ACIT, Mandi V. Sh. Vikas Thakur, Bilaspur

ITA 649/CHANDI/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6126 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: SH
• Keywords: Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO. 649/CHD/2013 ASSESSMENT YEAR: 2008-09 THE ACIT VS. SH. VIKAS THAKUR, CIRCLE S/O SH. RAM LAL THAKUR MANDI BILASPUR PAN NO. AANPT9914F & C.O. NO. 23/CHD/2013 (IN ITA NO. 649/CHD/2013) ASSESSMENT YEAR: 2008-09 SH. VIKAS THAKUR, VS. THE ACIT BILASPUR CIRCLE MANDI PAN NO. AANPT9914F (APPELLANT) (RESPONDENT) APPELLANT BY : SH. J.S. NAGAR RESPONDENT BY : SH. PANKAJ SONI DATE OF HEARING : 24/04/2014 DATE OF PRONOUNCEMENT : 13.5.2014 ORDER PER SANJAY GARG, JUDICIAL MEMBER 2. WITH THIS COMMON ORDER WE WILL DISPOSE OFF THE A BOVE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTIONS OF THE ASSESSEE PREFFERED AGAINST THE 2 ORDER DATED 01/03/2013 OF CIT(A), SHIMLA RELATING T O ASSESSMENT YEAR 2008-09. FIRST, WE WILL TAKE UP THE APPEAL OF THE REVENUE:- ITA NO. 649/CHD/2013 REVENUES APPEAL 3. THROUGH THE GROUNDS OF APPEAL, THE REVENUE HAS A GITATED THE DELETION OF ADDITION OF RS. 20,80,000/- OUT OF THE TOTAL ADDITION OF RS. 31,20,000/- WHICH WAS MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT FOR THE FAILURE OF THE ASSESSEE TO DEDUCT TDS O N HIRING CHARGES WHICH WERE CLAIMED AS EXPENDITURE BY THE ASSESSEE. 4. THE BRIEF FACTS OF THE CASE ARE THAT DURING ASSE SSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED AN AMOUNT OF RS. 31,20,000/- AS EXPENDITURE INCURRED TOWARDS RUN NING EXPENSES OF THE VEHICLES IN RELATION TO HIS PROPRIETORSHIP CONCERN M/S VIKAS CONSTRUCTION. IT WAS MENTIONED THAT THE SAID CHARGES WERE VEHICL E HIRING CHARGES BUT THE ASSESSEE HAD NOT DEDUCTED TDS ON PAYMENT OF ABO VE CHARGES. THE ASSESSEE EXPLAINED THAT IN FACT THESES CHARGES WERE VEHICLE RUNNING CHARGES AND NO VEHICLE HIRING CHARGES WERE PAID BY THE ASSESSEE DURING THE YEAR. HENCE THE PROVISIONS OF SECTION 40(A)(IA) WERE NOT ATTRACTED. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE. HE THEREFORE, MADE AN ADDIT ION OF RS. 31,20,000/- INTO THE INCOME OF THE ASSESSEE U/S 40(A)(IA) OF T HE ACT. 3 5. DURING THE FIRST APPEAL, THE LD. CIT(A) THOUGH O BSERVED THAT THE FINDING OF THE ASSESSING OFFICER THAT SAID EXPENDI TURE ON ACCOUNT OF PAYMENT OF HIRING OF THE VEHICLES WAS BASED ON PRES UMPTIONS AND THERE WAS NOT EVIDENCE IN THIS RESPECT. HOWEVER, SHE OBS ERVED THAT THE EXPENDITURE SO CLAIMED BY THE ASSESSEE WAS NOT COMM ENSURATE WITH THE BUSINESS TURN OVER OF ASSESSEE AND THE ASSESSEE HAD FAILED TO PROPERLY EXPLAINED THE BUSINESS NEEDS OF THE ASSESSEE TOWARD S THE SAID EXPENDITURE. SHE, THEREFORE, TAKING INTO THE CONSIDERATION THE O VERALL FACTS AND CIRCUMSTANCES OF THE CASE DISALLOWED 1/3 RD OF THE ABOVE EXPENSES AMOUNTING TO RS. 10,40,000/- ALLOWED THE REMAINING EXPENSES OF RS. 20,80,000/-. THE REVENUE IS THUS IN APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE LD. REPRESENTATIVES OF THE PARTIES. 7. THE LD. CIT(A), WHILE APPRECIATING THE FACTS ON THE FILE AS PER HER DETAILED DISCUSSION ON THE ISSUE, HAS RIGHTLY OBSE RVED THAT THERE WAS NO EVIDENCE THAT THE ASSESSEE HAD PAID ANY HIRING CHAR GES. THE ASSESSING OFFICER HAD NOT BEEN ABLE TO BRING ANYTHING ON RECO RD THROUGH ANY INDEPENDENT ENQUIRIES OR EVIDENCE THAT THE ASSESSEE HAD ACTUALLY TAKEN ANY VEHICLE ON HIRE AND HAD PAID THE HIRING CHARGES. TH E ASSESSING OFFICER HAD MADE THE ABOVE OBSERVATION IN DISREGARD TO THE ACCOUNTS MAINTAINED ASSESSEE IN THIS REGARD. THE LD. CIT(A), AFTER FURTHER GOING THROUGH 4 THE DETAILS OF THE EXPENDITURE CLAIMED BY THE ASSES SEE AND TAKING INTO CONSIDERATION THE EXPLANATION GIVEN BY THE ASSESSEE HAD RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 1/3 RD OF THE TOTAL DISALLOWANCE MADE BY THE ASSESSING OFFICER. WE DO NOT FIND ANY INFIRMITY I N THE WELL REASONED ORDER OF THE CIT(A) WHICH HAS BEEN MADE AFTER GOING THROUGH FACTUAL DETAILS AND ACCOUNTS OF THE ASSESSEE. ACCORDINGLY, THE ORDER OF THE CIT(A) IS HEREBY UPHELD AND THE APPEAL OF THE REVE NUE IS HEREBY DISMISSED. CROSS OBJECTION NO. 23/CHD/2013. 8. THE ASSESSEE HAS FILED THE FOLLOWING CROSS OBJEC TIONS VIDE C.O. NO. 23/CHD/ 2013. 1. THAT THE LD CIT(A) HAS ALLOWED EXPENDITURE OF RS . 20,80,000/- OUT OF TOTAL EXPENDITURE OF RS. 31,20,0 000/- MADE BY THE LD. AO U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961. 2. THAT THE LD CIT(A) HAS ALLOWED EXPENDITURE OF RS . 20,80,000/- OUT OF TOTAL EXPENDITURE OF RS. 31,20,0 000/- (I.E. 1/3 OF SAID EXPENDITURE DISALLOWED) ON THE GROUND T HAT LD. AO HAS NOT BOUGHT ANY EVIDENCE ON RECORD THAT THE ASSE SSEE HAD ACTUALLY TAKEN HIRE-BASIS CERTAIN VEHICLES AND PAID THE HIRE CHARGES FOR THE SAME. 3. THE LD. CIT(A) HAS ERRED IN LAW WHILE UPHOLDING DEPRECIATION ON TIPPERS & JCB @ 15% AS TIPPERS AND JCB ARE ENTITLED TO DEPRECIATION @ 30% U/S SECTION 32 OF TH E INCOME TAX ACT, 1961 SINCE THESE VEHICLES ARE USED THEM ON HIRE. 5 4. THE LD. CIT(A) HAD ERRED IN LAW WHILE UPHOLDING THE ADDITION OF RS. 500,000/- MADE BY THE LD. ASSESSING OFFICER ON ARBITRARY AND HYPOTHETICAL MANNER. 9 THE LD. AR OF THE ASSESSEE AT THE OUTSET HAD STAT ED AT BAR THAT AS PER INSTRUCTIONS OF HIS CLIENT HE DOES NOT PRESS THE CR OSS OBJECTION NOS. 1 TO 3 ABOVE. HENCE, THE CROSS OBJECTIONS NOS. 1 TO 3 ARE HEREBY DISMISSED BEING NOT PRESSED. 10. VIDE CROSS OBJECTION NO.4, THE ASSESSEE HAS AGI TATED AN ADDITION OF RS. 5 LAKHS MADE BY THE ASSESSING OFFICER ASSESSING THE INCOME OF THE ASSESSEE IN RELATION TO HIS CONCERN M/S VIKAS SERVI CE STATION. 11. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS BEEN RUNNING A PETROL PUMP UNDER THE NAME AND STYLE OF M/S VIKAS S ERVICE STATION. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEB ITED VARIOUS EXPENSES IN THE PROFIT AND LOSS ACCOUNT OF THE SAID CONCERN, HENCE CLAMING NET LOSS OF RS. 14,147/- AGAINST THE GROSS PROFIT OF RS. 9,9 2,132/- FROM THE SALE OF THE OIL. HE ALSO NOTICED THAT ASSESSEE HAD FAILED TO FURNISH THE NECESSARY DETAILS, VOUCHERS, EVIDENCE ETC. IN RESPECT OF SUCH EXPENDITURE. HE, THEREFORE, ASSESSED THE INCOME OF THE ASSESSEE FROM M/S VIKAS SERVICE STATION AT RS. 5 LAKHS AND ADDED BACK THE SAME TO T HE INCOME OF THE ASSESSEE. 6 12. IN THE FIRST APPEAL, THE LD. CIT(A) ALSO NOTED THAT THE ASSESSEE HAD FAILED TO SUBMIT THE DETAILS OF VARIOUS EXPENSES AN D HAD FAILED TO ESTABLISH THE GENUINENESS OF THE EXPENDITURE CLAIMED. SHE, T HEREFORE, HELD THAT ACTION OF THE ASSESSING OFFICER IN ESTIMATING THE N ET INCOME OF THE ASSESSEE FROM THE ABOVE CONCERN AT RS. 5 LAKHS WAS JUSTIFIED. SHE THEREFORE, CONFIRMED THE ADDITION SO MADE BY THE AS SESSING OFFICER. 13. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH T HE PARTIES AND HAVE ALSO GONE THROUGH THE RECORDS. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ESTIMATION OF THE INCOME OF THE ASSESSEE FROM M/S VIKAS SERVICE STATI ON WAS BASED ON ESTIMATE AND PRESUMPTIONS. THERE WAS NO EVIDENCE O N THE FILE THAT THE ASSESSEE HAD EARNED THE ABOVE INCOME AS ESTEEMED BY THE ASSESSING OFFICER. THE INCOME HAS BEEN ASSESSED BY THE ASSES SING OFFICER TOTALLY IGNORING THE AUDITED ACCOUNTS OF THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAD MISTAKENLY CLAIMED THE DEPREC IATION ON JCBS IN RELATION TO M/S VIKAS SERVICE STATION WHEREAS THE J CBS WERE MAINLY USED IN VIKAS CONSTRUCTION, ANOTHER PROPRIETORSHIP CONCE RN OF THE ASSESSEE. IF THE MISTAKE IS RECTIFIED, THE LOSS OF M/S VIKAS SE RVICE STATION SHOWN AT RS. 14,147/- WOULD GET CONVERTED INTO OF RS. 1,88,4 35/-. HE HAS FURTHER SUBMITTED THAT EVEN OTHERWISE THE ESTIMATE OF INCOME AT RS. 5 LAKHS WAS ON MUCH HIGHER SIDE. 7 14. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES. THERE IS NO DENIAL OF THE FACT THAT THE ASSESSEE HA D CREDITED THE INCOME FROM VARIOUS OTHER ACTIVITIES INTO THE PROFIT AND LOSS ACCOUNT OF M/S VIKAS SERVICE STATION AND HAS ALSO DEBITED THE RELATED EX PENDITURE. AFTER DEBITING EXPENSES UNDER VARIOUS HEADS OF PROFIT AND LOSS ACCOUNT, THE ASSESSEE DECLARED NET LOSS OF RS. 14,147/- AGAINST THE GROSS PROFIT OF RS. 9,92,132/- FROM THE SALE OF OIL/RUNNING OF PETROL P UMP. THOUGH THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN AUDITED BUT TH E ASSESSEE, WHEN CALLED FOR PRODUCING THE NECESSARY DETAILS, IT HAD FAILE D TO JUSTIFY THE SAID EXPENDITURE WITH THE BILLS / VOUCHERS ETC. HENCE , WE DO FIND ANY FAULT WITH THE ACTION OF THE LOWER AUTHORITIES IN REJECTI NG THE CLAIM OF THE ASSESSEE DECLARING LOSS OF RS. 14,147/- FROM THE AB OVE PETROL PUMP. HOWEVER, IT HAS ALSO TO BE NOTICED THAT THE ASSESSI NG OFFICER ESTIMATED THE INCOME AT RS. 5 LAKHS ON PRESUMPTION BASIS WHICH IS ALSO NOT SUPPORTED WITH ANY EVIDENCE OR OTHER BASIS. WE FIND F ORCE IN THE CONTENTION OF THE LD. AR THAT THE ESTIMATION OF INCOME AT RS. 5 LAKHS MADE BY THE ASSESSING OFFICER WAS ON THE HIGHER SIDE. SO, KEEPI NG IN VIEW THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, THE ESTIMATION OF INCOME IS RESTRICTED TO RS. 3.5 LAKHS AGAINST RS. 5 LAKHS CONFIRMED BY T HE CIT(A). THUS, THE ASSESSEE GETS RELIEF OF RS. 1.5 LAKHS TOWARDS ESTIM ATION OF INCOME FROM 8 M/S VIKAS SERVICE STATION. THUS, THE CROSS OBJECTI ONS OF THE ASSESSEE ARE PARTLY ALLOWED. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS HER EBY DISMISSED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE ARE PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS _13.5.20 14. SD/- SD/- (T.R. SOOD) (SANJAY GARG ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 TH MAY, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR