Shri Vinay Khanna, New Delhi V. CIT, Meerut

ITA 3579/DEL/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7152 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 22-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY VARMA
• Keywords: Business income; Question of law; Revenue expenditure; Capital expenditure
• Section: 143(3); 54F; 234B; 54; 263; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER, AND S MT BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 3579 /DEL/201 3 [A.Y 20 08 - 09 ] SHRI VINAY KHANNA VS. THE C. I.T PROP. M/S VEEKAY EXPRESS MEERUT 171/3, THAPAR NAGAR MEERUT PAN : AIGPK 2461 D [APPELLANT] [RESPONDENT] DATE OF HEARING : 0 3 . 0 7 .201 8 DATE OF PRONOUNCEMENT : 0 5 .0 7 .2018 ASSESSEE BY : SHRI SANDEEP SAPRA, ADV REVENUE BY : S HRI VIJAY VARMA, CIT - DR ORDER PER N.K. BILLAIYA , ACCOUNTANT MEMBER, BY T HIS APPEAL THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX , MEERUT FRAMED U/S 263 OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'. DATED 22 . 0 3 .201 3 PERTAINING TO A.Y 20 08 - 09 . 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF T HE ASSESSEE IS THAT THE CIT WRONGLY ASSUM ED JURISDICTION U/S 263 OF THE ACT AND SUCH ASSUMPTION IS ARBITRARY, UNJUSTIFIED AND ILLEGAL ON FACTS OF THE CASE. 3. THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH. THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE OF THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 18(6) OF ITAT RULES. JUDICIAL DECISIONS RELIED UPON WERE CAREFULLY PERUSED. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORTATION OF MATERIAL. THE ASSESSEE OWNS 8 BIG TRUCKS AND ALSO HIRES OUTSIDE TRUCKS FOR CARRYING OUT ITS BUSINESS. RETURN FOR THE YEAR WAS FILED ON 06.10.2008 DECLARING NET INCOME OF R S. 12.94 LAKHS. RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVICED UPON THE ASSESSEE. ASSESSMENT WAS COMPLETED VIDE ORDER DATED 30.11.2010 FRAMED U/S 143(3) OF THE ACT. THE OPERATIVE PART OF THE ASSESS MENT ORDER IS AS UNDER: 3 AFTER DISC U SSION AND TAKING IN TO CONSIDERATION THE INFORMATION FILED BY THE COUNSEL OF THE ASSESSEE THE ASSESSMENT IS COMPLETED HERE UNDER AS: - THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN TRANSPORTATION OF GOODS/ MATERIALS FOR VARIOUS BIG COMPANIES UNDER HIS PROPRIETORSHIP FIRM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT IN THE PROFIT AND LOSS ACCOUNT THE ASSESSEE HAS CLAIME D EXPENSES AT RS. 2,27,552/ - TOWARDS REPAIR & MAINTENANCE AND RS. 83,138/ - TOWARDS TELEPHONE EXPENSES. ON E EXAMINATION OF BOOK S OF ACCOUNT AND BILLS/VOUCHERS IT WAS FOUND THAT THE ASSESSEE HAS NOT PROVID ED THE BILLS OF REPAIR AND MAINTENANCE ) . THE VOUCHERS RELATED TO THESE EXPENSES ARE SELF MADE AND INTERNAL IN NATURE. HENCE, THE VERIFICATION OF THE SAME WAS NOT DONE AND THE PERSONAL ELEMENT TOWARDS TELEPHONE EXPENSES CAN NOT BE RULED OUT. THEREFORE, 10% OF THE ABOVE EXPENSE, WHICH COMES TO RS. 31 , 069 / - , IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. (ADDITION RS. 31,069/ - ) IN ADDITION TO THIS THE ASSESSEE HAS INCURRED EXPENSES TOWARDS ROAD EXPENSES AT RS. 18,36,340/ - . AFTER EXAMINATION IT WAS FOUND THAT THESE EXPENSES ARE NOT FULLY VOUCHED. HENCE, T H E VERIFICATION OF THE SAME CAN NOT BE DONE. THEREFORE, TO COVER - UP THE POSSIBLE LEAKAGE OF REVENUE RS. 35 ,000 / - FROM THE ABOVE EXPENSES IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. (ADDITION RS. 35,000/ - ) IN VIEW OF THE ABOVE FACTS THE INCOME OF THE ASSESSEE IS R E - COM P UTED AS UNDER: - RETURNED INCOME RS. 11,91,456/ - 4 ASSESSMENT IS COMPLETED ON TOTAL INCOME OF RS. 12,57,525/ - . CHARGE INTEREST U/S 234B & 234C. ISSUE NOTICE OF DEMAND AND CHALLAN. 5. AFTER FRAMING THE ASSESSMENT ORDER [SUPRA] ON 17.10.2011, THE AO ISSUED A NOTICE STATING THAT AN ERROR HAS CREPT IN FRAMING THE ASSESSMENT ORDER WHICH NEEDS TO BE RECTIFIED U/S 154 OF THE ACT. NOTICE IS EXHIBITED AT PAGE 32 OF THE PAPER BOOKS AND THE SAME IS AS UNDER: SH. VINAY KHANNA PROP. M/S VEE KEY EXP R ESS 171/03, THHPAR NAGAR MEERUT SU B - . INCORRECT COM PUTATIO N OF BUSINESS INCOME & SHORT LEVY OF TAX OF RS. 7,54 D UES - NOTICES U/S 154 FOR REVISION OF INCOME A.Y. 2008 - 07 - REGARDING ASSESSMENT IN YOUR CASE WAS COMPLETED ON AN INCOME OF RS. 12,57,525/ - ON 30.11.2010 AS AGAINST R ETURN ED INCOME OF RS. 12,94,580/ - . THE ASSESSEE IS ENGAGED IN TRANSPORTATION OF GOODS / MATERIALS FOR VARIOUS BIG COMPANIES. WHILE GOING THROUGH THE RECORD, THE ASSESSMENT ORDER, FORM 26AS, PROFIT & LOSS A/C, BALANCE SHEET & 3C.D (AUDITORS REPORT), IT 31,069/ - 35,000/ - RS . RS. ADDITIONS AS DISCUSSED ABOVE - ( I ) DISALLOWANCE OF REPAIR & MAINTENANCE AND TELEPHONE EXPENSES ( II ) DISALLOWANCE OF ROAD EXPENSES TOTAL INCOME RS.1 2,57,525/ - (LALJEE PRASAD) ASSISTANT COMMISSIONER OF INCOME - TAX CIRCLE - 2,MEERUT 5 REVEALED THAT THE ASSESSEE HAD CLAIMED TDS FOR RS. 2J 5,452/ - ' AGAINST FREIGHT RECEIPTS. IN FORM 26AS, FR EIGHT RECEIPTS WERE DECLARED AT R S. 1,11,51,690/ - AND TDS AT RS. 2,15,452/ - , WHEREAS THE ASSESSEE HAD DECLARED RS, 94,70,611/ - FOR FREIGHT RECEIPTS IN HIS P&L A/C. AS SUCH, FREIGHT RECEIPTS OF RS. 16,81,079/ - SHOULD HAVE BEEN ADDED BACK INTO THE INCOME O F THE ASSESSEE, I.E. (RS. 1,11,51,690 - RS. 9470,611). THE OMISSION HAS RESULTED IN SHORT LEVY OF TAX FOR RS. 7,34,247/ - PER DETAILS GIVEN BELOW 'T AX ON RS. 16,81,079 @ 30% RS. 5,04,324/ - SURCHARGE (FT) 10% RS. 50,432/ - TOTAL RS. 5,54,756/ - EDUC ATION CESS @ 3% + RS. 16,643/ - INTERES T U/S 234.B ( W.E.F) RS. 5,71,399/ - 01 .04.2008 TO 30. 11. 2010) RS. 1,82,848/ - I. E. FOR 32 MONTHS TOTAL RS. 7,54,247/ - THE ABOVE TAX OF RS. 7,54,247/ - NEEDS TO BE REVISED AND RECOVERY FROM THE ASSESSEE IS PROPOSED, (TO BE EFFECTED U/S I54CF IT ACT 1961. AS SUCH, THE ASSESSEE IS REQUIRED TO FILE HIS OBJECTION, IF ANY, TO THE' PROPOSED .RECTIFICATION AND REVISION, AS AFORESAID, WITHIN THREE DAYS OF RECEIPTS OF THIS NOTICE,, FAILIN G WHICH IT WOULD BE CONSIDERED THAT THE ASSESSEE ACCEPTS THE ABOVE REVISION AND RECOVERY OF THE PROPOSED SUM OF RS. 7.54,247/ - FROM HIM, WOULD BE MADE UNDER THE SPECIFIC PROVISIONS OF SECTION 1 54 O F THE ACT. (LALJEE PRASAD) ASSISTANT COMMISSIONER OF INCOME - TAX CIRCLE - 2,MEERUT 6 6. THE ASSESSEE FILED A DETAILED REPLY ON 11.11.2011 IN RESPONSE TO THE AFORESAID NOTICE. REPLY OF THE ASSESSEE IS EXHIBITED AT PAGES 33 AND 34 OF THE PAPER BOOK AND THE SAME READS AS UNDER: THA T T HE ASSESSES IS DOING THE TRANSPORTATION BUSINESS AND TRANSPORTING THE GOODS OF VARIOUS COMPANIES THROUGH HIS OWN TANKERS AS WELL AS FROM HIRED TANKERS. THAT THE COMPANIES GENERALLY RELEASE TENDERS IN THE NAME OF THE ASSESSES AND AFTER TRANSPORTING THE GOODS THE ASSESSEE RAISES BILLS OF TRANSPORTATION IN THE NAME OF RESPECTIVE COMPANIES: T H AT THE BILLS OF THE TOTAL TRANSPORTATION VALUE ARE RAISED BY THE ASSES SEE WHETHER GOODS ARE EITHER TRANSPORTED THROUGH OWN TANKERS OR THROUGH HIRED TANKERS. THAT AS PER THE PRACTICE ADOPTED BY THE ASSESSEE , THE G OODS TRANSPOR T ED B Y THE ASSESSEE THROUGH OWN T ANKE RS ARE DIRECTLY CREDITED I N THE FREIGHT RECEIVED ACCOUNT AND A GAINST THE GOODS TRANSPORTED THROUGH THE HIRED TANKERS SHOWN UNDER HANDLING CHARGES @ 3% OF THE TOTAL FREIGHT AMOUNT AND 97% OF THE FREIGHT IS DIRECTLY CREDITED IN THE ACCOUNT OF THE OWNERS OF THE HIRED TANKERS AS PER THE AGREEMENTS ENTERED BY THE A SSESSEE WITH THE OWNERS OF THE T ANKERS, WITH THE RESULT PROFIT & LOSS ACCOUNT OF THE ASSESSEE IS NOT CREDITED WITH THE AMOUNT OF THE TRANSPORTATION CHARGES OF HIRED TANKERS. THAT AS THE BILLS OF TOTAL FREIGHT ON OWN TANKERS AS WELL AS ON HIRED TANKERS) ARE RAISED BY THE ASSESSEE, THE TAX IS DEDUCTED BY THE 7 COMPANIES FROM THE TOTAL FREIGHT' FROM THE ASSESSEE WHEREAS THE ASSESSEE SHOWS ONLY THE FREIGHT ON OWN TANKERS AND 3% HANDLING CHARGES ARE CREDITED O NLY IN P & L A CCOUNT OF THE ASSESSEE ON THE VALUE OF FREIGHT ON HIRED TANKERS. T HAT THE ASSESSEE HA S ALSO DEDUCTED TDS ON THE VALUE OF TANKERS FROM THE T ANKER OWNERS . THAT THE ASS ESSEE HAS ALREADY FILED THE DETAILS OF TOTAL FREIGHT OF HIRED TANKERS, DETAILS OF 97% - O F THE FREIGHT WHICH IS CREDITED DIRECTLY IN THE ACCOUNT OF THE TANKER OWNERS AND BA LANCE 3% OF THE FREIGHT CREDITED IN HIS P & L ACCOUNT AS HANDLING CHARGES VIDE THE RE PLY SUBMITTED AT THE TIME OF HEARING OF THE CASE WHICH IS BEING FILED A GAIN NOW. T HAT AS PER YOUR CAPTIONED NOTICE THE ASSESSEE HAS NOT RECEIVED FREIGHT FOR RS. 1, 11 ,51.690/ - BUT TOTAL FREIGHT RECEIPT OF THE ASSESSEE FOR THE YEAR ARE AS UNDER: FREIGHT ON OWN TANKERS (CREDITED IN P&L A/C) RS. 94,70,611/ - FREIGHT ON HIRED TAN KE RS(AS PER DETAILS ENCLOSED) RS. , 1, 97 , 7 1 ,591 TOTAL FREIGHT RECEIPTS RS. 2,92,42,202/ - TDS DEDUC TED ON FREIGHT RS. 6,35,598/ - IDS DEDUCTED ON INTEREST RS. 6,667/ - . TO TAL IDS AS CLAIMED BY ASSESSEE RS. 6,42,265/ - IN THE RETURN OF INCOME . 8 2 FURTHER IT IS HUMBLY REQUESTED THAT AS PER THE ASSESSMENT ORDER U/S 143(3) FOR THE ABOVE ASSESSMENT YEAR A SUM OF RS. 369650/ - IS THE AMOUNT OF TAX ON TOTAL INCOME OF 1257525/ - WHEREAS THE TDS AS ABOVE IS RS. 642265/ - . HENCE A SUM OF RS.272614/ - + INTEREST TILL DATE IS PAYABLE TO THE ASSESSEE. A REQUEST FOR RECTIFICATION U/S SECTION 154(2) WAS ALSO FILED BEFORE YOUR HONOR ON 01 - 02 - 201) WHICH IS STILL PENDING AT YOUR END. THE ASSESSES HAS ALREADY FI LED WITH YOU THE PHOTOCOPY OF ALL THE TDS CERTIFICATES ON 10 TH JULY 2009. ANY OTHER INFORMATION, IF REQUIRED, WILL BE SUBMITTED. HOPE YOU WILL FIND THE ABOVE IN ORDER. THANKING. YOU NARESH SAIUJA. . COU NSEL TO THE ASSESSEE 7. THOUGHT THE NOTICE ISSUED U/S 154 OF THE ACT IS DATED 17.10.2011, BUT TILL DATE NO ORDER HAS BEEN FRAMED BY THE OFFICER AS POINTED OUT BY THE REPRESENTATIVES OF BOTH THE SIDES. 8. BE THAT AS IT MAY, THE CIT MEERUT ASSUMED JURISDICTION U/S 263 OF THE ACT ALLEGING THAT THE AS SESSMENT ORDER PASSED BY THE ACIT, CIRCLE 1, MEERUT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE SINCE THE AO HAS NOT VERIFIED THE POINTS PROPERLY. THE POINTS MENTIONED BY THE CT IN HIS NOTICE READ AS UNDER: 9 NOTICE UNDER SECTION 263 OF THE INCOMETAX ACT, 1961 FOR THE A.Y. 2008 - 09 - REG. - AN ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008 - 09 WAS PASSED UNDER SECTION 143(3) OF THE INCO ME TAX ACT ON 27.10.2010 BY THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 2, MEERUT. ON EXAMINATION OF THE RECORDS, IT IS EVIDENT THAT THE SAID ASSESSMENT ORDER WAS PASSED WITHOUT PROPER ENQUIRY IN VIEW OF THE FOLLOWING POINTS: - A) THE ASSESSEE IS ENGAGED IN TRANSPORTATION BUSINESS OF PLYING OF TANKERS. THE ASSESSEE WAS OWNER OF 8 TAN KERS ON WHICH FREIGHT RECEIVED RS. RS. 94,70,611 THE ASSESSEE HAD HIRED TANKERS ON WHICH FREIGHT RECEIVED RS. 1. 97 , 71,591 TOTAL FREIGHT WAS RECEIVED BY THE ASSESSEE RS. 2,92,42,202 TOTAL FREIGHT RECEIVED TOTAL TPS DEDUCTED RS. 2, 92, 42,202 RS. 6, 35,598 LESS : AS PER 26 AS DETAILS 1.11.51,690 2.15.452 DETAILS OF FREIGHT RECEIVED & TDS THEREON NOT SHOWN RS. 1,80,90,512 RS. 4,20,146 AS PER AUDIT REPORT COLUMN NO. 32, ACCOUNTING RATIO : NET PROFIT / TURNOVER 13.56% FREIGHT RECEIVED ON OWN TANKERS RS. 94, 70,611 X 13.56 % NET PROFIT RS. 12, 84,577 FREIGHT RECEIVED ON HIRED TANKERS RS. 1, 97, 71,591 X 13.56% NET PROFIT RS. 26, 81,028 NET PROFIT RS. 26, 81,028/ - TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE FROM BUSINESS INCOME 10 AS PER BALANCE SHEET AS ON 31.32008 RELEVANT TO A.Y 2008 - 09 SHOWS THAT THE ASSESSEE HAS SHOWN INSURANCE CLAIM RECEIVABLE RS. 4,52,360/ - . THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT ON MERCANTILE BASIS. ACTUALLY, INSURANCE CLAIM WAS NOT RECEIVED IN A.Y 200 7 - 08. THE ASSESSEE WAS LIABLE TO CREDIT AND INSURANCE CLAIM RECEIVABLE IN PLA ON ACCRUAL BASIS OTHERWISE THE ASSESSEE WAS LIABLE TO CREDIT THE INSURANCE CLAIM ON ACTUAL RECEIVED BASIS IN A.Y 2008 - 09. INSURANCE CLAIM LIKELY TO BE ADDE D IN TOTAL INCOME OF THE ASSESSEE FOR A.Y 2008 - 09. THE ASSESSEE HAD PAID FREIGHT TO THE FOLLOWING PERSONS ON WHICH TDS WAS NOT DEDUCTED: NAME OF THE PERSON FREIGHT PAID 1. M/S D.P. KHANNA & SONS 700965 2. SHRI JAHANGIR AHMAD 208599 3. SHRI KARAN MALHOTRA 1051311 4. SHRI MAHENDRA SINGH 83247 5. SHRI O.P. MAHENDRU 1125170 6. SHRI RAJENDRA KUMAR MALHOTRA 1596248 7. M/S RAJENDRA KUMAR & SONS 397327 8. SHRI RANJIT SINGH 896784 9. MRS. REKHA KHANNA 2145 926 10. SHRI SHAEIS AHMAD 219523 TOTAL 8425100 DURIN G THE YEAR UNDER CONSIDERATION THE ASSESSED HAD PAID FREIGHT TO I LIT EEL TANKER OWNERS RS. 84,25,100/ - TO THE DIFFERENT PARTIES, BUT, TDS WAS NOT DEDUCTED ON SUCH PAYMENTS. BUT, THE ASSESSEE HAD DEBITED TOTAL FREIGHT EXPENSES BEFORE TAKEN INTO ACCOUNT IN TOTAL FREIGHT RECEIVED IN P & L ACCOUNT AND ON WHICH TDS WAS ALSO . NOT DEDUCTED BY 11 THE ASSESSEE. THE ASSESSEE >VAS LIABLE TO DEDUCT TDS ON PAYMENT OF FREIGHT RS. 84, 25,100/ - U/S 40 (A)(IA) OF INCOME TAX ACT, 1961. HENCE, THE PAYMENT OF FREIGHT RS. 84, 25,100/ - ON WHICH TDS WAS NOT DEDUCTED BY THE ASSESSEE, TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S 40 (A)(IA) OF INCOME TAX ACT, 1961 . INCOME AS PER ASSESSMENT ORDER RS 12, 57.525 NET PROFIT FROM BUSINESS NOT SHOWN BY THE ASSESSEE RS. 26,81,028 INTEREST INCOME : INCOME F ROM OTHER SOURCES RS. 82,827 INSURANCE CLAIM : INCOME FROM OTHER SOURCES RS. 4, 52,360 ADD : U/S 40 (A)(IA) OF I.T. ACT RS. 84,25,100 RS. 1,28,98,840 9. IT CAN BE SEEN FROM THE ABOVE THAT THE CIT RAISED THREE ISSUES WHICH WE WILL ADDRESS HENCEFORTH AND SEE WHETHER THE ASSESSMENT ORDER IS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE. 10. FIRST ISSUE RELATES TO FREIGHT RECEIVED BY THE ASSESSEE AS SHOWN IN ITS BOOKS OF ACCOUNT AND TOTAL FREIGHT CONSIDERED BY THE CIT WHICH, ACCORDING TO HIM, HAS MADE THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 11. IN ITS PROFIT AND LOSS ACCOUNT WHICH IS EXHIBITED AT PAGES 10 OF THE PAPER BOOK, THE ASSESSEE HAS SHOWN FREIGHT RECEIPTS FROM ITS OWN 8 TRUCKS AT RS. 94,,70,611/ - . THE ASSESSEE HAS ALSO SHOWN HANDLING 12 CHARGES AT RS. 5 ,02,187/ - . IN SO FAR AS FREIGHT RECEIPTS ARE CONCERNED, THERE IS NO DISPUTE. THE DETAILS OF FREIGHT RECEIPTS AND HANDLING CHARGES ARE EXHIBITED AT PAGE 17 AND THE SAME ARE AS UNDER: DET AIL OF _ FREIGHT RECEIPTS - 2007 - 0 8 HANE OF THE OWNER P.A.N. TOTAL HAN DLING BALANCE T.D.S. FREIGHT CHARGES PAYABLE DEDUCTED AD AY GARG | AFUPG5633A 49,736 1,492 48,244 497 BHARTI BULK CARRIERS AAEFB83B7P 5,31,880 15,887 5,15,913 5,846 DINESH AGRAWAL AEXPA1326A 4,48,661 13,220 4,27,441 483 D P. KHANNA 4 - SONS 7,88,965 21,829 6,79,936 - HASMAT FTLI AEGPA8387L 5,58,936 16,768 5,42,168 5,583 GAHANGIR AHMED 2,88,599 6.258 2,82.341 _ KARAN RTALHOTRA 18,51,311 31,539 18,19,772 - RAHENDRA SINGH 83.247 2,497 80,758 - REERUT ROAD CARRIERS ABAPK0792N 497767840 1,48,942 48,27,898 49,718 M OHD RASID ABSPR5547G 7,23,384 21,715 7,81,669 7,226 RUBASHSHIRA PARVEEN AL0PP9169E 6,46,928 19,487 6,27,521 6,461 DR. PRAKASH SINGH ASRPS5827L 3,26.850 9,385 3,17,845 3,265 O.P. RAHENDRU 11,25,178 33,755 18,91,415 - P.RAVINDRA REDDY AKEPP5812B 1,48,866 4,226 1,36,648 1,487 RADENDRA KR.FTALHOTRA 15,96,248 47,887 15,48,361 RADENDRA KR. 4 SONS 3,97,327 11,928 3,85,407 REMINDER OIL CARRIER BAIPS1416B 9,38,480 28,153 9,18,247 9,377 P ANDIT SINGH 8.96,784 26.901 8.69,883 REKHA KHANNA 21,45.926 64,378 28,81,548 R.K. GINDAL ABDPG8247G 48,233 1,447 46,786 482 SATISH KUMAR LAABA AAEPLB576G 1.78,173 5,345 1,72,828 1,788 SEEMA RANI AGZPRB696N 5,76,789 28,128 5,56,661 5,732 S HAMI AHMED 2,19,523 6,586 2,12,937 _ SHARDA SHARMA 56,884 1,787 55,177 _ SUBHASH CHAND SHARMA BHGPS5298D 5,84,625 17,539 5.67.886 5,417 SUNIL KUMAR ACZPK2876R 1,95,266 5.955 1,89,311 1,958 SUNIL YADAV ARHPK9314K 3,73,088 11,892 3,61,908 2,729 YY 1,97,71,591 5,95,578 1,91,76,813 1,87,953 12. IN SO FAR AS HANDLING CHARGES ARE CONCERNED, IT WAS SPECIFICALLY EXPLAINED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS DURING THE COURSE OF PROCEEDINGS U/S 263 OF THE ACT THAT 97% OF THE BILL AMOUNT IS CREDITED TO THE ACCOUNT OF THE OWNER OF THE TRUCK 13 AND ONLY 3% OF THE TOTAL BILL AMOUNT IS TAKEN BY THE ASSESSEE WHICH IS SUBJECTED TO TDS. FORM NO. 15J HAS ALSO BEEN FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH IS AT PAGES 18 & 19 OF THE PAPER BOOK. 13. A PERUSAL OF THE AFORESAID FACTUAL DETAILS WHICH WERE BEFORE THE AO DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS CLEARLY SHOW THAT ALL THE DETAILS WERE EXAMINED BY THE AO BEFORE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT. MOREOVER, AS MENTIONED ELSEWHERE, THE A O DID MAKE EFFORT BY ISSUING NOTICE U/S 154 OF THE ACT ON FINDING THAT IN FORM NO. 26AS FREIGHT RECEIPTS WERE AT RS. 1.11 CRORES AND TDS WAS RS. 2.15 LAKHS WHEREAS THE ASSESSEE HAD DECLARED RS. 94.70 LAKHS FOR FREIGHT RECEIPTS IN HIS PROFIT AND LOSS ACCOUNT AND, THEREFORE, FREIGHT RECEIPTS SHOWN BY THE ASSESSEE IN HIS PROFIT AND LOSS ACCOUNT AND AS FOUND IN FORM NO. 26AS IS NOT MATCHING AND WANTED TO ADD THE DIFFERENCE BY RECTIFYING THE MISTAKE U/S 154 OF THE ACT. HOWEVER, AS MENTIONED ELSEWHERE TILL DATE NO ACTION HAS BEEN TAKEN BY THE AO, BUT IT CANNOT BE SAID THAT THE AO NEVER MADE ANY VERIFICATION ON THIS COUNT. 14 14. IT IS TRUE THAT THE ASSESSMENT ORDER IS SILENT ON THIS ISSUE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD 203 IT R 108 HAS HELD AS UNDER: THE POWER OF SUO MOTU REVISION UNDER SUBSECTION (1) IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIO NER TO EXERCISE POWER OF REVISION UNDER THIS SUB - SECTION, VIZ., (I) THE ORDER IS ERRONEOUS; (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. IT HAS, THEREFORE, TO BE CONSIDERED FIRSTLY AS TO WHEN AN ORD ER CAN BE SAID TO BE ERRONEOUS. WE FIND THAT THE EXPRESSIONS 'ERRONEOUS', 'ERRONEOUS ASSESSMENT' AND 'ERRONEOUS JUDGMENT' HAVE BEEN DEFINED IN BLACK'S LAW DICTIONARY. ACCORDING TO THE DEFINITION, 'ERRONEOUS' MEANS 'INVOLVING ERROR; DEVIATING FROM THE LAW'. 'ERRONEOUS ASSESSMENT' REFERS TO AN ASSESSMENT THAT DEVIATES FROM THE LAW AND IS, THEREFORE, INVALID, AND IS A DEFECT THAT IS JURISDICTIONAL IN ITS NATURE, AND DOES NOT REFER TO THE JUDGMENT OF THE ASSESSING OFFICER IN FIXING THE AMOUNT OF VALUATION OF TH E PROPERTY. SIMILARLY, 'ERRONEOUS JUDGMENT' MEANS 'ONE RENDERED ACCORDING TO COURSE AND PRACTICE OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW OF LAW; OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIPLES'. 12. FROM THE AFORESAID DEFINITIONS IT IS CLEAR TH AT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME - TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO H IM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE 15 JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME - TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES M AY BE VISUALISED WHERE THE INCOME - TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMA TE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME - TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE - EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE INCOME - TAX OFFICER HAS EXERCISED THE QUASI - JUDICIAL POWER VESTED IN HIM IN ACCORDAN CE WITH LAW AND ARRIVED AT CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUE STION IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT THAT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, VIZ., THAT THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY, IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE THE SUBJECT - MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. WE, THEREFORE, HOLD THAT IN ORDER TO EXERCISE POWER 16 UNDER SUB - SECTION (1) OF SECTION 263 OF THE ACT THERE MUST BE MATERIAL BEFORE THE COMMISSIONER TO CONSIDER THAT THE ORDER PASSED BY THE INCOME - TAX OFF ICER WAS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE HAVE ALREADY HELD WHAT IS ERRONEOUS. IT MUST BE AN ORDER WHICH IS NOT IN ACCORDANCE WITH THE LAW OR WHICH HAS BEEN PASSED BY THE INCOME - TAX OFFICER WITHOUT MAKING ANY ENQ UIRY IN UNDUE HASTE. WE HAVE ALSO HELD AS TO WHAT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. AN ORDER CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE IF IT IS NOT IN ACCORDANCE WITH THE LAW IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE T O THE STATE HAS NOT BEEN REALISED OR CANNOT BE REALISED. THERE MUST BE MATERIAL AVAILABLE ON THE RECORD CALLED FOR BY THE COMMISSIONER TO SATISFY HIM PRIMA FACIE THAT THE AFORESAID TWO REQUISITES ARE PRESENT. IF NOT, HE HAS NO AUTHORITY TO INITIATE PROCEED INGS FOR REVISION. EXERCISE OF POWER OF SUO MOTU REVISION UNDER SUCH CIRCUMSTANCES WILL AMOUNT TO ARBITRARY EXERCISE OF POWER. IT IS WELL - SETTLED THAT WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SUCH POWER MUST HAVE MATERIALS ON RECORD TO SATISFY IT IN THAT REGARD. IF THE ACTION OF THE AUTHORITY IS CHALLENGED BEFORE THE COURT IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER THE RELEVANT OBJECTIVE FACTORS WERE AVAILABLE FROM THE RECORDS CALLED FOR AND EXAMINED BY SUCH AUTHORITY. THE INCOME - TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE INCOME - TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE 17 ASSESSEE. SUCH DECISION OF THE INCOME - TAX OFFICER CANNOT BE HELD TO BE 'ERRONEOUS' SIMPLY B ECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. MOREOVER, IN THE INSTANT CASE, THE COMMISSIONER HIMSELF, EVEN AFTER INITIATING PROCEEDINGS FOR REVISION AND HEARING THE ASSESSEE, COULD NOT SAY THAT THE ALLOWANCE OF THE CLAIM OF T HE ASSESSEE WAS ERRONEOUS AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDITURE OF CAPITAL NATURE. HE SIMPLY ASKED THE INCOME - TAX OFFICER TO RE - EXAMINE THE MATTER . THAT, IN OUR OPINION, IS NOT PERMISSIBLE. HENCE THE PROVISIONS OF SECTION 263 OF THE ACT WERE NOT APPLICABLE TO THE INSTANT CASE AND, THEREFORE, THE COMMISSIONER WAS NOT JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDER. 15. THIS VIEW FURTHER FINDS SUPPORT FROM THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SHRI PRAKASH BHAGCHAND KHATRI IN TAX APPEAL NO. 177 WITH TAX APPEAL NO.178 OF 2016, WHEREIN THE HON'BLE GUJARAT HIGH COURT WAS SEIZED WITH THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: - 'WHETHER THE TRIBUNAL IS RIGHT IN LAW AND ON FACTS IN UPHOLDING THE ORDER PASS ED BY THE CIT UNDER SECTION 263 OF THE ACT ON MERITS AND STILL STORING THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54 OF THE ACT TO THE FILE OF ASSESSING OFFICER EVEN THOUGH THE WORKING OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54F IS AVAILABLE IN THE ORDER UNDER SECTION 263 WHICH IS NOT DISPUT ED BY THE ASSESSEE BEFORE ITAT .' 18 1 0 . AND THE HON'BLE HIGH COURT, AFTER CONSIDERING THE FACTS, HELD AS UNDER: - '6. IT CAN THUS BE SEEN THAT THOUGH FINAL ORDER OF ASSESSMENT WAS SILENT ON THIS ASPECT, THE ASSESSING OFFICER HAD CARRIED OUT INQUIRIES ABOUT THE NATURE OF SALE OF LAND AND ABOUT THE VALIDITY OF THE ASSESSEE'S CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. LEARNED COUNSEL FOR THE REVENUE HOWEVER SUBMITTED THAT THESE INQUIRIES WERE CONFINED TO THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT IN THE CONTEXT OF FULFILLING CONDITIONS CONTAINED THEREIN AND MAY POSSIBLY HAVE NO RELEVANCE TO THE QUESTION WHETHER THE SALE OF LAND GAVE RISE TO A LONG TE RM CAPITAL GAIN. LOOKING TO THE TENOR OF QUERIES BY THE ASSESSING OFFICE AND DETAILS . A.Y. 2009 - 10 SUPPLIED BY THE ASSESSEE, WE ARE UNABLE TO ACCEPT SUCH A CONDITION. IN THAT VIEW OF THE MATTER, THE OBSERVATION OF THE TRIBUNAL THAT THE ASSESSING OFFICER H AVING MADE INQUIRIES AND WHEN TWO VIEWS ARE POSSIBLE, REVISIONAL POWERS COULD NOT BE EXERCISED, CALLED FOR NO INTERFERENCE. SINCE WITH RESPECT TO COMPUTATION AND ASSERTIONS OF OTHER ASPECTS OF DEDUCTION UNDER SECTION 54FOFTHE ACT, THE TRIBUNAL HAS REMANDED THE PROCEEDINGS, NOTHING STATED IN THIS ORDER WOULD AFFECT EITHER SIDE IN CONSIDERATIONS OF SUCH CLAIM. 7. NO QUESTION OF LAW ARISES. TAX APPEALS ARE DISMISSED.' 16 . THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD., 243 ITR 83, HAS LAID DOWN THE FOLLOWING RA TIO: 19 ' A BARE READING OF SECTION 263 OF THE INCOME - TAX ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICE R SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT -- IF THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIA L TO THE REVENUE -- RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WH EN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS '. 17. FACTS ON RECORD CLEARLY SHOW THAT NOT ONLY THE AO HAD MADE ENQUIRIES DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS BUT ALSO THE ASSESSEE GAVE SPECIFIC REPLIES WHICH WERE SUPPORTED BY DOCUMENTARY EVIDENCES. YET, THE CIT, IN HIS WISDOM, NOT ONLY PROCEEDED WITH HIS FALLACIOUS VIEW BUT ALSO COMPUTED THE ADDITI ON ON ACCOUNT OF NET PROFIT AT RS. 26,81,028/ - TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE FROM BUSINESS. 20 18. IN OUR UNDERSTANDING OF THE FACTS IN THE LIGHT OF JUDICIAL DECISIONS DISCUSSED ELSEWHERE, WE DO NOT FIND ANY ERROR IN THE ASSESSMENT ORDER WHICH COUL D MAKE IT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WHICH COULD HAVE PROMPTED THE CIT TO ASSUME JURISDICTION U/S 263 OF THE ACT. THEREFORE, TO THIS EXTENT, THE ORDER OF THE CIT IS BAD IN LAW AND ON FACTS OF THE CASE IN HAND. 19. SECOND ISSUE RELATES TO INSURANCE CLAIM RECEIVABLE SHOWN AT RS. 4,52,360/ - . 20. THE CIT IS OF THE OPINION THAT INSURANCE CLAIM WAS NOT RECEIVED IN A.Y 2007 - 08 AND SINCE THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNT, HE WAS LIABLE TO CREDIT I NSURANCE CLAIM RECEIVABLE IN PROFIT AND LOSS ACCOUNT ON ACCRUAL BASIS 21. THIRD ISSUE RELATES TO NON VERIFICATION OF TDS DETAILS IN RESPECT OF 10 PERSONS TO WHOM TOTAL FREIGHT PAID TO HIRE TANKER OWNERS TOTALLING TO RS. 84.24 LAKHS. 22. A PERUSAL OF THE ASSESSMENT ORDER VIS A VIS THE ENQUIRY MADE DURING THE ASSESSMENT PROCEEDINGS SHOW THAT THE AO DID NOT MAKE ANY ENQUIRY ON THESE ISSUES AND THE CIT HAS RIGHTLY ASSUMED JURISDICTION U/S 21 263 OF THE ACT AND HAS RIGHTLY SET ASIDE THESE ISSUES TO THE FILE OF TH E AO FOR PROPER VERIFICATION. THEREFORE, TO THE EXTENT OF THESE ISSUES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER FRAMED U/S 263 OF THE ACT AND ACCORDINGLY TO THIS EXTENT THE ORDER OF THE CIT IS CONFIRMED. 23. TO SUM UP, ON THE FIRST ISSUE, THE CIT HAS W RONGLY ASSUMED JURISDICTION U/S 263 OF THE ACT AND TO THAT EXTENT THE ORDER OF THE CIT IS SET ASIDE AND THAT OF THE AO IS RESTORED. ON THE OTHER TWO ISSUES, THE ORDER OF THE CIT IS UPHELD. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 3 579 /DEL/201 3 IS PARTLY ALLOWED . THE ORDER IS PRON OUNCED IN THE OPEN COURT ON 0 5 .0 7 .2018. S D / - S D / - [ BEENA PILLAI ] [ N.K. BILLAIYA ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 5 T H JU LY , 2018 VL/ 22 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER