENDING FOR A LONG TIME AND THERE WAS AN ABNORMAL HIKE IN WORKERS SALARIE S WHICH ITA NO.1043/HYD/2011 M/S ANDHRA ROAD CORPORATION, HYD. 3 INDUCED THEM TO MAKE THE SUPPORTING VOUCHERS AND BI LLS UNAVAILABLE FOR VERIFICATION BEFORE THE ASSESSING O FFICER. THE MAIN PARTNER AND HEAD OF THE FAMILY CONCERN IS HIGHLY DIABETIC AND A HYPER TENSION PATIENT FOR THE LAST S EVERAL YEARS AND THE LOSS OF HIS WIFE DUE TO CANCER AILMEN T, THE INDIFFERENT AND MISGUIDED ACTIONS OF HIS TWO SONS W HO INCIDENTALLY ARE ALSO PARTNERS IN THE CONCERN AND T HE HOSTILE AND UNCOOPERATIVE ATTITUDE OF HIS STAFF AGGRAVATED THE ISSUES AND THE MAIN PARTNER I.E. MR. MURZA MURTZA BAIG FI NALLY LOST THE ABILITY AND STRENGTH TO FIGHT THE PROBLEMS AND SUCCUMBED TO THE PRESSURES OF TIME BARRING ASSESSME NT AND AGREED FOR THIS ABNORMAL ADDITION IN A FIT OF DESPERATION. UNFORTUNATELY, HIS COUNSEL HAS ALSO CONCEDED FOR THIS ADDITION, KEEPING IN MIND THE HEALTH AND M ENTAL STATE OF THE ASSESSEE. THE CIT(A) HAS ACCEPTED THE CONTENTIONS OF THE ASSESSEE AS BONAFIDE AND ACCEPTE D THE GROUND RAISED BY THE ASSESSEE AND DECIDED THAT THE PROFIT ESTIMATED BY THE ASSESSING OFFICER IS ON THE HIGHER SIDE AND HE ESTIMATED INCOME AT 2% OF GROSS RECEIPTS I.E., 2% ON RS.2,43,09,122/- AS THE INCOME CHARGEABLE TO TAX OF THE ASSESSEE. AGAINST THIS, THE REVENUE IS IN APPEAL B EFORE US. 5.1. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE BOOKS OF ACCOUN TS OF THE ASSESSEE ARE NOT CORRECT AND COMPLETE. THE INCOME IS TO BE COMPUTED TO THE BEST OF JUDGEMENT AS ENUMERATED IN THE PROVISIONS OF THE 145 OF THE INCOME TAX ACT, 1961 A FTER TAKING INTO ACCOUNT THE RELEVANT MATERIALS ON RECOR D. WHEN THE INCOME IS TO BE COMPUTED TO THE BEST OF JUDGEME NT, THE SAME HAS TO BE ON THE BASIS OF ALL RELEVANT FACTS A ND CIRCUMSTANCES OF THE CASE. IT IS SETTLED LAW THAT EVEN IF THE ASSESSMENT IS FRAMED TO THE BEST OF JUDGEMENT, SUCH ITA NO.1043/HYD/2011 M/S ANDHRA ROAD CORPORATION, HYD. 4 ASSESSMENT CANNOT BE ARBITRARY OR FANCIFUL AFTER CO NSIDERING THE ENTIRE MATERIALS ON RECORD AND CIRCUMSTANCES OF THE CASE. EVEN THE GUIDELINES PROVIDED BY THE STATUTORY PROVISIONS CAN ALSO BE CONSIDERED. COMPUTING THE I NCOME AS PER THE PRESUMPTIVE TAXATION, FOUND IN SECTION 4 4AE WHICH IS W.R.T. COMPUTING THE PROFITS AND GAINS OF BUSINESS OF PLYING, HIRING, LEASING OF GOODS CARRIAGES. SEC TION 44AE OF THE ACT AS STOOD DURING THE RELEVANT ASSESSMENT YEAR WHICH PROVIDES AS FOLLOWS : SECTION 44AE(1): NOTWITHSTANDING ANYTHING TO THE CO NTRARY CONTAINED IN SECTION 28 TO 43C, IN THE CASE OF AN A SSESSEE WHO OWNS NOT MORE THAN TEN GOODS CARRIAGES AT ANY T IME DURING THE PREVIOUS YEAR AND WHO IS ENGAGED IN THE BUSINESS OF PLYING, HIRING OR LEASING SUCH GOODS, CARRIAGES, THE INCOME OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION SHALL BE DEEMED TO BE AGGREGATE OF THE PROFITS AND GAINS, FR OM ALL THE GOODS CARRIAGES OWNED BY HIM IN THE PREVIOUS YEAR COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SUB S ECTION (2): 2. FOR THE PURPOSES OF SUB SECTION (1), THE PROFIT S AND GAINS FROM EACH GOODS CARRIAGE: I) BEING A HEAVY GOODS VEHICLE, SHALL BE AN AMOUNT EQUAL TO TWO THOUSAND RUPEES FOR EVERY MONTH OR PART OF A MO NTH DURING WHICH THE HEAVY GOODS VEHICLE IS OWNED BY TH E ASSESSEE IN THE PREVIOUS YEAR OR, AS THE CASE MAY B E AN AMOUNT HIGHER THAN THE AFORESAID AMOUNT AS DECLARED BY HIM IN HIS RETURN OF INCOME; ITA NO.1043/HYD/2011 M/S ANDHRA ROAD CORPORATION, HYD. 5 II) OTHER THAN HEAVY GOODS VEHICLE, SHALL BE AN A MOUNT EQUAL TO TWO THOUSAND RUPEES FOR EVERY MONTH OR PAR T OF A MONTH DURING WHICH THE GOODS CARRIAGE IS OWNED BY T HE ASSESSEE IN THE PREVIOUS YEAR OR, AS THE CASE MAY B E, AN AMOUNT HIGHER THAN THE AFORESAID AMOUNT AS DECLARED BY HIM IN HIS RETURN OF INCOME. 5.2. AS PER SECTION 44AE INCOME COULD BE ES TIMATED AT RS.2000/- FOR EVERY MONTH OR PART OF MONTH PER TRUC K DURING WHICH THE GOODS CARRIAGE IS OWNED BY THE ASS ESSEE IN THE PREVIOUS YEAR OR, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR 2001-02. 6. THOUGH THE ABOVE SECTION IS NOT DIRECTLY APPLIC ABLE TO THE PRESENT ASSESSEE BEING THE ASSESSEE OWNING MORE THAN 10 VEHICLES, STILL WE TOOK CLUE FROM THIS SECTION I N ESTIMATING THE INCOME. ACCORDINGLY, WE DIRECT THE ASSESSING O FFICER TO ESTIMATE THE INCOME AT RS.2000/- PER P.M. PER VEHI CLE ( I.E RS. 24,000/- P.A PER VEHICLE ) INSTEAD OF RS.4500/ - P.M. PER VEHICLE AS COMPUTED BY THE ASSESSING OFFICER. THEREAFTER, THE ASSESSEE IS ENTITLED FOR DEDUCTION TOWARDS PARTNERS SALARY AT RS.1, 20,000/- AND INTEREST TO PARTNERS AT RS.52,870/- AND THERE CANNOT BE ANY OTHER DEDUCT ION TOWARDS ANY OTHER EXPENDITURE INCLUDING DEPRECIATIO N WHICH SHALL BE CONSIDERED AS DEEMED TO HAVE BEEN ALREADY GRANTED/ALLOWED FULL EFFECT TO THE ASSESSEE NO FUR THER DEDUCTION SHALL BE ALLOWED. ACCORDINGLY, THE GROUN D TAKEN BY THE REVENUE STANDS PARTLY ALLOWED. ITA NO.1043/HYD/2011 M/S ANDHRA ROAD CORPORATION, HYD. 6 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 16.9.2011 SD/- (ASHA VIJAYA RAGHAVAN) SD/- (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 16 TH SEPTEMBER, 2011 COPY FORWARDED TO: 1. THE ITO, WARD 7(3), HYDERABAD 2. M/S ANDHRA ROAD CORPORATION, 15-1-477, OLD FEELKHANA, HYDERABAD 3. THE CIT(A)-VI, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/