P. Ramesh Chand, Hyd, Hyderabad V. ITO, Ward-11(1), Hyderabad, Hyderabad

ITA 375/HYD/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6409 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2016
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: B SHANTHI KUMAR
• Keywords: Depreciation
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 375/HYD/2016 ASSESSMENT YEAR: 2006-07 P. RAMESH CHAND, HYDERABAD [PAN: AHGPP4533J] VS INCOME TAX OFFICER, WARD-11(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI B. SHANTHI KUMAR, AR FOR REVENUE : SHRI K.E. SUNIL BABU, DR DATE OF HEARING : 30-06-2016 DATE OF PRONOUNCEMENT : 13-07-2016 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-5, HYDERABAD, WHO HAS DETERMINED THE PROFIT RATE AT 5% AS AGAINST 6% ASSESSED BY THE ASSESSING OFFICER (AO) BUT ACCEPTED AT 3% BY ASSESSE E BEFORE THE CIT(A). THE GROUNDS ARE RAISED ACCORDINGLY. 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL AND IS P ROPRIETOR OF DHATRI AUTO CABS, ENGAGED IN HIRING VEHICLES TO MAHIN DRA AND MAHINDRA LIMITED. ASSESSEE, IT SEEMS OWNS ABOUT THIRT Y VEHICLES AND ALSO HIRES VEHICLES FOR HIS BUSINESS. EVEN THOU GH THERE IS NO BIFURCATION ON THE RECEIPTS FROM THESE OWNED/HIRED VEH ICLES, THE GROSS RECEIPTS DURING THE YEAR AMOUNTED TO RS. 2,96,34 ,702/-. ON THIS, ASSESSEE HAS DECLARED A PROFIT OF RS. 3,89,076/ - WHICH IS LESS THAN 2% OF THE GROSS RECEIPTS. IN VIEW OF THE NON-COM PLIANCE TO VARIOUS NOTICES ISSUED BY THE AO, HE REJECTED THE BOOK S OF ACCOUNTS/STATEMENTS FILED BY ASSESSEE AND ESTIMATED THE INCOME AT 6% OF GROSS RECEIPTS, AFTER TAKING INTO ACCOUNT THE DEPRECIATION I.T.A. NO. 375/HYD/2016 P. RAMESH CHAND :- 2 -: ALLOWABLE. THE ASSESSED INCOME WAS DETERMINED AT RS. 17,78,082/-. 3. BEFORE THE LD. CIT(A), ASSESSEE QUESTIONED INVOKIN G THE PROVISIONS OF SECTION 144 AND ALSO ESTIMATION OF INCOM E AT 6%. ASSESSEE FILED THE ORDER OF ITAT IN THE CASE OF ITO VS. BHAVENDRA JHA IN ITA NO. 2696/DEL/2012 DT. 13-12-2013, REQUESTI NG THE LD. CIT(A) TO RESTRICT THE ESTIMATION TO 3% OF THE GROSS RE CEIPTS. HOWEVER, LD. CIT(A) CONSIDERING THE NATURE OF BUSINE SS, NUMBER OF VEHICLES OWNED AND OPERATED BY ASSESSEE, DETERMINED THE PROFIT AT 5% OF THE GROSS RECEIPTS. ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE ITAT. 4. LD. COUNSEL WHILE SUBMITTING THAT ASSESSEE HAS FILE D AUDITED ACCOUNTS, HOWEVER, HAS NO OBJECTION FOR REJECTION OF B OOKS OF ACCOUNT AND ESTIMATION OF INCOME AS ASSESSEE HAS GONE OUT OF BUSINESS AFTER THE CONTRACT WAS OVER. IT WAS SUBMITTED THAT THE ESTIMATION MAY BE REDUCED TO 3% AS DETERMINED BY THE IT AT IN THE ABOVE REFERRED CASE. 5. LD. DR HOWEVER, SUBMITTED THAT ESTIMATION OF 5% IS REASONABLE ON THE FACTS OF THE CASE. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE STATEMENTS PLACED ON RECORD. EVEN THOUGH ASSESSEE HA S TURNOVER OF RS. 2.96 CRORES, THERE WAS NEITHER A COMPLIANCE TO VARIOUS NOTICES ISSUED NOR PRODUCTION OF BOOKS OF ACCOUNT BE FORE THE AO FOR EXAMINATION. THEREFORE, REJECTION OF BOOKS OF AC COUNT HAVING NOT BEEN CONTESTED, HAS BECOME FINAL. THE ONLY ISSU E TO BE CONSIDERED IS ESTIMATION OF PROFIT ON THE TOTAL RECEIPTS. I.T.A. NO. 375/HYD/2016 P. RAMESH CHAND :- 3 -: 6.1. I HAVE PERUSED THE ORDER OF THE CO-ORDINATE BEN CH IN THE CASE OF ITO VS. BHAVENDRA JHA IN ITA NO. 2696/DEL/2012 ( SUPRA). IN THAT, THE FACTS INDICATE THAT AO ESTIMATED THE INCOME U/S. 4 4AD OF THE ACT IN THE ABSENCE OF BOOKS AND ALSO DISALLOWED 1 5% OF THE CLAIM OF EXPENDITURE. LD. CIT(A) FOLLOWING HIS PRE DECESSORS ORDERS IN AY. 2006-07, NOTICED THAT ASSESSEE HAS OWN VEHICLE S AS WELL AS HIRED VEHICLES AND IN THE ABSENCE OF BIFURCATION, ESTI MATED THE INCOME AT 3%. SINCE THESE ARE CONSIDERED FACTUALLY, ITAT HAS APPROVED THE SAME WITH THE OBSERVATION THAT WE ARE UNABLE TO SEE ANY PERVERSITY, AMBIGUITY OR OTHER VALID REASON TO INTERFERE WITH THE OBSERVATIONS AND FINDINGS OF THE CIT(A) IN THE IMPU GNED ORDER. EVEN THOUGH, THE ITAT AFFIRMED THE ORDER OF LD.CIT(A), NOWH ERE ITAT HAS DETERMINED THAT 3% OF THE INCOME IS REASONABLE. EACH CASE MERITS ON ITS OWN. CONSIDERING THE NATURE OF ASSESSEES BUSI NESS AND NUMBER OF VEHICLES USED IN THE HIRING BUSINESS, OWN ED AS WELL AS HIRED, I AM OF THE OPINION THAT IT WOULD BE REASONABLE IF THE INCOME IS ESTIMATED AT 4% OF THE GROSS RECEIPTS AS AGAINST 5% D ETERMINED BY THE CIT(A). THEREFORE, I DIRECT THE AO TO ESTIMATE THE INCOME @ 4% ON GROSS RECEIPTS IN AUTO CAB BUSINESS. IF ASSE SSEE HAS OFFERED ANY OTHER INCOME OTHER THAN PERTAINING TO THIS B USINESS, THE SAME CAN BE BROUGHT TO TAX SEPARATELY AS PER THE COM PUTATION OF INCOME FILED BY ASSESSEE. WITH THESE OBSERVATIONS , APPEAL IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JULY, 2016 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 13 TH JULY, 2016 TNMM I.T.A. NO. 375/HYD/2016 P. RAMESH CHAND :- 4 -: COPY TO : 1. SHRI P. RAMESH CHAND, HYDERABAD. C/O. SHRI B. SH ANTHI KUMAR, ADVOCATE, 111, TARAMANDAL COMPLEX, 5-9-13, SAIFABAD, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-11(1), HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-5, HYDERABAD , 4. THE PR. COMMISSIONER OF INCOME TAX-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.