ITO, New Delhi V. Sandeep Aggarwal, Delhi

ITA 150/DEL/2010

• Counselvise Citation: 15020114 RSA 2010
• Duration Of Justice: 4 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 15-04-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 11-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Assessee Lawyers: P K MISRA
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH G GG G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .150/DEL/2010 150/DEL/2010 150/DEL/2010 150/DEL/2010 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2006 2006 2006 2006- -- -07 0707 07 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -19(2), 19(2), 19(2), 19(2), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI SANDEEP SHRI SANDEEP SHRI SANDEEP SHRI SANDEEP AGGARWAL, AGGARWAL, AGGARWAL, AGGARWAL, B BB B- -- -3/6, ASHOK VIHAR, PHASE 3/6, ASHOK VIHAR, PHASE 3/6, ASHOK VIHAR, PHASE 3/6, ASHOK VIHAR, PHASE- -- -II, II,II, II, DELHI DELHI DELHI DELHI 110 052. 110 052. 110 052. 110 052. PAN : AAKPA5638A. PAN : AAKPA5638A. PAN : AAKPA5638A. PAN : AAKPA5638A. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. RENUKA JAIN GUPTA, CIT-DR. RESPONDENT BY : SHRI P.K. MISRA, CA. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXII, NEW DELHI DATED 4 TH NOVEMBER, 2009 FOR THE AY 2006-07. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELE TING THE DISALLOWANCE OF RS.35,95,655/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF BOGUS LORRY HIRE EXPENSES. 2. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELET ING THE DISALLOWANCE OF RS.35,95,655/- AS THE ASSESSEE HAD FAILED TO PRODUCE ANY DOCUMENT TO SUBSTANTIATE HIS CLAIM O F EXPENSES OF RS.35,95,655/- IN RESPECT OF VARIOUS PA RTIES FROM WHOM INFORMATION U/S 133(6) HAD BEEN CALLED FO R. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DERI VES INCOME FROM TRANSPORTATION BUSINESS. DURING THE YEAR UNDER CON SIDERATION, THE ASSESSEE HAS SHOWN THE RECEIPT AT ` 90,22,307/- ON WHICH THE NET LOSS OF ` 2,92,367/- WAS DECLARED. IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAS ITA-150/DEL/2010 2 CLAIMED AN EXPENDITURE OF ` 83,49,215/- ON ACCOUNT OF LORRY HIRE EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER CALLED FOR INFORMATION UNDER SECT ION 133(6) FROM THE BROKERS THROUGH WHICH TRUCKS WERE BOOKED. AS PER T HE DETAILS GIVEN IN THE ASSESSMENT ORDER AT PAGES 1 & 2, IN 21 CASES, N O REPLY WAS RECEIVED WHILE IN 12 CASES, THE LETTER ISSUED TO TH E BROKERS WAS RECEIVED BACK UNSERVED. IN THE TWO CASES, THE ASSE SSING OFFICER FOUND CERTAIN DIFFERENCES. THE ASSESSING OFFICER DISALLO WED THE ENTIRE PAYMENT OF ` 35,95,655/- MADE TO THE ABOVE 36 PERSONS IN RESPECT OF WHOM EITHER NO REPLY WAS RECEIVED OR THE LETTER ISS UED WAS RECEIVED BACK UNSERVED. HE DISALLOWED THE AMOUNT OF DIFFERE NCE IN THE CASE OF REMAINING PERSONS. ON APPEAL, LEARNED CIT(A) DELET ED THE ENTIRE ADDITION OF ` 35,95,655/- WITH THE FOLLOWING FINDING:- 5.3 AS UNDERSTOOD FROM THE SUBMISSION AND THE PRAC TICE IN TRANSPORTATION BUSINESS, THERE MAY NOT BE NECESS ARILY FINANCIAL TRANSACTIONS WITH THE BROKER. THE UTILIT Y OF BROKER IS TO MAKE ARRANGE AVAILABILITY TO THE INTERESTED PARTIES, OF TRUCKS COMING TO DELHI FROM DIFFERENT PART OF COUNT RY TO DELIVER GOODS. THE BROKER IS A SURETY WHO CAM BE CONTACTED IN CASE OF ANY MIS-HAPPENING. PAYMENTS A RE NOT ROUTED THROUGH BROKERS BUT MADE DIRECTLY TO DRIVERS AND BROKER GETS PAYMENT FROM DRIVERS ON SPOT. WHEN THE BROKERS ARE NOT IN THE FINANCIAL LOOP, THEIR LIKELI HOOD OF RESPONDING TO IT NOTICES ASKING FOR CONFIRMATION OF ACCOUNT IS QUITE REMOTE. FURTHER MOST OF THEM ARE NOT PERM ANENTLY LOCATED AT ONE PLACE AND SHIFT ACCORDING TO BUSINES S PROSPECT FROM PLACE TO PLACE. IT IS FOUND THAT ALL RECEIPTS FROM VARIOUS PARTIES HAVE BEEN SUBJECTED TO TDS FOR WHOM THE APPELLANT HAS ARRANGE D TRANSPORTATION. THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT U/S 145(2). IT IS BEYOND COMPREHENSION THA T OUT OF TOTAL RECEIPT OF RS.90,22,352/- THE APPELLANT HAD B OOKED BOGUS EXPENDITURE TO THE TUNE OF RS.35,95,655/-. T HE APPELLANT HAS SHOWN ME THE TOTAL CORRESPONDING RECE IPTS OF RS.37,85,785/-. THE AO WHILE DECLARING THE EXPENDI TURE AS BOGUS SHOULD HAVE DONE SOMETHING MORE TO ESTABLISH HIS CASE. MERE RETURN OF LETTERS AND NON-RESPONSE OF P ARTIES ARE NOT ADEQUATE TO ESTABLISH THE CASE OF AO. AO'S OBSERVATION THAT THE APPELLANT IS NOT LEFT WITH A S INGLE ITA-150/DEL/2010 3 PENNY IS MISCONCEIVED BECAUSE THE HIRE CHARGES RECE IVED FROM DIFFERENT CLIENTS ARE NOT RECORDED ON CHALLANS AND WHAT IS THERE ON LORRY CHALLAN IS RATE AND PAYMENTS TO BE MADE TO TRUCK DRIVERS ON SPOT. CONCERNING THE OBSERVATIONS OF AO AT PARA 4.2, IT APPEARS THAT THE Y ARE MORE IN THE NATURE OF DOUBTS THAN INFERENCES. THE ADDITION MADE OUT OF DISALLOWANCE OF EXPENSE CANNOT SUSTAIN THE JUDICIAL SCRUTINY HENCE DELETED. 4. AT THE TIME OF HEARING BEFORE US, LEARNED DR REL IED UPON THE ORDER OF THE ASSESSING OFFICER AND HE STATED THAT T HE ASSESSING OFFICER HAS ISSUED THE NOTICE CALLING FOR THE INFORMATION U NDER SECTION 133(6) FROM THE BROKER THROUGH WHOM THE TRUCKS WERE BOOKED . THAT IN MOST OF THE CASES, EITHER THE REPLY WAS NOT RECEIVED OR THE NOTICE ITSELF WAS RECEIVED BACK UNSERVED. THE ABOVE FACTS WERE CONFR ONTED TO THE ASSESSEE BUT HE ALSO DID NOT PRODUCE ANY DOCUMENTAR Y EVIDENCE TO JUSTIFY THE PAYMENT OF LORRY HIRE CHARGES TO THOSE PARTIES. HE, THEREFORE, SUBMITTED THAT THE ORDER OF LEARNED CIT( A) SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE R ESTORED. 5. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, STATED THAT IN THE TRANSPORTATION BUSINESS, THE ASSESSEE BOOKED THE TRUCKS THROUGH THE BROKERS. HOWEVER, PAYMENT OF TRUCK HIRE CHARGE S IS MADE TO THE DRIVERS DIRECTLY. THAT THE BROKER IS CONCERNED WIT H HIS BROKERAGE ONLY AND THE PAYMENT OF HIRE CHARGES ARE NOT ROUTED THRO UGH HIM. THEREFORE, THE QUESTION OF GIVING ANY REPLY BY BROK ER CONFIRMING THE PAYMENT OF HIRE CHARGES DOES NOT ARISE. HE POINTED OUT THAT THE TOTAL HIRE CHARGES RECEIVED BY THE ASSESSEE WERE ` 90,22,307/-, AGAINST WHICH, HIRE CHARGES PAID BY THE ASSESSEE WERE ` 83,49,215/-. THE ASSESSEE HAS FURNISHED THE DETAILS BEFORE THE LEARN ED CIT(A) POINTING OUT THAT IN RESPECT OF THE HIRE CHARGES OF ` 35,95, 655/- PAID BY THE ASSESSEE, THERE WAS A CORRESPONDING RECEIPT OF ` 37,85,785/-. HE, THEREFORE, SUBMITTED THAT THE ORDER OF LEARNED CIT( A) SHOULD BE SUSTAINED. ITA-150/DEL/2010 4 6. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. WE FIND THAT OUT OF 36 CASES QUOTED BY THE ASSESSING OFFICER AT PAGES 1 & 2 OF THE ASSESSMENT ORDER, IN RESPECT OF 34 CASES, NO REPLY HAS BEEN RECEIVED FROM THE PARTIES OR THE LETTER ISSUED WAS RECEIVED BACK UNSERVED. IN OUR OPINION, IF THE BROKER HAS NOT REPLIED TO THE L ETTER OF THE ASSESSING OFFICER, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE BECAUSE, AS POINTED OUT BY THE ASSESSEES COUNSEL, THE PAYMENT IS NOT ROUTED THROUGH THE BROKER AND, THEREFORE, HE IS NOT IN A POSITION TO REPLY. SIMILAR WOULD BE THE POSITION WHERE THE LET TER ISSUED TO THE BROKER IS RETURNED UNSERVED. MERELY BECAUSE THE BR OKER HAS SHIFTED FROM ONE PLACE TO ANOTHER OR HAS CLOSED HIS BUSINES S OR HAS NOT RECEIVED THE LETTER, NO ADVERSE INFERENCE CAN BE DR AWN AGAINST THE ASSESSEE. NOW, WE ARE LEFT WITH ONLY TWO CASES WHE RE THE CONFIRMATION HAS BEEN RECEIVED FROM THE PARTIES BUT THEY HAVE CL AIMED TO HAVE RECEIVED LESSER AMOUNT THAN WHAT IS DEBITED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE DETAILS OF WHICH AS GIVEN IN THE ASSESSMENT ORDER READS AS UNDER:- S.NO. NAME OF THE PARTY AMOUNT REMARKS 35. KRISHNA TRANSPORT CO. 7000 AMT. OF RS.69269/- CONFIRMED BY THE PARTY WHEREAS ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS.76269/-. THUS THERE IS DIFFERENCE OF RS.7,000/-. 36. DASMESH GOLDEN TPT.CO. 5000 AMT. OF RS.24,000/- CONFIRMED BY THE PARTY WHEREAS ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS.29000/-. THUS THERE IS DIFFERENCE OF RS.5,000/-. 7. NO SATISFACTORY EXPLANATION HAS BEEN GIVEN BY TH E ASSESSEE IN RESPECT OF THE ABOVE DIFFERENCE EITHER BEFORE THE L OWER AUTHORITIES OR ITA-150/DEL/2010 5 BEFORE US. THEREFORE, IN OUR OPINION, LEARNED CIT( A) OUGHT TO HAVE SUSTAINED THE DISALLOWANCE OF LORRY HIRE EXPENSES O F ` 12,000/-. ACCORDINGLY, WE PARTLY MODIFY THE ORDER OF LEARNED CIT(A) AND SUSTAIN THE DISALLOWANCE OUT OF LORRY HIRE EXPENSES AMOUNTI NG TO ` 12,000/-. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 2 ND MAY, 2014. SD/- SD/- ( (( (I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 02.05.2014 VK. COPY FORWARDED TO: - 1. APPELLANT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -19(2), NEW DELHI. 19(2), NEW DELHI. 19(2), NEW DELHI. 19(2), NEW DELHI. 2. RESPONDENT : SHRI SANDEEP AGGARWAL, SHRI SANDEEP AGGARWAL, SHRI SANDEEP AGGARWAL, SHRI SANDEEP AGGARWAL, B B B B- -- -3/6, ASHOK VIHAR, PHASE 3/6, ASHOK VIHAR, PHASE 3/6, ASHOK VIHAR, PHASE 3/6, ASHOK VIHAR, PHASE- -- -II, II,II, II, DELHI DELHI DELHI DELHI 110 052. 110 052. 110 052. 110 052. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR