THE ITO, 1 (2), V. SHRI RANDEEP SINGH SALUJA,

ITA 306/IND/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1453 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-11-2009
• Assessment Year: 1999-2000
• Appeal Filed On: 01-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S S SHEETAL
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGENDER SINGH, JM & SHRI V.K.GUPTA, AM ITA NO.306/IND/2006 AY: 2005-06 INCOME TAX OFFICER 1 (2), INDORE APPELLANT VS. M/S RANDEEP SINGH SALUJA PROP, GOLDEN EAGLE TRANSPORT 144, VISHNUPURI NX, INDORE PAN R-1024 RESPONDENT ASSESSEE BY S.S. SHEETAL, ADV DEPARTMENT BY SHRI T.K. SHAH, CIT, DR PER V.K.GUPTA, AM THIS APPEAL, FILED BY THE REVENUE, ARISES OUT OF OR DER OF LD. CIT DATED 27.02.2006 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PER USED THE MATERIAL ON RECORD. 3. THE FACTS, IN BRIEF, ARE THAT THE LD. COUNSEL FO R THE ASSESSEE, AT THE VERY OUTSET, SUBMITTED THAT GROUND NO. 1 TO 6 WERE IN R ESPECT OF ONLY ISSUE REGARDING ESTIMATION OF SALES, ESTIMATION OF NET P ROFIT THEREON @ 3.5% AND INVESTMENT IN UNACCOUNTED PURCHASES @ 10% OF SUCH PURCHASES. 2 4. THE LD COUNSEL, THEREAFTER, SUBMITTED THAT THIS ISSUE WAS DIRECTLY COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF M./S BALAJI LUBRICANT VS. ITO IN ITA 785/IND/04 FOR A,.Y 99-2000 ORDER D ATED 1.12.2006. THEREAFTER, HE CONTENTED THAT IN THAT CASE THE AO H ELD ESTIMATED SALES, NET PROFIT AND INVESTMENT IN UNACCOUNTED PURCHASES BASE D UPON THE ORDER OF SALES TAX OFFICER. WHICH WAS SUBSEQUENTLY REVISED B Y THE UPPER COMMISSIONER OF COMMERCIAL TAX INDORE VIDE ORDER DA TED 26.2.2005. THE TRIBUNAL, ACCORDINGLY, RESTORED THE MATTER TO THE A O TO VERIFY THE FACTS AS PER THE IMPUGNED ORDER AND TO WORK OUT THE UNDISCLOSED SALES ACCORDINGLY. THE TRIBUNAL ALSO DIRECTED THE AO TO ADOPT A NET PROFIT RATE OF 3.5% AND 10% FOR ESTIMATING THE UNDISCLOSED INVESTMENT IN THE UNRECO RDED PURCHASES. THE LD. COUNSEL AFTER THAT SUBMITTED THAT THE LD CIT(A) IN THE PRESENT CASE HAD PASSED THE ORDER AFTER TAKING INTO CONSIDERATION TH E FINAL ORDER PASSED BY ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES WHO HAD HELD THAT THERE WAS NO CASE OF TAX EVASION BY THE ASSESSEE AND THEREFOR E, THE VERY BASIS OF THE IMPUGNED ADDITIONS MADE BY THE A.O DID NOT EXIST. H E ALSO DREW OUT ATTENTION TO RELEVANT PAGES OF IMPUGNED TRIBUNAL OR DER AND APPELLATE ORDER. 5. THE LD DR, ON THE OTHER HAND, PLACED STRONG RELI ANCE ON THE ORDER OF AO. 3 6. WE HAVE CONSIDERED SUBMISSION MADE BY BOTH THE S IDES MATERIAL ON RECORD AND ORDER OF THE AUTHORITIES BELOW. IT IS N OTED THAT THE AO ESTIMATED THE SALE AND NET PROFIT THEREON ON THE BASIS OF ACT ION TAKEN BY ASSISTANT COMMISSIONER OF COMMERCIAL TAXES. ACCORDINGLY, HE E STIMATED THE SALES AT 15,75,00,000/- AND APPLIED NET PROFIT RATE OF 3.5% AFTER REJECTING THE BOOKS OF ACCOUNT U/S 145 (3) OF THE ACT. SUBSEQUENTLY, TH E ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES CANCELLED THE EARL IER ORDER OF THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES AND HELD THAT THERE WAS NO CASE OF TAX EVASION BY THE ASSESSEE. THE VALIDITY O F SUCH ORDER OF ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES HAS NOT BEEN DISPU TED BEFORE US. THUS, THE VERY BASIS OF IMPUGNED ADDITION HAS CEASED TO E XIT AND, THEREFORE, THE ORDER OF LD. CIT (A) IS CONFIRMED. 7. IN GROUND NO. 7, THE REVENUE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN HOLDING THAT INCOME OF RS.281303/- DECLAR ED BY THE ASSESSEE FROM TRANSPORT BUSINESS WAS TO BE ACCEPTED. 8. THE FACTS, IN BRIEF, ARE THAT ASSESSEE IS ALSO E NGAGED IN THE BUSINESS OF TRANSPORTATION. THE AO FOUND THAT ASSESSEE HAD CLAI MED INTEREST PAYMENT AND HAS ALSO MADE PAYMENT TO PERSON COVERED U/S 40A (2)(B) ON ACCOUNT OF TRUCK HIRED FROM SUCH PERSONS. THE AO ALSO HELD THA T VARIOUS EXPENSES WERE NOT FULLY VERIFIABLE AND NOT INDEPENDENT RECORDS OF TRUCK WISE RECEIPT HAD 4 BEEN KEPT, HENCE, HE, AFTER INVOKING PROVISION OF S ECTION 145 (3) OF THE ACT ESTIMATED NET INCOME FROM TRANSPORTATION AT 5% OF N ET ESTIMATED RECEIPTS OF RS. 1,29,10000/-. AGGRIEVED BY THIS, THE ASSESSEE P REFERRED IN APPEAL BEFORE THE LD CIT (A) WHEREIN IT WAS CONTENDED THAT BOOKS OF ACCOUNT AND OTHER RECORED WERE IN THE POSSESSION OF COMMERCIAL TAX DE PARTMENT/ CBI, HENCE, COULD NOT BE PRODUCED AND, THEREFORE, NO ADVERSE IN FERENCE COULD BE DRAWN AGAINST THE ASSESSEE AND CONSEQUENTLY, THE PROVISIO N OF SECTION 145(3) SHOULD NOT HAVE BEEN APPLIED. THE ASSESSEE ALSO SUBMITTED THAT WHILE APPLYING PROVISION OF SECTION 40A(2), THE AO DID NOT BRING O UT ANY COMPARABLE CASES TO SHOW THAT ASSESSEE HAD MADE EXCESSIVE PAYMENT TO RELATED PARTIES. AS REGARD INTEREST, THE ASSESSEE CLAIMED THAT IT HAD B EEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ASSESS EE ALSO RELIED ON THE VARIOUS JUDICIAL DECISIONS IN SUPPORT OF ITS CONTEN TION. THE LD CIT (A) DELETED THE ADDITION BY RECORDING HIS FINDINGS AS U NDER: I HAVE CAREFULLY CONSIDERED THE ABOVE FACTS AND DO NOT MUCH SUBSTANCE IN THE ESTIMATED ADDITION MADE BY THE AO, MAINLY ON THE GROUND OF NON FURNISHING OF CERTAIN DETAILS THOUGH HE WAS AWARE OF THE FACT THAT THE BOOKS OF ACCOUNTS ETC. WERE NOT IN THE POSSESSI ON OF THE APPELLANT BUT SOME OTHER GOVERNMENT AUTHORITY AND COPIES OF WHICH COULD WELL HAVE BEEN OBTAINED BY HIM. HE HAS NOT GIVEN DUE CREDENCE TO THE AUDITED ACCOUNT. MOREOVER, THERE IS ALSO NO COGENT BASIS FO R ESTIMATION OF THE NET 5 INCOME AT THE RATE OF 5% AS NOT A SINGLE COMPARABLE INSTANCE HAS BEEN CITED BY HIM. THE ADDITION MADE IS THEREFORE, DELET ED. 9. THE LD DR NARRATED THE FACTS AND PLACED STRONG R ELIANCE ON THE ORDER OF AO. 10. THE COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND , PLACED RELIANCE ON THE ORDER OF LD CIT (A) AND SUBMISSION MADE BEFORE HIM. 11. WE HAVE CONSIDERED SUBMISSION MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND ORDERS OF AUTHORITIES BELOW. IT IS NOTED THAT BOOKS OF ACCOUNT ARE AUDITED AND THE AUDITED REPORT HAS BEEN ENCLOSED WI TH THE RETURN OF INCOME, HENCE, IN THE ABSENCE OF BOOKS OF ACCOUNT WHICH COU LD NOT BE PRODUCED DUE TO NO FAULT OF THE ASSESSEE, THE AO SHOULD HAVE TAK EN INTO CONSIDERATION SUCH AUDIT REPORT. IN THIS REGARD, IT IS NOT DISPUTED TH AT NO ADVERSE COMMENTS HAVE BEEN MADE BY THE AUDITOR. WE ALSO FIND THAT THE AO HAS NOT DISCHARGED ITS BURDEN IN APPLYING PROVISION OF SECTION 40A(2) OF T HE ACT BY BRINING COMPARABLE CASES ON RECORD TO SHOW THAT ASSESSEE HA S MADE EXCESS PAYMENTS 6 TO RELATED PARTIES. IN VIEW OF THESE FACTS AND CIRC UMSTANCES, WE HOLD THAT THE LD CIT(A) HAS RIGHTLY DELETED THE ADDITION. HENCE, WE CONFIRM HIS FINDINGS. 12. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 16.11.09 SD/- SD/- (JOGINDER SINGH) (V.K.GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16.11.09 *KONGE*