DCIT, Circle-2(1), Tirupathi V. M/s Sai Swetha Transports, Kadapa

ITA 1604/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2780 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 22-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V B PRASAD REDDY
• Assessee Lawyers: A V RAGHURAM
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNA L HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1604/HYD/2012 ASSESSMENT YEAR 2009-10 THE DEPUTY CIT CIRCLE-2(1) TIRUPATI VS. M/S. SAI SWETHA TRANSPORTS, YERRAGUNTLA, PAN: ABLFS2467H APPELLANT RESPONDENT APPELLANT BY: SRI V.B. PRASAD REDDY RESPONDENT BY: SRI A.V. RAGHURAM DATE OF HEARING: 17.04.2013 DATE OF PRONOUNCEMENT: 10.05.20 13 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), GUNTUR DATED 17.8.2012 FOR ASSESSMENT YEAR 2009-10. 2. THE REVENUE RAISED THE GROUND THAT THE CIT(A) ERRED IN GIVING RELIEF TO THE ASSESSEE WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER OR WITHOUT CAL LING FOR ANY REMAND REPORT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM ENGAGED IN TRANSPORT CONTRACTS, E-FILED ITS RETURN OF INCOM E FOR THE A.Y. 2009-10 ON 30.09.2009, DECLARING TOTAL INCOME OF RS . 9,97,320. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSES SEE FIRM TRANSPORTED IRON ORE FROM BELLARY TO NELLORE HARBOU R AND SHOWED GROSS RECEIPTS OF RS. 8,15,65,725 AND CLAIME D TRANSPORT CHARGES TO THE TUNE OF RS. 7,92,40,954 AND SHOWN T HE GROSS IT A NO. 1604/HYD/2012 M/S. SAI SWETHA TRASPORTS ==================== 2 PROFIT AT 1.62% AND NET PROFIT AT 1.22%. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FIRM STATED TH AT IT DID NOT HAVE ITS OWN TRUCKS BUT DEPENDED ON MARKET TRUCKS T O EXECUTE THE ALLOTTED TONNAGE BY THE COMPANY AND DUE TO COMP ETITION IN THE MARKET; THE FIRM HAD TO HIRE THE TRUCKS AT HIGH ER RATE OF CHARGES AND HAVE SHOWN LOW PROFIT. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT ALL THE RECEIPTS WERE RECEIV ED FROM M/S RR GLOBAL ENTERPRISES PVT. LTD., AND THERE WAS DIFF ERENCE IN TOTAL AMOUNT OF RECEIPTS. AS PER THE BOOKS OF ETC. , THE GROSS RECEIPTS WERE AT RS. 8,15,65,725 AND AS PER LATEST GENERATED 26AS FORM, THE TOTAL AMOUNT PAID/CREDITED WAS RS. 8 ,70,65, 725, THUS, THERE WAS A DIFFERENCE OF RS. 54,56,107 IN THE GROSS RECEIPTS. THE ASSESSEE COULD NOT EXPLAIN THE REASO N FOR THE LESSER AMOUNT SHOWN IN THE BOOKS OF ACCOUNT. THE A O HAD STATED THAT UNLESS PROPER EXPLANATION WAS SUBMITTED FOR THE DIFFERENCE FOUND, THE AMOUNT AS SHOWN IN FORM NO. 2 6AS WOULD BE TREATED AS THE CORRECT RECEIPTS FROM M/S RR GLOBAL ENTERPRISES PVT. LTD. THERE WAS NO RESPONSE FROM T HE ASSESSEE. THE AO ALSO OBSERVED THAT MOST OF THE EXPENDITURE W AS TOWARDS TRANSPORT OF HIRE CHARGES, WHICH CONSTITUTED MORE T HAN 90% OF THE RECEIPTS. THE AO HAD VERIFIED THE PARTICULARS FURNISHED BY THE ASSESSEE WITH REGARD TO TRANSPORT HIRE CHARGES, THE TRUCKS TOWARDS WHICH THE HIRE CHARGES WERE PAID DID NOT EX IST AS PER THE INFORMATION GATHERED FROM THE WEBSITE OF AP TRA NSPORT DEPARTMENT. IN VIEW OF THE ABOVE DEFECTS, THE AO H AS REJECTED THE BOOKS OF ACCOUNT U/S 145 OF THE IT ACT AND ESTI MATED THE INCOME @ 6% ON THE NET RECEIPTS AS PER FORM NO. 26A S AT RS. 8,70,65,725 WHICH COMES TO RS. 52,23,940 AND COMPLETED THE ASSESSMENT. 4. ON APPEAL THE CIT(A) OBSERVED THAT THE CONTROVERSY OF TURNOVER BETWEEN THE ONE AT RS. 8,15,65,725 AS PER BOOKS AND THE ONE AS PER LATEST GENERATED 26AS FORM BEING RS. 8,70,65,725 IT A NO. 1604/HYD/2012 M/S. SAI SWETHA TRASPORTS ==================== 3 WAS REFERRED TO RR GLOBAL ENTERPRISES PVT. LTD., VIDE LETTER OF THE ACIT IN NO. ACIT-2(1)/TPT/ABLFS2467H/09-10 DATED 05.07.2010. IN TURN M/S. R.R. GLOBAL ENTERPRISES PV T. LTD. VIDE LETTER RRGEP/IT-TPT/10-11/22 DATED 23.07.2010, ADDR ESSED TO THE ACIT INFORMED THAT IT HAS PAID TO THE ASSESSEE AN AMOUNT OF RS. 8,15,65,725 AND TAX DEDUCTED AT RS. 18,63,880 F OR THE YEAR 2008-09, BUT BY OVERSIGHT SOME OTHER PAYMENT REFLEC TED WITH THE SAME PAN CREPT IN WHILE FILING THE E-TDS RETURN . THUS, THE CONTROVERSY AS TO WHAT IS THE CORRECT TURNOVER IS S ET AT REST, BEING RS. 8,15,65,725 AND THE ACTION OF THE ASSESS ING OFFICER IN THIS REGARD IN TAKING SUCH TURNOVER AT RS. 8,70,65, 725 IS NOT APPROVED. A PERUSAL OF PAGE NOS. 3, 4 & 5 REVEALED THE DEFICIENCIES FOUND IN THE DETAILS FURNISHED BY THE ASSESSEE, WHICH REMAINED UNATTENDED TO TILL THE TIME THE ASSE SSMENT WAS FINALISED BY ADOPTING ESTIMATION. THE SHORTCOMINGS POINTED OUT BY THE AO CONTINUED EVEN TO THIS DATE AS SUCH DEFIC IENCIES EXISTED AND THE ASSESSEE TOOK NO STEPS TO COME OUT OF SUCH CLOUD, THE ACTION OF THE AO IN RESORTING FOR ESTIMA TION IS UPHELD. BUT, THEN THE ASSESSEE HAS CONTESTED THE SANCTITY O F THE PERCENTAGE ADOPTED BY THE AO AT 6% AS AD-HOC AND NO T BASED ON ANY COMPARABLE CASES. THE ASSESSEE HAS CITED A CASE HAVING SIMILAR ACTIVITIES BY SRI LAKSHMI VENKATESWARA LORR Y TRANSPORT, WHEREIN THE BOOKS FOR THE ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10 SHOWED PROFITS AT 1.02%, 1.42% AND 1.48 % RESPECTIVELY AND REQUESTED THAT THE PERCENTAGE ADOP TED BY THE AO AT 6% MAY SUITABLY MODIFIED. THE CIT(A) OBSERVED THAT A PERCENTAGE OF 1.75 WOULD SUFFICE, WITH THE CONDITIO N THAT THE ASSESSEE BEING PARTNERSHIP FIRM, A FURTHER REDUCTIO N OF INTEREST ON PARTNER'S CAPITAL (RS. 84,070) AND REMUNERATION (RS. 2,40,000) ARE ALSO TO BE REDUCED SO AS TO DETERMINE THE TOTAL INCOME AND THE ASSESSING OFFICER WAS DIRECTED ACCOR DINGLY. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. IT A NO. 1604/HYD/2012 M/S. SAI SWETHA TRASPORTS ==================== 4 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE THE ASSESSING OFFICER REJE CTED BOOKS OF ACCOUNT OF THE ASSESSEE ON THE REASON THAT FREIGHT CHARGES PAID IN CASH TO THE TRUCK OWNERS AND THE INFORMATION GAT HERED SHOWS THAT THESE TRUCKS ARE NOT EXISTING. HE REJECTED TH E BOOKS OF ACCOUNT OF THE ASSESSEE BY INVOKING PROVISIONS OF S ECTION 145 OF THE ACT AND ESTIMATED INCOME AT 6% OF THE GROSS REC EIPTS. HOWEVER, THE CIT(A) PLACED RELIANCE ON THE CASE CIT ED BY THE ASSESSEE WHICH IS HAVING SIMILAR ACTIVITIES VIZ., S HRI LAKSHMI VENKATESWARA LORRY TRANSPORT WHEREIN FOR A.YS. 2007 -08, 2008- 09 AND 2009-10 SHOWED PROFIT AT 1.02%, 1.42% AND 1. 48%, RESPECTIVELY AND THE CIT(A) ESTIMATED INCOME OF THE ASSESSEE AT 1.75% OF THE GROSS RECEIPTS AND THEREAFTER GIVEN DE DUCTION TOWARDS INTEREST ON PARTNERS CAPITAL ACCOUNT AND RE MUNERATION TO PARTNERS. 6. THE LEARNED DR BROUGHT TO OUR NOTICE AN ORDER OF TH E TRIBUNAL DATED 31.1.2011 IN ITA NO. 668/HYD/2009 IN THE CASE OF C. ESWAR REDDY & CO., HYDERABAD WHEREIN THE TRIB UNAL ESTIMATED INCOME AT 3% OF THE GROSS RECEIPTS AND TH EREAFTER GIVEN DEDUCTION TOWARDS PARTNERS SALARY AND INTERES T PAID TO THEM. 7. CONSIDERING THE PLEA OF THE REVENUE, IN THE INTERES T OF JUSTICE, WE DIRECT THE ASSESSING OFFICER TO ESTIMAT E INCOME OF THE ASSESSEE AT 3% OF THE GROSS RECEIPTS AND THEREAFTER GIVE DEDUCTION TOWARDS SALARY AND INTEREST PAID TO THE P ARTNERS. 8. IN THE RESULT, REVENUE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 10 TH MAY, 2013. SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 10 TH MAY, 2013 TPRAO IT A NO. 1604/HYD/2012 M/S. SAI SWETHA TRASPORTS ==================== 5 COPY FORWARDED TO: 1. THE DEPUTY CIT, CIRCLE - 2(1), 2 ND FLOOR, AAYAKAR BHAVAN, KT ROAD, TIRUPATI. 2. M/S. SAI SWETHA TRANSPORTS, 6 - 46/2, KADAPA ROAD, YERRAGUNTLA, KADAPA (DIST.), AP. 3. THE CIT(A), GUNTUR 4. THE CIT, TIRUPATI 5. THE DR B' BENCH, ITAT, HYDERABAD.