Shri Harpreet Singh Chohan, Baroda V. The Income tax Officer,Ward-5(4), Baroda

ITA 666/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9961 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-09-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 02-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JHA SRDR
• Keywords: Unexplained cash credit; Gift; Depreciation; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.666/AHD/2010 ASSESSMENT YEAR:2004-05 DATE OF HEARING:6.9.10 DRAFTED: 6.9.1 0 HARPREET SINGH CHOHAN, 12/A,KALPANA NAGAR SOCIETY, HARNI NEW VIP ROAD, BARODA PAN NO.ADMPC2652D V/S . INCOME TAX OFFICER, WARD-5(4), BARODA (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SAKAR SHARMA, AR RESPONDENT BY:- SHRI S.K. JHA, SR-DR O R D E R THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF TH E ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-V, BARODA IN A PPEAL NO.CAB(A)/V/171/06-07 DATED 25-01-2010. THE ASSESSM ENT WAS FRAMED BY ITO WARD-5(4), BARODA U/S.143(3) OF THE INCOME-T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 27-11-2006 FOR ASSESSMENT YEAR 2004-05. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION OF RS.1,84,652/-. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUND NO.1 :- ITA NO.666/AHD/2010 A.Y.2004-05 HARPREET SINIGH CHOHAN V. ITO WD-5(4), BRD PAGE 2 1. THE LD. CIT(A) ERRED IN FACTS AND IN LAW IN CON FIRMING ADDITION OF RS.1,84,652/- OUT OF TRANSPORTATION INCOME ASSES SED BY THE ASSESSING OFFICER. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE IS CARRYING ON BUSINESS OF TRANSPORT IN THE NAME OF BARODA GOLDEN ROAD LINE AND HE HAS RECEIVED COMMISSION AT RS.5.65 LAKH AND CREDITED TO HIS PROFIT AND LOSS ACCOUNT AND ALSO RECEIVED AN AMOUNT OF RS.33,48,266/- AS PAYMENTS TO SUB-CONTRACTORS, AGAINST WHICH TAX O F RS.34,527/- WAS DEDUCTED AT SOURCE. BEFORE THE ASSESSING OFFICER, T HE ASSESSEE CONTENDED THAT IT HAD RECEIVED COMMISSIONS OF RS.5. 65 LAKH ONLY AND THE BALANCE IS PAYMENT TO SUB-CONTRACTORS. ACCORDING TO ASSESSEE, HE HAS ARRANGED TRANSPORT FOR CONSIGNOR AND EARNED COMMISS ION ON THE BASIS OF THESE AGREEMENTS WITH CONSIGNORS. ACCORDING TO ASSE SSING OFFICER THE ASSESSEE HAS RECEIVED CONTRACT AMOUNT OF RS.27,11,6 10/-, APART FROM THAT A SUM OF RS.6,54,900/- PERTAINS TO TDS CERTIFI CATES ISSUED IN OTHER PERSONS NAMES. AND TO THE EXTENT RS.27,11,610/- THE TDS CERTIFICATES ARE IN THE NAME OF THE ASSESSEE AND THE ASSESSEE HA S CLAIMED TDS OF RS.34,527/-. ACCORDINGLY, AO WORKED OUT RECEIPTS AT RS.34,01,510/- AND WORKED OUT THE INCOME AT RS.2,72,120/- APPLYING NET PROFIT RATE @ 8%. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND HE RESTRICTED ADDITION AT RS.1,84,652/- BY GIVING FOLLOWING FINDI NG IN PARA-4.3 OF HIS APPELLATE ORDER:- 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE SUBMISSIONS OF THE APPELLANT, THE ASSESSMENT ORDER AND THE REMAND REPORT. ALONG WITH THE RETURN OF INCOME THE APPELLANT FILED 111TDS CERTIFICATES, 86 OF WHICH WERE ISSUED IN THE NAME OF THE APPELLANT INDICATING RECEIPTS OF RS.27,11,610/- AND IN RESPECT OF OTHER 25 CERTIFICATES WHICH WERE IN THE NAMES OF OT HER PERSONS, THE RECEIPTS OF RS.6,54,900/- WERE SHOWN. IF THE CLAIM OF THE APPELLANT THAT HE IS MERELY A COMMISSION AGENT IS ACCEPTED TH EN THE TDS SHOULD HAVE BEEN IN RESPECT OF THE COMMISSION AMOUN T AND NOT RELATING TO TRANSPORTATION RECEIPTS. IT IS ALSO NOT CLEAR AS TO HOW THE ITA NO.666/AHD/2010 A.Y.2004-05 HARPREET SINIGH CHOHAN V. ITO WD-5(4), BRD PAGE 3 COMMISSION INCOME WAS RECORDED. IN ANY CASE THE APP ELLANT CANNOT CLAIM THE TDS NOT RELATING TO NON COMMISSION INCOME AND ALSO THOSE CERTIFICATES IN THE NAME OF OTHER PERSON S. IT IS ALSO NOTED THAT IN SIMILAR CASES OF TRANSPORT AGENTS, THE RECE IPTS ARE SHOWN AS TURNOVER AND THE PAYMENTS TO TRUCK DRIVERS/OWNERS A RE SHOWN AS EXPENDITURE AND IT IS NOT CLEAR AS TO WHY THE SAME PRACTICE WAS NOT EMPLOYED BY THE APPELLANT. I AM INCLINED TO AGREE W ITH THE AO THAT FROM THE DETAILS SUBMITTED IT IS NOT POSSIBLE TO CO RRECTLY ESTIMATE THE INCOME. I AM HOWEVER, IN AN AGREEMENT WITH THE APPELLANT THAT AN ESTIMATE OF 8% IS ON THE HIGHER SIDE AND CONSIDE RING THE FACTS AND THE CONTENTIONS OF THE APPELLANT REGARDING TRAD E PRACTICES IN THE BUSINESS BEING PARTIALLY TRUE, IN MY VIEW IT WO ULD BE FAIR TO ESTIMATE THE NET PROFIT @ 5% OF THE CONTRACT RECEIP TS OF RS.33,66,510/- (2711610 + 654900) I.E. RS.1,68,326/ -. FURTHER, IN RESPECT OF THE TRUCK PURCHASED IN MARCH, 2004, THE INCOME IS ESTIMATED @ RS.3,500/-. IN ADDITION THE AO WAS JUST IFIED IN TAXING THE PROFIT ON SALE OF TRUCK OF RS.12,826/-. HERE AG AIN, I AM NOT IN AGREEMENT WITH THE APPELLANT THAT THE SALE VALUE IS TO BE REDUCED FROM BLOCK WDV. THAT PROCEDURE IS TO BE USED FOR CA LCULATING THE WDV FOR PURPOSES OF DEPRECIATION WHEREAS ON SALE OF ANY ASSET IN TERMS OF SECTION 41(1), THE BALANCING CHARGE IS TAX ABLE IN SO FAR AS IT IS LESS THAN THE DEPRECIATION ALREADY CLAIMED. S INCE, THE NET PROFIT HAS BEEN ESTIMATED, NO FURTHER DEDUCTION IS TO BE A LLOWED ON ACCOUNT OF DEPRECIATION. TO SUM UP, THE ADDITION IS SUSTAINED TO THE EXTENT OF RS.1,84,652/- (168326 + 3500 + 12826) . GROUND NO.1 IS PARTLY ALLOWED. AGGRIEVED, NOW ASSESSEE CAME IN SECOND APPEAL BEFOR E TRIBUNAL. 4. HAVING HEARD THE RIVAL CONTENTIONS AND GOING THR OUGH THE FACTS AND CIRCUMSTANCES, I FIND THAT THE ASSESSEE IS IN BUSIN ESS OF TRANSPORTATION IN THE NAME OF BARODA GOLDEN ROAD LINE. AS REGARDS TO RECEIPTS THERE IS NO DISPUTE THAT THE CONTRACT RECEIPTS ARE AT RS.34, 01,510/-, REASON BEING THESE MAY BE RECEIPTS TO BE PAID TO SUB-CONTRACTORS OR HIS OWN COMMISSION. THE ASSESSING OFFICER HAS ESTIMATED THE NET RECEIPTS AT RS.8% TO BE TAKEN AS PROFIT OF THE ASSESSEE AND ACC ORDINGLY ASSESSED TRANSPORTATION INCOME AT RS.2,72,120/- AND MADE ADD ITION OF ITA NO.666/AHD/2010 A.Y.2004-05 HARPREET SINIGH CHOHAN V. ITO WD-5(4), BRD PAGE 4 RS.1,84,652/- AS AGAINST THE DECLARED INCOME OF THE ASSESSEE FROM TRANSPORTATION BUSINESS AT RS.1,07,380/-. I FURTHER FIND THAT THAT CIT(A) HAS TAKEN THE CONTRACT RECEIPTS FROM TRANSPORTATION AT RS.33,66,510/- AND APPLIED THE FAIR ESTIMATE OF NET PROFIT AT 5% AND E STIMATED THE TRANSPORTATION INCOME AT RS.1,68,326/-. THE CIT(A) ALSO SUSTAINED ADDITION OF TRUCK INCOME PURCHASED IN MARCH04 AT R S.35,000/- AND ALSO CONFIRMED TAXING THE PROFIT ON SALE OF TRUCK AT RS. 12,826/-. BEFORE ME THE LD. COUNSEL FOR THE ASSESSEE, SHRI SAKAR SHARMA STA TED THAT THE SALE VALUE IS TO BE REDUCED FROM VALUATION OF WDV, WHERE AS THE CIT(A) HAS CONFIRMED THE ADDITION ENTIRELY DIFFERENT ASPECT TH AT SALE OF ASSET IS NOT TO BE EXCLUDED FROM BLOCK WDV RATHER, IT IS TO BE USED FOR THE PURPOSE OF CALCULATING THE WDV FOR DEPRECIATION AND ACCORDING TO HIM, .THE SALE OF ANY ASSET IN TERMS OF SECTION 41(1) OF THE ACT, THE INCOME IS CHARGEABLE TO TAX FOR BALANCING CHARGE. ACCORDINGLY, HE MADE A DDITION OF RS.12,826/- AND ASSESSED THE INCOME AT RS.1,84,652/ -. I AM OF THE VIEW THAT ONCE THE CONTRACT RECEIPTS ARE ASSESSED BY EST IMATING THE PROFIT RATE AT 5%, ESTIMATING TRANSPORT INCOME AT RS.1,68,326/- , THEN NO FURTHER ADDITION IS REQUIRED. ACCORDINGLY, I DIRECT THE ASS ESSING OFFICER TO RE- COMPUTE THE INCOME OF TRANSPORT BUSINESS BY ADOPTIN G THE INCOME AT RS.1,68,326/- AS AGAINST THE INCOME DECLARED BY THE ASSESSEE AT RS.1,07,380/-. ACCORDINGLY, THIS ISSUE OF ASSESSEE S APPEAL IS PARTLY ALLOWED. 5. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION OF RS.1.01 LAKH O N ACCOUNT OF UNEXPLAINED CASH CREDITS. FOR THIS, ASSESSEE HAS RA ISED THE FOLLOWING GROUND NO.2 :- ITA NO.666/AHD/2010 A.Y.2004-05 HARPREET SINIGH CHOHAN V. ITO WD-5(4), BRD PAGE 5 2. THE LD. CIT(A) ERRED ON FACT AND IN LAW IN CONF IRMING ADDITION OF RS.1,01,000/- OUT OF TOTAL ADDITION OF RS.1,82,000/ - MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS. 6. HAVING HEARD THE RIVAL CONTENTIONS AND GOING THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSESSEE HAS INT RODUCED AN AMOUNT OF RS.1.82 LAKH IN HIS CAPITAL ACCOUNT. THE ASSESSE E HAS EXPLAINED THAT A SUM OF RS.50,000/- WAS OUT OF THE WITHDRAWAL OF RS. 1,06,597/-. IT WAS FURTHER CLAIMED THAT A SUM OF RS.31,000/- WAS RECEI VED FROM ASSESSEES BROTHER, SHRI GURBUXSINGH CHAUHAN, WHO IS AN AGRICU LTURIST AND CIT(A) ACCEPTED THIS AMOUNT OF RS.31,000/- AS EXPLAINED AN D BALANCE ADDITION OF RS.1.01 LAKH WAS RESTRICTED BY GIVING FOLLOWING FINDING IN PARA-5.3 OF HIS APPELLATE ORDER :- 5.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE SUBMISSIONS OF THE APPELLANT, THE ASSESSMENT ORDER AND THE REMAND REPORT. ALTHOUGH THE AO HAS NOT COMMENTED ON THE GIFTS DOCUMENTS NOW SUBMITTED, FROM EXAMINATION OF DOCUME NTS IT IS SEEN THAT THE APPELLANTS BROTHER GURUBAXSINGH CHAU HAN IS AN INCOME-TAX ASSESSEE HAVING PAN NO. AND CONSIDERING THE DOCUMENT SUBMITTED THE SOURCE OF RS.31,000/- IS TRE ATED AS EXPLAINED. HOWEVER, IN REGARD TO BALANCE OF RS.1,01 ,000/- THE CLAIM OF THE APPELLANT THAT IT IS OUT OF ITS OWN AG RICULTURAL INCOME IS NOT SUSTAINED. THUS, THE ADDITION IS RESTRICTED TO RS.1,01,000/-. GROUND NO.2 IS PARTLY ALLOWED. 7. BEFORE THE LOWER AUTHORITIES ASSESSEE CONTENDED THAT THE SUM OF RS.1.01 LAKH WAS FROM AGRICULTURAL INCOME OF ANCEST RAL LAND OF THE ASSESSEE. THE ASSESSEE HAS FILED A COPY OF JAMABAND I OF AGRICULTURE LAND TO PROVE OWNERSHIP AND LAND HOLDING, WHICH IS ENCLOSED AT PAGES 16-17 OF ASSESSEES PAPER BOOK. I FIND THAT ASSESSE ES OWN APPROXIMATELY 34 BIGHAS OF AGRICULTURAL LAND, WHICH MEANS THERE IS ABOUT 9 ACRES OF AGRICULTURAL LAND WITH THE ASSESSEE. THE ASSESSEE CLAIMED THAT HE HAS EARNED AGRICULTURAL INCOME OF RS.1.01 L AKH OUT OF THIS ITA NO.666/AHD/2010 A.Y.2004-05 HARPREET SINIGH CHOHAN V. ITO WD-5(4), BRD PAGE 6 AGRICULTURAL LAND. IN THE FITTINGS THINGS, I FEEL T HAT NO PURPOSE WILL SERVE IN CASE THE MATTER IS RESTORED BACK TO THE FILE OF ASS ESSING OFFICER, AND IN THAT EVENTUALITY, I PROPOSE TO THE ASSESSEE AS WELL AS LD. SR-DR THAT A FAIR ESTIMATE OF AGRICULTURAL INCOME CAN BE MADE AN D TO THAT EXTENT CAPITAL INTRODUCE TO BE TREATED AS EXPLAINED. ACCOR DINGLY, I ESTIMATE THAT THE ASSESSEE MIGHT HAVE SAVED A SUM OF RS.50,000/- OUT OF THE AGRICULTURAL INCOME DURING THE YEAR AND THIS MIGHT HAVE BEEN USED FOR INTRODUCTION OF CAPITAL. ACCORDINGLY, I DIRECT THE AO TO DELETE THE ADDITION OF RS.50,000/- OUT OF TOTAL ADDITION SUSTAINED BY C IT(A) AT RS.1.10 LAKH AND ACCORDINGLY RE-COMPUTE THE INCOME. THE ONLY REL IEF OF RS.50,000/- AND BALANCE RS.51,000/- IS SUSTAINED AND THIS ISSUE OF ASSESSEES APPEAL IS PARTLY ALLOWED. 8. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 06/09/2010 SD/- (MAHAVIR SIN GH) (JUDICIAL MEMBER) AHMEDABAD, DATED : 06/09/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-V, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD