ACIT, Cuttack V. Sukdev Singh, Cuttack

ITA 439/CTK/2010

• Counselvise Citation: 43922114 RSA 2010
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 25-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-12-2010
• Court: TRIBUNAL
• Keywords: Source of fund

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 439/CTK/2010 AND C.O.NO.21/CTK/2010 (FILED BY THE ASSESSEE) (ASSESSMENT YEAR ASST.COMMISSIONER OF INCOME - TAX , CIRCLE 2(2), CUTT ACK. VERSUS SUKDEV SINGH, GANGAMANDIR SQUARE,CUTTACK PAN: AIWPS 1197 G (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.C.MOHANTY, DR. FOR THE RESPONDENT SHRI S.N.SAHOO/K.SAHOO, ARS ORDER SHRI K.K. GUPTA, ACCOUNTANT MEMBER : THE REVENUE IS IN APPEAL ON A SOLITARY ISSUE AS CONSIDERED BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) WHO WAS NOT JUSTIFIED IN GIVING DIRECTION TO THE ASSESSING OFFICER TO ESTIMATE THE INCOME FROM COMMISSION RECEIVED OF 16,84,000 @5% FOLLOWING THE ORDER OF THE ITAT IN THE CASE OF M/S.HARI ROADWAY, CUTTACK V. ITO, WHICH IS UNREASONABLE AND ARBITRARY. 2. THE REVENUE AGITATES THAT THE ASSESSEE HAVING NOT SHOWN ANY COMMISSION PAYMENT IN THE PROFIT & LOSS ACCOUNT AND HAVIN G NOT ESTABLISHED THAT THERE WAS EXPENDITURE FOR EARNING OF COMMISSION, THE ENTIRE COMMISSION RECEIVED WAS REQUIRED TO BE TAXED AS WAS DONE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 3. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE AS SES SEE IS A PROPRIETORSHIP CONCERN DERIVING INCOME FROM TRANSPORT BUSINESS. RETURN OF INCOME OF 34,37,585 WAS FILED ALONG WITH TAX AUDIT REPORT U/S.44AB OF THE I.T.ACT. THE CASE WAS SCRUTINIZED UNDER THE PROVISIONS OF SECTION143(3) WHEN THE ASSESSING OFFICE R WAS UNABLE TO PROCURE DETAILS WITH THE PRODUCTION OF BOOKS OF ACCOUNT RELATING TO THE AUDITED FINANCIAL STATEMENTS HELD THAT THE ITA NO.439/CTK/2010 AND C.O.NO.21/CTK/2010 2 EXPENSES CLAIMED IS NOT VERIFIABLE AND IS LACKED VERIFICATION WITH RESPECT TO TDS, ESTIMATED THE INCOME OF THE ASSESSEE @2.73 % OF THE GROSS RECEIPTS FROM TRANSPORTATION. THE P & L ACCOUNT OF THE BUSINESS CONCERN INCLUDED GROSS RECEIPTS FROM TRANSPORTATION AS ALSO INTEREST ON SAVINGS BANK ACCOUNT AND INTEREST ON FIXED DEPOSITS AND ALSO SHOWED INCOME FROM COMMISSION AT 16,84,000.THE ASSESSING OFFICER ASSESSED INCOME U/S.143(3) AT 54,03,669. 4. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY, WHO CONSIDERED THE CASE OF THE ASSESSEE APPELLANT BEFORE HIM AND ALSO VERIFIED THE FACTS AS WERE SUBMITTED TO THE ASSESSI NG OFFICER WHEN HE CHOSE TO TAX INTEREST INCOME FROM SAVINGS BANK ACCOUNT AND ALSO INTEREST ON FIXED DEPOSITS AS INCOME FROM OTHER COURSES AS RETURNED BY THE ASSESSEE BUT RESTRICTED THE ADDITION ON ACCOUNT OF COMMISSION RECEIVED AT 5% THEREO F BY HOLDING THAT THE TRADING AND P & L ACCOUNT OF THE ASSESSEE INCLUDED THE AMOUNT OF EXPENSES CLAIMED WHICH DID NOT REQUIRE FURTHER VERIFICATION IN VIEW OF THE FACT THAT THE ASSESSING OFFICER HAD DISALLOWED EXPENSES BY ADOPTING THE FIXED RATE OF INCOME O N THE BASIS OF GROSS RECEIPTS FROM TRANSPORTATION BUSINESS. THE NET INCOME AT 2. 7 3% THEREFORE STOOD ACCEPTED BY THE LEARNED CIT(A) ON THE LEARNED COUNSEL FOR THE ASSESSEE AGREEING TO THE PROPOSITION TO THAT THE COMMISSION INCOME WAS NOT A SEPARATE INCOME B UT WAS ERRONEOUSLY GIVEN A NAME OF COMMISSION WHEN ACTUALLY IT WAS RECEIVED ON ACCOUNT OF TRANSPORTATION CARRIED OUT ON BEHALF OF A PARTICULAR PERSON WHICH DID NOT REQUIRE SEPARATE CLAIM FOR EXPENSES. THE ASSESSEE, AS SUCH, HAS NOT FILED FURTHER APPEAL AGA INST THE PART SUSTENANCE OF THE INCOME AS HAS BEEN SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE. ITA NO.439/CTK/2010 AND C.O.NO.21/CTK/2010 3 5. THE LEARNED DR SUBMITTED THAT A PART FROM GROSS BILL FROM TRANSPORTING AND DEBITS OF VARIOUS EXPENSES THE ITEMS INTEREST ON SAVINGS BANK A/C , INTE REST ON FIXED DEPOSIT AND C OMMISSION R ECEIVED HAVE BEEN CRE DITED TO THE P & L ACCOUNT. WHEN COMMISSION HAS BEEN CREDITED SEPARATELY FROM THE GROSS BILL FROM TRANSPORTING , IT DOES NOT REPRESENT RECEIPTS OF THE SAME NATURE AS THE LATTER. LIKE THE VARIOUS EXPENSES DEBITED TO THE TRADING AND PROFIT & LOSS A/C CANNOT BE ATTRIBUTED TO INTEREST ON SAVINGS BANK A/C OR FIXED DEPOSITS, THESE DO NOT REPRESENT CHARGES AGAINST COMMISSION RECEIVED. IN OTHER WORDS NO EXPENSES HAVE BEEN CLAIMED AGAINST COMMISSION AS AL SO AGAINST INTEREST ON SAVINGS BANK A/C AND FIXED DEPOSIT. AS PER ITEM 10 ON PAGE 1 OF THE ASSESSMENT ORDER AND FIRST LINES OF IT , THE ASSESSEE IS IN TRANSPORT BUSINESS AS DISTINGUISHED FROM AN EXCLUSIVE TRANSPORT COMMISSION BUSINESS. THIS NATURE OF BUSINE SS IS ALSO CORROBORATED BY THE COMPARATIVE SCALE OF RECEIPTS FROM TRANSPORTING VIS - - VIS C OMMISSION VIZ., 12,60,20,103 AS AGAINST A RELATIVELY PALTRY 16,84,000 RESPECTIVELY . 6. THE LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A) W HEN HE SUBMITTED THAT THE LEARNED HAS CIT(A) CONSIDERED ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE RELYING ON THE ORDERS OF THE ITAT IN THE CASES OF SHRI A.K.MOHANTY V. ITO FOR THE ASSESSMENT YEAR 1989 - 90 AND M/S.HARI ROADWAY V. ITO FOR THE AYS 1995 - 96, 19 96 - 97 AND 1997 - 98, WHEN THE COMPUTATION OF INCOME @5% ON TRANSPORTATION RECEIPTS WAS ON THE BASIS OF THE COMMISSION WHICH ALONE WAS THE MISNOMER IN THE HANDS OF THE ASSESSEE. HE POINTED OU T THAT THE REVENUE ACCEPTED 2.7 3% NP ON THE FACTS AS BROUGHT OUT BY THE ASSESSING OFFICER THEREFORE DID NOT REQUIRE FURTHER APPEAL WHEN THE COMMISSION WAS IN THE NATURE OF TRANSPORTATION RECEIPTS WAS ENHANCED TO BE TAXED @5% THEREOF IRRESPECTIVE OF THE DISALLOWANCE OF THE EXPENSES AS ITA NO.439/CTK/2010 AND C.O.NO.21/CTK/2010 4 SOUGHT TO BE MADE BY THE LEARNED DR. IN ANY CASE, THE CASE LAWS CITED BEFORE THE LEARNED CIT(A) WERE THAT INCOME FROM COMMISSION RECEIPTS RENDERED INCOME FROM 1 % TO 2.5% THEREFORE JUSTIFIED THE ACTION OF THE LEARNED CIT(A), WHO HAS DIRECTED THE ASSESSING OFFICER TO TAX @5% OF 16,84,000 AGAINST WHICH NO CORROBORATING MATERIAL HAS BEEN BROUGHT ON RECORD BY THE DEPARTMENT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LEARNED CIT(A). THE LEARNED CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE EXPENSES SOUGHT TO HAVE BEEN CLAIMED AGAINST COMMISSION RECEIPTS WHICH ALONE WAS A MISNOMER IN THE HANDS OF THE ASSESSEE WHEN THE TRANSPORTATION RECEIPTS HA VE BEEN TAX ED @2.73% BY THE ASSESSING OFFICER. NON - PRODUCTION OF BOOKS OF ACCOUNT THE RE FORE BECOMES IMMATERIAL INSOFAR AS THE LEARNED ASSESSING OFFICER AND THE LEARNED CIT(A) HAVE RELIED ON THE FACTS DULY DISCLOSED IN THE FINANCIAL STATEMENTS AUDITED AND CERTIFIED WE RE AVAILABLE AND MAINTAINED BY THE ASSESSEE. THE DISALLOWANCE OF EXPENSES THEREFORE CANNOT BE NOW RAISED UNLESS THE R E VENUE IS ABLE TO ESTABLISH THAT THE COMMISSION WAS NOT PART OF THE TRANSPORTAT IO N BUSINESS OF THE ASSESSEE. WE FIND FAVOUR IN THE CONTENTI ON OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER VERIFIED THE TDS FROM THE VARIOUS SOURCES OF INCOME THEREFORE, JUSTIFIED THAT THE COMMISSION , IF ANY, HAD BEEN SUBJECTED TO TDS WHEN THE PREPAID TAXES WERE GIVEN DUE CREDIT BY TH E ASSESSING OFFICER. THIS CLEARLY INDICATES THAT THE COMMISSION, WHICH THE REVENUE IS AGITATING BEFORE US IS A SOLITARY INCOME NOT TO BE TINKERED WITH FOR ASSESSMENT THEREFORE CONTRADICTS HIS OWN OBSERVATION OF ADOPTING 2.73% FOR TAXATION ON ACCOUNT OF TRA NSPORTATION RECEIPTS. THE LEARNED CIT(A) THEREFORE ITA NO.439/CTK/2010 AND C.O.NO.21/CTK/2010 5 DIRECTING THE ASSESSING OFFICER TO TAX @5% THEREOF WAS AGREED TO BY THE LEARNED COUNSEL BEFORE HIM REQUIRES NO FURTHER INTERFERENCE. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DIS MISS THE APPEAL OF THE REVENUE AND ALLOW THE CROSS OBJECTION FILED BY THE ASSESSEE SUPPORTING THE ORDER OF THE LEARNED CIT(A). 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED I N OPEN COURT ON DT. 5 TH AUGUST, 2011 S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 5 TH AUGUST, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: ASST.COM MISSIONER OF INCOME - TAX, CIRCLE 2(2), CUTTACK. 2. THE RESPONDENT: SUKDEV SINGH, GANGAMANDIR SQUARE,CUTTACK. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.