SHRI AGARSEN TRANSWAYS PVT. LTD., NASIRABAD V. INCOME TAX OFFICER, WARD-2-3, AJMER

ITA 676/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0554 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 17-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI SINGH
• Assessee Lawyers: DHIRAJ BORAD; M.L. BORAD
• Keywords: Corroborative evidences; Set aside; Bogus
• Section: 145; 133(6); 143(2); 13; 145(3); 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 694/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2015-16 JAI NAKODA ROADWAYS PVT. LTD., 452, PATEL COLONY, MAKHUPURA, WARD NO. 29, AJMER. CUKE VS. INCOME TAX OFFICER WARD-2(2), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCJ 7715 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 676/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2015-16 SHRI AGARSEN TRANSWAYS PVT. LTD., FRAMJI CHOWK, NASIRABAD. CUKE VS. INCOME TAX OFFICER WARD-2(3), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAMCS 9338 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 677/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2015-16 AMIT ROAD CARRIER INDIA PVT. LTD. HOTEL SHANTI PALACE, PANCH BATTI CHOURAHA, NASIRABAD. CUKE VS. INCOME TAX OFFICER WARD-2(3), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAGCA 9562 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI DHIRAJ BORAD (CA) & SHRI M.L. BORAD (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI JAI SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/09/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 17/09/2018 ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 2 VKNS'K@ ORDER PER: BENCH THESE THREE APPEALS BY THE THREE DIFFERENT ASSESSEE S ARE DIRECTED AGAINST THE THREE SEPARATE ORDERS DATED 12/03/2018 OF LD. CIT(A), AJMER FOR THE A.Y. 2015-16 RESPECTIVELY. 2. SINCE THE ISSUES RAISED IN THESE THREE APPEALS A RE IDENTICAL AND ARISING FROM THE SIMILAR FACTS AND CIRCUMSTANCES, T HEREFORE, FOR THE SAKE OF CONVENIENCE, THESE THREE APPEALS WERE CLUBBED TOGETH ER FOR HEARING AND ADJUDICATION. 3. ITA NO. 694/JP/2018 IS TAKEN AS A LEAD CASE FOR THE PURPOSE OF RECORDING THE FACTS AND FINDINGS. IN THIS APPEAL, T HE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE IMPUGNED ORDER PASSED BY THE LEARNED COMMIS SIONER (APPEALS), AJMER TO THE EXTENT PREJUDICIAL TO THE APPELLANT IS BAD IN LAW AND LIABLE TO BE QUASHED. 2. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND LAW APPLICABLE PROVISIONS OF SECTION 145(3) OF THE I.T. ACT ARE INAPPLICABLE AND CONSEQUENTLY UPHOLDING BY THE LEAR NED COMMISSIONER (APPEALS) OF REJECTION OF BOOK RESULTS U/S. 145(3) OF THE I.T. ACT MADE BY THE AO IS NOT VALID AND NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW. 3. THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDING THE APPLICATION OF NET PROFIT RATE OF 1.5% AS AGAINST D ECLARED N.P. RATE OF 0.19% AND CONSEQUENTIALLY CONFIRMING THE TRADING AD DITION OF RS.21,12,644/- (ADDITION MADE BY THE AO RS.37,29,38 7/- MINUS ADDITION DELETED BY COMMISSIONER (APPEALS) RS. 16,1 6,743/-) TO THE ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 3 TOTAL INCOME OF THE ASSESSEE COMPANY. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SUSTENANCE OF N ET PROFIT RATE OF 1.5% AS AGAINST DECLARED NP RATE OF 0.19% AND CONSE QUENTIALLY SUSTAINING TRADING ADDITION OF RS.21,12,644/- IS ER RONEOUS AND UNJUSTIFIED AND IN THE ALTERNATIVE IT IS HIGHLY EXC ESSIVE. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND OR SUBSTITUTE ONE OR MORE GROUNDS OF APPEAL AS AND WHEN NEEDED. 4. GROUND NO. 1 OF THE APPEAL IS GENERAL IN NATURE AND HAS NOT BEEN PRESSED BY THE ASSESSEE. THE LD AR OF THE ASSESSEE MADE STATEMENT AT BAR THAT THE ASSESSEE DOES NOT PRESS GROUND NO.1. A CCORDINGLY, GROUND NO. 1 OF THE APPEAL IS DISMISSED BEING GENERAL AND NOT PRESSED BY THE ASSESSEE. 5. GROUND NO. 2 OF THE APPEAL IS REGARDING REJECTIO N OF BOOKS OF ACCOUNT U/S 145(3) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT). THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND ENGAGED I N PROVIDING TRANSPORTATION WORK OF DIFFERENT PARTIES THROUGH THE THIRD PARTY VEHICLES. THUS THE ASSESSEE IS NOT HAVING ANY VEHICLE OR LORRY BUT ONLY WORKING AS A INTERMEDIARY IN PROVIDING TRANSPORTATION SERVICE TO THE CLIENTS BY HIRING THE VEHICLES FROM THIRD OWNERS. THE ASSESSEE FILED RETUR N OF INCOME THROUGH E-FILING ON 29/9/2015 DECLARING TOTAL INCOME OF RS. 3,11,790/-. IN THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER ON EXAMI NATION OF THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS HAS OBSERVED THAT THE A SSESSEE HAD PAID TOTAL FREIGHT OF RS. 15,95,77,213/- TO NUMBER OF VOLUMINO US TRUCK/TRAILER ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 4 OWNERS AND MOST OF THE FREIGHT HAVE BEEN PAID IN CAS H TO THE VEHICLE DRIVERS. FROM THE VOUCHERS, THE COMPLETE DETAILS OF THE RECIPIENT REGARDING THEIR IDENTITY, ADDRESS OR CONFIRMATION OF OWNERS OF THE VEHICLES WERE NOT ASCERTAINABLE. THE ASSESSEE PRODUCED SELF MADE VOUCH ERS, THUS THE ASSESSING OFFICER NOTED THAT IT IS NOT CLEAR WHETHER THE RECIPIENT OWNER OF THE TRUCKS HAS ACCOUNTED FOR THIS ENTIRE CASH PAYME NT OR NOT. THE ASSESSEE PRODUCED A COPY OF THE LEDGER AS APPEARING IN THE BOOKS OF ACCOUNT FOR VERIFICATION OF THE PAYMENTS MADE TO TH E TRUCK/TRAILER OWNERS. THE ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF TH E ACT TO 11 PARTIES TO WHOM THE ASSESSEE PAID THE FREIGHT CHARGES. THE SAID NOTICES WERE ISSUED ON 07/12/2017 AND REQUIRED THE INFORMATION UP TO 15 /12/2017. ONLY TWO RESPONSE WERE RECEIVED BY THE ASSESSING OFFICER OUT OF 11 PARTIES AND THEREFORE, THE ASSESSING OFFICER HAS PROCEEDED TO R EJECT THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S 145(3) OF THE ACT. THE A SSESSING OFFICER THEN APPLIED A N.P. RATE OF 2.5% TO ESTIMATE THE INCOME OF THE ASSESSEE AND CONSEQUENTLY ASSESSED THE TOTAL INCOME OF THE ASSES SEE AT RS. 40,41,860/- AS AGAINST THE RETURNED INCOME OF RS. 3 ,11,790/-. 6. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) AND CONTENDED THAT THE REJECTION OF B OOKS OF ACCOUNT IS NOT JUSTIFIED AND SUSTAINABLE WHEN THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT AND ON LY OBJECTION OF THE ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 5 ASSESSING OFFICER IS REGARDING THE CLAIM OF PAYMENT OF FREIGHT CHARGES TO THE TRUCK/LORRY OWNERS. THE LD. CIT(A), THOUGH, CONFI RMED THE REJECTION OF BOOKS OF ACCOUNT, HOWEVER, THE INCOME ESTIMATED BY T HE ASSESSING OFFICER BY APPLYING N.P. RATE @ 2.5% WAS RESTRICTED T O 1.5%. HENCE, THE LD. CIT(A) HAS PARTLY GRANTED RELIEF TO THE ASSESSEE ON THE QUANTUM OF THE ADDITION. 7. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE HAS BEEN MAINTAINABLE PROPER AND REGULAR B OOKS OF ACCOUNT WHICH HAS BEEN AUDITED BY THE QUALIFIED AUDITORS AND THEREFORE, WHEN NO DEFECT WAS POINTED OUT BY THE AUDITOR IN THE BOOKS O F ACCOUNT AS WELL AS NO SPECIFIC DEFECT WAS POINTED OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNT THEN THE REJECTION OF THE SAME IS NOT WARRAN TED AS PER PROVISIONS OF SECTION 145(3) OF THE ACT. THE LD AR HAS FURTHER SUBMITTED THAT EVEN REGARDING THE FREIGHT PAYMENT, THE ASSESSEE PRODUCE D THE DETAILS OF THE VEHICLE OWNERS TOGETHER WITH PAN OF EACH AND EVERY OWN ER AND ON THE BASIS OF THOSE DETAILS, THE ASSESSING OFFICER ISSUE D NOTICE TO THE VEHICLE OWNERS AT THE ADDRESS TAKEN FROM THE PAN DETAILS FRO M THE OFFICIAL RECORD WITHOUT ASKING THE ASSESSEE TO FURNISH THE PRESENT A DDRESS OF THESE PARTIES. THE LD AR HAS ALSO POINTED OUT THAT THE ASS ESSING OFFICER HAS ISSUED THESE NOTICES U/S 143(2) OF THE ACT ON 07/12 /2017 GIVING VERY SHORT TIME PERIOD TO THE PARTIES TO FILE THEIR REPL Y UP TO 15/12/2017 AND ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 6 THEREAFTER THE ASSESSING OFFICER HAS PASSED ASSESSM ENT ORDER ON 26/12/2017. THE LD AR HAS POINTED OUT THAT THE TRUC K OWNERS/DRIVERS ARE ILLITERATE PERSONS AND COULD NOT REPLY THE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 133(6) OF THE ACT. THOUGH, MOST OF THESE PARTIES HAVE FILED THEIR REPLY AFTER THE ASSESSMENT ORDER WAS PASSED WHI CH WAS NOT CONSIDERED BY THE ASSESSING OFFICER. THUS, THE LD AR HAS SUBMITTED THAT THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT IN A HURRIED MANNER WITHOUT GIVING SUFFICIENT TIME TO THE ASSESSEE AS WEL L AS THESE PARTIES TO FILE THE REPLY. HENCE, THE LD AR HAS SUBMITTED THAT WHEN NO SPECIFIC DEFECT WAS POINTED OUT BY THE ASSESSING OFFICER IN THE BOOK S OF ACCOUNT AND ONLY DOUBTED THE PAYMENT OF FREIGHT THEN THE SAME CANNOT BE A REASON FOR REJECTION OF BOOKS OF ACCOUNT. THE ASSESSEE HAS DULY PRODUCED THE DETAILS AND PROVED THE IDENTITY OF THE RECIPIENT OF THE PAY MENT. THE LD AR HAS FURTHER SUBMITTED THAT ABOUT 70 TO 80% OF THE FREIG HT PAYMENT WAS MADE THROUGH CHEQUES AND ONLY 20 TO 25% OF THE PAYMENT WA S IN CASH AND THEREFORE, IN THE PECULIAR NATURE OF THE BUSINESS O F THE ASSESSEE, THE CASH PAYMENT IS INEVITABLE TO THE SMALL VEHICLE OWNERS WH O HAVE ONLY ONE VEHICLE IN THEIR INDIVIDUAL CAPACITY. EVEN OTHERWISE WHEN THE FREIGHT RECEIPTS AND PAYMENTS ARE MATCHING THEN THE CLAIM O F FREIGHT PAYMENT CANNOT BE DOUBTED. THE ASSESSEE DOES NOT HAVE OWN VE HICLES FOR TRANSPORTATION BUT TRANSPORTATION IS DONE BY GIVING SUB-CONTRACT TO THE ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 7 PERSONS OWNING THE VEHICLES USED FOR TRANSPORTATION AND THEREFORE, THE ASSESSEE IS EARNING ONLY SOME COMMISSION IN THE ENT IRE ACTIVITY AND TRANSACTION. BILLS HAVE BEEN RAISED ON THE PARTIES WHICH IS NOT IN DOUBT. THESE BILLS ARE RAISED THROUGH THE VEHICLE OWNERS AND THEREFORE WHATEVER FREIGHT RECEIVED FROM THE PARTIES BY THE ASSESSEE, THE SAME HAS BEEN DIRECTED CREDITED TO THE VEHICLE OWNERS ACCOUNT AFT ER DEDUCTING THE MARGIN/COMMISSION OF THE ASSESSEE, WHICH IS CONSIDER ED AS INCOME OF THE ASSESSEE. THUS, WHEN THE TRANSACTIONS ARE MATCHING R EGARDING RECEIPT AND PAYMENT OF THE FREIGHT FOR EACH AND EVERY BILL AS WELL AS VEHICLE THEN THE CLAIM OF FREIGHT PAYMENT IS OTHERWISE CANNOT BE DISALLOWED OR DOUBTED. THE LD AR HAS SUBMITTED THAT THE ASSESSING OFFICER AND THE LD. CIT(A) HAS FOLLOWED THE DECISION OF THIS TRIBUNAL IN T HE CASE OF OM PRAKASH BANSAL VS. ITO ORDER DATED 05/6/2015 IN ITA NO. 734/JP/2012 WHEREAS THE FACTS OF THE SAID CASE ARE DISTINGUISHAB LE AND THE FINDING IN THE SAID CASE IS SPECIFIC TO THE FACTS OF THE SAID CASE AND CANNOT BE APPLIED IN GENERAL AND PARTICULAR TO THE CASE OF TH E ASSESSEE. IN THE SAID CASE, THE ASSESSEE DID NOT ISSUE OR MAINTAIN ANY RE CEIPT OR VOUCHER AND WAS INVOLVED IN TRANSPORTATION OF CEMENT. HE HAS REF ERRED TO THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAS ADMITTED THE FACT THAT THE ASSESSEE HAVE BEEN MAINTAINING BOOKS OF AC COUNT AND PRODUCED THE RECORD OF THE VEHICLE NUMBER AND REGISTRATION C ERTIFICATE. THE LEDGERS ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 8 OF EACH PERSON TO WHOM THE FREIGHT CHARGES HAVE BEEN PAID BY THE ASSESSEE HAS BEEN MAINTAINED ON THE BASIS OF VEHICL E NUMBER AND NAME APPEARING IN THE REGISTRATION CERTIFICATE OF THE VE HICLE. THE LD. CIT(A) HAS ACCEPTED THE FACT THAT EACH PAYMENT OF FREIGHT CAN BE LINKED TO THE FREIGHT INCOME BOOKED BY THE ASSESSEE OF THAT PARTICULAR TR IP. THEREFORE, ONCE THE ASSESSEE HAS PROVED THE DIRECT NEXUS BETWEEN THE FRE IGHT RECEIPT AND FREIGHT PAYMENT AS WELL AS A PARTICULAR TRIP THEN TH E CLAIM OF FREIGHT PAYMENT CANNOT BE DOUBTED AND A REASON FOR REJECTIO N OF BOOKS OF ACCOUNT. IN SUPPORT OF HIS CONTENTION, HE HAS RELIE D UPON THE VARIOUS DECISIONS INCLUDING THE DECISION OF THE HON'BLE SUP REME COURT IN THE CASE OF CIT VS. PADAMCHAND RAMGOPAL (1970) 76 ITR 719 (SC ) AND SUBMITTED THAT THE HON'BLE SUPREME COURT HAS OBSERVED THAT IN SIGNIFICANT MISTAKES CANNOT BE A GROUND FOR RESORTING TO SECTION 145 OF THE ACT. HE HAS ALSO RELIED UPON THE DECISION OF HONBLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF TELELINKS VS. CIT, BHATINDA ORDER DATED 20/1 1/2014 IN ITA NO. 269/2014 AND SUBMITTED THAT WHEN THE ASSESSEE DECLAR ED NP RATE IS NOT LESS THAN THE AVERAGE N.P. DECLARED IN THE PAST THE N THERE IS NO REASON FOR MAKING ANY ADDITION. 8. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE ASSESSEE HAS PAID THE FREIGHT CHARGES IN CASH AND HAS NOT MAINTA INED COMPLETE RECORD IN THE BOOKS OF ACCOUNT REGARDING THE RECIPIENT OF THE FREIGHT CHARGES, ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 9 THEREFORE, THE ASSESSING OFFICER FOUND VARIOUS DEFE CTS IN THE BOOKS OF ACCOUNT. MOST OF THE VOUCHERS ARE SELF MADE AND THE NOTICES ISSUED U/S 133(6) OF THE ACT BY THE ASSESSING OFFICER WERE NOT RESPONDED BY NINE PARTIES OUT OF ELEVEN, THEREFORE, THE ASSESSING OFF ICER HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ASS ESSEE HAS CARRIED OUT THE BUSINESS ACTIVITY OF TRANSPORTATION OF GOODS BY GIVING SUB-CONTRACT TO THE PERSONS OWNING VEHICLES. THE ASSESSEE DOES NOT O WN ANY VEHICLE FOR TRANSPORTATION AND HENCE THE INCOME OF THE ASSESSEE IS IN THE SHAPE OF MARGIN/COMMISSION ON THE FREIGHT RECEIPT FROM THE C LIENTS AND FREIGHT PAID TO THE VEHICLE OWNERS. THE LD. CIT(A) HAS ACCEPTED TH E FACT THAT THE FREIGHT RECEIVED BY THE ASSESSEE HAS A DIRECT NEXUS WITH THE FREIGHT PAID BY THE ASSESSEE FOR A PARTICULAR TRIP AND THEREFORE , FREIGHT INCOME AND FREIGHT PAYMENT FOR A PARTICULAR TRIP IS MAINTAININ G AS PER THE REGULAR BOOKS OF ACCOUNT, WHICH IS NOT IN DISPUTE. THE ASSESS ING OFFICER HAS QUESTIONED THE CLAIM OF FREIGHT CHARGES PAYMENT BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS MADE THE PAYMENT OF FR EIGHT IN CASH FOR WHICH THE ASSESSEE HAS PRODUCED SELF MADE VOUCHERS A ND THEREFORE, IN ABSENCE OF CONFIRMATION FROM THE RECIPIENT, THIS CL AIM OF THE ASSESSEE WAS ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 10 NOT ACCEPTABLE. WE NOTE THAT THE ENTIRE PAYMENT OF FREIGHT IS NOT IN CASH BUT ONLY THE PART OF THE PAYMENT IS IN CASH. HOWEVER , ONCE THE ASSESSEE HAS ESTABLISHED THIS FACT WITH THE ENTRIES RECORDED IN THE BOOKS OF ACCOUNT PARTICULARLY IN THE LEDGER ACCOUNT OF THE PARTIES T O SHOW THAT EACH PAYMENT OF FREIGHT IS LINKED TO THE FREIGHT INCOME BOOKED BY THE ASSESSED IN RESPECT OF A PARTICULAR TRIP THEN THE CLAIM OF T HE ASSESSEE OF PAYMENT OF FREIGHT CANNOT BE REJECTED OR DISALLOWED MERELY ON T HE GROUND THAT THE ASSESSEE HAS MADE SOME PAYMENT IN CASH FOR WHICH TH E SELF MADE VOUCHERS WERE PRODUCED BY THE ASSESSEE. THE RELEVANT FINDING OF THE LD. CIT(A) ON THIS ISSUE IN PARA 4.3 AS UNDER: 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STAT EMENT OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSIONS CAREFULLY. IT IS SEE N THAT THE ASSESSEE SUPPLIES TRAILERS TO MAIN CONTRACTORS (TRANSPORTERS ) WHO ISSUE BUILTY/CONSIGNMENT NOTES AT THE TIME OF LOADING GOO DS IN TRAILER. THE BUSINESS OF ASSESSEE HAS BEEN DISCUSSED AT PAGE 2 O F ASSESSMENT ORDER AS UNDER. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, I T HAS BEEN STATED THAT THE ASSESSEE WAS CARRYING TRANSPORTATION WORK OF DIFFER ENT PARTIES AND DIFFERENT TYPES. IT IS ALSO STATED THAT THE ASSESSEE IS NOT O BTAINING ANY WORK ORDER, ALSO NOT FILING ANY SPECIFIC TENDER OR QUOTATION AND ALS O NO MAKING ANY AGREEMENT IN WRITING WITH THE PARTIES. THE TERMS AND CONDITIONS ON WHICH WORK IS CARRIED ON ARE ALWAYS MUTUALLY DECIDED BY BOTH THE PARTIES, NO SPECIFIC AGREEMENT IS REQUIRED TO BE MADE FOR THE SAME. THE RATE OF TRANS PORTATION IS DEPEND UPON THE TYPE OF GOODS, RISK, WEIGHT, DISTANCE AND MARKE T CONDITIONS. IT IS FURTHER SUBMITTED THAT NATURE OF GOODS TRANSPORTED ARE STEE L COIL, STONE, WOOD, MACHINERY, COAL ETC. IT IS FURTHER SUBMITTED THAT T RANSPORTATION IS DONE BY GIVING SUB CONTRACT TO MARKET OWNED TRAILERS ON SUM MARGIN OR SAY COMMISSION BASIS. BILLS HAVE BEEN RAISED ON PARTIES AND THE PARTIES H AVE PAID FREIGHT TO THE ASSESSEE. WHATEVER FREIGHT EARNED FROM PARTIES HAVE BEEN CREDITED TO TRAILER ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 11 OWNERS, AFTER DEDUCTING THE MARGIN WHICH IS RECEIVE D AS INCOME OF THE ASSESSEE . THE AO CONDUCTED ENQUIRIES U/S 133(6). AFTER CONSID ERING THE OUTCOME OF THE ENQUIRIES MADE U/S 133(6), THE AO FOUND OUT DIS CREPANCIES / DEFICIENCIES IN THE BOOKS OF ACCOUNTS WHICH HAS BEEN DISCUSSED B Y THE AO IN THE ASSESSMENT ORDER AT PAGE 2 TO 5. IN VIEW OF THE DIS CREPANCIES / DEFICIENCIES NOTED BY THE AO, BOOK RESULTS OF THE APPELLANT WERE REJECTED U/S 145(3) AND NET PROFIT OF THE APPELLANT WAS ESTIMATED BY THE AO @2.5% OF THE FREIGHT RECEIPTS OF RS. 16,16,74,377/- DECLARED IN THE PROF IT AND LOSS ACCOUNT, RELYING ON THE DECISION OF ITAT JAIPUR BENCH IN THE CASE OF OM PRAKASH BANSAL VS ITO, WARD- BEHROR (ITA NO. 734/JP/2012, O RDER DATED 05.06.2015, A.Y. 2008-09). DURING THE COURSE OF APPELLATE PROCE EDINGS, THE APPELLANT HAS FURNISHED EXPLANATION WITH SUPPORTING EVIDENCES WITH RESPECT TO THE DISCREPANCIES / DEFICIENCIES DISCUSSED BY THE AO IN THE ASSESSMENT ORDER. THE EXPLANATION FURNISHED BY THE APPELLANT IS FOUND TO BE REASONABLY CORRECT. IT CAN BE SEEN THAT THE APPELLANT HAS MAIN TAINED HIS BOOKS OF ACCOUNTS MAINLY ON THE BASIS OF VEHICLE NUMBER AND RC NUMBER. THE LEDGER OF EACH PERSON WHOM FREIGHT CHARGES HAVE BEEN PAID BY THE APPELLANT HAVE BEEN MAINTAINED BY THE APPELLANT ON THE BASIS OF VE HICLE NUMBER AND NAME APPEARING IN RC OF THE VEHICLE. IN THE VOUCHER PREP ARED FOR PAYMENT OF FREIGHT IN CASH, THE APPELLANT WRITES VEHICLE NUMBE R, AMOUNT PAID AND OBTAINS SIGNATURE OF THE RECIPIENT (DRIVER / OWNER OF THE VEHICLE). IN THE BILLS ISSUED BY THE APPELLANT FOR THE FREIGHT CHARGES REC EIVED BY HIM, NAME OF THE PARTY (MAIN TRANSPORTER), VEHICLE NUMBER, DESTINATI ON OF THE VEHICLE (FROM & TO) AND AMOUNT OF FREIGHT IN RESPECT OF EACH TRIP A ND DATE OF EACH TRIP ARE MENTIONED. THE APPELLANT HAS FURNISHED STATEMENT LI NKING EACH FREIGHT PAYMENT WITH THE CORRESPONDING FREIGHT INCOME (TRIP REGISTER) BOOKED BY THE APPELLANT TO SHOW THAT THERE IS NO FREIGHT PAYM ENT WITHOUT ANY FREIGHT INCOME AGAINST THAT PAYMENT. THE APPELLANT OBTAINS COPY OF PAN CARD AND RC FROM EACH PERSON WHOM THE PAYMENT OF FREIGHT IS PAID BY THE APPELLANT. ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 12 I HAVE GONE THROUGH EACH DOCUMENT FURNISHED BY THE APPELLANT CAREFULLY. THE CONTENTION OF THE APPELLANT THAT ITS EACH PAYME NT OF FREIGHT CAN BE LINKED TO FREIGHT INCOME BOOKED BY HIM IN RESPECT O F THAT PARTICULAR TRIP IS FOUND TO BE CORRECT. STILL, THE POSSIBILITY OF FREI GHT PAYMENT SHOWN TO HAVE BEEN MADE IN CASH HAVING BEEN INFLATED BY THE APPEL LANT CANNOT BE RULED OUT. IN VIEW OF THE DISCREPANCIES / DEFICIENCIES DI SCUSSED BY THE AO IN THE ASSESSMENT ORDER, I AM OF THE CONSIDERED VIEW THAT THE AO HAS RIGHTLY REJECTED THE BOOK RESULTS U/S 145(3). HENCE, THE RE JECTION OF BOOK RESULTS U/S 145(3) IS HELD TO BE VALID AND IN ACCORDANCE WITH T HE PROVISIONS OF LAW. THUS, THE LD CIT(A) HAS ACCEPTED THE FACT THAT THE A SSESSEE HAS PRODUCED THE PAN CARD AND REGISTRATION CERTIFICATE OF EACH V EHICLE OWNER AS WELL AS MAINTAINED THE BOOKS OF ACCOUNT. IT WAS FOUND THAT T HE LEDGER ACCOUNT OF EACH PERSON REGARDING FREIGHT CHARGES PAYMENT HAVE BEEN MAINTAINED ON THE BASIS OF VEHICLE NUMBER AND NAME OF THE OWNER AS PER REGISTRATION CERTIFICATE OF THE VEHICLE. THE ASSESSING OFFICER HA S NOT DOUBTED THE BUSINESS ACTIVITY OF THE ASSESSEE BEING WORKING ONLY AN INTERMEDIARY IN THE ACTIVITY OF PROVIDING TRANSPORTATION TO VARIOUS CLIENTS BY HIRING THE VEHICLES FROM THE VEHICLE OWNERS. THE BILLS WERE RAISE D BY THE VEHICLE OWNERS TO THE CLIENTS AND THE ASSESSEE IS ONLY CHARG ING SOME MARGIN/COMMISSION IN THE TRANSACTION FOR PROVIDING THE SERVICES OF TRANSPORTATION. ONCE THIS BUSINESS ACTIVITY OF THE ASSESSEE IS NOT DOUBTED AND THE FREIGHT INCOME AND FREIGHT PAYMENT WHICH AR E MATCHING TO EACH OTHER WITH THE TRANSACTION BY TRANSACTION OF EACH TR IP THEN THE FREIGHT CHARGES PAYMENT CANNOT BE DISALLOWED OR HELD AS BOGU S IGNORING THE FACT ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 13 THAT THE CORRESPONDING FREIGHT RECEIPT IS ACCEPTED ON THE BASIS OF THE SAME BILLS. EVEN IF THE ASSESSING OFFICER WAS NOT S ATISFIED WITH THE CLAIM OF FREIGHT PAYMENT FOR WANT OF SUPPORTING EVIDENCE AND CONFIRMATION FROM THE RECIPIENT OF THE FREIGHT THEN THE CLAIM OF THE FREIGHT PAYMENT CAN BE EXAMINED AND DISALLOWED TO THE EXTENT OF NOT FOUND T O BE PROVED BY THE ASSESSEE. THE NON-ACCEPTANCE OF A PARTICULAR CLAIM O F EXPENDITURE CANNOT BE A REASON TO HOLD THAT THE BOOKS OF ACCOUNT OF TH E ASSESSEE ARE DEFECTIVE AND SUFFERING FROM DEFICIENCY OR DISCREPA NCIES WARRANTING REJECTION U/S 145(3) OF THE ACT. IN CASE, THE ASSES SING OFFICER WAS NOT SATISFIED WITH THE CLAIM OF FREIGHT CHARGES THEN THA T PARTICULAR CLAIM COULD HAVE BEEN EXAMINED AND DISALLOWED TO THE EXTENT OF N OT PROVED BY THE ASSESSEE INSTEAD OF RESORTING TO THE PROVISIONS OF SECTION 145(3) OF THE ACT. EVEN OTHERWISE SOME OTHER EXPENDITURE WHICH IS NOT SUBSTANTIATED BY THE ASSESSEE BY FILING A SUPPORTING EVIDENCE, THE S AME CAN BE DISALLOWED BUT THESE DISALLOWANCES CANNOT BE A REASON FOR REJEC TION OF BOOKS OF ACCOUNT. ACCORDINGLY, WHEN THE ASSESSEE HAS BEEN MAI NTAINING REGULAR BOOKS OF ACCOUNT DULY AUDITED BY THE QUALIFIED AUDI TOR THEN IN ABSENCE OF SPECIFIC DISCREPANCY OR DEFICIENCY IN THE BOOKS OF ACCOUNT, THE PROVISIONS OF SECTION 145(3) OF THE ACT CANNOT BE INVOKED. HEN CE WE HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING TH E BOOKS OF ACCOUNT MERELY BECAUSE THE ASSESSEE COULD NOT FILE THE CONF IRMATION FROM THE ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 14 PARTIES TO WHOM THE FREIGHT CHARGES WERE PAID. HENCE , THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 10. GROUND NO. 3 OF THE APPEAL IS REGARDING THE EST IMATION OF INCOME BY APPLYING THE NP RATE. THIS ISSUE IS CONSEQUENTIAL IN NATURE AND THEREFORE, IN VIEW OF OUR FINDING ON THE ISSUE OF RE JECTION OF BOOKS OF ACCOUNT, THIS GROUND BECOMES INFRUCTUOUS. SINCE THE ASSESSING OFFICER HAS DOUBTED THE CLAIM OF FREIGHT PAYMENT AS THE ASSESSE E HAS NOT FILED ANY CONFIRMATION AND THE PARTIES HAVE NOT RESPONDED TO THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 133(6) OF THE ACT, THEREF ORE, THE ISSUE OF ALLOWABILITY OF THE SAID CLAIM CAN BE REEXAMINED BY THE ASSESSING OFFICER ONLY TO THE EXTENT OF SCOPE OF ANY INFLATION IN THE QUANTUM OF THE FREIGHT CHARGES PAID BY THE ASSESSEE. SO FAR AS THE OUTRIGH T REJECTION OF FREIGHT CHARGES IS CONCERNED WE NOTE THAT WHEN THE FREIGHT IN COME AND FREIGHT CHARGES ARE LINKED ONE TO ONE FOR EACH TRIP AND ALS O FOUND RECORDED IN THE BOOKS THEN THE ENTIRE CLAIM OF THE ASSESSEE CANNOT BE HELD AS BOGUS. THE ONLY ISSUE WHICH CAN BE EXAMINED BY THE ASSESSING O FFICER IS THE QUANTUM OF THE FREIGHT CHARGES INFLATED BY THE ASSESSEE OR NOT. ACCORDINGLY, FOR LIMITED PURPOSE, WE SET ASIDE THE ISSUE OF ALLOWABILI TY OF THE FREIGHT CHARGES IN THE ABOVE TERMS. WE MAY CLARIFY THAT THE ADDITION/DISALLOWANCE, IF ANY, CANNOT BE EXCEEDED TH E ADDITION SUSTAINED ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 15 BY THE LD. CIT(A) IN THE FIRST ROUND OF APPEAL AS T HE DEPARTMENT HAS NOT CHALLENGED THE IMPUGNED ORDERS OF LD. CIT(A). 11. NOW WE TAKE ITA NOS. 676/JP/2018 AND 677/JP/2018. IN BOTH THESE APPEALS, THE ASSESSEES HAVE RAISED COMMON GROUNDS A S UNDER: GROUNDS OF ITA NO. 676/JP/2018 1. THE IMPUGNED ORDER PASSED BY THE LEARNED COMMIS SIONER (APPEALS), AJMER TO THE EXTENT PREJUDICIAL TO THE APPELLANT IS BAD IN LAW AND LIABLE TO BE QUASHED. 2. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND LAW APPLICABLE PROVISIONS OF SECTION 145(3) OF THE I.T. ACT ARE INAPPLICABLE AND CONSEQUENTLY UPHOLDING BY THE LEAR NED COMMISSIONER (APPEALS) OF REJECTION OF BOOK RESULTS U/S. 145(3) OF THE I.T. ACT MADE BY THE AO IS NOT VALID AND NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW. 3. THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN UPHOLDING THE APPLICATION OF NET PROFIT RATE OF 1.75% AS AGAINST DECLARED N.P. RATE OF 0.34% AND CONSEQUENTIALLY CONFIRMING THE TRADING ADDITION OF RS.22,41,255/- (ADDITION MADE BY THE AO RS.32,28,99 4/- MINUS ADDITION DELETED BY COMMISSIONER (APPEALS) RS. 9,87 ,739/-) TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE SUSTENANCE OF N ET PROFIT RATE OF 1.75% AS AGAINST DECLARED NP RATE OF 0.34% AND CONS EQUENTIALLY SUSTAINING TRADING ADDITION OF RS.22,41,255/- (TRAD ING ADDITION MADE BY THE AO RS.32,28,994/- MINUS ADDITION DELETED BY COMMISSIONER (APPEALS) IS ERRONEOUS AND UNJUSTIFIED AND IN THE A LTERNATIVE IT IS HIGHLY EXCESSIVE. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND OR SUBSTITUTE ONE OR MORE GROUNDS OF APPEAL AS AND WHEN NEEDED. 12. GROUND NO. 1 OF BOTH THESE APPEALS IS GENERAL I N NATURE AND HAS NOT BEEN PRESSED BY THE ASSESSEE. THE LD AR OF THE A SSESSEE MADE ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 16 STATEMENT AT BAR THAT THE ASSESSEE DOES NOT PRESS G ROUND NO.1 OF BOTH THESE APPEALS. ACCORDINGLY, GROUND NO. 1 OF BOTH TH ESE APPEALS IS DISMISSED BEING GENERAL AND NOT PRESSED BY THE ASSE SSEE. 13. IN BOTH THESE CASES, THE ASSESSING OFFICER REJE CTED THE BOOKS OF ACCOUNT ON THE IDENTICAL GROUNDS AS IN ITA NO. 694/ JP/2018 AND ESTIMATED THE INCOME BY APPLYING THE N.P. RATE @ 2.5 %, WHICH WAS RESTRICTED BY THE LD. CIT(A) TO 1.75%. THE ISSUE OF R EJECTION OF BOOKS OF ACCOUNT HAVE BEEN CONSIDERED BY US IN ITA NO. 694/J P/2018 AND IN VIEW OF OUR FINDING IN ITA NO. 694/JP/2018, THE SAID ISS UE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. 14. AS REGARDS THE CLAIM OF FREIGHT CHARGES PAID BY THE ASSESSEES, THE SAID ISSUE IS SET ASIDE TO THE RECORD FOR LIMITED P URPOSE OF EXAMINATION AND VERIFICATION OF THE CLAIM. THE ASSESSEE IS DIREC TED TO FILE THE RELEVANT SUPPORTING EVIDENCES. 15. IN THE RESULT, ALL THESE THREE APPEALS ARE PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/09/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 17 TH SEPTEMBER, 2018 ITA 694 676 & 677/JP/2018_ JAI NAKODA ROADWAYS P LTD. VS ITO WITH TWO ORS. 17 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- (I) JAI NAKODA ROADWAYS PVT. LTD., AJM ER. (II) SHRI AGARSEN TRANSWAYS PVT. LTD., NASIRABAD. (III) AMIT ROAD CARRIER INDIA PVT. LTD., NASIRABAD. 2. IZR;FKHZ @ THE RESPONDENT- (I) THE ITO, WARD-2(2), AJMER. (II) THE ITO, WARD-2(3), AJMER. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 694, 676 & 677/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR