M/s Truck Operator Union, Ludhiana V. ITO, Ludhiana

ITA 843/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9096 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 07-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Section: 143(3); 133(6); 194C; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 843/CHD/2016 ASSESSMENT YEAR: 2010-11 M/S THE TRUCK OPERATOR UNION, VS THE I TO, VILLAGE & P.O. SAHNEWAL, WARD V(4), G.T.ROAD, LUDHIANA. LUDHIANA. PAN: AAAAT0870C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 09.08.2016 DATE OF PRONOUNCEMENT : 14.09.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-2 LUDHIANA DATED 31.05.2016 FOR ASSESSMENT YEAR 2010-11 CHALLENGING THE ADDITION OF RS. 21,95,421/- BY APPLYING TRANSPORTAT ION BUSINESS @ 8% ON THE GROSS RECEIPTS. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED RETURN OF INCOME SHOWING INCOME OF RS. 4,98,980/-. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRANSPO RT CONTRACTOR DURING THE PERIOD UNDER CONSIDERATION. THE ASSESSING OFFICER NOTED THE ASSESSEE HAD SHOWN GROS S 2 TRANSPORTATION RECEIPTS OF RS. 3.36 CRORES ON WHICH TDS WAS DEDUCTED OF RS. 59,83,541/- AND CLAIMED IN THE COMPUTATION OF INCOME. THE ASSESSING OFFICER A LSO OBSERVED THAT ASSESSEE HAD DEBITED AN AMOUNT OF RS. 3.27 CRORES ON ACCOUNT OF TRANSPORTATION AND BAG HANDLING CHARGES. THE ASSESSEE WAS ASKED TO FURNIS H THE NAME AND ADDRESS OF THE TRANSPORTERS ALONGWITH TRUCK NUMBERS TO WHOM PAYMENTS HAVE BEEN MADE ON ACCOUNT OF TRANSPORTATION AND BAG HANDLING CHARGES. THE REPLY OF THE ASSESSEE WAS FOUND INCOMPLETE. TH E ASSESSEE WAS ALSO ASKED TO FURNISH A TRANSPORTER-WI SE LIST ALONGWITH TRUCK NUMBER TO WHOM PAYMENTS EXCEEDING RS. 50,000/- ON ACCOUNT OF TRANSPORTATION AND BAG HANDLING CHARGES HAVE BEEN MADE IN ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE FILED L IST OF PERSONS TO WHOM PAYMENT ON ACCOUNT OF TRANSPORTATION AND BAG HANDLING CHARGES HAD BEEN MADE AND PRODUCED CASH BOOK, LEDGER AND BAHI KHATA. THE ASSESSING OFFICER, ON GOING THROUGH BAHI KHATA, NOTED THAT ONLY NAME AND FATHERS NAME OF THE DRIVE R HAVE BEEN MENTIONED AGAINST TRUCK NUMBER AND PAYMENTS HAVE BEEN MADE TO THE PERSONS IN CASH AGAINST THESE NAMES. THE ASSESSEE WAS ALSO ASKED TO FURNISH THE LIST OF MEMBERS OF THE ASSOCIATION AND ALSO PRODUCE THE PRESIDENT OF THE TRUCK OPERATOR UNION. THE STATEMENT OF SHRI GURDEEP SINGH, PRESIDENT WAS RECORDED WHICH IS REPRODUCED IN THE IMPUGNED ORDER. 3 THE ASSESSING OFFICER, ON GOING THROUGH THE STATEME NT OBSERVED THAT ASSESSEE HAD ADMITTED IN THE STATEMEN T THAT UNION WAS CARRYING ON TRANSPORTATION BUSINESS AND AFTER RECEIVING ORDERS FROM THE COMPANIES, THEY ARE PROVIDING TRANSPORTATION AFTER BOOKING ORDER IN REG ISTER MAINTAINED BY THE UNION BUT AT THE TIME OF ASSESSME NT PROCEEDINGS, IT WAS NOT AVAILABLE WITH THE ASSESSEE . THE TRANSPORTING AND BAG HANDLING CHARGES HAVE BEEN PAID IN CASH TO THE DRIVERS AND NO ADDRESS OF THE DRIVERS ARE AVAILABLE AND UNION HAD NOT KEPT ANY GR , BILITY AGAINST WHICH PAYMENTS HAVE BEEN MADE. THE ASSESSEE DID NOT MAINTAIN THESE RECORDS WITH THEM. THE ASSESSING OFFICER ALSO OBTAINED INFORMATION UND ER SECTION 133(6) OF THE ACT FROM DTO, PATIALA SANGRUR , JALANDHAR, MOGA AND LUDHIANA. THE ASSESSING OFFICE R OBSERVED THAT SOME PERSONS WERE NOT REGISTERED AGAI NST TRUCK NUMBER WITH THE DTO OR IN SOME CASES THE TRUC K NUMBERS WERE MENTIONED AS SCOOTER, MINI BUS/MOTOR CYCLE. THE ASSESSING OFFICER, THEREFORE, REJECTED THE BOOK RESULTS AND APPLIED 8% OF THE TOTAL RECEIPTS O F RS. 3.36 CR. AND COMPUTED THE INCOME AT RS. 21,95,421/- . 3. THE ADDITION WAS CHALLENGED BEFORE LD. CIT(APPEALS) AND WRITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE APPELLATE ORDER IN WHICH ASSESSEE REITERATED THE SAME FACTS AND ALSO MENTIONED THAT I N EARLIER YEARS, AMOUNT WAS DISALLOWED BY APPLYING SECTION 194C OF THE ACT WHICH IS NOT APPLICABLE IN THE 4 CASE OF THE ASSESSEE. THE ISSUE HAVE BEEN FINALIZE D BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. IT IS SUBM ITTED THAT THERE MAY BE SOME MISTAKE OF MUNSHI IN RECORDI NG THE WRONG TRUCK NUMBER ETC. IT WAS PLEADED THAT IN SUBSEQUENT ASSESSMENT YEARS 2011-12 TO 2015-16, ASSESSEE HAS DECLARED NP RATE OF 0.25% TO 0.29% THEREFORE, ADDITION IS WHOLLY UNJUSTIFIED. THE LD. CIT(APPEALS) DID NOT ACCEPT CONTENTION OF THE ASSES SEE AND DISMISSED APPEAL OF THE ASSESSEE BECAUSE OF THE DISCREPANCIES FOUND BY THE ASSESSING OFFICER IN MAINTENANCE OF THE RECORD BY THE ASSESSEE. 4. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW ADDITION IS STILL ON EXCESSIVE SIDE. THE ASSE SSING OFFICER HAS POINTED OUT CERTAIN DISCREPANCIES IN MAINTENANCE OF THE RECORD BY THE ASSESSEE WHICH HAV E BEEN NOTED ABOVE. THE ASSESSING OFFICER, THEREFORE , REJECTED BOOKS OF ACCOUNT OF THE ASSESSEE AS THE SA ME ARE NOT GIVING TRUE AND CORRECT PROFIT OF THE ASSES SEE. THE LD. COUNSEL FOR THE ASSESSEE DID NOT DISPUTE TH E FINDING OF FACT RECORDED BY THE AUTHORITIES BELOW F INDING DISCREPANCIES IN THE ACCOUNTS OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE UN ION DID NOT OWN AND MAINTAINED ANY TRUCK IN THEIR NAME FOR THE PURPOSE OF TRANSPORTATION. THE ASSESSEE UNION ARRANGED THE TRUCKS FROM THE MEMBERS OF THE ASSOCIATION FOR DIFFERENT PARTIES/COMPANIES. THE M AIN INCOME OF THE ASSESSEE IS GROSS TRANSPORTATION RECE IPTS 5 OF RS. 3.36 CRORES AGAINST WHICH ASSESSEE HAS TO PA Y SUBSTANTIAL AMOUNT AS EXPENDITURE ON ACCOUNT OF TRANSPORTATION AND BAG HANDLING CHARGES. IN THIS YEAR, ASSESSEE PAID RS. 3.27 CRORES. THE LD. COUNS EL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT EVEN IF THE ASSESSING OFFICER FOUND CERTAIN DISCREPANCIES BUT I N ASSESSMENT YEAR UNDER APPEAL ASSESSEE HAS SHOWN NET PROFIT RATE OF 1.05% WHICH IS BETTER AS COMPARED TO THE NET PROFIT DECLARED IN THE SUBSEQUENT YEARS. COPY OF ASSESSMENT ORDERS UNDER SECTION 143(3) FOR ASSESSME NT YEAR 2012-13 AND 2014-15 ARE FILED IN WHICH NO ADDITION IS MADE OF SIMILAR NATURE. HE HAS SUBMITT ED THAT CONSIDERING HISTORY OF THE ASSESSEE, APPLICATI ON OF NET PROFIT RATE AT 8% IS HIGHLY EXCESSIVE. HE HAS RELIED UPON DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V PRAVEEN KUMAR MITTAL IN ITA 272/2011 DATED 13.10.2011, COPY OF WHICH IS PLACED ON RECORD. IN THIS CASE, ASSESSEE FAILED TO PRODUCE B OOKS OF ACCOUNT DURING ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS. WHEN ASSESSEES RETURN FOR ASSESSMENT YEAR 2003-04 WERE CLAIMED AT 6.37% AND FOR ASSESSME NT YEAR 2004-05 AT 2.15%, THE ASSESSMENT BY APPLYING RATE OF NET PROFIT AT 4% WAS FOUND QUESTION OF FACT . THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT CONSIDERING HISTORY OF THE ASSESSEE, THE PROFIT RAT E OF 8% IS EXCESSIVE. ON THE OTHER HAND, LD. DR RELIED U PON ORDERS OF AUTHORITIES BELOW. 6 4(I) CONSIDERING FACTS OF THE CASE AND HISTORY OF THE ASSESSEE, I AM OF THE VIEW ADDITION IS ON EXCESSIVE SIDE. THE ASSESSEE ADMITTEDLY DID NOT MAINTAIN AND OWN AN Y TRUCK. THE ASSESSEE IS A TRUCK OPERATOR UNION AND ARRANGE TRUCKS FOR TRANSPORTATION THROUGH ITS MEMBE RS FOR OTHER COMPANIES. THE MAIN SOURCE OF THE ASSESS EE TRUCK OPERATOR UNION IS TRANSPORTATION RECEIPT AGAI NST WHICH ASSESSEE SHALL HAVE TO SUBSTANTIALLY INCUR TH E TRANSPORTATION AND BAG HANDLING CHARGES. MAY BE, SOME OF THE DETAILS OF EXPENSES COULD NOT BE PROVED TO THE SATISFACTION OF THE AUTHORITIES BELOW BUT IT IS A FACT THAT IN ASSESSMENT YEAR UNDER APPEAL, ASSESSEE HAS DECLARED BETTER BOOK RESULTS BY SHOWING NET PROFIT RATE OF 1.05%. IN SUBSEQUENT ASSESSMENT YEARS 2011-12 T O 2015-16, ASSESSEE HAS DECLARED NP RATE OF 0.25% TO 0.29% AND ACCEPTED IN ORDER UNDER SECTION 143(3) IN ASSESSMENT YEAR 2012-13 AND 2014-15. THEREFORE, CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE AND ITS HISTORY, IN THE LIGHT OF DECISION OF HON'BLE PU NJAB & HARYANA HIGH COURT IN THE CASE OF PRAVEEN KUMAR MITTAL (SUPRA), AS NOTED ABOVE, I AM OF THE VIEW AUTHORITIES BELOW WERE JUSTIFIED IN REJECTING BOOK RESULTS OF THE ASSESSEE, HOWEVER, THERE IS NO JUSTIFICATION TO APPLY NET PROFIT RATE OF 8% AGAINS T TOTAL RECEIPTS. THE TOTALITY OF THE FACTS AND CIRCUMSTAN CES, THEREFORE, CLEARLY SHOWS THAT APPLICATION OF NP RAT E AT 8% IS UNREASONABLE, EXCESSIVE AND EXORBITANT. I, 7 THEREFORE, MODIFY THE ORDERS OF AUTHORITIES BELOW A ND REDUCE THE NP TO 2% AS AGAINST 8%. THE ASSESSING OFFICER IS, THEREFORE, DIRECTED TO APPLY NP RATE OF 2% AGAINST 8% APPLIED BY THE AUTHORITIES BELOW AGAINST THE RECEIPTS SHOWN BY ASSESSEE AND SHALL COMPUTE THE INCOME OF THE ASSESSEE ACCORDINGLY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 14 TH SEPT., 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH