Smt. Sheela Bhatia, W/o, Sh. Narain Das Bhatia, Indore V. The I.T.O., Indore

ITA 170/IND/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5852 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-12-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 05-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: H P VERMA; GIRISH AGRAWAL
• Keywords: Depreciation; Bonafide belief
• Section: 44AD; 143(3); 68; 28

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.169/IND/2010 A.Y. 2007-08 NARAIN DAS BHATIA INDORE PAN ACIPB4351M APPELLANT VS ASSTT. COMMR. OF INCOME TAX 3(1), INDORE RESPONDENT ITA NO.170/IND/2010 A.Y. 2007-08 SMT. SHEELA BHATIA INDORE PAN AGVPB2744D APPELLANT VS ASSTT. COMMR. OF INCOME TAX 3(1), INDORE RESPONDENT 2 APPELLANTS BY : SHRI H.P. VERMA AND SHRI GIRISH AGRAWAL RESPONDENT BY : SHRI P.K. MITRA O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THESE APPEALS ARE BY DIFFERENT ASSESSEES AGAINST SE PARATE ORDERS OF THE LEARNED CIT(A) DATED 23.2.2010 AND 24.2.2010 , RESPECTIVELY, ON THE FOLLOWING COMMON GROUNDS. I. THAT THE ASSESSMENT ORDERS PASSED U/S 143(3) ARE ILLEGAL AND WRONG. II. THAT THE ADDITION MADE AND SUSTAINED AT RS.3,03 ,410/- AND RS.6,07,753/-, RESPECTIVELY, IS ILLEGAL AND WITHOUT CONSIDERATION OF MATERIAL FACTS/RECORD III. THAT THE ADDITION OF RS.24,000/- EACH ON ACCOU NT OF HOUSEHOLD EXPENSES IS ALSO UNJUSTIFIED AND WITHOUT CONSIDERATION OF MATERIAL FACTS. 2. DURING HEARING OF THESE APPEALS, THE LD. COUNSEL FOR THE ASSESSEE SHRI H.P. VERMA ALONG WITH SHRI GIRISH AGRAWAL DID NOT PRESS GROUND NO. 1, THEREFORE, THIS GROUND IS DISMISSED AS NOT PRESS ED. 3. SO FAR AS GROUND NO. 2 IS CONCERNED, THE CONTENT ION RAISED ON BEHALF OF THE ASSESSEE IS THAT AD HOC DISALLOWANCE WAS MADE BY THE LEARNED ASSESSING OFFICER AS THE RESPECTIVE ASSESSE ES WERE UNDER A 3 BONAFIDE BELIEF THAT NET PROFIT AT THE RATE OF 8% O F GROSS RECEIPTS WILL MEET THE ENDS OF JUSTICE, CONSIDERING THE NATURE OF BUSI NESS, THEREFORE, THE AD- HOC DISALLOWANCE AT THE RATE OF 20% OF THE EXPENSES IS QUITE UNJUSTIFIED. ON THE OTHER HAND, THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE DEFENDED THE IMPUGNED ORDERS BY SUBMITTING THAT SIN CE THE ASSESSEES ARE NOT MAINTAINING PROPER BOOKS OF ACCOUNTS, THERE FORE, THERE WAS NO ALTERNATIVE WITH THE ASSESSING OFFICER BUT TO MAKE THE DISALLOWANCE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RE CORD. BRIEF FACTS ARE THAT THE ASSESSEES ARE SENIOR CITIZENS, ARE NOT MAI NTAINING BOOKS OF ACCOUNTS. SHRI NARAINDAS BHATIA DECLARED TOTAL INC OME OF RS.1,86,160/- AND SMT. SHEELA BHATIA DECLARED TOTAL INCOME OF RS. 1,26,660/- IN THEIR RESPECTIVE RETURNS FILED ON 28.7.2007 AND 28.10.200 7, RESPECTIVELY. THE ASSESSEES ARE HUSBAND AND WIFE AND ARE RUNNING VEHI CLES LIKE 3 TATA BUS AND 2 SUMO JEEP DECLARED INCOME THEREFROM ON ES TIMATE BASIS. THE ASSESSEES WERE ASKED BY THE ASSESSING OFFICER T O FURNISH THE TENTATIVE INCOME AND EXPENDITURE ACCOUNTS OF THESE VEHICLES ALONG WITH SOURCE OF INVESTMENT. AS PER THE REVENUE, NO REPLY WAS FILED TO THE QUERY RAISED. THEREFORE, THE ASSESSING OFFICER DISALLOWE D 20% OF EXPENSES CLAIMED BY THE ASSESSEES WHICH WORKED OUT TO RS.3,0 3,410/- AND RS.6,07,753/- WHICH WERE TREATED AS UNDISCLOSED INC OME FROM RUNNING OF VEHICLES AND ADDED TO THE TOTAL INCOME OF THESE ASS ESSEES AGAINST THE 4 INCOME SHOWN AT THE RATE OF 8% BY THESE ASSESSEES, AS PER THE PROVISIONS OF SECTION 44AD OF THE ACT. ON APPEAL, A DDITIONS WERE CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS UNDER CHALLENGED BEFORE THE TRIBUNAL. BEFORE COM ING TO ANY CONCLUSION WE ARE REPRODUCING HEREUNDER THE PROVISI ONS OF SECTION 44AD OF THE ACT :- 65 SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS O F BUSINESS OF CIVIL CONSTRUCTION, ETC. 44AD. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONT AINED IN SECTIONS 28 TO 43C , IN THE CASE OF AN ASSESSEE ENGAGED IN THE BUSINES S OF CIVIL CONSTRUCTION OR SUPPLY OF LABOUR FOR CIVIL CONSTRUC TION, A SUM EQUAL TO EIGHT PER CENT OF THE GROSS RECEIPTS PAID OR PAYABL E TO THE ASSESSEE IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS OR, A S THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SUM AS DECLARED BY TH E ASSESSEE IN HIS RETURN OF INCOME, SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL A PPLY IN CASE THE AFORESAID GROSS RECEIPTS PAID OR PAYABLE EXCEED AN AMOUNT OF FORTY LAKH RUPEES. (2) ANY DEDUCTION ALLOWABLE UNDER THE PROVISIONS 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 : 66 [ PROVIDED THAT WHERE THE ASSESSEE IS A FIRM, THE SALARY AND I NTEREST PAID TO ITS PARTNERS SHALL BE DEDUCTED FROM THE INCOME COMPUTED UNDER SUB- SECTION (1) SUBJECT TO THE CONDITIONS AND LIMITS SP ECIFIED IN CLAUSE ( B ) OF SECTION 40 .] (3) THE WRITTEN DOWN VALUE OF ANY ASSET USED FOR TH E PURPOSE OF THE BUSINESS REFERRED TO IN SUB-SECTION (1) SHALL BE DEEMED TO H AVE BEEN CALCULATED AS IF THE ASSESSEE HAD CLAIMED AND HAD BEEN ACTUALL Y ALLOWED THE DEDUCTION IN RESPECT OF THE DEPRECIATION FOR EACH O F THE RELEVANT ASSESSMENT YEARS. (4) THE PROVISIONS OF SECTIONS 44AA AND 44AB SHALL NOT APPLY IN SO FAR AS THEY RELATE TO THE BUSINESS REFERRED TO IN SUB-SECTION ( 1) AND IN COMPUTING THE MONETARY LIMITS UNDER THOSE SECTIONS, THE GROSS RECEIPTS OR, AS THE CASE MAY BE, THE INCOME FROM THE SAID BUSINESS SHAL L BE EXCLUDED. 67 [(5) NOTHING CONTAINED IN THE FOREGOING PROVISIONS OF THIS SECTION SHALL APPLY, WHERE THE ASSESSEE CLAIMS AND PRODUCES EVIDENCE TO PROVE THAT THE PROFITS AND GAINS FROM THE AFORESAID BUSINESS DURIN G THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 5 1997 OR ANY EARLIER ASSESSMENT YEAR, ARE LOWER THAN THE PROFITS AND GAINS SPECIFIED IN SUB-SECTION (1), AND THEREUPON T HE ASSESSING OFFICER SHALL PROCEED TO MAKE AN ASSESSMENT OF THE TOTAL IN COME OR LOSS OF THE ASSESSEE AND DETERMINE THE SUM PAYABLE BY THE ASSES SEE ON THE BASIS OF ASSESSMENT MADE UNDER SUB-SECTION (3) OF SECTION 14 3.] 68 [(6) NOTWITHSTANDING ANYTHING CONTAINED IN THE FORE GOING PROVISIONS OF THIS SECTION, AN ASSESSEE MAY CLAIM LOWER PROFITS AND GA INS THAN THE PROFITS AND GAINS SPECIFIED IN SUB-SECTION (1), IF HE KEEPS AND MAINTAINS SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS REQUIRED UN DER SUB-SECTION (2) OF SECTION 44AA AND GETS HIS ACCOUNTS AUDITED AND FURNISHES A REPORT OF SUCH AUDIT AS REQUIRED UNDER SECTION 44AB .] EXPLANATION. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION CIVIL CONSTRUCTION INCLUDES ( A ) THE CONSTRUCTION OR REPAIR OF ANY BUILDING, BRIDG E, DAM OR OTHER STRUCTURE OR OF ANY CANAL OR ROAD; ( B ) THE EXECUTION OF ANY WORKS CONTRACT.] THE FOLLOWING SECTION 44AD SHALL BE SUBSTITUTED FO R THE EXISTING SECTION 44AD BY THE FINANCE (NO. 2) ACT, 2009, W.E. F. 1-4-2011 : SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS OF BUSINESS ON PRESUMPTIVE BASIS. 44AD. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONT AINED IN SECTIONS 28 TO 43C , IN THE CASE OF AN ELIGIBLE ASSESSEE ENGAGED IN AN ELIGIBLE BUSINESS, A SUM EQUAL TO EIGHT PER CENT OF THE TOTA L TURNOVER OR GROSS RECEIPTS OF THE ASSESSEE IN THE PREVIOUS YEAR ON AC COUNT OF SUCH BUSINESS OR, AS THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SUM CLAIMED TO HAVE BEEN EARNED BY THE ELIGIBLE ASSESSE E, SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGE ABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSI ON. (2) ANY DEDUCTION ALLOWABLE UNDER THE PROVISIONS 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 : PROVIDED THAT WHERE THE ELIGIBLE ASSESSEE IS A FIRM, THE SAL ARY AND INTEREST PAID TO ITS PARTNERS SHALL BE DEDUCTED FROM THE INCOME COMP UTED UNDER SUB- SECTION (1) SUBJECT TO THE CONDITIONS AND LIMITS SP ECIFIED IN CLAUSE ( B ) OF SECTION 40 . (3) THE WRITTEN DOWN VALUE OF ANY ASSET OF AN ELIGI BLE BUSINESS SHALL BE DEEMED TO HAVE BEEN CALCULATED AS IF THE ELIGIBLE ASSESSEE HA D CLAIMED AND HAD BEEN ACTUALLY ALLOWED THE DEDUCTION IN RESPECT OF T HE DEPRECIATION FOR EACH OF THE RELEVANT ASSESSMENT YEARS. (4) THE PROVISIONS OF CHAPTER XVII-C SHALL NOT APPL Y TO AN ELIGIBLE ASSESSEE IN SO FAR AS THEY RELATE TO THE ELIGIBLE BUSINESS. (5) NOTWITHSTANDING ANYTHING CONTAINED IN THE FOREG OING PROVISIONS OF THIS SECTION, AN ELIGIBLE ASSESSEE WHO CLAIMS THAT HIS P ROFITS AND GAINS FROM THE ELIGIBLE BUSINESS ARE LOWER THAN THE PROFITS AN D GAINS SPECIFIED IN SUB-SECTION (1) AND WHOSE TOTAL INCOME EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX, SHALL BE REQ UIRED TO KEEP AND 6 MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS REQUIRED UNDER SUB-SECTION (2) OF SECTION 44AA AND GET THEM AUDITED AND FURNISH A REPORT OF SUCH AUDIT AS REQUIRED UNDER SE CTION 44AB. EXPLANATION. FOR THE PURPOSES OF THIS SECTION, ( A ) ELIGIBLE ASSESSEE MEANS, ( I ) AN INDIVIDUAL, HINDU UNDIVIDED FAMILY OR A PARTNE RSHIP FIRM, WHO IS A RESIDENT, BUT NOT A LIMITED LIABILITY PARTNERSHIP FIRM AS DEFINED UNDER CLAUSE ( N ) OF SUB-SECTION (1) OF SECTION 2 OF THE LIMITED LI ABILITY PARTNERSHIP ACT, 2008 (6 OF 2009); AND ( II ) WHO HAS NOT CLAIMED DEDUCTION UNDER ANY OF THE SE CTIONS 10A, 10AA, 10B, 10BA OR DEDUCTION UNDER ANY PROVISIONS O F CHAPTER VIA UNDER THE HEADING C . - DEDUCTIONS IN RESPECT OF CERTAIN INCOMES IN THE RELEVANT ASSESSMENT YEAR; ( B ) ELIGIBLE BUSINESS MEANS, ( I ) ANY BUSINESS EXCEPT THE BUSINESS OF PLYING, HIRIN G OR LEASING GOODS CARRIAGES REFERRED TO IN SECTION 44AE; AND ( II ) WHOSE TOTAL TURNOVER OR GROSS RECEIPTS IN THE PRE VIOUS YEAR DOES NOT EXCEED AN AMOUNT OF FORTY LAKH RUPEES. DURING HEARING, THE LEARNED SENIOR DR CONTENDED THA T SECTION 44AE OF THE ACT IS APPLICABLE, THEREFORE, WE ARE REPRODUCIN G UNDERUNDER SECTION 44AE OF THE ACT ALSO :- SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS O F BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES. 44AE. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONT AINED IN SECTIONS 28 TO 43C , IN THE CASE OF AN ASSESSEE, WHO OWNS NOT MORE THAN TEN GOODS CARRIAGES 70 [AT ANY TIME DURING THE PREVIOUS YEAR] AND WHO IS ENGAGED IN THE BUSINESS OF PLYING, HIRIN G OR LEASING SUCH GOODS CARRIAGES, THE INCOME OF SUCH BUSINESS C HARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS O R PROFESSION SHALL BE DEEMED TO BE THE AGGREGATE OF THE PROFITS AND GAINS, FROM ALL THE GOODS CARRIAGES OWNED BY HIM IN THE PREVIOU S YEAR, COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SUB-S ECTION (2). (2) FOR THE PURPOSES OF SUB-SECTION (1), THE PROFIT S AND GAINS FROM EACH GOODS CARRIAGE, (I) BEING A HEAVY GOODS VEHICLE, SHALL BE AN AMOU NT EQUAL TO 71 [THREE THOUSAND FIVE HUNDRED] RUPEES FOR EVERY MONTH OR PA RT OF A MONTH DURING WHICH THE HEAVY GOODS VEHICLE IS OWNED BY TH E ASSESSEE IN THE PREVIOUS YEAR OR, AS THE CASE MAY BE, AN AMOUNT HIGHER THAN THE AFORESAID AMOUNT AS DECLARED BY HIM IN HIS RETU RN OF INCOME; (II) OTHER THAN A HEAVY GOODS VEHICLE, SHALL BE AN AMOUNT EQUAL TO 72 [THREE THOUSAND ONE HUNDRED AND FIFTY] RUPEES FOR EVERY MO NTH OR PART OF A MONTH DURING WHICH THE GOODS CARRIAGE IS OWNED BY THE ASSESSEE 7 IN THE PREVIOUS YEAR OR, AS THE CASE MAY BE, AN AMO UNT HIGHER THAN THE AFORESAID AMOUNT AS DECLARED BY HIM IN HIS RETU RN OF INCOME. THE FOLLOWING SUB-SECTION (2) SHALL BE SUBSTITUTED FOR THE EXISTING SUB-SECTION (2) OF SECTION 44AE BY THE FINANCE (NO. 2) ACT, 2009, W.E.F. 1-4-2011 : (2) FOR THE PURPOSES OF SUB-SECTION (1), THE PROFIT S AND GAINS FROM EACH GOODS CARRIAGE, (I) BEING A HEAVY GOODS VEHICLE, SHALL BE AN AMOUN T EQUAL TO FIVE THOUSAND RUPEES FOR EVERY MONTH OR PART OF A MONTH DURING WHICH THE HEAVY GOODS VEHICLE IS OWNED BY THE ASSESSEE IN THE PREVIOUS YEAR OR AN AMOUNT CLAIMED TO HAVE BEEN ACTUALLY EAR NED FROM SUCH VEHICLE, WHICHEVER IS HIGHER; (II) OTHER THAN A HEAVY GOODS VEHICLE, SHALL BE AN AMOUNT EQUAL TO FOUR THOUSAND FIVE HUNDRED RUPEES FOR EVERY MONTH OR PAR T OF A MONTH DURING WHICH THE GOODS CARRIAGE IS OWNED BY THE ASS ESSEE IN THE PREVIOUS YEAR OR AN AMOUNT CLAIMED TO HAVE BEEN ACT UALLY EARNED FROM SUCH VEHICLE, WHICHEVER IS HIGHER. (3) ANY DEDUCTION ALLOWABLE UNDER THE PROVISIONS OF SECTIONS 30 TO 38 SHALL, FOR THE PURPOSES OF SUB-SECTION (1), BE DEE MED TO HAVE BEEN ALREADY GIVEN FULL EFFECT TO AND NO FURTHER DE DUCTION UNDER THOSE SECTIONS SHALL BE ALLOWED : 73 [ PROVIDED THAT WHERE THE ASSESSEE IS A FIRM, THE SALARY AND INTEREST PAID TO ITS PARTNERS SHALL BE DEDUCTED FRO M THE INCOME COMPUTED UNDER SUB-SECTION (1) SUBJECT TO THE CONDI TIONS AND LIMITS SPECIFIED IN CLAUSE (B) OF SECTION 40 .] (4) THE WRITTEN DOWN VALUE OF ANY ASSET USED FOR TH E PURPOSE OF THE BUSINESS REFERRED TO IN SUB-SECTION (1) SHALL BE DE EMED TO HAVE BEEN CALCULATED AS IF THE ASSESSEE HAD CLAIMED AND HAD BEEN ACTUALLY ALLOWED THE DEDUCTION IN RESPECT OF THE DE PRECIATION FOR EACH OF THE RELEVANT ASSESSMENT YEARS. (5) THE PROVISIONS OF SECTIONS 44AA AND 44AB SHALL NOT APPLY IN SO FAR AS THEY RELATE TO THE BUSINESS REFERRED TO IN S UB-SECTION (1) AND IN COMPUTING THE MONETARY LIMITS UNDER THOSE SECTIO NS, THE GROSS RECEIPTS OR, AS THE CASE MAY BE, THE INCOME FROM TH E SAID BUSINESS SHALL BE EXCLUDED. 74 [(6) NOTHING CONTAINED IN THE FOREGOING PROVISIONS OF THIS SECTION SHALL APPLY, WHERE THE ASSESSEE CLAIMS AND PRODUCES EVIDENCE TO PROVE THAT THE PROFITS AND GAINS FROM THE AFORESAID BUSINESS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR C OMMENCING ON THE 1ST DAY OF APRIL, 1997 OR ANY EARLIER ASSESSMEN T YEAR, ARE LOWER THAN THE PROFITS AND GAINS SPECIFIED IN SUB-S ECTIONS (1) AND (2), AND THEREUPON THE ASSESSING OFFICER SHALL PROC EED TO MAKE AN ASSESSMENT OF THE TOTAL INCOME OR LOSS OF THE AS SESSEE AND DETERMINE THE SUM PAYABLE BY THE ASSESSEE ON THE BA SIS OF ASSESSMENT MADE UNDER SUB-SECTION (3) OF SECTION 143 .] 75 [(7) NOTWITHSTANDING ANYTHING CONTAINED IN THE FORE GOING PROVISIONS OF THIS SECTION, AN ASSESSEE MAY CLAIM L OWER PROFITS AND GAINS THAN THE PROFITS AND GAINS SPECIFIED IN SUB-S ECTIONS (1) AND 8 (2), IF HE KEEPS AND MAINTAINS SUCH BOOKS OF ACCOUN T AND OTHER DOCUMENTS AS REQUIRED UNDER SUB-SECTION (2) OF SECTION 44AA AND GETS HIS ACCOUNTS AUDITED AND FURNISHES A REPORT OF SUCH AUDIT AS REQUIRED UNDER SECTION 44AB .] EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) THE EXPRESSIONS GOODS CARRIAGE 76 AND HEAVY GOODS VEHICLE 76 SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO TH EM IN SECTION 2 OF THE MOTOR VEHICLES ACT, 1988 (59 OF 1988); (B) AN ASSESSEE, WHO IS IN POSSESSION OF A GOODS C ARRIAGE, WHETHER TAKEN ON HIRE PURCHASE OR ON INSTALMENTS AND FOR WHICH TH E WHOLE OR PART OF THE AMOUNT PAYABLE IS STILL DUE, SHALL BE DEEMED TO BE THE OWNER OF SUCH GOODS CARRIAGE.] IF THE AFORESAID PROVISIONS ARE ANALYSED, SECTION 44AD OF THE ACT SPEAKS ABOUT WHERE AN ASSESSEE IS ENGAGED IN TH E BUSINESS OF CIVIL CONSTRUCTION OR SUPPLY OF LABOUR FOR CIVIL CONSTRUC TION, A SUM EQUAL TO 8% OF THE GROSS RECEIPTS PAID OR PAYABLE TO THE ASSESS EE, IN THE PREVIOUS YEAR, SHALL BE DEEMED TO BE PROFITS AND GAINS OF SUCH BUSINESS, SUBJECT TO THE AMOUNT OF RS.40 LACS WHEREAS SECTION 44AE OF THE ACT IS APPLICABLE WHERE THE ASSESSEE OWNS NOT MORE THAN 10 GOODS CARRIAGE AND IS ENGAGED IN THE BUSINESS OF PLYING, HIRING OR LEASING SUCH GOODS CARRIAGES. IN THE PRESENT APPEAL, THE VEHICLES RUN BY THE RESPECTIVE ASSESSEES ARE NOT THE GOODS CARRIAGES, THEREFORE, S ECTION 44AE IS NOT APPLICABLE. IF THE ASSESSMENT ORDER IS ANALYSED, T HE LEARNED ASSESSING OFFICER EVEN CALLED FOR TENTATIVE INCOME AND EXPEN DITURE ACCOUNT VIDE HIS LETTER DATED 3 RD NOVEMBER, 1999 BEFORE COMPLETING THE ASSESSMENT. IT IS ALSO AN UNDISPUTED FACT THAT THE LEARNED ASSE SSING OFFICER MADE AD HOC DISALLOWANCE OF EXPENSES AT THE RATE OF 20% WHI CH RESULTED INTO NET PROFIT RATE OF 19.3% ON THE GROSS RECEIPTS (AFTER DEPRECIATION). THE 9 FINANCE (NO. 2) ACT OF 2009 EXTENDS THE SCHEME OF T AXATION OF INCOME ON PRESUMPTIVE BASIS TO ALL SMALL BUSINESSMEN (OTHE R THAN TRANSPORT), CONSEQUENTLY AMENDMENT WAS CARRIED OUT AND SECTION 44AD WAS SUBSTITUTED TO ENLARGE THE AMBIT OF PRESUMPTIVE TAX ATION. HOWEVER, THE ASSESSING OFFICER WHILE MAKING AN ASSESSMENT, TO TH E BEST OF HIS JUDGMENT, IN THE ABSENCE OF BOOKS OF ACCOUNTS, IS A LSO BOUND TO FOLLOW STRICT JUDICIAL PRINCIPLES AND MUST BE GUIDED BY RU LES OF JUSTICE, EQUITY AND GOOD CONSCIENCE. THEREFORE, IT IS INCUMBENT UPON T HE ASSESSING OFFICER TO RESORT TO ESTIMATE THE PROFIT IN A JUST AND REAS ONABLE MANNER. ADMITTEDLY, IN THE ABSENCE OF MAINTENANCE OF BOOKS OF ACCOUNTS THE ASSESSING OFFICER IS ALSO HAVING NO OTHER OPTION BU T TO ESTIMATE. THEREFORE, TO MEET THE ENDS OF JUSTICE AND KEEPING IN VIEW NATURE OF BUSINESS IN WHICH OVERHEAD EXPENSES, ACCIDENTS, ACC IDENT CLAIMS, SALARY TO STAFF, FUEL EXPENSES, MAINTENANCE OF VEHI CLES, ETC. ARE NECESSARILY TO BE INCURRED, THEREFORE, WE THINK IT APPROPRIATE TO RESTRICT THE DISALLOWANCE AT 10%. IN PLACE OF 20% ESTIMATED BY THE ASSESSING OFFICER WHICH WAS CONFIRMED IN APPEAL BY THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS), THEREFORE, THIS GROUND OF THE ASSESSEES IS PARTLY ALLOWED. 4. AS FAR AS THE WITHDRAWALS FOR HOUSEHOLD EXPENSE S ARE CONCERNED, KEEPING IN VIEW THE ARGUMENTS ADVANCED B Y THE RESPECTIVE COUNSELS, THE TOTAL WITHDRAWALS MADE BY THE ASSESSE ES ARE 10 RS.1,20,000/- (RS. 60,000/- EACH). THE LEARNED ASS ESSING OFFICER ESTIMATED THE ADDITION OF RS. 24,000/- EACH ON AD H OC BASIS. HOWEVER, IT WAS ASSERTED THAT THERE IS NO SCHOOL OR COLLEGE GOI NG CHILD AND THEIR LIFE IS VERY SIMPLE. BOTH THE ASSESSEES ARE HUSBAND AN D WIFE AND OWNING THEIR OWN HOUSE, THEREFORE, WE ARE OF THE VIEW THAT THE WITHDRAWALS ARE SUFFICIENT TO MEET OUT THEIR HOUSEHOLD EXPENSES, CO NSEQUENTLY, THIS GROUND OF THE ASSESSEE IS ALLOWED. FINALLY, THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT IN THE PRE SENCE OF LEARNED REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF HEARING ON 2 ND DECEMBER, 2010. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 02.12.2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE DN/- 11