Shri Babulal K.Daga, Ahmedabad V. The ACIT.,Circle-9, Ahmedabad

ITA 2638/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51050 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 30-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PF JAIN
• Section: 143(3); 250

Judgement Text

, , . .. . . .. . , , , , ! ! ! ! ' '' '# ## # ' ' ' '. .. .$ #$ $ #$ $ #$ $ #$ , %& ' %& ' %& ' %& ' % ! % ! % ! % ! IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD BEFORE HONBLE SHRI G.C.GUPTA, V.P. & HONBLE SHRI A.MOHAN ALANKAMONY, A.M.) # # # #. ITA NO. 2638 / AHD./2009 : ()- 2006-2007 BABULAL K. DAGA, AHMEDABAD -VS- ACIT, CIRCLE-9, AHMEDABAD (,- /APPELLANT) ( ./,- /RESPONDENT ) (PAN : ADQPD 8962R) ,- 0 1 % / APPELLANT BY : SHRI P.F.JAIN, A.R. ./,- 0 1 % / RESPONDENT BY : SHRI VINOD TANWANI, SR.D.R. 2 0 34& / DATE OF HEARING : 30/11/2011 5$( 0 34& / DATE OF PRONOUNCEMENT : 16/12/2011 %6 %6 %6 %6 / ORDER PER SHRI A. MOHAN ALANKAMONY, A.M. : THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XV, AHMEDABAD I N APPEAL NO.CIT(A)- XV/ACIT/CIR.9/317/08-09 DATED 22.07.2009 FOR THE AS SESSMENT YEAR 2006-2007 PASSED UNDER SECTION 250 R.W.S.143(3) OF THE I.T. A CT, 1961. 2. THE ASSESSEE HAS RAISED THREE REVISED GROUNDS I N HIS APPEAL. GROUND NOS. 2 AND 3 ARE GENERAL IN NATURE AND DO NOT SURVIVE FOR ADJU DICATION. THE GROUND NO.1 IS REPRODUCED AS FOLLOWS: 1. THE LEARNED C. I. T. (APPEALS) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ESTIMATED ADDITION OF RS. 14,60,450/- MADE BY T HE ASSESSING OFFICER @ 1.5 % OUT OF MAJOR EXPENDITURE UNDER THE HEAD FREIGHT ACC OUNT, TRIP EXPENSES, DIESEL EXPENSES, TYRE EXPENSES AND TRUCK EXPENSES AGGREGAT ING RS.9,73, 63, 349/- AS DETAILED IN PARA 2.4 OF THE ASSESSMENT ORDER AND PA RA 5 OF THE ORDER OF C.I.T.(APPEALS)WITHOUT APPRECIATING THE FACT THAT S IMILAR ADDITION MADE ON AD- HOC BASIS WAS DELETED BY THE C.I.T. (APPEALS) IN TH E EARLIER ASSESSMENTS. ITA NO. 2638-AHD-09 2 3. THE ASSESSEE IS A TRANSPORTER RUNNING BUSINESS I N THE NAME OF M/S. PORBANDAR ROADLINES HAVING ABOUT 70 TRUCKS. HE IS IN THIS BUS INESS FOR SEVERAL YEARS. THE ASSESSEE FILED HIS RETURN OF INCOME ON 02.02.2007 DECLARING TOTAL INCOME OF RS.69,27,336/- ALONGWITH AUDIT REPORT IN FORM NO.3CD. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED ON 31.12.2008 UNDER SECTIO N 143(3) OF THE ACT. ON 07.11.2006, A SURVEY WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE COURSE OF THE SURVEY, THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WERE IMPOUNDED VIDE ORDER UNDER SECTION 133A(3)(IA) OF THE ACT. DU RING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSEE HAD SHOWN UNDISCLOSED INC OME OF RS.77,01,958/- IN ADDITION TO HIS REGULAR INCOME AND PAID TAX ACCORDINGLY. HOW EVER, IN THE RETURN OF INCOME, THE ASSESSEE HAD FILED DECLARING A TOTAL INCOME OF RS.6 9,27,336/- ONLY. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE LD. A.O. MA DE THE ADDITION OF RS.14,60,450/- BEING 1.5% OF THE AGGREGATE CLAIM OF RS.9,73,63,349 /- ON EXPENSES RELATED TO FREIGHT ACCOUNT, TRIP EXPENSES, DIESEL EXPENSES, TYRE EXPEN SES AND TRUCK EXPENSES. THIS AD HOC ADDITION WAS MADE DUE TO FOLLOWING REASONS: I) THE EXPENDITURE WAS NOT VERIFIABLE. II) THE ASSESSEE DID NOT HAVE PROPER CONTROL OVER THE BUSINESS. III) THE BILLS/VOUCHERS MAINTAINED BY THE ASSESSEE COULD NOT BE RELIED UPON. IV) VERIFICATION OF EXPENSES WAS NOT POSSIBLE. V) MOST OF THESE EXPENSES WERE CASH PAYMENTS. VI) THERE WAS A POSSIBLE SUPPRESSION OF RECEIPTS, S INCE RETURN TRIPS WERE NOT ACCOUNTED. VII) THE WEAR AND TEAR OF TYRES WERE NOT VERIFIABLE . VIII) DURING THE COURSE OF SURVEY, THERE WAS A CLEA R FINDING BY THE REVENUE THAT THERE WERE UNPAID FREIGHT AND DEFECTS IN LIABI LITIES. IX) THERE WAS AN INFRACTION OF LAW DUE TO PENALTY L EVIED BY RTO AUTHORITIES. ITA NO. 2638-AHD-09 3 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT HE HAD PRODUCED ALL THE ACCOUNTS BEFORE THE AO IN REGARD TO THIS EXPENDITURE. THE NATURE OF EXPENDITURE REQUIRE D CERTAIN CASH PAYMENTS TO BE MADE TO DRIVERS AND LABOURERS ON THE BASIS OF SELF PREPA ID VOUCHERS . FURTHER THE ASSESSEE SUBMITTED THAT ALL THESE EXPENSES WERE WHOLLY AND E XCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS. THE ASSESSEE HAS FURTHER SUBMITTED A C OMPARATIVE CHART OF EXPENSES FOR THE LAST THREE YEARS. HOWEVER, NOT CONVINCED WITH THE R EPLY OF THE ASSESSEE, THE LD. CIT(A) UPHELD THE ADDITION MADE BY THE AO. 5. THE LD. A.R. SUBMITTED BEFORE US THAT THE ASSESS EE HAD INCURRED ALL THESE EXPENSES AND THEY WERE DULY ACCOUNTED AND AUDITED. HE FURTHER SUBMITTED THAT ALL THE VOUCHERS AND BILLS WERE PRODUCED BEFORE THE AUTHORI TIES AT VARIOUS STAGES. KEEPING IN VIEW OF THE NATURE OF EXPENSES, THE LD. A.R. PRAYED FOR THE DELETION OF THE ADDITION MADE ON ESTIMATE BASIS. THE LD. A.R. FURTHER PRODUC ED BEFORE US THE ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2003-04, WHEREIN FOR THE SIMILAR ADDITION MADE ON THE BASIS OF AD HOC DISALLOWANCE OF 1%, THE LD. CIT(A) HAD DULY DELETED THE ADDITION AND GRANTED RELIEF TO THE ASSESSEE. IT WAS, THEREFORE, PRAYED BY THE LD. A.R. THAT THE ADDITION MADE BY THE AO WHICH WAS FURTHER CONFIRMED BY THE L D. CIT(A) MAY BE DELETED. 6. THE LD. SR.D.R. VEHEMENTLY OPPOSED TO THE SUBMIS SIONS OF THE LD. A.R. AND SUBMITTED THAT SINCE EXPENSES INCURRED BY THE ASSES SEE WAS NOT VERIFIABLE AND KEEPING IN VIEW OF THE NATURE OF TRADING, THE ESTIMATE OF 1 .5% MADE BY THE LD. A.O. IS PROPER AND THEREFORE THE ORDER OF THE AO AND THE LD. CIT(A ) MAY BE UPHELD. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS EVID ENT THAT THE EXPENSES INCURRED BY THE ASSESSEE ARE NOT VERIFIABLE AND CANNOT BE RELIED UP ON COMPLETELY FROM THE BILLS AND VOUCHERS PRODUCED BEFORE THE REVENUE AUTHORITIES. T HERE IS EVERY POSSIBILITY OF CERTAIN ADJUSTMENTS MADE REMAINS TO BE UNDETECTED. HOWEVER, ON SIMILAR CIRCUMSTANCES FOR THE EARLIER ASSESSMENT YEAR 2003-04, THE LD. CIT(A) , AFTER CONSIDERING THE ISSUE, HAD DELETED SUCH ADDITION. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ITA NO. 2638-AHD-09 4 ARE OF THE CONSIDERED VIEW THAT AN AD HOC ADDITION OF 0.5% MAY BE MADE INSTEAD OF 1.5% MADE BY THE AO TO MEET THE ENDS OF JUSTICE. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 7 %6 0 5$( 8#) 16 / 12 /2011 $ 9 0 2 : SD/- SD/- (G.C.GUPTA) (A.MOHAN ALANKAMONY) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 16/12/2011 %6 %6 %6 %6 0 00 0 .3; .3; .3; .3; <%;(3) <%;(3) <%;(3) <%;(3)- -- - 1. ,- 2. ./,- 3. ## 3 @ 4. @- - 5. ;C .3 , , : 6. E F7 %6 %, / # , : TALUKDAR/ SR. P.S.