Shri Satyanarayan Sharma, Indore V. THE ITO WARD 4(1), Indore

ITA 258/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6009 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 21-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO.258/IND/2016 A.Y. : 2010-11 SHRI SATYANARAYAN SHARMA, ITO, WD. 4(1), 396, USHA NAGAR EXTN., VS INDORE. INDORE. APPELLANT RESPONDENT PAN NO. ADSPS8232R A PPELLANT BY : SHRI RAJESH MEHTA, CA RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 31.12.2015 FOR THE ASSE SSMENT YEAR 2010-11. DATE OF HEARING : 25.05.2016 DATE OF PRONOUNCEMENT : 09 .0 6 . 201 6 SHRI SATYANARAYAN SHARMA, INDORE VS. ITO, WD. 4(1), INDORE I.T.A.NO. 258/IND/2016 A.YT. 2010-11 2 2 2. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS GROUND NO. 1, WHICH READS AS UNDER :- THAT THE AGGREGATE ADDITION OF RS. 3,00,000/- TO THE INCOME HAS BEEN DONE WITHOUT AFFORDING ANY ,OPPORTUNITY OF HEARING AND WITHOUT ANY BASIS, IS ILLEGAL, WRONG, BAD IN LAW AND HENCE LIABLE TO BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL DERIVES INCOME FROM TRADING IN SCRAP OF GLASS DURING THE YEAR. THE ASSESSEE FILED RETURN OF INCOME FOR T HE ASSESSMENT YEAR 2010-11 ON 23.09.2010 DECLARING TOT AL INCOME OF RS. 5,91,650/-. THE AO PASSED THE ASSESS MENT ORDER U/S 143(3) OF THE INCOME-TAX ACT, 1961, BY MA KING ADDITIONS OF RS. 4,38,593/-TO THE RETURNED INCOME O UT OF WHICH RELIEF OF RS. 63,296/-HAS BEEN GRANTED BY THE LD. CIT(A). THE ASSESSEE HAS CHALLENGED THE ADDITION MADE ON AC COUNT OF FREIGHT RECEIVED OF RS. 3,00,000/-. THE AO HAS ERRE D IN TREATING THE FREIGHT RECEIVED AS INCOME OF THE ASSESSEE. SHRI SATYANARAYAN SHARMA, INDORE VS. ITO, WD. 4(1), INDORE I.T.A.NO. 258/IND/2016 A.YT. 2010-11 3 3 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS CONFIRMED THE ADDITION OF RS. 3,00,000/- BY OBS ERVING AS UNDER :- 3. GROUND NO. 1 IS GENERAL IN NATURE AND GROUND NO.2 HAS BEEN RAISED AGAINST THE ADDITION OF RS. 3 LACS ON ACCOUNT OF INCOME FROM THE REIMBURSEMENT OF THE FREIGHTS. THE AO HAS DISCUSSED THE ISSUE AT PAGE 2 OF THE ASSESSMENT ORDER WHEREIN IT HAS BEEN BROUGHT OUT THAT THE APPELLANT DURING THE RELEVANT ASSESSMENT YEAR HAS RECEIVED FREIGHT OF RS. 55,15,312/- AND CLAIMED REFUND OF RS. 44,110/- OUT OF THE TDS MADE ON FREIGHT RECEIVED. HOWEVER, FROM PERUSAL OF THE ASSESSMENT RECORD, IT WAS OBSERVED THAT THE ELEMENT OF PROFIT ON ACCOUNT OF FREIGHT RECEIPT/REIMBURSED HAVE NOT BEEN REFLECTED BY THE APPELLANT. SINCE THE APPELLANT HAD FAILED TO FILE ANY COGENT REASONS TO EXPLAIN AS TO WHY THE INCOME ON ACCOUNT OF FREIGHT CHARGES WAS NOT SHRI SATYANARAYAN SHARMA, INDORE VS. ITO, WD. 4(1), INDORE I.T.A.NO. 258/IND/2016 A.YT. 2010-11 4 4 REFLECTED, THE AO MADE AN ADDITION OF RS. 3 LACS ON THIS ACCOUNT. DURING THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT HAS FILED THE WRITTEN SUBMISSIONS WHICH HAVE BEEN CONSIDERED. AFTER TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS CONCLUDED THAT THE APPELLANT HAS FAILED TO CONTROVERT THE FINDINGS OF AO IN NOT EXPLAINING THE PROFIT ELEMENT OF TRUCK FREIGHTS. THEREFORE, THE AO HAS BEEN FOUND JUSTIFIED IN MAKING REASONABLE ADDITION OF RS. 3 LACS ON THE TOTAL RECEIPT OF RS. 55.15 LACS. THEREFORE, THE ADDITION IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT THE AO HAS ERRED IN TREATING THE FRE IGHT RECEIVED AS INCOME OF THE ASSESSEE AND CIT(A) ERRED IN CONFIRMING THE SAME. THE ASSESSEE DEALS IN THE BUSI NESS OF TRADING IN SCRAP OF GLASS AND HE IS NOT A TRANSPORT ER. THE AO HAS OVERLOOKED THE FACTS THAT THE ASSESSEE RECEIVED FREIGHT FROM THE SUPPLIER AS A REIMBURSEMENT FOR THE AMOUNT PAID BY SHRI SATYANARAYAN SHARMA, INDORE VS. ITO, WD. 4(1), INDORE I.T.A.NO. 258/IND/2016 A.YT. 2010-11 5 5 THE ASSESSEE TO THE TRUCK OWNERS. THUS, THERE WAS NO PROFIT ELEMENT IN THESE TRANSACTIONS AS THE ASSESSEE WAS O NLY THE MEDIATOR BETWEEN TRUCK OWNERS AND THE SUPPLIERS. THE ASSESSEE RECEIVED FREIGHT ON ONE HAND AND PAID ON T HE OTHER HAND AND THUS, THE ADDITION OF RS. 3,00,000/- IS AR BITRARY, ILLEGAL, WRONG AND NEED TO BE DELETED. 5. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE AO HAS FAILED TO APPRECIATE THE BOOKS OF ACCOUN TS, WHICH WERE DULY AUDITED BY A CHARTERED ACCOUNTANT. THE AO HAS ERRED IN TREATING THE FREIGHT AS INCOME OF THE ASSE SSEE AND LD. CIT(A) HAS CONFIRMED THE SAME. I FIND THAT THE FREI GHT WAS PAID BY THE ASSESSEE TO THE TRUCK OWNERS ON BEHALF OF THE SUPPLIER, WHICH WAS REIMBURSED BY THE SUPPLIER TO THE ASSESSEE. THEREFORE, THERE WILL BE NO PROFIT ELEMENT IN FREIGH T RECEIVED AND PAID. THEREFORE, I HOLD THAT THE ADDITION ON AC COUNT OF FREIGHT IS ILLEGAL AND WRONG. I REVERSE THE ORDER OF THE CIT(A) ON SHRI SATYANARAYAN SHARMA, INDORE VS. ITO, WD. 4(1), INDORE I.T.A.NO. 258/IND/2016 A.YT. 2010-11 6 6 THIS GROUND. THE ADDITION OF RS. 3,00,000/- MADE ON ACCOUNT OF FREIGHT RECEIVED IS DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 9 TH JUNE, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 9 TH JUNE, 2016. CPU* 6