JAGAN JAT, Jaipur V. ITO, BEHROR

ITA 301/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54264 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: SATISH GUPTA
• Keywords: Rejection of books of accounts

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH SMC JAIPUR (BEFORE SHRI N.L. KALRA, ACCOUNTANT MEMBER) ITA NO. 301/JP/2011 ASSESSMENT YEAR: 2005-06 PAN ADKPJ 2319 Q SHRI JAGAN JAT VS. THE ITO S/O SHRI MOOL CHAND JAT WARD- BEHROR PAOTA, TEHSIL KOTPUTLI, JAIPUR BEHROR (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI SATISH GUPTA DEPARTMENT BY: SHRI D.K. MEENA DATE OF HEARING: 22-11-2011 DATE OF PRONOUNCEMENT: 25-11-2011 ORDER THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) , ALWAR DATED 23-12-2010 FOR THE ASSESSMENT YEAR 2005-06. 2.1 THE FIRST GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 2,39,272/- IN COMMIS SION INCOME. 2.2 THE ASSESSEE IS EARNING INCOME FROM PLYING OF T RUCKS. DURING THE YEAR UNDER REFERENCE, THE ASSESSEE HAS TRANSPORTED THE GOODS O N BEHALF OF M/S. J.R. ROADLINES. SUCH TRANSPORTATION HAS BEEN DONE THROUGH HIS OWN TRUCKS AS WELL AS TRUCKS ENGAGED ON COMMISSION BASIS. THE AO OBTAINED INFORMATION FROM M/S. J.R. ROADLINES FROM WHICH IT WAS NOTICED THAT M/S. J.R. ROADLINES HAS ISSUED PAY MENTS IN RESPECT OF TRANSPORTATION FROM 09 TRUCKS. THE NUMBERS OF THESE 09 TRUCKS ARE AVAILABLE AT PAGE 2 OF THE ASSESSMENT ORDER. IN THE RETURN OF INCOME, THE ASSESSEE HAS SH OWN THE INCOME U/S 44AE OF THE ACT IN RESPECT OF RECEIPTS FROM HIS OWN TRUCKS. IT MEANS THAT THE ASSESSEE HAS NOT SHOWN ANY 2 RECEIPTS FROM OTHER TRUCKS. THE ASSESSEE STATED THA T HE IS NOT MAINTAINING THE BOOKS OF ACCOUNTS. IT WAS FURTHER STATED BY HIM THAT OTHER T RUCKS BELONGED TO HIS RELATIVES AND HE WAS OBTAINING RS. 100/- PER TRIP AS COMMISSION. THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT. THE STATEMENTS OF TWO TRUCKS OWNERS WERE ALSO RECOR DED BY THE AO IN WHICH THEY ADMITTED THAT THEY WERE PAYING RS. 100/- PER TRIP T O THE ASSESSEE. THE ASSESSEE FILED THE PROFIT AND LOSS ACCOUNT OF TRANSPORTATION COMMISSIO N AND LOSS OF RS. 1,247/- WAS SHOWN. THE AO IN THE ABSENCE OF BOOKS OF ACCOUNTS ESTIMATE D AN INCOME @ 10% ON THE RECEIPTS OF THE TRUCKS NOT BELONGING TO THE ASSESSEE. SUCH 1 0% WAS ESTIMATED AS COMMISSION RECEIVED FROM THE TRUCK OWNERS WHOSE TRUCKS WERE PR OVIDED FOR TRANSPORTATION THROUGH M/S. J.R. ROADLINES. 2.3 BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT NE T PROFIT RATE ON TRANSPORTATION IN THE CASE OF THE ASSESSEE IS ONLY 2.34%. IT WAS FURTHER SUBMITTED THAT TRIBUNAL HAS CONFIRMED THE NET PROFIT RATE OF 3.26% AND 2% IN TWO CONSECUT IVE YEARS. 2.4 THE LD. CIT(A) UPHELD THE REJECTION OF BOOKS OF ACCOUNTS. THE LD. CIT(A) HAS MENTIONED THAT ASSESSEE HAS NOT PRODUCED ANY EVIDEN CE THAT HE HAS PASSED ON RECEIPTS TO OTHER TRUCK OPERATORS. THE ADITION WAS CONFIRMED BY THE LD. CIT(A). 2.5 I HAVE HEARD BOTH THE PARTIES. THE COMMISSION W HICH HAS BEEN UPHELD BY THE AO IS EXCESSIVE AS THE TRUCK OWNERS HAVE ADMITTED IN T HEIR STATEMENT BEFORE THE AO THAT THEY WERE PAYING RS. 100/- PER TRIP AS COMMISSION. THE A O HAS NOT COLLECTED ANY EVIDENCE FOR APPLYING THE NET PROFIT RATE OF 10%. IT IS NOT THE CASE OF THE REVENUE THAT OTHER TRUCKS BELONGED TO THE ASSESSEE. IT WAS SUBMITTED BY THE A SSESSEE THAT THE TRUCKS BELONGED TO HIS RELATIVES. IN THE PROFIT AND LOSS ACCOUNT , THE ASS ESSEE HAS SHOWN THE TRANSPORTATION COMMISSION AT RS. 7,300/-. IT IS TRUE THAT THE BOOK S OF ACCOUNTS WERE NOT MAINTAINED AND 3 ONLY ESTIMATED COMMISSION HAS BEEN SHOWN. LOOKING T O THE EVIDENCE PLACED BEFORE THE AO, I FEEL THAT IT WILL BE FAIR AND REASONABLE TO E STIMATE THE COMMISSION AT RS. 15,000/-. 3.1 THE SECOND GROUND OF APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 1,10,579/- U/S 69 OF THE ACT. 3.2 BEFORE THE AO, THE ASSESSEE STATED THAT HE HAS INCURRED EXPENDITURE OF RS. 3,57,421/- ON TRUCK TROLLY AND RS. 62,000/- FOR CAB IN. NO VOUCHERS WERE PRODUCED IN RESPECT OF THESE EXPENSES. IN THE CASE OF SHRI OM PRAKASH GOYAL, THE INSPECTOR MADE ENQUIRIES TO ASCERTAIN THE EXPENDITURE INCURRED ON THE CABIN OF THE TRUCK AND TRUCK TROLLY. THE INSPECTOR IN HIS REPORT SUBMITTED IN THAT CASE THAT THE EXPENDITURE FOR MAKING CABIN COMES TO RS.60,000/- TO RS. 70,000/- WHILE EXPENDIT URE FOR MAKING TRUCK TROLLY COMES TO RS. 4.50 LACS TO RS. 4.75 LACS. THE AO ESTIMATED TH E EXPENDITURE ON MAKING THE CABIN AT RS. 62,000/- AND ESTIMATED THE EXPENDITURE ON TRUCK TROLLY AT RS. 4.65 LACS. THUS THE ADDITION OF RS. 1,10,579/- WAS MADE WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A). 3.3 I HAVE HEARD BOTH THE PARTIES. THE ISSUE BEFORE ME HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE OF BABU LAL JAT VS. ITO (ITA N O. 302 & 303/ JP/2011 DATED 14 TH OCT. 2011). IT WILL BE USEFUL TO REPRODUCE PARA 12 FROM THAT ORDER AS UNDER:- 12. AFTER CONSIDERING THE SUBMISSIONS AND PERUSIN G THE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS GROUND. UNDISPUTEDLY, THE REPORT OF THE INSPECTOR WAS NOT CONFRONTED TO THE ASSESSEE BEFORE DRAWING ANY ADVERSE INFERENCE. IT IS ALSO A MATTER OF FACT THAT THE REPORT OBTAINED THROUGH INSPECTOR WAS OBTAINED AFTER TWO YEARS OF FILING OF RETURN I.E. DURING ASSESSMENT PR OCEEDINGS AND WAS NOT OBTAINED FROM THE PERSON FROM WHOM THE TRUCKS WERE PURCHASED, RATHER THE REPORT WAS OBTAINED FROM THE OPEN MARKET TO ESTIMAT E THE INVESTMENT IN THE TRUCKS SHOWN BY ASSESSEE. THEREFORE, THERE IS NO D IRECT EVIDENCE AGAINST 4 ASSESSEE THAT ASSESSEE HAS INVESTED OVER AND ABOVE THE AMOUNT SHOWN IN THE BALANCE SHEET. THE HONBLE SUPREME COURT IN CA SE OF KISHNICHAND CHELA RAM, 125 ITR 713 (SC) HAS CLEARLY HELD THAT W ITHOUT CONFRONTING THE MATERIAL ON WHICH BASIS THE ADDITION HAS BEEN M ADE, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE PERSON AGAINST W HOM THE MATERIAL IS USED. ASSESSEE HAD FILED AFFIDAVIT SHOWING INVESTM ENT IN THE TRUCKS AND DETAILS OF INVESTMENT WAS ALSO MENTIONED IN THE AFF IDAVIT. CONTENTS OF THE AFFIDAVIT WERE NOT FOUND INCORRECT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. THEREFORE, IN OUR CONSIDERED VIEW THE ESTI MATE MADE BY AO IN RESPECT TO PURCHASE OF TWO TRUCKS AND A BOLERO JEEP OVER AND ABOVE THE INVESTMENT SHOWN BY ASSESSEE WAS NOT JUSTIFIED. AC CORDINGLY, THE ADDITION MADE BY AO AND CONFIRMED BY LD. CIT (A) AT RS. 6,81 ,764/- IS DELETED. THIS GROUND OF THE ASSESSEE IS ALLOWED. 3.4 FOLLOWING THE ORDER OF THE TRIBUNAL ON THIS ISS UE, I HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 1,1 0,579/-. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 25-1 1-2011. SD/- (N.L. KALRA) ACCOUNTANT MEMBER JAIPUR DATED: 25/11/2011 *MISHRA COPY FORWARDED TO:- 1. SHRI JAGAN JAT, PAOTA, TEHSIL: KOTPURLI DISTT JA IPUR 2.THE I.T.O. , WARD BEHROR BY ORDER 3.THE LD. CIT(A) 4.THE LD. CIT 5.THE LD. DR 6.THE GUARD FILE (I.T.A. NO 301/JP/11) A.R. ITAT: JAIPUR 5