Sri Venkata Balaji Transports, Renigunta, Renigunta V. ACIT, Circle-1(1), Tirupathi, Tirupathi

ITA 1236/HYD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5991 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 27-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: E PHALGUNA KUMAR
• Assessee Lawyers: M SITARAM
• Keywords: Depreciation; Rule of consistency
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1236/HYD/2015 ASSESSMENT YEAR: 2011-12 SRI VENKATA BALAJI TRANSPORT, RENIGUNTA PAN AAQJFS 1302 A VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1(4), TIRUPATHI. (ASSESSEE) (RESPONDENT) REVENUE BY : SHRI E. PHALGUNA KUMAR ASSESSEE BY : SHRI M. SITARAM DATE OF HEARING 02-03-2016 DATE OF PRONOUNCEMENT 16-03-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS), TI RUPATHI, DATED 28/08/2015 FOR AY 2011-12. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED SIX GRO UNDS, THE SUM AND SUBSTANCE OF WHICH IS AGAINST THE ESTIMATION OF INCOME @ 8% MADE BY THE AO AND UPHELD BY THE LD. CIT(A). 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS RUNNING TRANSPORT BUSINESS, FILED IT'S RETURN ELECTRONICALL Y FOR AY 2011-12 ON 30.9.2011. IN THE ASSESSMENT ORDER, THE AO MENTIONE D, INTER ALIA, THAT HE ISSUED NOTICES U/S. 143(2) & 142(1) ALONG WITH A LETTER CALLING FOR DETAILS FOR WHICH THE APPELLANT SOUGHT AN ADJOURNME NT. LATER ON, HE ISSUED NOTICES FIXING THE HEARINGS ON 28.11.13 & 10 .01,2014 2 ITA NO. 1236 /HYD/2015 SRI VENKATA BALAJI TRANSPORT INTIMATING THAT THE ASSESSMENT WOULD BE COMPLETED E X-PARTE U/S144. FURTHER, A FINAL LETTER DT. 04.03.2014 WAS ALSO ISS UED TO APPEAR WITHOUT FAIL ON 10.03.2014 WITH A REMARK THAT THIS IS THE 'FINAL OPPORTUNITY' OF BEING HEARD FOR WHICH ALSO THE APPE LLANT DID NOT COMPLY AND HENCE THE ASSESSMENT WAS COMPLETED U/S 1 44 BASED ON THE AVAILABLE MATERIAL ON RECORD. THEN THE AO ESTIM ATED THE INCOME @8% ON THE ADMITTED GROSS RECEIPTS OF RS.20,52,04,4 04/- AT RS.1,64,15,352/-, TO WHICH HE ADDED DIVIDEND INCOME OF RS 13,74,200 & INTEREST AT RS.1,29,812/- UNDER THE HEAD 'OTHER S OURCES' AND THEN DISALLOWED U/S 40(A)(IA), THE INTEREST AND RENT CLA IMED BY THE APPELLANT AT RS 7,48,579 & RS.1,92,000/, RESPECTIVE LY, ON ACCOUNT OF NON- DEDUCTION OF TDS ON SUCH PAYMENTS. 4. ON AN APPEAL, THE CIT(A) OBSERVED THAT THE ASSES SEE CLAIMED HUGE EXPENDITURE ON TRANSPORT (HIRE CHARGES) RS 14, 31,77,381/- I.E. @ 71.87% ON THE TOTAL RECEIPTS, ALTHOUGH IT IS HAVING 22 LORRIES OF ITS OWN AND CLAIMS HUGE EXPENDITURES UNDER THE HEAD DIESEL FOR LORRIES, DRIVER & CLEANER SALARIES & BATTAS, TYRES RETRADING, VEHIC LE MAINTENANCE, DEPRECIATION ETC. THE ASSESSEE HAS NOT DEDUCTED TDS ON ANY OF ITS EXPENDITURE AT ALL. THIS SHOWS THAT ALL THE PAYMENT S WERE MADE ONLY IN CASH AND THERE IS EVERY POSSIBILITY FOR INFLATIO N. FURTHER, IF WE EXAMINE THE TRANSPORT (HIRE CHARGES) TO ITS TOTAL R ECEIPTS OF AY 2012- 13, ITS COMES @ 74.25%. IN SPITE OF IT, THE ASSESSE E HAS CLAIMED LESSER EXPENDITURE UNDER THE HEAD DIESEL FOR LORRIE S, TYRES ETC. IN THAT ASSESSMENT YEAR. THIS SHOWS THAT THE EXPENDITURE CL AIMED UNDER THE HEAD TRANSPORT OPERATIONS AND THE LORRY OPERATIONS FOR THE RELEVANT AY ARE ALSO ABNORMALLY HIGH. SIMILARLY, IF WE EXAMINE THE HANDLING EXPENDITURES ACCOUNTED IN THE AY 2010-11 WITH REFER ENCE TO SIMILAR HEADS ON THIS ASSESSMENT YEAR, MANY OF THEM ARE DIS PROPORTIONATELY VERY HIGH AND ARE APPARENTLY INFLATED. 4.1 IN VIEW OF THE ABOVE OBSERVATIONS, THE CIT(A) CONFIRMED THE ACTION OF THE AO BY HOLDING THAT THE INCOME ESTIMAT ED @ 8% ON THE GROSS RECEIPTS WITHOUT ANY DEDUCTION TOWARDS PARTNE RS CAPITAL AND 3 ITA NO. 1236 /HYD/2015 SRI VENKATA BALAJI TRANSPORT REMUNERATION TO THE PARTNERS IS HELD AS REASONABLE AND HENCE APPROVED. 5. AS REGARDS OTHER ADDITIONS MADE TOWARDS DIVIDEND INCOME AND INTEREST UNDER THE HEAD OTHER SOURCES AND THE ADDIT ION U/S 40(A)(IA), THE CIT(A) DIRECTED THE AO TO DELETE THE SAME. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US CHALLENGING THE ACTION OF THE CIT(A) IN C ONFIRMING THE ESTIMATION OF INCOME @ 8% ON THE GROSS RECEIPTS BY THE AO. 7. BEFORE US, THE LD. AR SUBMITTED THAT THE MAIN P ARTNER OF THE FIRM WAS BED RIDDEN AT THE TIME OF ASSESSMENT DUE T O ILL HEALTH. MAIN PARTNER IS RESPONSIBLE FOR THE MAINTENANCE OF BOOKS OF ACCOUNT AND RELATED DOCUMENTS. THIS WAS THE MAIN REASON FOR EX- PARTE ASSESSMENT. HE ALSO SUBMITTED THAT THE AO HAS NOT E XERCISED HIS POWER JUDICIOUSLY BY ESTIMATING PROFIT @ 8%, WHICH IS NOT BASED ON MATERIAL ON HAND. THE LD. AR SUBMITTED THAT THE CIT (A) HAS NOT CONSIDERED THE FACT THAT IN ALL THE PREVIOUS ASSESS MENTS COMMENCING FROM AY 2006-07 AS WELL AS THE SUBSEQUENT AY MADE B Y THE DEPARTMENT, THE INCOME WAS ASSESSED AT 5% OF THE GR OSS RECEIPTS BEFORE DEDUCTING INTEREST ON CAPITAL AND PARTNERS REMUNERATION. LD. AR FURTHER SUBMITTED THAT ASSESSEE HAD ADMITTED INC OME @ 4% ON THE GROSS BILLS FOR THE AY 2012-13 AND THE AO INCRE ASED THE INCOME TO 4.5% (BEFORE ALLOWING REMUNERATION AND INTEREST ON CAPITAL) IN THE ASSESSMENT FOR AY 2012-13. HE RELIED ON THE FOLLOWI NG DECISIONS OF THE COORDINATE BENCH OF THIS TRIBUNAL FOR ESTIMATIO N OF INCOME: 1. BALAJI TRANSPORT AGENCY, ITA NO. 899/HYD/2012 2. M/S SRI SAI RAM TRANSPORT, KHAMMAM, ITA NO. 102 /HYD/13 3. SRI GUNDAPANENI NAGESWARA RAO & ANR., ITA NO. 1799/HYD/13 & OTHERS 4. M/S SRI VENKATESWARA SWAMY LORRY SERVICE VS. IT O, SURYAPET, ITA NO. 903/H/09 4 ITA NO. 1236 /HYD/2015 SRI VENKATA BALAJI TRANSPORT HE CONTENDED THAT THE PRINCIPLE OF CONSISTENCY WAS NOT FOLLOWED BY THE CIT(A). FOR THIS PROPOSITION, HE RELIED ON THE FOLLOWING CASES: 1. CIT VS. SRIDEVI ENTERPRISES, 192 ITR 165 (KAR.) 2. RADHASOAMI SATSUNG VS. CIT, 193 ITR 321 (S C) 3. CIT VS. JAGAJIT INDUSTRIES LTD., ITA NO. 848/20 10 (DEL HC) 4. CIT VS. HARYANA TOURISM CORPORATION LTD., 327 I TR 0026 5. PIEM HOTELS LTD. VS. DCIT, ITA NO. 240/MUM/2012 , 6. BERGER PAINTS INDIA LTD., VS. CIT, CIVIL APPEAL , 1081-1083 OF 2004 (SC). 8. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 9. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSEES INCOME WAS ASSESSED AT 5% OF THE GROSS RECEIPTS BEFORE DEDUCTING INTEREST ON CAPITAL AND P ARTNERS REMUNERATION IN ALL THE PREVIOUS ASSESSMENTS STARTI NG FROM AY 2006- 07 AS WELL AS IN THE SUBSEQUENT AY 2012-13 BY THE D EPARTMENT. HE, THEREFORE, CONTENDED THAT IN THE PRESENT AY UNDER C ONSIDERATION, THE AO WITHOUT FOLLOWING THE PRINCIPLE OF CONSISTENCY, ESTIMATED GROSS RECEIPTS AT 8%, WHICH IS NOT PROPER. WE OBSERVE THA T IN SIMILAR CASES, ON WHICH RELIANCE PLACED BY THE LD. AR (MENTIONED A T PARA 7 ABOVE), THE COORDINATE BENCHES OF THIS TRIBUNAL HAD ESTIMAT ED THE PROFIT AT 4% OF THE GROSS RECEIPTS. WE FIND THAT IN THE ABOVE CA SES, THE ASSESSEES WERE RUNNING THE BUSINESS WITH HIRED VEHICLES WHERE AS IN THE PRESENT CASE, THE ASSESSEE IS OWNING 22 LORRIES. THIS CASE IS SLIGHTLY DIFFERENT COMPARED TO THE CASES RELIED UPON BY LD. AR. SINCE THE DEPARTMENT HAS CONSISTENTLY ACCEPTED ASSESSEES PROFIT AT AROU ND 5% OF THE GROSS RECEIPTS, WE FIND IT APPROPRIATE TO ESTIMATE THE PR OFIT OF THE ASSESSEE AT 5% OF THE GROSS RECEIPTS BEFORE DEDUCTING PARTNE RS INTEREST AND REMUNERATION. WE, THEREFORE, DIRECT THE AO TO ESTI MATE THE INCOME AT 5% OF THE GROSS RECEIPTS AS AGAINST 8% MADE BY HIM. WE ALSO DIRECT THE AO TO ALLOW THE SALARY AND INTEREST PAID TO THE PARTNERS 5 ITA NO. 1236 /HYD/2015 SRI VENKATA BALAJI TRANSPORT REMUNERATION SUBJECT TO THE LIMITATION PROVIDED IN SECTION 40(B) OF THE ACT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 16 TH MARCH, 2016 KV COPY TO:- 1) SRI VENKATA BALAJI TRANSPORT, 17-45-1, NEAR OLD CHECK POST, AIRPORT ROAD, RENIGUNTA 2) ACIT, CIRCLE 1(1), AAYAKAR BHAVAN, K.T. ROAD, TIRUPATHI. 3 CIT(A), TIRUPATHI 4) PR. CIT, TIRUPATHI 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.