ITO, Ward-2, Karimnagar, Karimnagar V. Gudla Chandra Shekar, Karimnagar, Karimnagar

ITA 506/HYD/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6027 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-05-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 17-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D PRASAD RAO
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Rejection of books of accounts

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.506/HYD/2017 ASSESSMENT YEAR: 2013-14 ITO, WARD-2, KARIMNAGAR. VS. SHRI GUDLA CHANDRA SHEKAR, KARIMNAGAR. PAN AQSPG5017D (APPELLANT) (RESPONDENT) REVENUE BY : SHRI D. PRASAD RAO ASSESSEE BY : SHRI T. CHAITANYA KUMAR DATE OF HEARING : 29-05-2018 DATE OF PRONOUNCEMENT : 31-05-2018 ORDER PER SHRI B. RAMAKOTAIAH, AM: THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF CIT(A)-2, HYDERABAD DATED 30.12.2016. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PROPRIETOR OF LORRY TRANSPORT BUSINESS, ADMITTED INCOME OF RS. 7,77,120/-. IN THE SCRUTINY PROCEEDINGS, A.O REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE INCOME AT 5% OF THE GROSS RECEIPTS AND DETERMINED THE TOTAL INCOME AT RS. 68,30,701/-. 3. BEFORE LD. CIT(A), ASSESSEE CONTENTED THAT THE MARGIN OF INCOME WAS NOT THAT MUCH AND ASSESSEES TRANSPORT CHARGE ITSELF IS TO THE TUNE OF RS. 13.20 CRORES AND AFTER 2 ITA NO. 506/HYD/2017 SHRI G. CHANDRA SHEKAR, KARIMNAGAR. GIVING FUEL AND OTHER CHARGES, ASSESSEE SUBMITTED THAT INCOME CAN BE ESTIMATED AT 1.5%. LD. CIT(A) HAS ESTIMATED THE INCOME AT 3%, FOLLOWING THE COORDINATE BENCH DECISION BY STATING AS UNDER: 6.1 I HAVE GONE THROUGH THE AOS OBSERVATION AND ARS CONTENTIONS. IT IS SEEN FROM THE FACTS THAT THE A.O HAS ESTIMATED THE INCOME OF THE ASSESSEE @ 5% OF THE GROSS RECEIPTS OF RS. 13,72,66,257/- BY REJECTING THE ASSESSEES BOOKS OF ACCOUNT. THE AR CONTENDS THAT ESTIMATION OF INCOME @ 5% OF THE GROSS RECEIPTS IS ON THE HIGHER SIDE AND IF ALL THE EXPENDITURE INCURRED TOWARDS TRANSPORTATION CHARGES, FUEL CHARGES AND DRIVERS BATTA IS TAKEN INTO ACCOUNT, THE INCOME ADMITTED WORKS OUT TO 1.5% OF THE GROSS RECEIPTS. IT IS TO BE MENTIONED HERE THAT THE AR RELIED ON THE DECISION OF HONBLE ITAT, HYDERABAD BENCH B, HYDERABAD IN THE CASE OF SRI VEERA VADIVEL MURIUGAN IN ITA NO. 1919/HYD/2011 DATED 28.06.2012 FOR THE A.Y 2008-09 WHEREIN IT WAS HELD AS UNDER: 3. WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE ASSESSING OFFICER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE, ESTIMATED THE INCOME OF THE ASSESSEE AT 5% OF THE TOTAL TURNOVER OF RS.6,54,15,734/- CLEAR OF ALL THE EXPENDITURE, AND ACCORDINGLY DETERMINED THE INCOME OF THE ASSESSEE AT RS.32,70,790. ON APPEAL, THE CIT(A) UPHELD THE ASSESSMENT THUS MADE BY THE ASSESSING OFFICER. IN THE PROCEEDINGS BEFORE US, THE ASSESSEE WITHOUT QUESTIONING THE REJECTION OF THE BOOKS OF ACCOUNT, PLEADED THAT THE ESTIMATION OF INCOME ADOPTING A RATE OF 5% IS ON HIGHER SIDE AND NEEDS TO BE REDUCED. IT IS ALSO SUBMITTED THAT THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN NOT ALLOWING THE DEDUCTION IN TERMS OF S.40(B) ON ACCOUNT OF INTEREST AND REMUNERATION TO PARTNERS FROM SUCH ESTIMATED INCOME. ON CAREFUL CONSIDERATION OF THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ESTIMATION OF INCOME OF THE ASSESSEE MADE BY THE ASSESSING OFFICER ADOPTING A RATE OF 5% IS ON HIGHER SIDE, AND IT WOULD MEET THE ENDS OF JUSTICE IF THE INCOME IS ESTIMATED APPLYING A RATE OF 3%. IN DECIDING THE ISSUE AS ABOVE, WE CONSIDERED THE FACT THAT THE ASSESSEE DOES NOT OWN TRUCKS USED IN THE BUSINESS AND IS INCURRING HUGE INCIDENTAL EXPENDITURE. FROM SUCH INCOME ESTIMATED APPLYING RATE OF 3%, DEDUCTION TOWARDS INTEREST AND REMUNERATION TO PARTNERS 3 ITA NO. 506/HYD/2017 SHRI G. CHANDRA SHEKAR, KARIMNAGAR. IN TERMS OF S.40(B) OF THE ACT MAY BE ALLOWED. WE ARE SUPPORTED IN THIS BEHALF BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.668/HYD/2009 AND THEE OTHERS IN THE CASE OF M/S. C.ESWARA REDDY & CO., HYDERABAD, RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, WHEREIN THE TRIBUNAL, VIDE PARA 14 OF ITS ORDER DATED 31.1.2011, EVEN IN A CASE COVERED BY THE PROVISIONS OF S.44AD, HAS DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION TOWARDS SALARY AND INTEREST AND SALARY PAID TO SRI VEERA VADIVEL MURUGAN TRANSPORT AGENCY, KODAD, NALGONDA DIST. PARTNERS, FROM OUT OF THE INCOME ESTIMATED IN TERMS OF S.44AD OF THE ACT. ACCORDINGLY, IMPUGNED ORDER OF THE CIT(A) IS SET ASIDE, AND THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE INCOME OF THE ASSESSEE. ACCORDINGLY, ASSESSEE'S GROUND NO.2 IS PARTLY ALLOWED AND GROUND NO3 IS ALLOWED. AS THE ISSUE INVOLVED IS SIMILAR, RESPECTFULLY FOLLOWING THE RATION LAID DOWN IN THE DECISION MENTIONED SUPRA, THE A.O IS DIRECTED TO ESTIMATE THE INCOME OF THE ASSESSEE @ 3% OF THE GROSS RECEIPTS. AS A RESULT, THE GROUNDS RAISED ARE PARTLY ALLOWED. 4. ASSESSEE IS NOT IN APPEAL BUT REVENUE IS AGGRIEVED ON THE ABOVE. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE ORDERS OF THE AUTHORITIES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). A.O HIMSELF IN PARA 5 OF THE ORDER ADMITS THAT ASSESSEE HAS ACTED AS AN AGENT WHO FACILITATED TRANSPORT FOR GRANITE FIRMS FROM TRANSPORTERS AND EARNED COMMISSION. IF THAT BEING THE CASE, THE COMMISSION CANNOT BE MORE THAN WHAT IS ALREADY BEEN DETERMINED BY LD. CIT(A) AT 3%. CONSIDERING THE FACTS OF THE CASE, WE DO NOT SEE ANY REASON TO CONSIDER THE REVENUE GROUNDS. IN THE RESULT GROUNDS ARE REJECTED. 4 ITA NO. 506/HYD/2017 SHRI G. CHANDRA SHEKAR, KARIMNAGAR. 6. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2018. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST MAY, 2018. KRK 1) SHRI G. CHANDRA SHEKAR, PROP: SRI LAXMI GANAPATHI AGENCIES, H. NO. 2-10-1946, BHAGYANAGAR, KARIMNAGAR, PIN 505 001. 2) ITO, WARD-2, HYDERABAD. 3) CIT(A) -2, HYDERABAD. 4) THE ADDL. CIT, KARIMNAGAR RANGE. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE