Smt. Neelaben S Majithia, PORBANDAR V. The Income Tax Officer, Ward-2(4), PORBANDAR

ITA 344/RJT/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67298 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 08-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: J C RANPURA
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM ITA NO. 344 /RJ T/201 1 ASSESSMENT YEAR : 200 7 - 0 8 SMT NEELABEN SHARADBHAI MAJITHIA PROP. SHREE BHAGWATI TRASNPORT SERVICE, M G ROAD, PORBANDAR PAN: ABSPM 6598 G V. ITO, WARD - 2 ( 4 ), PORBANDAR DATE OF HEARING : 13 .0 6 .2013 DATE OF PRONOUNCEMENT : 10 .0 7 .2013 ASSESSEE BY : SHRI J C RANPURA, CA REVENUE BY : SHRI K C MATHEWS, DR ORDER D. K. SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) , JAMNAGAR ON 1 8 . 0 8 .20 1 1 . THE ASSESSEE IS A T RANSPORT C ONTRACTOR WITHIN THE MEANING OF SECTION 194 C READ WITH EXPLANATION (IV)(C) THERETO. THE ASSESSEE FILED HER RETURN OF INCOME ON 05.03.2008 RET URNING TOTAL INCOME AT RS.2,76,730/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD RECEIVED RS.5 ,16,20,851/ - , AS PER THE TDS C ERTIFICATE S, ON ACCOUNT OF EXECUTION OF TRANSPORT CONTRACTS WITH SEVERAL FIRMS . HE ALSO PERUSED THE BOOKS OF ACCOUNTS AND NOTICED THAT THEY SUFFERED FROM SEVERAL DEFECTS AND DEFICIENCIES. HE THEREFORE APPLIED NET PROFIT OF 2.5% ON THE AFORESAID CONTRACTUAL RECEIPTS AND ASSESSED THE NET PROFIT AT RS.12,90,521/ - AS AGAINST RS. 2,44,300 / - SHOWN BY THE ASSESSEE. ON APPEAL, THE LD CIT(A) HAS ASSESSED THE NET PROFIT FROM THE BUSINESS OF EXECUTION OF TRANSPORT CONTRACTS AT RS.10,79,05 5 / - AS AGAINST RS.12,90,521/ - ASSESSED BY THE ASSESSING OFFICER. HE HAS ALSO CONFIRMED ADDITION MADE BY THE A O U/S 68 OF THE INCOME - TAX ACT TO THE EXTENT OF RS.2,30,346/ - AS AGAINST RS.6,05,346/ - MADE BY THE ASSESSING OFFICER. HE HAS ALSO CONFIRMED FURTHER ADDITION AMOUNTING TO RS.53,389/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF VALUATION OF PROPERTY U/S 50 C OF THE INCOME - TAX ACT. 2. AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 3. GROUND NOS. 1 AND 5 TAKEN BY THE ASSESSEE ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION. 2 344 - RJT - 2011 SMT NEELABEN SHARADBHAI MAJ ITHIA 4. GROUND NO.2 TAKEN BY THE ASSESSEE READS AS UNDER: - 2.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), JAMNAGAR (HEREINAFTER REFERRED TO AS THE CIT (A)) ERRED ON FACTS AS ALSO IN LAW THAT THE NP SHOULD BE EQUAL TO TDS RECEIPT OR COMMISSION RECEIPT WHICHEVER IS HIGHER AND THEREBY ESTIMATING PROFIT OF THE APPELLANT AT RS.10,79,055/ - AND THEREBY RETAINING ADDITION OF RS.8,34,755/ - . THE ADDITION MAY KINDLY BE DELETED. 5. WE HAVE ALREADY GIVEN THE FACTUAL BACKGROUND WHICH HAS LED TO ASSESSMENT OF NET PROFIT BY THE ASSESSING OFFICER AT RS.12,90,521/ - . THE LD CIT(A) HAS REDUCED THE AFORESAID ESTIMATION TO RS.10,79,05 5 / - WITH THE FOLLOWING OBSERVATIONS: - 10. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION OF THE APPELLANT AND THE DISCUSSION MADE BY THE AO IN THE AS SESSMENT ORDER. CONSIDERING THE FACT THAT IN PRECEDING PARA THE AO HAS BEEN DIRECTED TO TREAT THE APPELLANT AS COMMISSION AGENT AND NOT TRANSPORT CONTRACTOR, THE SITUATION REGARDING BOOKS OF ACCOUNTS ALSO DIFFERENT. THE DEFECTS POINTED OUT BY THE AO HAVE B EEN EXPLAINED PROPERLY BY THE APPELLANT. HOWEVER, IT IS FOUND THAT KEEPING IN VIEW THE TDS MADE ON THE TOTAL RECEIPTS, THE RATIO OF NET PROFIT, WHICH IS 0.47% IS QUITE LOW. IN THIS LINE OF BUSINESS MOSTLY IN THE CASE OF COMMISSION AGENTS THE RECEIPTS AND P AYMENTS FOR TRUCK HIRING EQUALS AND ONLY INCOME WHICH REMAINS IN THE HANDS OF COMMISSION AGENT IS EITHER COMMISSION OR THE CREDIT FOR TDS WHICH COMES IN THE NAME OF THE COMMISSION AGENT. THEREFORE, KEEPING IN VIEW THE ABOVE FACTS IT IS REASONABLE TO CONSID ER THAT N.P. SHOULD BE EQUAL TO TDS RECEIPT OR COMMISSION RECEIPT WHICHEVER IS HIGHER. THE APPELLANT HAS SHOWN NET COMMISSION INCOME OF RS.2,76,730 AND IT HAS CLAIMED TDS CREDIT FOR RS.10,79,055. THUS THE NET PROFIT SHOULD BE RS.10,79,055 WHEREAS THE APPEL LANT HAS SHOWN NET PROFIT OF ONLY RS.2,44,300. THEREFORE, THE BALANCE (10,79,055 2,44,300) RS.8,34,755 IS REQUIRED TO BE ADDED. ACCORDINGLY, OUT OF THE ADDITION OF RS.12,90,521 MADE BY THE AO, ADDITION TO THE EXTENT OF RS.8,34,755 IS RETAINED AND REST RS .4,55,766 IS HEREBY ORDERED TO BE DELETED. 3 344 - RJT - 2011 SMT NEELABEN SHARADBHAI MAJ ITHIA 6. IN SUPPORT OF APPEAL, THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REITERATED THE SUBMISSIONS WHICH WERE EARLIER MADE BEFORE THE LD CIT(A). IN REPLY, THE LD DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDE R PASSED BY THE LD CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES. THE REVENUE IS NOT IN APPEAL AGAINST THE ORDER PASSED BY THE LD CIT(A). OUR JURISDICTION IS THEREFORE LIMITED TO EITHER SUSTAINING THE ORDER PASSED BY THE LD CIT(A) BY WHICH HE HAS REDUCED THE ASSESSMENT OF NET PROFIT TO RS.10, 79,055/ - OR QUASH THE ORDER OR REDUCE THE AMOUNT OF NET PROFIT ESTIMATED BY HIM . THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE CANNOT BE SAID TO BE CORRECT AND COMPLETE IN VIEW OF THE MATERIALS BROUGHT ON RECORD BY THE ASSESSING OFFICER. THE ORDER PASSED BY THE LD CIT(A) ESTIMATING THE NET PROFIT FROM THE BUSINESS OF EXECUTION OF TRANSPORT CONTRACTS WORKS OUT TO ALMOST 2% WHICH IS QUITE MODERATE (RATHER ON LOWER SIDE) IN THIS LINE OF BUSINESS. THEREFORE, THE ESTIMATION O F NET PROFIT BY THE LD CIT(A) CANNOT BE SAID TO BE UNREASONABLE. IN THIS VIEW OF THE MATTER, HIS ORDER IN THIS BEHALF IS CONFIRMED. GROUND NO.2 IS DISMISSED. 8. GROUND NO.3 TAKEN BY THE ASSESSEE READS AS UNDER: - THE LEARNED CIT (A) ERRED ON FACTS AS ALS O IN LAW IN CONFIRMING ADDITION OF RS.53,389/ - MADE U/S. 50C OF THE ACT. THE ADDITION MAY KINDLY BE DELETED. 9. IN SUPPORT OF APPEAL, THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE RELIED UPON THE SUBMISSIONS MADE EARLIER BEFORE THE LD CIT(A) IN THIS BEHALF. IN REPLY, THE LD DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LD CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES. THE LD CIT(A) HAS DECIDED THE ISSUE UNDER APPEAL WITH THE FOLLOWING OBSERVATIONS: - 13. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION OF THE APPELLANT AND THE DISCUSSION MADE BY THE AO IN THE ASSESSMENT ORDER. I HAVE FOUND THAT THE AO HAS RIGHTLY TAKEN THE VALUE OF THE PROPERTY AS PER SEC.50C OF THE ACT. THE PROVISIONS OF SEC.50C ARE DEEMING PROVISIONS AKIN TO THE PROVI SIONS OF SECTION 68 & 69 OF THE ACT. THE PROVISIONS OF SEC.50C HAVE BEEN UPHELD AS 4 344 - RJT - 2011 SMT NEELABEN SHARADBHAI MAJ ITHIA CONSTITUTIONAL BY VARIOUS DECISIONS I.E. K.R.PALANISAMI VS. UNION OF INDIA (2008) 306 ITR 61 (MADRAS). THE PROVISIONS OF SEC.50C ARE LEGALLY BINDING ON THE AO AND HAVE BEEN ENACTED BY LEGISLATURE WITH A VIEW TO CURB THE MALPRACTICE OF REGISTRATION OF IMMOVABLE PROPERTY AT LESSER VALUE. MOREOVER THE APPELLANT HAS NOT OBJECTED U/S.50C (2) & (3) BEFORE THE AO HENCE WAIVED THE RIGHT. THEREFORE THE AO IS JUSTIFIED IN TAKING VALUAT ION U/S. 50C OF THE ACT, RELIANCE IS PLACED ON THE DECISION IN THE CASE OF AMBATTAR CLOTHING CO. LTD. VS. ACIT 221 CTR (MAD) 196. KEEPING INTO VIEW THE FACTS & THE LAW THE ACTION OF ASSESSING OFFICER IS CONFIRMED AND THE GROUND IS DISMISSED. 11. THE LD A UTHORIZED REPRESENTATIVE FOR THE ASSESSEE COULD NOT POINT OUT ANY INFIRMITY IN THE AFORESAID ORDER PASSED BY THE LD CIT(A). IN THIS VIEW OF THE MATTER, GROUND NO.3 IS DISMISSED. 12. GROUND NO.4 TAKEN BY THE ASSESSEE READS AS UNDER: - THE LEARNED CIT (A) ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING ADDITION OF RS.2,30,346/ - MADE U/S. 68 OF THE ACT BEING UNSECURED LOANS ACCEPTED AND INTEREST PAID ON SUCH LOANS. THE ADDITION MAY KINDLY BE DELETED. 13. IN SUPPORT OF APPEAL, THE ONLY SUBMISSION MADE ON BEHAL F OF THE ASSESSEE WAS THAT THE IMPUGNED ADDITION SHOULD BE TELESCOPED AGAINST THE ADDITION SUSTAINED BY THE LD CIT(A) ON ACCOUNT OF ESTIMATION OF PROFIT FROM THE BUSINESS OF EXECUTION OF TRANSPORT CONTRACTS. IN REPLY, THE LD DEPARTMENTAL REPRESENTATIVE SUP PORTED THE ORDER PASSED BY THE LD CIT(A). THE LD CIT(A) HAS CONFIRMED THE IMPUGNED ADDITIONS WITH THE FOLLOWING OBSERVATIONS: - 16. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION OF THE APPELLANT AND THE DISCUSSION MADE BY THE AO IN THE ASSESSMENT ORDER . THE APPELLANT HAS BEEN ABLE TO DISCHARGE THE ONUS BY FILING CONFIRMATIONS IN THE CASE OF SMT. KASTURBEN HEMRAJ MAJITHIA AND SMT. NIRMABEN D. BADIYANI AMOUNTING TO RS.1,75,000 AND RS. 2 LAKHS RESPECTIVELY. HOWEVER, IN THE CASE OF SMT. POONAMBEN N. MONANI (RS.1,80,000) AND SHARE OF HUF (RS.50,346) NO CONFIRMATION IS FILED AND THEREFORE, THE APPELLANT HAS FAILED TO DISCHARGE THE ONUS PERTAINS TO THESE TWO CASH CREDITS TOTALING TO RS.2,30,346 (1,80,000 + 5 344 - RJT - 2011 SMT NEELABEN SHARADBHAI MAJ ITHIA 50,346). THEREFORE, ADDITION TO THE EXTENT OF RS.2,30,3 46 IS CONFIRMED OUT OF TOTAL ADDITION OF RS.6,05,346 AND REST OF ADDITION AMOUNTING TO RS.3,75,000 IS ORDERED TO BE DELETED. INTEREST OF RS.3,662 ON CASH CREDIT SHOULD ALSO ACCORDINGLY BE STAND PART CONFIRMED IN THE CASE OF TWO CASH CREDITORS, I.E. SMT. PO ONAMBEN N. MONANI AND SHARE OF HUF AND FOR REMAINING TWO CASH CREDITS IN THE CASE OF SMT. KASTURBEN H. MAJITHIA AND SMT. NIRMALABEN D. BADIYANI, THE AO IS DIRECTED TO ALLOW INTEREST ON THE ABOVE CASH CREDITS ALSO. 14. THE LD AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE COULD NOT POINT OUT ANY INFIRMITY IN THE AFORESAID ORDER PASSED BY THE LD CIT(A). IN THIS VIEW OF THE MATTER, THE ORDER PASSED BY THE LD CIT(A) IN THIS BEHALF IS CONFIRMED. 15. AT THE TIME OF HEARING , THE ASSESSEE SUBMITTED THAT THE IMPUGN ED ADDITIONS SHOULD BE TELESCOPED AGAINST OTHER ADDITIONS CONFIRMED BY THE LD CIT(A). THIS PLEA OF THE ASSESSEE ESTABLISHE S THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) REPRESENTED HER REAL INCOME WHICH WAS NOT DECLARED IN T HE RETURN OF INCOME FURNISHED BY HER. IT ALSO ESTABLISHES THAT THE INCOME SUPPRESSED BY HER WAS INTRODUCED IN THE BOOKS IN THE GARB OF CASH CREDIT. THUS THE PLEA OF THE ASSESSEE THAT THE IMPUGNED ADDITIONS SHOULD BE TELESCOPED AGAINST OTHER ADDITIONS SEEMS TO BE REASONABLE AS SAME INCOME CANNOT BE TAXED TWICE; FIRSTLY BY WAY OF ADDITION AS REPRESENTING SUPPRESSED PROFIT AND SECONDLY BY WAY OF CASH CREDIT, WHICH, IN SUBSTANCE, REPRESENTS THE SAME SUPPRESSED INCOME. THE BENEFIT OF THE TELESCOPY IS ACCORDINGLY ALLOWED TO THE ASSESSEE. RESULTANTLY, THE IMPUGNED ADDITION MADE BY THE AO U/S 68 AND SUSTAINED BY THE CIT(A) WOULD STAND COVERED BY OTHER ADDITIONS CONFIRMED BY THE LD CIT(A). GROUND NO. 4 STANDS DISPOSED OF ACCORDINGLY. 16. THE APPEAL FILED BY THE ASSE SSEE IS DISMISSED SUBJECT TO THE AFORESAID OBSERVATIONS. ORDER PRONOUNCED ON 10 . 0 7 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 10 .07 .2013 B T 6 344 - RJT - 2011 SMT NEELABEN SHARADBHAI MAJ ITHIA COPY OF ORDER FOR WARDED TO: - 1 . APPELLANT SMT NEELABEN SHARADBHAI MAJITHIA, PROP. SHREE BHAGWATI TRASNPORT, SERVICE, M G ROAD, PORBANDAR 2 . RESPONDENT - ITO, WARD - 2(4), PORBANDAR 3 . CONCERNED CIT - JAMNAGAR 4 . CIT (A) - JAMNAGAR 5 . DR, ITAT, RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT