The Income Tax Officer, Abohar V. Sh. Barinderpal Singh Grewal, Fazilka

ITA 506/ASR/2013

• Counselvise Citation: 50620914 RSA 2013
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 506 (ASR)/2013 ASSESSMENT YEAR: 2008-09 PAN: AEIPG2066C INCOME TAX OFFICER, VS. SH. BRINDERPAL SINGH GRE WAL WARD-II(4), ABOHAR. PROP. M/S VIKRAM SIDH AK GOODS, CARRIERS, 187-NGM, FAZILKA (APPELLANT) (RESPONDENT) APPELLANT BY: SH. TARSEM LAL, DR RESPONDENT BY: SH. P.N. ARORA, ADVOCATE DATE OF HEARING: 24.03.2014 DATE OF PRONOUNCEMENT: 25.03.2014 ORDER PER BENCH 1) THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST IMPUGNED ORDER DATED PASSED BY THE COMMISSIONER OF INCOME TA X (APPEALS), BATHINDA, FOR THE ASSESSMENT YEAR 2008-09 ON THE FO LLOWING GROUNDS: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A), BATHINDA, HAS ERRED IN DELETING THE ADDITIO N MADE BY THE ASSESSING OFFICER ON ACCOUNT OF FREIGHT RECEIVABLES TO THE TUNE OF RS. 4,61,837/- WHICH WAS NOT ACCOUNT FOR THE GROSS RECEIPTS WHEREAS ALL THE EXPENSES HAD BEEN DEBITED TO THE PR OFIT & LOSS ACCOUNT. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A), BATHINDA, HAS ERRED IN DELETING THE ADDITIO N MADE BY THE 2 I.T.A. NO. 506 (ASR)/2013 ASSESSMENT YEAR: 2008-09 ASSESSING OFFICER ON ACCOUNT OF DISALLOWING VARIOUS EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT AMOUNTING TO RS. 5 ,54,610/-. 2) THE FACTS NARRATED BY THE REVENUE AUTHORITY ARE NOT DISPUTED BY BOTH THE PARTIES; THEREFORE THERE IS NO NEED TO REP EAT THE SAME FOR THE SAKE OF CONVENIENCE. AS PER THE ASSESSMENT ORDER DATED 21.12.2010 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF TH E INCOME-TAX ACT, 1961(IN SHORT THE ACT), THE ASSESSING OFFICER HAS MADE THE ADDITION IN DISPUTE, AS MENTIONED IN PARA NOS. 3 AND 4 OF THE A SSESSMENT ORDER, FOR THE SAKE OF CONVENIENCE, THE SAME ARE REPRODUCED AS UND ER: 3. THE ASSESSEE HAS DECLARED RECEIPTS AT RS. 1,4 2,30,488/- ON THE BASIS OF TDS CERTIFICATES. AS PER DETAILS OF 26 AS THE ASSESSEE HAS RECEIVED PAYMENT OF RS. 21,323/- FROM M/S. J. UDAY & COMPANY WHICH HAS NOT BEEN ACCOUNTED FOR BY THE ASSESSEE. THE ASS ESSEE HAS SHOWN FREIGHT RECEIVABLE AT RS. 4,61,837/-. FREIGHT RECEI VABLE HAS ALSO NOT BEEN ACCOUNTED FOR IN THE GROSS RECEIPTS WHEREAS ALL THE EXPENSES HAVE BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT. IT IS THEREFO RE CLEAR AND PRESUMED THAT AMOUNT OF RS. 21,323/- IS INCLUDED IN FREIGHT RECEIVABLE. THEREFORE FREIGHT RECEIVABLE AT RS. 4,61,837/- WHICH HAS NOT BEEN CORRECTLY ACCOUNTED FOR IS ADDED BACK TO THE INCOME OF THE AS SESSEE. 4. THE ASSESSEE HAS DEBITED EXPENSES OF RS. 1,16 ,66,813/- TO THE PROFIT & LOSS ACCOUNT UNDER THE VARIOUS HEADS I.E. BANK CHARGES, BONUS, COMPENSATORY ALLOWANCE, DIESEL & OIL EXPENSES, EFFI CIENCY ALLOWANCE, INSURANCE, INTEREST ON TRUCK LOANS WITH ICICI, INTE REST ON TRUCK LOANS WITH TATA, GENERAL TEA & REFRESHMENT, PARTS & REPAIR, PR INTING & STATIONARY, SALARY TO STAFF, DRIVER, CNR, TELEPHONE EXPENSES, T OUR EXPENSES, LEGAL FEES, HOME COMMUNICATION ALLOWANCE, PETROL, MISC. E XPENSES, CAR REPAIR ETC. THE ASSESSEE HAS FAILED TO PRODUCE THE DETAILS OF EXPENSES & EXPENDITURE BILLS/VOUCHERS IN SUPPORT OF EXPENSES D EBITED TO THE PROFIT & LOSS ACCOUNT. IN THE ABSENCE OF EXPENDITURE VOUCHER S, THE GENUINENESS OF THE EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT ARE N OT VERIFIABLE. IN THE 3 I.T.A. NO. 506 (ASR)/2013 ASSESSMENT YEAR: 2008-09 BUSINESS OF TRANSPORT CONTRACTOR EXPENSES LIKE DIES EL, DRIVERS SALARY, PARTS & REPAIRS OF THE VEHICLES ETC ARE INCIDENTAL TO THE BUSINESS. AFTER DUE CONSIDERATION OF ALL THE ASPECTS OF THE CASE 5% OF THE EXPENSES OTHER THAN INTEREST PAID ON TRUCK LOANS, WHICH COMES TO RS. 5, 54,610/- (5% OF RS. 11666813-303680-270929=11092204) ARE ADDED BACK TO THE INCOME OF THE ASSESSEE. 3) BEING AGGRIEVED WITH THE ASSESSMENT ORDER, THE A SSESSEE FILED AN APPEAL BEFORE LEARNED FIRST APPELLATE AUTHORITY. ON THE APPEAL FILED BY THE ASSESSEE, LEARNED FIRST APPELLATE AUTHORITY HAD DISCUSSED AND DECIDED THE ISSUES IN DISPUTE IN PARA NOS. 1.6 TO 4.4, PAGE NOS. 4 TO 8, WHICH ARE REPRODUCED AS UNDER: 1.6 THE A.O. HAS MADE ADDITION OF RS. 4,61,837/- BECAUSE OF THE FREIGHT RECEIVABLE HAS NOT BEEN CORRECTLY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. 1.7 THE A.O. HAS FURTHER ADDED RS. 5,54,610/- BEIN G 5% OF EXPENDITURE OF RS. 1,10,92,204/- (EXPENDITURE OF RS . 1,16,66,813/- (-) INTEREST PAID ON TRUCK LOANS WITH ICICI & TATA RS. 5,74,609/- = RS. 1,10,92,204/-). 2. DURING THE COURSE OF APPELLANT PROCEEDINGS, TH E A/R OF THE APPELLANT HAS ARGUED THAT IF THE ADDITIONS OF RS. 1 6,93,217/- ARE TAKEN INTO CONSIDERATION ALONGWITH THE RETURNED INCOME OF RS. 1,70,420/- THEN THE ASSESSED INCOME COMES TO RS. 18,63,460/- AND THE N ET PROFIT RATE ON THE GROSS RECEIPTS OF RS. 1,42,30,488/- COMES TO 13.09% WHICH IS HIGHLY EXCESSIVE. THE A/R OF THE APPELLANT HAS STATED THA T WHILE DEALING WITH THE CASE OF THE TRANSPORTERS WHERE BOOKS OF ACCOUNT WERE NOT PRODUCED BEFORE THE A.O., THE NET PROFIT RATE OF 3% WAS APPL IED IN THE CASE OF M/S VIJAY ROADWAYS, BATHINDA TRUCK OPERATOR UNION, BATH INDA IN ITA NO. 380(ASR)/2003 VIDE ORDER DATED 28.04.2006. THE ABOV E SAID ORDER WAS UPHELD BY THE I.T.A.T., AMRITSAR BENCH, AMRITSAR IN ITA NO. 72(ASR)/2010 VIDE ORDER DATED 30 TH AUGUST, 2010. THE RELIANCE HAS ALSO BEEN PLACED IN THE CASE OF SUNNY GURDEEP SINGH, BA THINDA IN APPEAL 4 I.T.A. NO. 506 (ASR)/2013 ASSESSMENT YEAR: 2008-09 NO. 427-IT/11-12 VIDE ORDER DATED 30.11.2012 FOR A .Y. 2009-10 IN WHICH THE ORDER OF THE HON'BLE I.T.A.T., AMRITSAR B ENCH, AMRITSAR HAS BEEN FOLLOWED BY ME WHILE DIRECTING THE A.O. TO APP LY NET PROFIT RATE OF 3% ON GROSS RECEIPTS. THE DEPARTMENT HAS ALSO ACCEP TED THIS ORDER WHILE FRAMING ASSESSMENT U/S 143(3) FOR A.Y. 2010-11 AND THE NET PROFIT OF 3% HAS BEEN APPLIED ON THE GROSS RECEIPTS. (COPIES OF RELEVANT ORDERS PLACED ON RECORD). HE HAS FURTHER ARGUED THAT THERE IS NO DISPUTED REGARDING THE GROSS RECEIPTS OF RS. 1,42,30,488/- WHICH HAS BEEN ACCEPTED BY THE A.O. EXCEPT THE ADDITION OF RS. 4,61,837/- ON ACCOUNT O F FREIGHT RECEIVABLE. 2.1 THE A/R OF THE APPELLANT HAS ALSO ARGUED THAT THE PROFIT ELEMENT OF RS. 4,61,837/- BEING THE FREIGHT RECEIVABLE CAN BE ADDED AND NOT THE WHOLE OF THE AMOUNT WHICH HAS BEEN ADDED BY THE A.O . 3. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF T HE A/R OF THE APPELLANT AND I FIND THAT THE APPELLANT FAILED TO P RODUCE THE BOOKS OF ACCOUNT DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE ACTION OF THE A.O. OF REJECTING THE BOOKS OF ACCOUNT AFTER APPLYI NG THE PROVISIONS OF SECTION 145(3) IS JUSTIFIED. BUT I AM ALSO CONVINCE D WITH THE ARGUMENTS OF THE A/R OF THE APPELLANT THAT THE ADDITIONS MADE BY THE A.O. HAS ENHANCED THE N.P. RATE TO 13% WHICH IS HIGHLY EXCES SIVE BECAUSE THE FIRST APPELLANT AUTHORITY AND A.O.S IN THE BATHINDA CHAR GE OF COMMISSIONER OF INCOME TAX HAS APPLIED NET PROFIT RATE OF 3% WHI LE MAKING BEST JUDGMENT ASSESSMENT AFTER APPLYING THE PROVISIONS O F SECTION 145(3) ON ACCOUNT OF NON-PRODUCTION OF BOOKS OF ACCOUNT. 3.1 THE HON'BLE I.T.A.T., AMRITSAR BENCH, AMRITSAR IN THE CASE OF THE BATHINDA TRUCK OPERATOR UNION, BATHINDA VS. ITO IN ITA NO. 380(ASR)/2003 VIDE ORDER DATED 28 TH APRIL, 2006 (PAGE 6-15 OF APB) WHILE RELYING ON THE JUDGMENT OF PRIVY COUNCIL IN T HE CASE OF CIT CENTRAL AND UNITED PROVINEER VS. LAXMI NARAIN BADRI DASS 5 ITR 370 AND WHILE DEALING WITH IDENTICAL FACTS, HELD THAT I N SUCH CIRCUMSTANCES THAT THE ACTION CANNOT BE TAKEN IN ARBITRARY MANNER THE A.O. IS DUTY BOUND TO MAKE A FAIR AND REASONABLE ESTIMATE OF INC OME BASED ON EVIDENCE AND MATERIAL ON RECORD. THE INCOME ESTIMAT ED SHOULD BE A FAIR ESTIMATE WHICH NO DOUBT INVOLVES CERTAIN AMOUNT OF GUESS WORK (PARA 8 PAGE 6 OF THE ORDER). THE HON'BLE I.T.A.T. FURTHER HELD IN THE JUDGMENT DISCUSSED SUPRA THAT FOR THE PURPOSE OF ESTIMATING THE INCOME OF THE ASSESSEE A.O. CAN REFER TO COMPARATIVE CASES ENGAG ED IN SIMILAR TRADE 5 I.T.A. NO. 506 (ASR)/2013 ASSESSMENT YEAR: 2008-09 AND ESTIMATED THE INCOME ON THE BASIS OF GP/NP SHOW N/ESTIMATED IN THOSE CASES (PARA 9 PAGE 7 OF THE ORDER). NO APPEA L WAS FILED BY THE DEPARTMENT AGAINST THIS ORDER BEFORE THE HIGH COURT . 3.2 THE HON'BLE I.T.A.T. WHILE DEALING WITH THE C ASE OF THE BATHINDA TRUCK OPERATOR UNION, BATHINDA IN ITA NO. 188(ASR)/2005 VIDE ORDER DATED 13 TH APRIL, 2007 FOR A.Y. 2001-02 HAS HELD ONCE IT IS HELD THAT THE BOOKS OF ACCOUNT ARE LIABLE TO BE REJ ECTED AND PROVISIONS OF SECTION 145(3) HAVE BEEN INVOKED, INCOME HAS TO BE ESTIMATED BY APPLYING REASONABLE AND FAIR RATE OF PROFIT IN RESP ECT OF ENTIRE RECEIPTS. NO APPEAL WAS FILED BY THE DEPARTMENT AGAINST THIS ORDER BEFORE THE HIGH COURT. 3.3 I HAVE FOLLOWED THE JUDGMENT OF HON'BLE I.T.A. T. IN THE CASE OF THE BATHINDA TRUCK OPERATOR UNION, BATHINDA AND VIJ AY ROADWAYS, BATHINDA (DISCUSSED SUPRA) WHILE DECIDING THE APPEA L OF SUNNY GURDEEP SINGH, BATHINDA FOR A.Y. 2009-10 (DISCUSSED SUPRA). THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT WHILE FRAMING ASSESSMENT IN HIS CASE BY APPLYING NET PROFIT RATE 3% IN A.Y. 2010-11. (COPY OF ASSESSMENT ORDER ON RECORD). I AM OF THE OPINION THAT NET PROFIT RAT E OF 3% SHOULD BE APPLIED IN THE GROSS RECEIPTS AND IT WOULD COVER AL L THE ADDITIONS. 3.4 IN VIEW OF THE FACTS AND LAWS DISCUSSED SUPRA I DIRECT THE A.O. TO APPLY NET PROFIT RATE OF 3% ON GROSS RECEIPTS FO R THE PURPOSE OF ESTIMATION OF INCOME FOR RELEVANT PERIOD. 4.1 NOW COMING TO THE ISSUE OF GROSS RECEIPTS ON W HICH THE NET PROFIT RATE IS TO BE APPLIED. THE A.O. HAS NOT DISP UTED THE RECEIPTS OF FREIGHT DECLARED BY THE APPELLANT AT RS. 1,42,30,48 8/-(AS REFLECTED IN THE AUDITED P&L ACCOUNT FILED BY THE APPELLANT DURING T HE ASSESSMENT PROCEEDINGS AND COPY OF WHICH HAS BEEN PLACED ON RE CORD) BUT HAS MADE ADDITION OF RS. 4,61,837/- ON ACCOUNT OF RECEIPTS WHICH HAS NOT BEEN TAKEN AS PART OF THE GROSS RECEIPTS. 4.2 THE A/R OF THE APPELLANT ARGUED THAT IN THE CA SE OF DEVI CHAND & CO. TALWANDI BHAI IN APPEAL NO. 61-IT/09-10 VIDE ORDER DATED 23.04.2013, IT HAS BEEN HELD BY CIT(A), BATHINDA TH AT ONLY EMBEDDED PORTION OF THE PROFITS IS TO TAKEN INTO CONSIDERATI ON AND NOT THE WHOLE AMOUNT OF SALE/RECEIPTS WHICH HAS NOT BEEN TAKEN AS PART OF THE GROSS 6 I.T.A. NO. 506 (ASR)/2013 ASSESSMENT YEAR: 2008-09 RECEIPTS. THE A/R OF THE APPELLANT HAS ARGUED THAT THE NET PROFIT RATE SHOULD ALSO BE APPLIED IN THE FREIGHT RECEIVABLE AM OUNTING TO RS. 4,61,837/- FOR WHICH SEPARATE ADDITION HAS BEEN MAD E BY THE A.O. 4.3 I HAVE CONSIDERED THE ARGUMENTS OF THE A/R OF THE APPELLANT AND I AM CONVINCED THAT ONLY PROFIT ELEMENT OF THE FREI GHT RECEIVABLE AMOUNTING TO RS. 4,61,837/- SHOULD BE ASSESSED AS I NCOME. THE INCOME TAX DEPARTMENT IS ALSO ADOPTING THIS METHOD WHICH I S EVIDENT FROM THE ASSESSMENT ORDER U/S 143(3) DATED 21.12.2012 IN THE CASE OF TRUCK UNION, SARDULGARH FOR A.Y. 2010-11 IN WHICH THE INCOME TAX OFFICER, WARD- 1(4), MANSA ASSESSED THE NET PROFIT @ 2.5% OF THE G ROSS RECEIPT FROM FREIGHT WHICH WERE NOT DECLARED IN THE RETURN OF I NCOME. THE HON'BLE I.T.A.T. BENCH, AMRITSAR HAS ALSO HELD IN THE CASE OF THE BATHINDA TRUCK OPERATOR UNION, BATHINDA WHILE DECIDING THE APPEAL FOR A.Y. 2000-01 AND 2001-02 THAT ONCE THE BOOKS OF ACCOUNT ARE REJE CTED THE INCOME HAS TO BE ESTIMATED BY APPLYING FAIR AND REASONABLE RAT E OF NET PROFIT ON THE ENTIRE RECEIPTS (PAGE 12 PARA 8 OF THE ORDER FOR A. Y. 2001-02). THIS ISSUE HAS ALREADY BEEN DECIDED BY ME IN THE CASE OF DEVI CHAND AND CO., TALWANDI BHAI IN APPEAL NO. 61-IT/09-10 VIDE ORDER DATED 23.04.2013. IN VIEW OF THE FACTS AND LAWS DISCUSSED SUPRA I DIRECT THE A.O. TO ADOPT THE GROSS RECEIPTS AMOUNTING TO RS. 1,46,9 2,325/- (RS. 1,42,30,488/- FREIGHT AS DECLARED IN THE PROFIT AND LOSS ACCOUNT + RS. 4,61,837/- FOR WHICH SEPARATE ADDITION HAS BEEN MAD E IN THE ASSESSMENT ORDER) FOR THE PURPOSE OF APPLICATION OF NET PROFIT RATE @ 3% FOR ESTIMATION OF INCOME FOR THE RELEVANT PERIOD. 4.4 I HAVE RESPECTFULLY FOLLOWED THE FINDINGS OF T HE HON'BLE SUPREME COURT IN THE CASE OF BERGER PAINTS 266 ITR 99 AND THE JURISDICTIONAL TRIBUNAL IN THE CASE OF THE BATHINDA TRUCK OPERATOR UNION, BATHINDA, THAT THE PRINCIPAL OF CONSISTENCY AND UNI FORMITY IN APPROACH IS REQUIRED TO BE FOLLOWED TO MAINTAIN JUDICIAL DISCIP LINE, TO GIVE THE FINDING THAT THE NET PROFIT RATE OF 3% SHOULD BE APPLIED ON ENTIRE RECEIPTS INCLUDING FREIGHT RECEIVABLE. 4) AFTER HEARING BOTH THE PARTIES AND PERUSING THE REL EVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE IMPUGNED ORDER, W E ARE OF THE VIEW THAT THE 7 I.T.A. NO. 506 (ASR)/2013 ASSESSMENT YEAR: 2008-09 LEARNED FIRST APPELLANT AUTHORITY HAS APPLIED THE N ET PROFIT @ 3% ON THE BASIS OF CASES WHICH ARE SIMILARLY SITUATED TO THE ASSESS EE AND DECIDED BY THIS BENCH, INCLUDING BATHINDA TRUCK OPERATOR UNION, BAT HINDA (SUPRA) AND THE ORDER OF THIS BENCH HAS BEEN ACCEPTED BY THE DEPART MENT. LEARNED FIRST APPELLATE AUTHORITY HAS PASSED A WELL REASONED ORDE R BY FOLLOWING THE ORDER OF THIS BENCH AND RIGHTLY DIRECTED THE ASSESSING OF FICER TO APPLY THE NET PROFIT @ 3% ON THE GROSS RECEIPTS FOR THE PURPOSE O F ESTIMATION OF INCOME FOR THE RELEVANT PERIOD AND DELETE THE ADDITION IN DISPUTE BECAUSE THESE ARE INCLUDED WHILE DETERMINING THE NET PROFIT @ 3% FOR ESTIMATION OF INCOME FOR THE RELEVANT PERIOD. THEREFORE, WE ARE OF THE V IEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY LEA RNED FIRST APPELLATE AUTHORITY. ACCORDINGLY, WE DISMISS THE APPEAL FILED BY THE REVENUE AND UPHOLD THE IMPUGNED ORDER DATED 22.05.2013 PASSED B Y LEARNED CIT(A), BATHINDA. 5) IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH, 2014 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH MARCH, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 8 I.T.A. NO. 506 (ASR)/2013 ASSESSMENT YEAR: 2008-09 1. THE ASSESSEE: SH. BRINDERPAL SINGH GREWAL PROP. M/S VIKRAM SIDHAK GOODS, CARRIERS, 187-NGM, FAZILKA 2. INCOME TAX OFFICER, WARD-II(4), ABOHAR. 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.