ITO 17(3)(2), MUMBAI V. KUSUM K. JAIN, MUMBAI

ITA 2062/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55805 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARTHSARTHI NAIK
• Assessee Lawyers: NARAYAN SARDA
• Keywords: Business income; Onus to prove
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, A, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND RAJENDRA SINGH(A .M ) ITA NO.2062/MUM/2010 (ASSESSMENT YEAR : 2006-07) INCOME TAX OFFICER 17(3)(2), ROOM NO.611, 6 TH FLOOR, PIRAMAL CHAMBERS, MUMBAI-400012. SMT.KUSUM K.JAIN, OFFICE NO.410, 4 TH FLOOR, CENTRAL FACILITY BUILDING 2, PHASE-2, APMC MARKET, SECTOR 19/C, VASHI, NAVI MUMBAI-400703 PAN:ADHPJ4418K APPELLANT V/S RESPONDENT DATE OF HEARING : 24.10.2011 DATE OF PRONOUNCEMENT : 28.10.2011 APPELLANT BY : SHRI PARTHSARTHI NAIK RESPONDENT BY : SHRI NARAYAN SARDA O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 29.12.2009 PASSED BY THE LD .CIT(A) FOR THE ASSESSMENT YEAR 2006-07. 2. AT THE TIME OF HEARING, THE ASSESSEE VIDE APPLIC ATION DATED 20.10.2011 SEEKS ADJOURNMENT. IN THE ABSENCE OF ANY ORIGINAL POWER OF ATTORNEY IN FAVOUR OF THE ASSESSE ES REPRESENTATIVE, THE REQUEST OF THE ASSESSEE FOR ADJ OURNMENT ITA NO.2062/MUM/2010 (ASSESSMENT YEAR : 2006-07) 2 WAS REJECTED BY THE BENCH AND IT WAS DECIDED TO DI SPOSE OF THE APPEAL ON MERITS AFTER HEARING THE LD. DR. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS AN INDIVIDUAL ENGAGED IN TRANSPORTATION BUSINESS AS COMMISSION AGENT. THE RETURN WAS FILED DECLARING TO TAL INCOME AT RS.4,10,470/-. THE AO NOTED THAT THE ASSE SSEE DISCLOSED TOTAL RECEIPTS OF RS.22,12,765/- AND N ET PROFIT AT RS.4,60,727/- WHICH HE WORKED OUT TO 20.82%. THE AO FURTHER NOTED THAT ACCORDING TO TDS CERTIFICATES ENCLOSED ALONG WITH RETURN OF INCOME THE GROSS AMOUNT WORKS OUT TO RS.3,78,83,413/-. THUS, ACCORDING TO THE AO, THE A SSESSEE DID NOT DISCLOSE THE GROSS RECEIPTS AND ONLY DISCLO SED THE COMMISSION INCOME. THE AO ISSUED LETTER U/S 133(6) TO SOME OF THE PARTIES. IN RESPONSE THEY HAVE CONFIRMED THA T FREIGHT CHARGES AS PER TDS HAS BEEN PAID TO THE ASSESSEE EI THER IN CASH OR BY CHEQUES. THE AO FURTHER OBSERVED THAT, T HE ASSESSEE PRODUCED ONLY REGISTER FOR RECEIPTS AND PA YMENTS OF TRANSPORT RECEIPTS. NO OTHER REGULAR BOOKS OF ACCOU NTS WERE PRODUCED. DURING THE ASSESSMENT PROCEEDINGS IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE IS ONLY COMMISSION AGENT, HENCE THE AMOUNT RECEIVED FROM TH E PARTIES ARE GROSS RECEIPTS OUT OF WHICH THE MAJOR P ORTION HAS BEEN PAID TO THE TRANSPORTERS BY WAY OF FREIGHT. TH E NET INCOME WAS DECLARED AT RS.4,60,727/- WHICH WORKED O UT TO ITA NO.2062/MUM/2010 (ASSESSMENT YEAR : 2006-07) 3 1.2% OF THE GROSS RECEIPT AS PER TDS CERTIFICATES. HOWEVER, THE ASSESSEE AGREED TO OFFER 2% OF SUCH GROSS AMOUN T AS INCOME FOR THE YEAR TO BYE PEACE. THE AO DID NOT A CCEPT THE SAME. THE AO, IN THE ABSENCE OF ANY REGULAR BOOKS OF ACCOUNTS AND VOUCHERS/BILLS, APPLIED THE NET PROFIT RATE AT 10% ON THE GROSS RECEIPTS OF RS.3,78,83,413/- AND W ORKED OUT THE BUSINESS INCOME AT RS.37,88,340/- AND AFTE R ALLOWING CERTAIN DEDUCTIONS COMPLETED THE ASSESSMENT AT AN I NCOME OF RS.37,38,080/- VIDE ORDER DATED 30.12.2008 PASSE D U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE AC T). 4. ON APPEAL, THE LD. CIT(A) WHILE HOLDING THAT THE ASSESSEE DID NOT DISCHARGE THE BURDEN TO PROVE THA T ALL THE EXPENSES INCLUDING THE PAYMENTS TO DRIVERS AND OTHE R INCIDENTALS AS REFLECTED IN THE REGISTER OF RECEIPT S AND PAYMENTS, ESTIMATED THE PROFIT AT RS.10,00,000/- O N GROSS COMMISSION INCOME OF RS.22,12,765/- AND GROSS RECEI PT OF RS.3,78,83,413/- WHICH WORKED OUT TO 2.6% OF THE G ROSS RECEIPTS AND 45% OF THE GROSS COMMISSION INCOME AND ACCORDINGLY SUSTAINED THE ADDITION OF RS.10,00,000/ - AS AGAINST THE BUSINESS INCOME ESTIMATED BY THE AO AT RS.37,88,340/- AND ACCORDINGLY PARTLY ALLOWED THE A PPEAL. ITA NO.2062/MUM/2010 (ASSESSMENT YEAR : 2006-07) 4 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US TAKING THE FOLLOWIN G GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ADOPT ESTIMATION OF INCOME @ 2.6% OF GROSS RECEIPT S THOUGH THERE IS NO LOGIC FOR REDUCING THE ESTIMATE BY THE LD. CIT(A); 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE A O BE RESTORED 6. AT THE TIME OF HEARING, THE LD. DR SUBMITS THAT FOR THE REASONS AS MENTIONED IN THE ASSESSMENT ORDER AND I N THE GROUNDS OF APPEAL, THE LD. CIT(A) WAS NOT JUSTIFIED IN REDUCING THE INCOME TO RS.10,00,000/- AS AGAINST RS.37,88,340/- ESTIMATED BY THE AO. HE, THEREFORE SUBMITS THAT THE ORDER PASSED BY THE AO BE RESTORED. 7. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE LD . DR AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE F IND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNTS INCLUDING BILLS/VOUCHERS OF EXPENSES, THER EFORE, THE AO WAS JUSTIFIED IN ESTIMATING THE INCOME OF THE A SSESSEE. HOWEVER, KEEPING IN VIEW THE FACTS THAT THE ASSESS EE IS A COMMISSION AGENT FOR TRANSPORT, DOES NOT OWN ANY VE HICLE, THE REGISTER CONTAINING RECEIPTS AND PAYMENTS OF T RANSPORT ITA NO.2062/MUM/2010 (ASSESSMENT YEAR : 2006-07) 5 RECEIPTS HAS BEEN PRODUCED BEFORE THE AO AS WELL AS DURING THE APPELLATE PROCEEDINGS, DETAILS OF EXPENS ES HAVE ALSO BEEN SUBMITTED, THE AO HAS NOT POINTED OUT AN Y DEFECT IN THE MAINTENANCE OF SAID REGISTER AND MERELY BECA USE, THE ASSESSEE HAS NOT PRODUCED THE VOUCHERS/BILLS, WE AR E OF THE VIEW THAT THE NET PROFIT RATE APPLIED BY THE AO AT 10% WITHOUT ANY BASIS IS HIGHLY EXCESSIVE AND THE LD. C IT(A) WAS FULLY JUSTIFIED IN ESTIMATING THE BUSINESS INCOME A T RS.10,00,000/- WHICH HE WORKED OUT TO ABOUT 2.6% O F THE GROSS RECEIPT AND 45% OF THE GROSS COMMISSION INCO ME. THIS BEING SO AND IN THE ABSENCE OF ANY OTHER CONTR ARY MATERIAL PLACED ON RECORD BY THE REVENUE AGAINST TH E FINDING OF THE LD. CIT(A), THE ORDER PASSED BY THE LD. CIT (A) IN ESTIMATING THE ASSESSEES INCOME AT RS.10,00,000/- AS AGAINST RS.37,88,340/- ESTIMATED BY THE AO DOES NO T CALL FOR ANY INTERFERENCE AND ACCORDINGLY, THE GROUNDS TAKEN BY THE REVENUE ARE REJECTED. 8. IN THE RESULT, THE REVENUE APPEAL STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH OCT., 2011. SD SD (RAJENDRA SINGH) (D .K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 28TH OCTOBER, 2011 ITA NO.2062/MUM/2010 (ASSESSMENT YEAR : 2006-07) 6 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI