ITO, Jaipur V. M/S BAID ROAD CARRIER PVT. LTD., Jaipur

ITA 1287/JPR/2010

• Counselvise Citation: 128723114 RSA 2010
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 01-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Keywords: Depreciation; Corroborative evidences; TDS
• Section: 143(3); 194C

Judgement Text

1 ITA 1287(2)-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1287/JP/2010 ASSTT. YEAR : 2005-06. THE INCOME-TAX OFFICER, VS. M/S. BAID ROAD CARRIE R PVT. LTD., WARD 6(3), B-181, MANGAL MARG, BAPU NAGAR, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) C.O. NO. 64/JP/2011 ( ARISING OUT OF ITA NO. 1287/JP/2010 ) ASSTT. YEAR : 2005-06. M/S. BAID ROAD CARRIER PVT. LTD., VS. THE INCOME-T AX OFFICER, JAIPUR. WARD 6(3), JAIPUR. (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI VINOD JOHARI ASSESSEE BY : SHRI MUKESH KHANDELWAL DATE OF HEARING : 21.9.2011. DATE OF PRONOUNCEMENT : 23.9.2011. ORDER DATE OF ORDER : 23/09/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AND CROSS OBJECTIO N BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. THE DEPARTMENT IN ITS APPEAL IS OBJECTING IN DEL ETING THE ADDITION OF RS. 64,06,918/- MADE BY AO ON ACCOUNT OF DISALLOWANCE O F VARIOUS EXPENSES CLAIMED AND 2 REPLACING THIS DELETION BY AN ESTIMATED INCOME OF R S. 6,37,217/- BY APPLYING N.P. RATE OF 10% ON TOTAL SAID TRANSPORTATION CONTRACT RECEIPTS. 3. THE ASSESSEE IS OBJECTING IN ESTIMATING THE INCO ME @ 10% ON CONTRACT RECEIPTS AGAINST LOSS SHOWN BY ASSESSEE. 4. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED RETURN SHOWING LOSS OF RS. 43,430/-. DURING THE ASSESSMENT PROCEEDINGS THE AS SESSEE WAS REQUIRED TO PRODUCE THE BOOKS OF ACCOUNT ALONG WITH SUPPORTING EVIDENCE IN RESPECT OF VARIOUS EXPENDITURES CLAIMED. THEREAFTER, THE RELEVANT REPLY FILED BY A SSESSEE WAS CONSIDERED BY AO AND FOUND THAT REPLY FILED BY ASSESSEE IS NOT CONVINCIN G. THE AO OBSERVED THAT ASSESSEE HAS NOT RECEIVED CONTRACT RECEIPTS BUT HAS RECEIVED COM MISSION FROM VARIOUS COMPANIES AND EXPENSES CLAIMED AGAINST THOSE COMMISSIONS ARE NOT VERIFIABLE AS BOOKS OF ACCOUNT ALONG WITH VOUCHERS ETC. WERE NOT PRODUCED. THEREFORE, VA RIOUS EXPENSES CLAIMED UNDER 11 HEADS AGGREGATING RS. 64,06,918/- WAS DISALLOWED BY THE AO. IT WAS ARGUED BEFORE LD. CIT (A) THAT NO VEHICLE APPEARS IN THE BALANCE SHEE T OF THE ASSESSEE COMPANY BUT IT HAS NOT BEEN ENQUIRED AND IN FACT, THE ASSESSEE COMPANY HAD TAKEN THE LPG CARRIERS ON LEASE FROM M/S. MGF LTD. TO WHOM MONTHLY LEASE RENTALS WE RE PAID AND THIS FACT WAS ALSO EXPLAINED TO A.O. DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 1998-99. ON THIS BASIS THE ASSESSMENT WAS COMPLETED UNDER SECTI ON 143(3). ACCORDING TO THE LEASE RENT AGREEMENT TILL THE TIME WHOLE LEASE RENTAL ARE PAID OFF THE OWNERSHIP OF THE VEHICLE WAS TO REST WITH FINANCING COMPANY. IT WAS FURTHER SUBMITTED THAT TDS CERTIFICATE ISSUED BY RAJ AUTOMOBILES CLEARLY PROVES THAT THEY WERE DE DUCTING TDS UNDER SECTION 194C ON FREIGHT PAYMENT MADE BY THEM TO THE ASSESSEE COMPAN Y. IT WAS FURTHER SUBMITTED THAT6 DURING THE RELEVANT ASSESSMENT YEAR THE PAYMENT HAS BEEN SHOWN AT RS. 63,72,170/- ON 3 WHICH TDS OF RS. 64,996/- WAS MADE UNDER SECTION 19 4C OF THE ACT. ACCORDINGLY IT WAS SUBMITTED THAT THE SAID RECEIPTS ARE ON ACCOUNT OF FREIGHT RECEIPTS AND NOT THE NET COMMISSION INCOME AS ASSESSEE BY THE AO. AFTER CON SIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) WA S SATISFIED WITH THE ASSESSEE THAT THEY ARE CONTRACT RECEIPT ON ACCOUNT OF FREIGHT AND NOT THE NET COMMISSION RECEIPTS. HE FURTHER NOTED THAT THIS FACT HAS ALREADY BEEN ASCERTAINED W HILE PASSING ASSESSMENT ORDER UNDER SECTION 143(3) FOR ASSESSMENT YEAR 1998-99. HOWEV ER, SINCE VARIOUS VOUCHERS FOR EXPENDITURES WERE NOT FURNISHED, THEREFORE, IT WAS HELD THAT BOOKS OF ACCOUNT ARE NOT RELIABLE. ACCORDINGLY THE LD. CIT (A) HELD THAT IF A NP RATE OF 10% IS APPLIED ON GROSS RECEIPTS THEN IT WILL MEET THE ENDS OF JUSTICE. ACC ORDINGLY AN ADDITION OF RS. 6,37,217/- WAS SUSTAINED AGAINST THE ASSESSED INCOME AT RS. 63 ,63,488/- MADE BY THE AO. THUS RELIEF OF RS. 57,26,271/- WAS GIVEN TO THE ASSESSEE. 5. NOW BOTH ARE IN APPEAL HERE BEFORE THE TRIBUNAL. 6. THE LD. D/R PLACED RELIANCE ON THE ORDER OF THE AO. A BRIEF WRITTEN NOTE WAS FILED BEFORE THE TRIBUNAL. 7. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). IT WAS FURTHER SUBMITTED THAT THE ASS ESSMENT FOR ASSESSMENT YEAR 1998-99 WAS COMPLETED UNDER SECTION 143(3). COPY OF ASSESSM ENT ORDER IS PLACED AT PAGES 7 TO 9 OF THE PAPER. IT WAS FURTHER SUBMITTED THAT AFTER A SSESSMENT YEAR 1998-99, THE CONTRACT RECEIPTS ON ACCOUNT OF FREIGHT CHARGES SHOWN BY ASS ESSEE HAS BEEN ACCEPTED BY THE DEPARTMENT ITSELF. THEREFORE, THE AO WAS WRONG IN T REATING THE RECEIPTS AS NET COMMISSION RECEIPTS AND THE LD. CIT (A) WAS JUSTIFI ED IN HOLDING THAT THEY ARE CONTRACT 4 RECEIPTS. HOWEVER, IT WAS SUBMITTED THAT 10% NP RAT E APPLIED BY LD. CIT (A) IS ON HIGHER SIDE. THEREFORE, A REASONABLE RELIEF SHOULD BE GIVE N TO THE ASSESSEE. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED T HEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE SIDES, WE A RE OF THE VIEW THAT THERE IS NO SUBSTANCE IN THE APPEAL OF THE DEPARTMENT. HOWEVER, WE ARE OF THE VIEW THAT NP RATE APPLIED BY LD. CIT (A) AT 10% IS ON HIGHER SIDE. TH ERE IS NO DISPUTE THAT ASSESSEE HAS RECEIVED FREIGHT FROM M/S. RAJ AUTOMOBILES. A COPY OF TDS CERTIFICATE IS PLACED ON RECORD BY WHICH IT IS CLEARLY SEEN THAT THEY ARE CO NTRACT RECEIPTS ON WHICH TDS HAS BEEN DEDUCTED. THEREFORE, THEY CANNOT BE SAID THAT THEY ARE NET COMMISSION RECEIPTS. IT IS FURTHER SEEN THAT THIS ISSUE WAS EXAMINED UNDER SEC TION 143(3) FOR ASSESSMENT YEAR 1998- 99 AND RECEIPTS ON ACCOUNT OF FREIGHT WERE ACCEPTED BY THE DEPARTMENT. A COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 1998-99 IS PLA CED ON RECORD. IT IS ALSO A MATTER OF FACT THAT AFTER ASSESSMENT YEAR 1998-99 TO 2004-05 THE DEPARTMENT HAS ACCEPTED THE RECEIPTS SHOWN BY ASSESSEE ON ACCOUNT OF FREIGHT CH ARGES. VARIOUS EXPENSES CLAIMED HAVE BEEN ALLOWED BY THE DEPARTMENT. THEREFORE, WE HOLD THAT LD. CIT (A) WAS JUSTIFIED IN HOLDING THAT THEY WERE FREIGHT RECEIPTS AND NOT NET COMMISSION RECEIPTS AS HELD BY AO. SINCE COMPLETE VOUCHERS WERE NOT MAINTAINED AND PRO DUCED, THEREFORE, BOOKS OF ACCOUNT WERE NOT RELIABLE. THEREFORE, THE LD. CIT (A) WAS J USTIFIED IN APPLYING NP RATE. HOWEVER, WE ARE OF THE VIEW THAT NP RATE OF 10% IS ON HIGHER SIDE, NEITHER THERE IS DEDUCTION ON ACCOUNT OF DEPRECIATION OR INTEREST ETC. THEREFORE, WE ARE OF THE VIEW THAT IF A NP RATE OF 8% ON THE GROSS RECEIPTS SHOWN BY ASSESSEE IS APPLI ED, THEN IT WILL MEET THE ENDS OF JUSTICE. 5 9. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED IN PART. 10. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23 .9.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ITO, WARD 6(3) JAIPUR. M/S. BAID ROAD CARRIER PVT. LTD., JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1287(2)/JP/2010) BY ORDER, AR ITAT JAIPUR.