Hitesh Rastogi, Ghaziabad V. DCIT, Ghaziabad

ITA 4863/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7251 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT JAIN SENIOR
• Keywords: Depreciation
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.4863/DEL./2013 (ASSESSMENT YEAR : 2008-09) SHRI HITESH RASTOGI, VS. DCIT, CIRCLE 1, PROP. BULAND GUPTA GOODS CARRIER, GHAZIABAD. SA 109, SHASTRI NAGAR, GHAZIABAD (UP). (PAN : AFIPR2882J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.P. RASTOGI, ADVOCATE REVENUE BY : SHRI AMIT JAIN, SENIOR DR DATE OF HEARING : 23.11.2015 DATE OF PRONOUNCEMENT : 27.01.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS FI LED AGAINST THE ORDER OF THE CIT (APPEALS), MUZAFFARNAGAR DATED 14.06.2013 F OR THE ASSESSMENT YEAR 2008-09. 2. THE SOLITARY GROUND TAKEN BY THE ASSESSEE IS AGA INST THE SUSTENANCE OF DISALLOWANCE OF RS.4 LAKHS OUT OF THE FREIGHT AND F UEL EXPENSES. 3. THE ASSESSEE IS PROPRIETOR OF M/S. BULAND GUPTA GOODS CARRIER AND IS ENGAGED IN TRANSPORT BUSINESS AND SUPPLY OF BUILDIN G MATERIAL. THE ASSESSEE ITA NO.4863/DEL./2013 2 HAD HIS OWN TRUCKS AND ALSO ENGAGED TRUCKS OF OTHER S FOR TRANSPORTING THE MATERIAL AND MADE PAYMENTS TO THE TRUCK OWNERS. TH E ASSESSEE FILED RETURN OF INCOME ON 30.09.2008 AT RS.5,93,612/-. THE CASE WA S TAKEN UP FOR SCRUTINY AFTER THE APPROVAL OF CCIT, GHAZIABAD. ACCORDINGLY , THE NOTICES U/S 143(2) AND 142(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) WERE ISSUED. IN RESPONSE, THE AR FOR THE ASSESSEE ATTENDED THE A SSESSMENT PROCEEDINGS FROM TIME TO TIME AND FILED WRITTEN SUBMISSIONS ALO NG WITH NECESSARY DETAILS. THE AO, AFTER CONSIDERING THE SUBMISSIONS OF THE AR FOR THE ASSESSEE, MADE CERTAIN ADDITIONS. THE AO OBSERVED THAT THE ASSESSE E HAD CLAIMED FREIGHT/FUEL/OTHER CHARGES AMOUNTING TO RS.39,51,55 0/- AND THE ASSESSEE ALSO FILED COPY OF THIS ACCOUNT WHICH SHOWED THAT MOST OF THESE EXPENSES WERE ON PURCHASE OF FUEL WHEREAS A PORTION THEREOF WAS PAYM ENT OF FREIGHT TO OTHER PARTIES, FROM WHOM THE ASSESSEE HIRED TRUCKS FOR TR ANSPORTATION. THE AO OBSERVED THAT IN THE ABSENCE OF THE BILLS, NEITHER THE AMOUNT CLAIMED WAS VERIFIABLE NOR THE NATURE OF THE EXPENSES OR PROPOR TION OF FUEL EXPENSES AND FREIGHT EXPENSES IN THE GROSS AMOUNT COULD BE ASCER TAINED, SO REJECTED THE BOOKS OF THE ASSESSEE. HE ALSO OBSERVED THAT FREIG HT PAYMENTS ALSO ATTRACTED TDS DEDUCTION LIABILITY. THEREFORE, THE AO MADE A LUMP SUM DISALLOWANCE OF RS.5 LAKHS TAKING INTO ACCOUNT THE UNVERIFIABLE NATURE OF THESE EXPENSES. ITA NO.4863/DEL./2013 3 3.1 AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE T HE FIRST APPELLANT AUTHORITY AND THE LD. CIT (A) PARTLY CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT THE AO HAD MADE ADDITION OF RS.5,00,000/- ON THE GROUND THAT THE APPELLANT HAD PRODUCED ONLY COMPUTER GENERATED CASH BOOK BUT BILLS/VOUCHER IN R ESPECT OF EXPENSES DEBITED UNDER THE HEAD 'FREIGHT & FUEL EXPENSES' WE RE NOT FURNISHED. SINCE THE BOOKS OF ACCOUNT WERE NOT COMPLETE IN ABSENCE O F BILLS/VOUCHERS, THEREFORE THE AO WAS PERFECTLY JUSTIFIED IN REJECTI NG THE SAME BY INVOKING PROVISIONS OF SECTION 145(3) OF THE ACT. FURTHER NE T PROFIT DECLINED TO 12.98% AS AGAINST RS.16.83% SHOWN IN THE IMMEDIATEL Y PRECEDING YEAR. THUS THE BASIS OF DISALLOWANCE MADE BY THE AO IS UP HELD IN PRINCIPLE BUT IS ON THE HIGHER SIDE. IT WOULD AMPLY MEET THE ENDS OF JUSTICE IF THE AMOUNT OF DISALLOWANCE IS RESTRICTED TO RS.4,00,000/-. THU S THE APPELLANT IS ENTITLED FOR RELIEF AT RS.1,00,000/- ON THIS SCORE. GROUND O F APPEAL NO.3 IS PARTLY ALLOWED. 4. THE ASSESSEE, BEING AGGRIEVED, AGAINST THE SUSTE NANCE OF ADDITION OF RS.4 LAKHS IS IN APPEAL BEFORE US. 5. LD. AR FOR THE ASSESSEE REITERATED THE SUBMISSIO NS MADE BEFORE THE LD. CIT (A) AND SUBMITTED THAT DURING THE YEAR UNDER C ONSIDERATION, THE ASSESSEE HAD RECEIVED THE TRANSPORTATION. CHARGES A T RS.61,44,530/- AGAINST WHICH THE ASSESSEE HAD CLAIMED THE FREIGHT AND FUEL CHARGES ETC. AT RS.39,51,550/ -. HE FURTHER SUBMITTED THAT IN THE P RECEDING YEAR, THE TRANSPORTATION RECEIPTS WERE OF RS.36,82,297/- AGAI NST WHICH THE FREIGHT AND FUEL CHARGES WERE CLAIMED AT RS.21,56,080/- WHICH W ORKED OUT TO 58.55% OF THE RECEIPTS, WHEREAS DURING THE YEAR UNDER CONSIDE RATION, SUCH CHARGES WORK OUT TO 58.17% OF THE RECEIPTS. HE SUBMITTED THAT THE BOOKS OF ACCOUNT HAD BEEN REJECTED BY THE AO ON ACCOUNT OF NON-AVAILABIL ITY OF THE RELEVANT ITA NO.4863/DEL./2013 4 VOUCHERS FOR SUCH EXPENSES AND MADE THE DISALLOWANC E. BUT, HE SUBMITTED THAT FOR MAKING THE DISALLOWANCE, THE AO HAD NOT GI VEN ANY BASIS. HE SUBMITTED THAT THAT AFTER REJECTION OF THE BOOKS OF ACCOUNT, THE AO HAD TO MAKE BEST JUDGMENT OF ASSESSMENT AND SUCH BEST JUDG MENT HAD TO BE MADE BASED ON THE MATERIAL AVAILABLE ON RECORD AND ON TH E BASIS OF SOME OTHER COMPARABLE SIMILAR ASSESSEES. HE SUBMITTED THAT TH E REJECTION OF BOOKS DID NOT MEAN THAT THE DISALLOWANCE HAD TO BE MADE. HE FURTHER SUBMITTED THAT THE AO HAS ALSO FAILED TO GIVE ANY BASIS FOR SUCH HUGE DISALLOWANCE AND ALSO NOT BROUGHT ANY COMPARABLE CASES FOR JUSTIFICATION OF S UCH DISALLOWANCE. HE FURTHER SUBMITTED THAT HOWEVER, IN THE YEAR UNDER C ONSIDERATION, THE RECEIPTS FROM THE TRANSPORTATION CHARGES HAD INCREASED TREM ENDOUSLY IN COMPARISON TO THE PRECEDING YEAR AND THE FUEL AND FREIGHT CHARGES ETC. HAD BEEN REDUCED IN COMPARISON TO THE PRECEDING YEAR. HE ALSO SUBMITTE D A CHART IN THIS REGARD WHICH IS REPRODUCED BELOW :- AY 2008-09 AY 2007-08 TOTAL RECEIPTS RS.61,44,530/- RS.59,31,687/- FREIGHT/FUEL/OTHER CHARGES RS.21,92,980/- RS.21,56,080/- %AGE OF FREIGHT / FUEL 35.69% 36.34% AO/CIT DISALLOWED RS.4 LAKHS NIL ITA NO.4863/DEL./2013 5 THE LD. AR FURTHER SUBMITTED THAT THE NET PROFIT RA TE IN THE YEAR UNDER CONSIDERATION WAS 20.13% WHEREAS IN THE PRECEDING Y EAR IT WAS 16.80% AND IN THIS REGARD, HE HAS SUBMITTED A COMPARATIVE CHAR T OF TRADING RESULTS WHICH IS AS UNDER :- COMPARATIVE CHART OF TRADING RESULTS PARTICULARS 2008-09 2007-08 RECEIPTS 6,144,530.00 5,931,687.00 GROSS PROFIT 2,192,980.00 1,825,077.00 G.P. RATE 35.68% 30.70% NET PROFIT 1,237,205.00 999,757.00 N.P. RATE 20.13% 16.80% AFTER DEPRECIATION 13.03% 7.44% HE SUBMITTED THAT THE ASSESSMENT ORDER FOR PRECEDIN G YEAR I.E. 2007-08 HAD ALSO BEEN MADE SCRUTINY ASSESSMENT U/S 143(3) OF TH E ACT. THE LD. AR POINTED OUT THAT IF INCOME U/S 44AE IS CALCULATED F ROM 4 TRUCKS OF THE ASSESSEE, THEN IT WOULD BE RS.1,68,000/-, WHEREAS T HE ASSESSEE HAS DECLARED INCOME OF RS.5,93,612/- WHICH IS FAR MORE THAN THE INCOME WHICH IS PRESCRIBED BY SAID SECTION FOR SIMILAR ASSESSEES ; AND SINCE THE FUEL EXPENSES OF 36.34% WAS ACCEPTED IN SCRUTINY IN THE PRECEDIN G ASSESSMENT YEAR, FUEL EXPENSES OF ONLY 35.69% SHOULD HAVE BEEN ACCEPTED. THE LD. AR, RELYING ON ITA NO.4863/DEL./2013 6 THE DECISIONS MADE BEFORE THE LD. CIT (A), PLEADED THAT THE ORDERS OF THE AUTHORITIES BELOW BE SET ASIDE ON THIS ISSUE AND TH E ADDITION BE DELETED. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL. WE FIND THAT BOOKS OF THE ASSESSEE HAS BEEN REJECTED BY THE AO B ECAUSE THE ASSESSEE COULD NOT PRODUCE BILLS AND HAS MADE AN AD HOC DISALLOWAN CE OF RS.5 LAKHS, WHICH HAS BEEN REDUCED BY THE CIT (A) TO RS.4 LAKHS, GIVI NG A RELIEF OF RS.1 LAKH TO THE ASSESSEE. WE FIND THAT THE ASSESSEE IS INTO TR ANSPORT BUSINESS AND HAS 4 TRUCKS. IN THE PRECEDING ASSESSMENT YEAR (AY 2007- 08), THE ASSESSMENT WAS CARRIED OUT U/S 143(3) OF THE ACT, WHEREIN THE FUEL EXPENSES OF RS.21,56,080/- WAS ACCEPTED BY THE DEPARTMENT, WHICH WORKED OUT TO 36.34% OF THE TOTAL RECEIPT OF RS.59,31,687/-. IN THE INSTANT YEAR, TH E ASSESSEE CLAIMED FREIGHT/FUEL/OTHER CHARGES OF RS.21,92,980/-, WHEN THE TOTAL RECEIPT WAS RS.61,44,530/- WHICH WORKS OUT TO 35.69% ONLY. WHE N THE DEPARTMENT HAS ACCEPTED THE EXPENDITURE OF 36.34% IN AY 2007-08, I N THAT YEAR, SO WHEN THE EXPENSES IS LESS I.E. 35.69% IN THIS YEAR, THE AD H OC DISALLOWANCE WITHOUT BRINGING IN COMPARABLE CASES IS NOT JUSTIFIED. MOR EOVER, AS PER SECTION 44AE, THE INCOME FROM FOUR TRUCKS WORKS OUT TO RS.1,64,00 0/- WHEREAS THE ASSESSEE HAS DECLARED AN INCOME OF RS.5,93,612/- WHICH PUTS THE ASSESSEES CASE IN A BETTER POSITION; AND THE ASSESSEES CONTENTION THAT TAKING INTO CONSIDERATION ITA NO.4863/DEL./2013 7 THE TRANSPORT BUSINESS CARRIED OUT BY THE ASSESSEE, WHEREIN EXPENSES ARE INCURRED FOR WHICH NO BILLS CAN BE OBTAINED ALWAY S, CANNOT BE RULED OUT. SO WE FIND FORCE IN THE ARGUMENT OF THE LD. AR, THAT I N THE AFORESAID FACTS AND CIRCUMSTANCES AND CONSIDERING THE PREVIOUS YEAR RES ULTS TOO, THE AD HOC DISALLOWANCE WAS NOT WARRANTED. SO WE DIRECT DELET ION OF THE ADDITION. WE ORDER ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 27 TH DAY OF JANUARY, 2016. SD/- SD/- (O.P.KANT) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 27 TH DAY OF JANUARY, 2016. TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.