ACIT, Chandigarh V. Sh. Prince Sharma, Chandigarh

ITA 493/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95527 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-09-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITENDER KUMAR
• Assessee Lawyers: ANIL BATRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 493/CHD/2015 ASSESSMENT YEAR: 2011-12 THE ACIT, VS SHRI PRINCE SHARMA, CIRCLE 5(1), L/H SHRI SHIV KUMAR SHARMA, CHANDIGARH. PLOT NO. 6, TRANSPORT AREA, SECTOR 26, CHANDIGARH. PAN: ADQPS0155B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JITENDER KUMAR RESPONDENT BY : SHRI ANIL BATRA DATE OF HEARING : 16.09.2015 DATE OF PRONOUNCEMENT : 18.09.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(APPEALS)-II CHANDIGARH DATED 26.02.2015 FOR ASSESSMENT YEAR 2011-12, CHALLENGING THE DELETION O F ADDITION OF RS. 2,22,61,267/-. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN BUSINESS OF TRANSPORTATION OF GOODS BY R OAD, HAD DECLARED TOTAL FREIGHT RECEIPTS OF RS. 18,41,90 ,569/- IN ADDITION TO SOME MISCELLANEOUS INCOME AND HAD CL AIMED EXPENSES OF RS. 15,90,88,647/-. THE ASSESSING OFFI CER HAS REPRODUCED THE DETAILS PROVIDED BY THE ASSESSEE IN THE 2 ASSESSMENT ORDER AND DISALLOWED LORRY HIRE CHARGES OF RS. 2,22,61,267/- WITH THE FOLLOWING OBSERVATIONS : 'FREIGHT EARNED (HIRED ITEM) RS. 18,41,90,569/- ADD: MISC. INCOME 1. DISCOUNT RECEIVED RS. 1,52,518/- 2. INTEREST RECEIVED RS. 10,000/- 3. INSURANCE CLAIM RS. 2,79,619/- 4. LORRY HIRE COLLECTION (LIFTING/HIRING OUT OWN RS. 2,14,33,296/- TRUCKS) TOTAL RS. 20,61,16,002/- LESS: DIRECT EXPENSES 1. HAMALI (LOADING/UNLOADING) RS. 32,70,592/- 2. LEGAL EXPENSES RS. 12,200/- 3. LORRY HIRE (PAYMENTS FOR HIRING THE TRUCKS) RS.4,37,44,563/- TOTAL (NET AS DECLARED BY APPELLANT IN P&L ACCOUNT) RS.15,90,88,647/- 4.1 A CAREFUL GLANCE AT THE ABOVE TABLE REVEALS THA T THE NET COLLECTION OF LORRY HIRE HAS BEEN DECLARED BY THE A PPELLANT AT RS. 2,14,83,296/-. ON THE OTHER HAND, THE PAYMEN TS MADE ON ACCOUNT OF LORRY HIRE HAVE BEEN REFLECTED AT RS. 4,37,44,563/-. IT IS VERY UNLIKELY SITUATION THAT T O EARN RS. 2.14 CRORES, THE APPELLANT HAS INCURRED EXPENSES OF RS. 4.37 CRORES. THIS WAY, THE APPELLANT HAS INCURRED A NET LOSS OF RS. 2.23 CRORES. NO PRUDENT BUSINESSMAN WOULD UNDER TAKE SUCH A VENTURE WHERE HE SUFFERS LOSSES OF MORE THAN 200% OF THE EARNINGS. THIS SITUATION IS NOT ACCEPTABLE A T ALL. UNDER SUCH CIRCUMSTANCES, EITHER THE RECEIPTS HAVE BEEN SUPPRESSED OR THE EXPENDITURE HAS BEEN INFLATED. IT IS HELD THAT THE APPELLANT HAS SUPPRESSED ITS RECEIPTS AND THE SAME DESERVES TO BE ASSESSED ATLEAST EQUAL TO THE AMOUNT OF EXPENDITURE, ASSUMING THE APPELLANT IS WORKING ON P ROFIT NO GAINS IN RESPECT OF HIRED TRUCKS. ACCORDINGLY, ADDI TION OF RS. 2,2,61,267/-(43744563- 21483296) IS MADE TO THE INCOME OF THE APPELLANT ON ACCOUNT OF SUPPRESSION O F LORRY HIRE COLLECTION. 3 3. THE LD. CIT(APPEALS) CONSIDERING SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION. HIS FINDINGS IN PA RA 3.3 AND 3.3.1 ARE REPRODUCED AS UNDER : 3.3 I HAVE CONSIDERED FACTS OF THE ISSUE. IT HAS B EEN EXPLAINED IN THE APPELLATE PROCEEDINGS THAT THE FRE IGHT EARNED IS AGAINST OWN BOOKINGS IRRESPECTIVE OF WHET HER THE GOODS WERE TRANSPORTED IN THE TRUCKS OWNED BY THE A PPELLANT OR TRUCKS HIRED FROM OTHERS, WHEREAS LORRY HIRE COL LECTION CHARGES ARE THE AMOUNTS RECEIVED ON HIRING OF TRUCK S THROUGH OTHERS (WHEN OWN BOOKING WAS NOT AVAILABLE). IN OTHER WORDS, THE 'FREIGHT EARNED' AND LORRY HIRE COL LECTION CHARGES' ARE RESPECTIVELY THE AMOUNTS EARNED FROM THE CUSTOMERS AGAINST OWN BOOKINGS BY GRS AND TRUCK HIRE CHARGES COLLECTED FROM OTHER TRANSPORTERS. IT HAS B EEN CONTENDED THAT THE LORRY HIRE CHARGES PAID ARE FOR H IRING TRUCKS. AS PER THE APPELLANT, THERE IS NO RELATIONSH IP BETWEEN THE RECEIPTS UNDER THE HEAD LORRY HIRE COLLECTION' AND EXPENSES INCURRED UNDER THE HEAD LORRY HIRE'. 3.3.1 THE ASSESSING OFFICER HAS CORRELATED T HE LORRY HIRE EXPENSES WITH LORRY HIRE COLLECTION CHARGES WHEREAS EXPE NSES ON ACCOUNT OF LORRY HIRE ARE NOT SOLELY IN RESPECT OF THE LORRY HIRE COLLECTION CHARGES. THE ASSESSING OFFICER HAS NOT UND ERSTOOD THE ACCOUNTING TREATMENT GIVEN BY THE APPELLANT TO VARIOUS RECEIPTS & EXPENSES AND HEADS' UNDER WHICH THE DIFFE RENT RECEIPTS/ EXPENSES WERE ENTERED. IT APPEARS THAT THE ASSESSING OFFICER HAS DRAWN HER OWN CONCLUSION WITHOUT CONFRON TING THE ISSUE TO THE APPELLANT, BUT THE INFERENCE DRAWN BY HER IS NOT CORRECT. THE ADDITION MADE ON THIS ACCOUNT IS ACCOR DINGLY DELETED. GROUND OF APPEAL NO. 2 IS ALLOWED. 3. ON CONSIDERING RIVAL SUBMISSIONS, WE DO NOT FIND AN Y MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE HAS FILED PROFIT & LOSS ACCOUNT AT PAGE 29 OF THE 4 PAPER BOOK SHOWING THE NET SERVICE CHARGES AT RS. 15,90,88,647/- AS PER SCHEDULE K. COPY OF SCHEDU LE K IS FILED AT PAGE 34 OF THE PAPER BOOK. THE SAME IS ALSO REPRODUCED BY THE ASSESSING OFFICER IN THE IMPUGNED ORDER. THE PROFIT & LOSS ACCOUNT SHOWS THAT AFTER INCURRING CERTAIN EXPENSES, THE NET PROFIT HAS BEEN DECLARED BY ASSESSEE AT RS. 92,57,060/- ON WHICH TH E ASSESSEE HAS ALSO FILED THE RETURN OF INCOME. THUS, NO INFIRMITY HAVE BEEN POINTED OUT IN THE PROFIT & LOS S ACCOUNT AS WELL AS SCHEDULE K FILED BY THE ASSESS EE. THE ASSESSING OFFICER, BY HIS OWN ASSUMPTIONS NOTED THA T THERE IS A NET LOSS IN THE BUSINESS OF THE ASSESSEE WHICH IS WHOLLY INCORRECT. IT IS NOT ALWAYS NECESSARY THAT BUSINESSMAN WOULD ONLY EARN THE PROFIT. IT IS ALWA YS LIKELY IN BUSINESS THAT THE BUSINESSMAN MAY ALSO SU FFER THE LOSS. THE ASSESSING OFFICER COULD NOT DICTATE T HAT ASSESSEE SHOULD ONLY EARN THE PROFIT, THEREFORE, TH E FINDINGS OF THE ASSESSING OFFICER WERE WHOLLY INCOR RECT IN MAKING THIS ADDITION WITHOUT ANY BASIS. 4. THE LD. CIT(APPEALS) CORRECTLY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE THAT FREIGHT EARNED IS AGAINST OWN BOOKING. THE ASSESSING OFFICER HAS WRONGLY CO- RELATED THE LORRY HIRE EXPENSES WITH LORRY HIRE COL LECTION CHARGES WHEREAS EXPENSES ON ACCOUNT OF LORRY HIRE CHARGES ARE NOT SOLELY IN RESPECT OF THE LORRY HIRE COLLECTION CHARGES. THE LD. CIT(APPEALS), THUS, ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD, CORRE CTLY 5 DELETED THIS ADDITION. THIS GROUND OF APPEAL OF THE REVENUE HAS NO MERIT. THE SAME IS ACCORDINGLY DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNES H SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH SEPT,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH