LAL BAHADUR JAISWAL, MUMBAI V. ITO 17(3)(3), MUMBAI

ITA 1211/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8175 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 12-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Assessee Lawyers: SURESH R SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , , BEFORE S/SHRI RAJENDRA, A.M. AND SANJAY GARG,J.M. ./ITA NO.1211/MUM/2013 , / ASSESSMENT YEAR: 2006-07 SHRI LAL BAHADUR JAISWAL SUMAN STORES COAL, BUNDER PLOT NO.12 SEWRI, MUMBAI. PAN: AABPL 0866 C VS. INCOME TAX OFFICER-17(3)(3) MATRU MANDIR BLDG., TARDEO RD., GRANT RD., MUMBAI. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI PAVAN KUMAR BEERLA ASSESSEE BY: SHRI SURESH R. SHARMA / DATE OF HEARING: 18.01.2017 / DATE OF PRONOUNCEMENT:15.02.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , -PER RAJENDRA,AM: CHALLENGING THE ORDER,DATED 16/11/2012,OF THE CIT ( A)-16,MUMBAI THE ASSESSEE AND HAS FILED THE PRESENT APPEAL.ASSESSEE,AN INDIVIDUAL,ENGAGED IN TH E BUSINESS OF RUNNING TRUCKS ON HIRE BASIS, FILED HIS RETURN OF INCOME ON 31/10/2006,DECLARING TOTAL TAXABLE INCOME OF RS. 4.19 LAKHS U/S.44 AE OF THE ACT.THE ASSESSING OFFICER (AO)COMPLETED T HE ASSESSMENT,U/S.143(3),ON 31/12/ 2008, DETERMINING HIS INCOME AT RS.21.71 LAKHS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT NOT ACCEPTING T HE DEEMED NET PROFIT UNDER SPECIAL PROVISION OF SECTION 44 AE OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT AS PER THE CLAIM OF THE ASSESSEE HE WAS HAVING SIX TRUCKS, THA T HE WAS NOT MAINTAINING ANY BOOKS OF A/C.S, THAT HE HAD OFFERED INCOME DERIVED FROM TRANSPORTAT ION BUSINESS FOR TAXATION AS PER THE PROVISIONS OF SECTION 44 AE. ON GOING THROUGH THE RETURN AND O THER SUPPORTING DOCUMENTS, THE AO OBSERVED THAT THE ASSESSEE WAS HAVING TOTAL TURNOVER OF RS.1 ,13,58,269/-,THAT HE WAS DOING BUSINESS OF HIRING TRUCKS FOR RAJASTHAN SPINNING AND WEAVING MI LLS LTD. (RSWML).HE ISSUED A NOTICE U/S.133(6)TO RSWML.THE COMPANY,IN RESPONSE TO HIS N OTICE,FURNISHED LEDGER COPY OF THE TRANSACTIONS WITH THE ASSESSEE.IT ALSO FILED DETAIL ED STATEMENT PROVIDING INFORMATION REGARDING THE TRUCK WISE CHARGES PAID BY IT TO THE ASSESSEE.THE A NALYSIS OF THE INFORMATION PROVIDED BY THE COMPANY REVEALED THAT ASSESSEE HAD BEEN USING OTHER TRUCKS BELONGING TO OTHER TRANSPORTERS ALONG WITH HIS SIX TRUCKS FOR THE PURPOSE OF RUNNING HIS BUSINESS, THAT HE WAS ALSO HIRING TRUCKS FROM 1211/M/13(06-07) LAL BAHADUR JAISWAL 2 OTHER TRANSPORTERS ON COMMISSION BASIS. THE AO WAS OF THE OPINION THAT THE ACT OF HIRING TRUCKS ON COMMISSION BASIS/HIRING TRUCKS OF OTHER TRANSPOR TERS WAS NOT COVERED BY THE PROVISION SECTION 44AE OF THE ACT. FROM THE TDS CERTIFICATES FILED BY THE ASSESSEE ALONG WITH THE RETURN IT WAS OBSERVED THAT THE ASSESSEE HAD UTILISED NUMEROUS TR UCKS. THEREFORE, HE DIRECTED THE ASSESSEE TO FURNISH THE BIFURCATIONS OF THE HIRING CHARGES RECE IPTS FROM HIS OWN TRUCKS AS WELL AS FROM OTHER TRUCKS WHICH HAD BEEN USED ON HIRE BASIS.AS PER THE AO,THE ASSESSEE DID NOT SUBMIT ANY DETAILS AS CALLED FOR NOR DID IT FILE ANY SUBMISSION IN RES PECT OF THE HIRING CHARGES RECEIPTS. THE ASSESSEE STATED THAT HE WAS NOT IN A POSITION TO FURNISH SUC H DETAILS.THE AO OBSERVED THAT THE ASSESSEE HAD NEITHER MAINTAINED ANY BOOKS OF ACCOUNTS NOR HAD KE PT DOCUMENTS/PROOF ABOUT HIS BUSINESS, THAT SECTION 44 AE WAS NOT APPLICABLE TO THE FACTS OF TH E CASE.HE REJECTED THE CLAIM MADE BY THE HIM WITH REGARD TO RECEIPT OF RS. 1.13 CRORES.TREATING THE SAID SUM AS TOTAL TURNOVER OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION,THE AO ESTIMATED N ET PROFIT @20%. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).HE MADE ELABORATE SUBMISSIONS BEFOR E THE FAA AND STATED THAT ALL THE DETAILS CALLED FOR BY THE AO WERE SUBMITTED DURING THE ASSE SSMENT PROCEEDINGS, THAT SECTION 44 AE PROVIDED FOR DECLARING MINIMUM INCOME OF RS. 42,000 PER TRUCK , THAT HE HAD DECLARED RS. 90,000 PER TRUCK FOR THE YEAR UNDER CONSIDERATION,THAT THE ESTIMATE OF THE AO AT RS.3.8 LAKHS PER TRUCK WAS EXORBITANT AND WITHOUT ANY JUSTIFICATION, THAT THE AO HAD NOT GIVEN ANY SPECIFIC BASIS AND APPLIED RATE OF 20% OF THE TURNOVER. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER, THE FAA MENTIONED THAT A COMPARABLE CASE WAS FOUND,BEING MS ROAD LINE S, THAT MS ROAD LINES WAS ALSO ENGAGED IN BUSINESS OF TRANSPORTATION.THE FAA TABULATED THE GR OSS RECEIPTS, NET PROFITS, THAT PROFIT RATIO PERCENT IS FOR THE ASSESSMENT YEARS 2007-08 TO 2009 -10 AND HELD THAT IN THE ABOVE-MENTIONED CASE THE ASSESSEE HAD DECLARED AN AVERAGE NET PROFI T RATIO AT 42.7% AND CONSISTENTLY ABOVE 38% IN THE THREE SUCCESSIVE YEARS,THAT IT WAS CONSIDERABLY HIGHER THAN THE ESTIMATED PROFIT ADOPTED BY THE AO,THAT THE AO HAD DECIDED THE ISSUE ON THE CONSERV ATIVE SIDE WHILE ESTIMATING THE NET PROFIT. FINALLY,THE FAA CONFIRMED THE ORDER OF THE AO. 4. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) ARGUED THAT AS PER THE PROVISIONS OF SECTION 44 AE PROFIT HAD TO BE ES TIMATED AT THE RATE OF 8%, THAT THE ASSESSEE HAD 1211/M/13(06-07) LAL BAHADUR JAISWAL 3 FIVE TRUCKS ONLY,THAT THE ESTIMATION WAS ON HIGHER SIDE. HE REFERRED TO THE CASE OF M. RAJENDRAN (65SOT42).THE DEPARTMENTAL REPRESENTATIVE (DR) SUPP ORTED THE ORDER OF THE AO AND THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD FILED HIS RETURN OF INCOME ABOUT THE T RANSPORTATION BUSINESS, AS PER THE PROVISIONS OF SECTION 44AE OF THE ACT, THE AO MADE CERTAIN ENQUIR IES DURING THE ASSESSMENT PROCEEDINGS AND FOUND THAT THE ASSESSEE WAS HIRING TRUCKS ON COMMIS SION BASIS AND WAS ALSO USING TRUCKS OF OTHER TRANSPORTERS,THAT HE HELD THAT ASSESSEE WAS NOT COV ERED BY THE PROVISIONS OF SECTION 44 AE,THAT HE APPLIED THE RATE OF 20% OF NET PROFIT WITH REGARD T O THE TOTAL RECEIPT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION,THAT THE FAA,AFTER CONSIDERING THE CASE OF MS ROAD LINES,HELD THAT THE ESTIMATION MADE BY THE AO WAS ON LOWER SIDE. 5.1. BEFORE PROCEEDING FURTHER,WE WOULD LIKE TO DISCUSS THE PROVISIONS OF SECTION 44AE OF THE ACT.IT WAS INTRODUCED BY THE FINANCE ACT OF 1994 WI TH EFFECT FROM 01/04/1994 AND PROVIDES THE METHOD OF ESTIMATING THE INCOME FROM THE BUSINESS O F PLYING, HIRING OR LEASING TRUCKS OWNED BY THE ASSESSEE.THE SECTION APPLIED TO PERSONS OWNING NOT MORE THAN TEN TRUCKS. THE INCOME FROM EACH TRUCK,BEING A HEAVY GOODS VEHICLE, IS ESTIMATE D AT RS. 3,000 FOR EVERY MONTH OR PART OF A MONTH. THE INCOME FROM EACH TRUCK, OTHER THAN A HEA VY GOODS VEHICLE, IS ESTIMATED AT RS.3,100/- FOR EVERY MONTH OR PART OF A MONTH,AS PER THE AMEND ED PROVISIONS IN THE YEAR 2004.AS PER SECTION 44AE(3),ANY DEDUCTION ALLOWABLE UNDER THE PROVISION S OF SECTIONS 30 TO 38 SHALL, FOR THE PURPOSES OF SUB-SECTION (1),BE DEEMED TO HAVE BEEN ALREADY GIVEN FULL EFFECT TO AND NO FURTHER DEDUCTION UNDER THOSE SECTIONS SHALL BE ALLOWED.THE SCHEME IS OPTIONAL.IF THE ASSESSEE PRODUCES EVIDENCE THAT PROFITS AND GAINS FROM THE BUSINESS O F PLYING THE LORRIES DURING THE YEAR IS LESS THAN THE PROFITS AND GAINS SPECIFIED IN SUB-SECTIONS (1) AND (2),THE AO SHOULD PROCEED TO MAKE THE ASSESSMENT AND DETERMINE THE TOTAL INCOME OR LOSS U /S.143(3) OF THE ACT. THE SAID OPTION IS GIVEN TO THE ASSESSEE U/S.44AE(6). WE FIND THAT THE AO AND THE FAA HAVE GIVEN CATEGORI CAL FINDING OF FACT THAT ASSESSEE WAS USING TRUCKS OWNED BY OTHERS FOR CARRYING OUT HIS BUSINES S ACTIVITIES DURING THE YEAR UNDER APPEAL. HE HAS NOT BROUGHT ON RECORD TO CONTROVERT THE FACT T HAT HE HAD HIRED TRUCKS ON COMMISSION BASIS ALSO.THE PROVISIONS OF SECTION 44 AE TALKS OF TRUCK S OWNED BY AN ASSESSEE. THE AO HAD MADE ENQUIRIES WITH THE COMPANY THAT WAS THE MAIN SOURCE OF INCOME FOR THE ASSESSEE. AFTER COLLECTING THE EVIDENCES,INCLUDING THE TAX DEDUCTED AT SOURCE CERTIFICATES,HE HAD DIRECTED THE ASSESSEE TO 1211/M/13(06-07) LAL BAHADUR JAISWAL 4 SEGREGATE THE INCOME FROM HIS OWN TRUCKS AS WELL AS FROM THE TRUCKS HIRED BY HIM.THE ASSESSEE DID NOT FILE ANY EXPLANATION IN THAT REGARD. IN THE CIRCUMSTANCES,HE WAS LEFT WITH NO OTHER OPTION BUT TO ESTIMATE THE INCOME OF THE ASSESSEE. IT IS F OUND THAT THE FAA HAS COMPARED THE CASE OF ONE OF THE TRANSPORTERS WHILE DECIDING THE APPEAL. CONSIDERING THE FACTS-THAT ASSESSEE IS A SMALL-TIME OPERATOR DOING TRANSPORTATION BUSINESS WITH HIS SIX TRUCKS,THAT HE HAS NOT MAINTAINED REGULAR B OOKS OF ACCOUNTS,THAT HE HAD HIRED THE TRUCKS OF OTHER TRANSPORTERS-WE ARE OF THE OPINION THAT ENDS OF JUSTICE WOULD MEET,IF THE ESTIMATED PROFIT RATE IS RESTRICTED TO 15% AS AGAINST 20% ADOPTED BY THE AO. EFFECTIVE GROUND OF APPEAL, RAISED BY THE ASSESSEE, IS DECIDED IN HIS FAVOUR, IN PART. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS PA RTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH FEBRUARY, 2017. 15 TH , 2017 SD/- SD/- ( /SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 15.02.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.