M/s. Jay Khodiyar Roadlines, Navsari V. The Income tax Officer, Ward-2, Navsari

ITA 322/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8795 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-03-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 18-01-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: T P HEMANI
• Keywords: Reason to believe; Reassessment proceedings; TDS; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.321 AND 322/AHD/2007 A. Y.: 2002-03 AND 2003-04 M/S. JAY KHODIYAR ROADLINES, 19, CITY TOWER, GRID ROAD, NAVSARI, PA NO. AADFJ 5044 Q VS THE INCOME TAX OFFICER, WARD -2, AAYAKAR BHAVAN, NAVSARI (APPELLANT) (RESPONDENT) APPELLANT BY SHRI T. P. HEMANI, AR RESPONDENT BY SHRI GOVIND SINGHAL, DR O R D E R PER BHAVNESH SAINI: BOTH THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE CIT(A), VA LSAD DATED 13-10-2006 FOR ASSESSMENT YEARS 2002-03 AND 2003-04. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. 3. IN ASSESSMENT YEAR 2003-04, THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NOS. 1 TO 3 CHALLENGING THE RE -OPENING OF THE ASSESSMENT ON THE GROUND THAT IT WAS REGULAR ASSESS MENT AND THE LEARNED CIT(A) WRONGLY DECIDED THIS ISSUE. IN THIS VIEW OF THE MATTER THESE GROUNDS OF APPEAL OF THE ASSESSEE ARE ACCORDINGLY D ISMISSED AS WITHDRAWN. 4. IN BOTH THE APPEALS, THE ASSESSEE ON MERIT HAS C HALLENGED THE ADDITIONS OF RS.6,18,832/- AND RS.6,02,275/- BEIN G 5% OF THE TOTAL TRANSPORT EXPENSES AT RS.1,23,76,648/- AND RS.1,20, 45,561/- RESPECTIVELY. ITA NO.321 AND 322/AHD/2007 M/S. JAY KHODIYAR ROADLINES 2 5. BRIEFLY, FACTS OF THE CASE ARE THAT ASSESSEE IS CARRYING OUT JOBS FOR OTHER PARTIES THROUGH RENTED TRUCKS. DURING THE ASS ESSMENT YEAR 2002- 03 THE ASSESSEE HAS SHOWN TOTAL CARTING RECEIPT OF RS.1,35,03,589/- AND PAID CARTING EXPENSES TO VARIOUS TRUCK OWNERS TO TH E EXTENT OF RS.1,23,76,648/-. AFTER DEDUCTING THE EXPENDITURE T HE ASSESSEE HAS SHOWN NET PROFIT OF RS.2,44,190/- WHICH COMES TO 7. 58%. SAME IS THE POSITION IN THE ASSESSMENT YEAR 2003-04 IN WHICH NE T PROFIT AFTER DEDUCTING EXPENDITURE WAS SHOWN AT RS.13,32,423/- W HICH COMES TO 10.24%. THERE WERE MINOR DISCREPANCIES IN THE TDS C ERTIFICATES AND THE GROSS RECEIPTS WHICH THE ASSESSEE RECONCILED. THE A O THEREAFTER, NOTED THAT DETAILS FILED BY THE ASSESSEE ARE EXAMINED AND IT WAS FOUND THAT THE ASSESSEE PAID AMOUNT TO THE VARIOUS TRUCK OWNERS BE LOW RS.20,000/- IN CASH AS RENT ON TRIP BASIS. THE ASSESSEE EXECUTED V ARIOUS WORK ORDERS THROUGH OTHERS. THE ASSESSEE DID NOT POSSESS ANY OF HIS OWN TRUCK. DAY TO DAY PAYMENTS IS MADE TO THE TRUCK OWNERS. THE AO , THEREFORE, CONCLUDED THAT THERE CANNOT BE ANY CONCRETE FULL-PR OOF CHECK OF SUCH DAY TO DAY REQUISITION OF TRUCKS AND THE PAYMENTS. THE ASSESSEE WAS INFORMED THAT AS THERE CANNOT BE FULL-PROOF CHEEK O N THE PAYMENTS OF THE EXPENDITURE, THEREFORE, 5% OUT OF THE EXPENDITURE W OULD BE DISALLOWED. THE AO ACCORDINGLY, DISALLOWED 5% OF THE EXPENDITUR E AND MADE BOTH THE ADDITIONS. THE EARNED CIT(A) CONFIRMED THE ADDITION S. 6. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNT AND FILED ALL THE DETAILS B EFORE THE AO IN WHICH NO DEFECTS HAVE BEEN POINTED OUT AND THE ASSESSEE R ECONCILED ALL THE RECEIPTS WITH THE TDS. THEREFORE, DISALLOWANCE OF T HE EXPENDITURE IS NOT JUSTIFIED. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.321 AND 322/AHD/2007 M/S. JAY KHODIYAR ROADLINES 3 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT BOTH THE ADDITIONS ARE CLEARLY UNJUSTIFIED. THE ASS ESSEE PRODUCED ALL THE DETAILS OF THE EXPENDITURE BEFORE THE AO AND THE AO HAS NOT SPECIFICALLY POINTED OUT ANY INADMISSIBLE EXPENDITURE IN THE ASS ESSMENT ORDER. THE ASSESSEE ADMITTEDLY ENGAGED THE TRUCKS FOR COMPLETI NG THE WORK CONTRACTS FOR OTHERS. THE SUBSTANTIAL PAYMENT IS, T HEREFORE, MADE FOR ENGAGING THE TRUCKS FOR DOING THE WORK OF OTHERS. T HE PROFIT MARGIN SHOWN BY THE ASSESSEE APPEARS TO BE CORRECT AND REL EVANT. CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE AND THAT NO SPECIFIC DEFECTS IN ANY VOUCHERS OR PAYMENTS HAVE BEEN POINTED OUT BY THE A O, THEREFORE, THERE APPEARS TO BE AD HOC ADDITION IN NATURE. THE AO NOT ED THAT THE ASSESSEE WAS INFORMED FOR DISALLOWANCE OF 5% BUT THEREAFTER HE DID NOT NOTE IF ANY OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO EXPLAIN TH E ABOVE ISSUE. IN THE ABSENCE OF ANY SPECIFIC FINDING AGAINST THE ASSESSE E FOR DISALLOWANCE OF THE EXPENDITURE, WE ARE OF THE VIEW THAT AD HOC DIS ALLOWANCE IS NOT PERMITTED UNDER THE LAW. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE BOTH THE ADDITIONS ON MERIT. AS A RESULT, THESE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED IN BOTH THE APPEALS. 8. IN ASSESSMENT YEAR 2002-03, THE ASSESSEE CHALLEN GED THE REOPENING OF THE ASSESSMENT. THE ASSESSEE ASKED FOR THE COPY OF THE REASONS FOR INITIATION OF REASSESSMENT PROCEEDINGS BUT THE AO DID NOT PROVIDE COPY OF THE REASONS TO THE ASSESSEE. THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT REASONS WERE RECORDED FOR D IFFERENCE IN GROSS RECEIPTS AS COMPARED TO THE TDS CERTIFICATE ON WHIC H THE ASSESSEE RECONCILED THE RECEIPTS QUA THE TDS. THEREFORE, REO PENING IS UNJUSTIFIED. HE HAS RELIED UPON THE ORDER OF ITAT AHMEDABAD BENC H IN THE CASE OF SANJAY P. MEHTA DATED 03-10-2008. ON THE OTHER HAND , THE LEARNED DR SUBMITTED THAT REOPENING COULD BE DONE IF THE AO HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND IF AT THE AS SESSMENT STAGE ANY OTHER INCOME ESCAPED IS FOUND, FURTHER ADDITION COU LD BE MADE IN RESPECT ITA NO.321 AND 322/AHD/2007 M/S. JAY KHODIYAR ROADLINES 4 OF OTHER INCOME AND RELIED UPON THE DECISION OF HON BLE ANDHRA PRADESH HIGH COURT REPORTED AT 145 ITR 423(AP). 9. ON CONSIDERATION OF THE ABOVE FACTS, WE ARE OF T HE VIEW THAT CONSIDERING THE REQUEST OF THE ASSESSEE FOR SUPPLY OF THE REASONS FOR REOPENING OF THE ASSESSMENT, THE AO SHOULD HAVE SUP PLIED THE COPY OF THE REASONS OF REOPENING OF THE ASSESSMENT TO THE A SSESSEE AND SHOULD HAVE DECIDED THE OBJECTION OF THE ASSESSEE CHALLENG ING REOPENING OF THE ASSESSMENT. NO COPY OF THE REASONS IS ALSO FILED ON RECORD. THEREFORE, INSTEAD OF DECIDING THE ISSUE ON MERIT, NORMALLY WE WOULD HAVE RESTORED THIS ISSUE TO THE FILE OF THE AO WITH DIRECTION TO SUPPLY THE COPY OF THE REASONS FOR REOPENING OF THE ASSESSMENT TO THE ASSE SSEE AND DECIDE THE OBJECTION OF THE ASSESSEE ACCORDINGLY. BUT WE MAY N OTE HERE THAT THERE WERE ONLY ADDITIONS MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE ON WHICH WE HAVE ALREADY DELETED THE ADDITIONS IN BOTH THE ASSESSMENT YEARS. THEREFORE, NO PURPOSE WOULD SERVE TO ISSUE A NY DIRECTION IN THIS MATTER BECAUSE THE ISSUE WOULD BE OF ACADEMIC NATUR E ONLY. NO PURPOSE WOULD SERVE TO REMAND THE MATTER TO THE AO BECAUSE IT WOULD NOT YIELD ANY RESULT. AS A RESULT, THIS GROUND OF APPEAL OF T HE ASSESSEE IS DISPOSED OF ACCORDINGLY. 10. CHARGING OF INTEREST IS CONSEQUENTIAL IN NATURE AND NO FURTHER DIRECTION IS REQUIRED. 11. AS A RESULT, BOTH THE APPEALS OF THE ASSESSEE A RE ALLOWED PARTLY AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 19-03-2010. SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 19- 03-2010 LAKSHMIKANT/- ITA NO.321 AND 322/AHD/2007 M/S. JAY KHODIYAR ROADLINES 5 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD