Sri Mohammed Maqsoor Ali, Raayachuru V. Income tax officer Ward-1, Raayachuru

ITA 366/BANG/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0258 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 28-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATYASAI RATH BENGALURU
• Assessee Lawyers: ASHOK A KULKARNI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT ITA NO. 366 /BANG/2019 ASSESSMENT YEAR : 20 1 0 - 1 1 SHRI MOHAMMED MAQSOOR ALI, PROP. M/S. HASS TRADING AND TRANSPORTATION, H.NO.1-4-4, V.V. GIRI ROAD, RAICHUR 584 101. P AN: AEAPA 3024J VS. THE INCOME TAX OFFICER, WARD 1, RAICHUR. APP ELLANT RESPONDENT APP ELLANT BY : SHRI ASHOK A. KULKARNI, ADVOCATE RESPONDENT BY : SHRI SATYASAI RATH, ADDL CIT(DR)(ITAT), BENGALURU. DATE O F HEARING : 25.06 .20 19 DATE OF PRONOUNCEMENT : 28 . 0 6 . 201 9 O R D E R THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORD ER DATED 16.07.2018 OF THE CIT(APPEALS), GULBARGA RELATING TO ASSESSMEN T YEAR 2010-11. 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL IS AS TO, WHETHER THE CIT(APPEALS) WAS JUSTIFIED IN CONFIRMIN G THE ADDITION OF RS,19,01,830 TO THE TOTAL INCOME OF ASSESSEE BY EST IMATING THE INCOME OF ASSESSEE FROM TRANSPORT BUSINESS @ 8% OF THE GROSS RECEIPTS OF RS.2,19,66,114 (WRONGLY MENTIONED AS RS.2,37,72,900 IN THE ORDER OF ASSESSMENT). ITA NO.366/BANG/2019 PAGE 2 OF 4 3. THE FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUA L, ENGAGED IN THE BUSINESS OF TRANSPORTATION. IT IS NOT IN DISPUTE T HAT THE TRANSPORTATION CHARGES RECEIVED BY THE ASSESSEE AS PER THE PROFIT & LOSS ACCOUNT WAS A SUM OF RS.2,19,66,114. IT WAS THE PLEA OF ASSESSEE THAT ASSESSEE WAS WORKING AS A FACILITATOR AND PROVIDING LORRIES FOR TRANSPORTATION. THE ASSESSEE EARNED ONLY A COMMISSION OF 2% AND THEREFO RE DECLARED A SUM OF RS.1,91,500 AS INCOME FROM BUSINESS OF TRANSPORTATI ON. THE AO CALLED UPON THE ASSESSEE TO SUBMIT DOCUMENTARY EVIDENCE LI KE BILLS/VOUCHERS TO PROVE THAT ASSESSEE WAS WORKING AS A COMMISSION AGE NT AND THE AMOUNTS HAVE BEEN PAID TO THE LORRY OWNERS. SINCE SUCH EVI DENCE WAS NOT FILED BY THE ASSESSEE, THE AO APPLIED 8% PROFIT RATE ON THE TOTAL AGGREGATE OF RS.2,37,72,900 REFLECTED IN THE BANK STATEMENT OF A SSESSEE AND ESTIMATED PROFIT OF THE ASSESSEE AT RS.19,01,830. THIS WAS A DDED TO THE TOTAL INCOME OF THE ASSESSEE DECLARED IN THE RETURN OF INCOME. 4. BEFORE THE CIT(APPEALS), THE ASSESSEE REITERATED HIS CASE THAT ESTIMATION OF INCOME AS DONE BY THE AO WAS UNREASON ABLE. THE SAID OBJECTION WAS, HOWEVER, REJECTED BY THE CIT(APPEALS ) BY HOLDING THAT WITHOUT BILLS & VOUCHERS IN RESPECT OF EXPENDITURE INCURRED, IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE SAME. ON THIS REA SONING, THE CIT(A) CONFIRMED THE ORDER OF AO. 5. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASSE SSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. I HAVE HEA RD THE RIVAL SUBMISSIONS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE EARNED ONLY 2% OF THE RECEIPTS IN THE FORM OF TRANSPORTATION CH ARGES OF RS.2,19,66,114, WHICH WAS A SUM OF RS.4,40,006. FROM THE GROSS COM MISSION EARNED, THE ASSESSEE DEDUCTED EXPENSES OF RS.2,48,506 AND DECLA RED THE NET PROFIT FROM TRANSPORTATION BUSINESS OF RS.1,91,500. THE C IT(A) CONFIRMED THE ORDER OF AO ONLY BECAUSE THERE WAS ABSENCE OF BILLS & VOUCHERS IN RESPECT OF EXPENDITURE INCURRED. THE OVERALL RECEIPTS FROM THE TRANSPORTATION ITA NO.366/BANG/2019 PAGE 3 OF 4 BUSINESS AND TRANSPORTATION CHARGES PAID AND THE MO DE OF OPERATION OF BUSINESS OF ASSESSEE AS CLAIMED BY THE ASSESSEE WAS NOT DISPUTED EITHER BY THE AO OR THE CIT(A). IT IS ALSO A FACT THAT TH E ASSESSEE DID NOT OWN ANY VEHICLES IN THE TRANSPORTATION BUSINESS. IT WAS THE REFORE SUBMITTED BY HIM THAT THE AO OUGHT NOT TO HAVE MADE THE IMPUGNED ADD ITION AND IF AT ALL SOME ADDITION HAS TO BE MADE, IT CAN ONLY BE DISALL OWANCE OF EXPENSES, WHICH WAS CLAIMED BY THE ASSESSEE AT A SUM OF RS.2, 48,506. HE POINTED OUT THAT THE EXPENSES CLAIMED BY ASSESSEE WERE REAS ONABLE AND IF AT ALL, ONLY A PART OF EXPENSES CAN BE DISALLOWED FOR WANT OF BILLS & VOUCHERS. 6. THE LD. DR RELIED ON THE ORDER OF CIT(APPEALS). 7. I HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVA L SUBMISSIONS AND I FIND MERIT IN THE SUBMISSIONS MADE ON BEHALF OF ASS ESSEE. THE ADMITTED POSITION IS THAT INCOME IN THE FORM OF TRANSPORTATI ON CHARGES HAS NOT BEEN DISPUTED BY THE AO. HE HAS DISPUTED ONLY THE EXPEN SES. EXPENSES ALSO INCLUDE TRANSPORTATION CHARGES PAID BY THE ASSESSEE WHICH FORMS ABOUT 98% OF THE TRANSPORTATION CHARGES RECEIVED BY THE A SSESSEE. THE ASSESSEE HAS PRODUCED BEFORE THE AO DETAILS OF TRAN SPORTATION CHARGES PAID BY HIM AND THESE ARE CONTAINED IN PAGES 105 TO 134 OF THE ASSESSEES PB-1 FILED BEFORE US. THE DETAILS OF OTHER EXPENSE S HAVE ALSO BEEN FILED. WHILE IT MAY CORRECT TO SAY THAT THE ACTION OF THE AO IN RESORTING TO A PROCESS OF ESTIMATION OF INCOME OF ASSESSEE BY DISR EGARDING THE BOOK RESULTS MAY BE JUSTIFIED, BUT THERE APPEARS TO BE N O BASIS FOR ESTIMATING INCOME @ 8% OF THE TRANSPORTATION CHARGES RECEIVED BY THE ASSESSEE. APART FROM THAT, THE AO HAS ALSO TAXED THE SUM OF R S.1,91,500 DECLARED AS INCOME FROM TRANSPORTATION CHARGES. I AM OF THE VI EW THAT THE ESTIMATION OF INCOME BY THE AO IS EXCESSIVE. ALL FACTS CONSIDERE D, ESTIMATION OF 3% OF THE RECEIPTS FROM TRANSPORTATION CHARGES WOULD MEET THE ENDS OF JUSTICE, WHICH WILL BE A SUM OF RS.6,58,983. THE AO IS DIREC TED TO ALLOW INDIRECT EXPENSES AS CLAIMED BY THE ASSESSEE OF RS.2,48,506. THUS, ESTIMATION OF ITA NO.366/BANG/2019 PAGE 4 OF 4 INCOME FROM TRANSPORTATION BUSINESS SHOULD BE A SUM OF RS.4,10,477. THIS SUM SHALL BE TAXED AS INCOME FROM BUSINESS IN PLACE OF RS.1,91,500 DECLARED BY THE ASSESSEE IN RETURN OF INCOME AND TH E SUM OF RS.20,93,330 DETERMINED AS TOTAL INCOME BY THE AO. 8. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS TR EATED AS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF JUNE, 2019. SD/- ( N.V. VASUDEVAN ) VICE PRESIDENT BANGALORE, DATED, THE 28 TH JUNE, 2019. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.