M/s Haryana Kashmir Transport Carriers, Yamunanagar V. JCIT, Yamunanagar

ITA 90/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5470 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 24-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; TDS
• Section: 143(3); 40(b)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS.SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.90 /CHD/2011 (ASSESSMENT YEAR : 2006-07) M/S HARYANA KASHMIR TRANSPORT CARRIERS VS. THE J. C.I.T., TRUCK ADDA, SAHARANPUR ROAD, YAMUNA NAGAR RANGE, YAMUNA NAGAR. YAMUNA NAGAR. PAN: AACFH6023L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ROHIT GOEL RESPONDENT BY : SMT.SARITA KUMARI, DR O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME-TAX (A), DATED 24.9.2010 REL ATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER PASSED U/S 143(3) OF THE INCOME-TAX ACT. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER : 1. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AN D FACTS IN REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) OF THE INCOME-TAX ACT, 1961. 2. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AND FACTS IN APPLYING A NET PROFIT @5% ON THE GROSS FREIGHT RECEIPTS. 3. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AND FACTS IN ESTIMATING GROSS FREIGHT RECEIPTS AT 2 RS.11,47,98,419/-. 4. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AND FACTS IN APPLYING A NET PROFIT @5% ON THE GROSS FREIGHT RECEIPTS WHICH IS NEITHER ON THE BASIS OF P AST HISTORY OF THE CASE NOR ANY COMPARABLE CASE. 5. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AND FACTS IN NOT ALLOWING DEPRECIATION AFTER APPLYING A FLAT NET PROFIT RATE. 3. THE PRESENT APPEAL HAS BEEN FILED AFTER A DELAY OF 28 DAYS. THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDONATION O F DELAY IN FILING THE PRESENT APPEAL. THE APPEAL WAS DUE TO BE FILED BY 27.12.2010, BUT WAS FILED ON 24.1.2011. THE REASON FOR DELAY IN FILING THE PRESENT APPEAL WAS THE OVERSIGHT OF THE CHARTERED ACCOUNTANT WHO IS AP PEARING BEFORE THE LOWER AUTHORITIES. THE ORDER OF THE CIT(A) WAS HA NDED OVER TO THE CHARTERED ACCOUNTANT BUT DUE TO HIS OCCUPATION IN T IME-BARRING ASSESSMENT, RELEVANT DOCUMENTS COULD NOT BE HANDED OVER TO ANOTHER COUNSEL. THE CHARTERED ACCOUNTANT, SHRI RATAN GUPT A HAS FILED ON RECORD AN AFFIDAVIT IN THIS REGARD. IN THE TOTALIT Y OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE CONDONE THE DELAY IN F ILING THE PRESENT APPEAL BEFORE THE TRIBUNAL AND PROCEED TO DISPOSE O FF THE SAME AFTER TAKING IT ON RECORD. 4. THE ISSUE RAISED IN THE PRESENT APPEAL IS IN CON NECTION WITH THE ASSESSMENT OF INCOME OF THE ASSESSEE FROM PLYING OF TRUCKS AFTER REJECTION OF BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS ENGAGED IN THE BUSINESS OF TRANSPORTATION. THE ASSESSEE HAD FILED RETURN OF INCOME SHOWING TOTAL INCOME OF RS.7,28,670/-. THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSEE WAS REQUISITIONED TO PRODUCE COMPLETE BOOKS OF ACCOUNT 3 ALONGWITH SUPPORTING BILLS/VOUCHERS. HOWEVER, ON V ERIFICATION OF BOOKS OF ACCOUNT PRODUCED BEFORE THE ASSESSING OFFICER, S EVERAL DISCREPANCIES WERE NOTED BY THE ASSESSING OFFICER. THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE PROVISIONS OF SECTION 145(3) OF THE INCO ME-TAX ACT BE NOT INVOKED AND NET PROFIT BE CALCULATED @ 5% OF GROSS FREIGHT RECEIPTS. THE ASSESSING OFFICER FURTHER NOTED THAT THE AMOUNT OF TOTAL FREIGHT RECEIPTS I.E. FREIGHT REFLECTED IN THE TDS CERTIFICATE FURNI SHED ALONGWITH THE RETURN OF INCOME AND FREIGHT ACTUALLY SHOWN IN THE PROFIT & LOSS ACCOUNT WERE DIFFERENT. AS PER A CHART SUBMITTED BY THE A SSESSEE, THE TOTAL FREIGHT RECEIVED AMOUNTED TO RS.11,46,59,126/- AS A GAINST RS.2,90,83,962/- CREDITED IN THE PROFIT & LOSS ACCO UNT. AS PER THE TDS CERTIFICATE,, THE FREIGHT RECEIPTS WORKED OUT TO RS .10,21,57,831/-. THE ASSESSING OFFICER OBSERVED THAT THE RECEIPTS WERE N OT VERIFIABLE AS MOST OF THE GRS WERE NOT PRODUCED. THE EXPLANATION OF T HE ASSESSEE REGARDING DIFFERENCE IN FREIGHT WAS THAT APART FROM ITS OWN TRUCKS, IT ARRANGES TRUCKS FROM VARIOUS PARTIES TO FULFILL THE TERMS OF CONTRACT AND THE ASSESSEE SENDS THE TRUCKS TO THE CONSIGNOR ON I TS BEHALF AND MAKE PAYMENT TO THE TRUCK OWNERS FROM ITS OWN POCKET. THE PAYMENT OF FREIGHT IS THUS MORE THAN AS REFLECTED IN THE TDS C ERTIFICATE/S. THE ASSESSEE IN ITS REPLY SUBMITTED THAT IT HAD RECEIVE D PAYMENT OF RS.11,46,59,126/- DURING THE YEAR ON WHICH TDS OF R S.20,85,821/- WAS DEDUCTED. OUT OF THIS TOTAL FREIGHT, A SUM OF RS.4 ,40,76,357/- WAS RECEIVED BY THE ASSESSEE AS FREIGHT ON ITS OWN TRUC KS AND THE BALANCE WAS RECEIVED ON BEHALF OF OTHERS AGAINST WHICH THE ASSE SSEE HAD RECEIVED COMMISSION OF RS.22,27,784/-, WHICH WAS DECLARED IN THE RETURN OF INCOME. THE ASSESSEE THUS CLAIMED THAT THE AVERAGE COMMISSION WORKS OUT TO 3.16%. THE ASSESSING OFFICER ON CONSIDERATI ON OF THE EXPLANATION OF THE ASSESSEE WAS OF THE VIEW THAT IN THE ABSENCE OF EVIDENCE BEING FURNISHED BY THE ASSESSEE AND NO BOOKING REGISTER B EING AVAILABLE WITH 4 THE ASSESSEE, THE EXACT AMOUNT OF COMMISSION RECEIV ED ON FREIGHT COLLECTED ON BEHALF OF TRUCK OWNERS CANNOT BE WORKE D OUT. FURTHER, THE ASSESSEE WAS FOUND NOT TO HAVE MAINTAINED ANY LOG B OOK IN RESPECT OF THE JOURNEYS PERFORMED BY EACH TRUCK. THE VOUCHERS PRO DUCED BY THE ASSESSEE IN RESPECT OF VARIOUS HEADS OF EXPENSES WE RE ALSO FOUND WANTING BY THE ASSESSING OFFICER. IN THE LIGHT OF THE SAME THE ASSESSING OFFICER HELD THE ASSESSEE NOT TO BE MAINTAINING PROPER BOOK S OF ACCOUNT, THEREFORE, BOOKS OF ACCOUNT WERE REJECTED UNDER SEC TION 145(3) OF THE ACT. THE ASSESSING OFFICER SHOW CAUSED THE ASSESS EE AS TO EXPLAIN WHY INCOME BE NOT COMPUTED @5% AS PER THE SHOW CAUSE NO TICE ISSUED, CONTENTS OF WHICH ARE REPRODUCED IN PARA 2.2 AT PAG E 5 OF THE ASSESSMENT ORDER. THE REPLY OF THE ASSESSEE IN THIS CONNECTIO N WAS THAT AS IT HAD LESS THAN TRUCKS 50 TRUCKS, NET INCOME SHOULD BE CO MPUTED AS PER SECTION 44AE OF THE INCOME-TAX ACT AS SOME TRUCKS WERE ACQU IRED DURING THE YEAR AND SOME WERE SOLD DURING THE YEAR. WITH REGA RD TO THE ADOPTION OF FREIGHT RECEIPTS AT RS.11.46 CRORES, IT WAS POINTED OUT THAT A SUM OF RS.20,85,821/- WAS DEDUCTED AS TDS. FURTHER OUT OF THE TOTAL FREIGHT, A SUM OF RS.,4.40 CRORES WAS RECEIVED BY THE ASSESSEE AS FREIGHT ON ITS OWN TRUCKS AND BALANCE WAS RECEIVED ON BEHALF OF OTHER TRUCKS, ON WHICH IT HAD RECEIVED AND DECLARED COMMISSION OF RS.22,27,78 4/-. FURTHER THE INSURANCE CLAIM OF RS.55,010/- WAS THAT THE SAME BE NOT INCLUDED AS THE BOOKS WERE REJECTED. SIMILARLY, PROFITS FROM BRANC HES BEING THE NET RECEIPTS BY THE BRANCHES AGAINST BOOKINGS MADE BY T HEM WAS CLAIMED TO BE NOT INCLUDIBLE IN THE INCOME OF THE ASSESSEE. T HE ASSESSEE FURTHER POINTED OUT THAT SALARY AND INTEREST TO THE PARTNER S AMOUNTING TO RS.6,41,559/- WAS TO BE ALLOWED AGAINST THE SAID IN COME. THE ASSESSING OFFICER IN PARA 2.4 OBSERVED THAT THE PROVISIONS O F SECTION 44AE OF THE ACT WERE NOT APPLICABLE AS THE SAME ARE TO BE APPLI ED WHERE THE NUMBER OF TRUCKS OWNED WERE UP TO 10, WHEREAS IN THE CASE OF THE ASSESSEE THE 5 NUMBERS OF TRUCKS WERE AROUND 30. FURTHER THE ASS ESSING OFFICER POINTED OUT MISMATCH IN THE TOTAL FREIGHT RECEIPTS AND THOSE REFLECTED IN THE ACCOUNTS AND IN THE ABSENCE OF PROPER EVIDENCE BEING PRODUCED BY THE ASSESSEE, THE ESTIMATION OF INCOME UNDER SECTIO N 44AE OF THE ACT WAS HELD TO BE NOT ACCEPTABLE. FURTHER THE ASSESSI NG OFFICER NOTICED THE ASSESSEE NOT TO HAVE MAINTAINED VOUCHERS PERTAINING TO FREIGHT PAID TO OTHER TRUCK OWNERS TO THE EXTENT OF RS.7.05 CRORES AND NO TDS WAS DEDUCTED OUT OF SAID PAYMENT. IN THE CIRCUMSTANCE S, THE COMMISSION STATED TO BE SHOWN @ 3.16% WAS HELD TO BE NOT ONLY QUITE LOW BUT ALSO NOT RELIABLE DUE TO LACK OF PRIMARY DOCUMENTS. TH E ASSESSING OFFICER FURTHER OBSERVED THAT IN THE CASE OF THE ASSESSEE I TSELF RELATING TO ASSESSMENT YEAR 2004-05 A NET PROFIT RATE OF 3.5% O N FREIGHT COLLECTED ON BEHALF OF OTHER TRUCK OWNERS WAS APPLIED VIDE ORDER PASSED UNDER SECTION 143(3) OF THE ACT DATED 28.12.2006. KEEPING IN VI EW THE INCREASE IN GROSS FREIGHT BY TWO FOLDS AND THE EXPENSES CLAIMED BY THE ASSESSEE BEING UNVERIFIABLE, THE INCOME FROM GROSS PROFIT RE CEIPTS BOTH ON ACCOUNT OF OWN TRUCKS AND HIRED TRUCKS WAS TAKEN AT 5% AND THE INCOME WAS COMPUTED AT RS.51,00,831/- AFTER ALLOWING THE DEDUC TION ON ACCOUNT OF SALARY AND INTEREST PAID TO THE PARTNERS. 6. THE CIT(A) ON CONSIDERATION OF THE SUBMISSIONS M ADE BY THE ASSESSEE OBSERVED THAT THE PLEA OF THE APPELLANT IS NOT TENABLE. IT IS A N ADMITTED FACT THAT PROVISIONS OF SECTION 44AE ARE N OT APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT. OTHERWISE ALSO , IF THE PLEA OF THE APPELLANT IS CONSIDERED THEN IT AMOUNTS TO PERPETUA TING A MISTAKE. IN THIS REGARD RELIANCE IS PLACED ON THE DECISION OF T HE HON'BLE SUPREME COURT IN THE CASE OF BARODA DISTRIBUTORS PVT. LTD. 155 ITR 120(SC). ACCORDINGLY, THE ORDER OF THE ASSESSING OFFICER IN ESTIMATING THE INCOME @5% OF THE GROSS FREIGHT RECEIPTS WAS UPHELD. 6 7. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF THE CIT(A) BOTH IN RESPECT OF REJECTION OF BOOKS OF ACCOUNT, ESTIMA TION OF GROSS FREIGHT RECEIPTS AND APPLICATION OF NET PROFIT RATE OF 5%. THE LEARNED A.R. FOR THE ASSESSEE AFTER TAKING US THROUGH THE FACTS OF T HE CASE POINTED OUT THAT THE INCOME WAS ESTIMATED @5% FOR OWN TRUCKS AND ALS O OUTSIDE TRUCKS. IT WAS FURTHER CLAIMED BY THE LEARNED A.R. THAT THE RE WAS NO BASIS FOR ADOPTION OF RATE OF 5% AS COMPARED TO THE ESTIMATIO N MADE IN THE PRECEDING YEAR WHERE THE INCOME OF OWN TRUCKS WAS E STIMATED AS PER THE PROVISIONS OF SECTION 44AE OF THE ACT AT RS.42,000/ - PER TRUCK AND INCOME FROM OUTSIDE TRUCKS WAS ADOPTED @3.5% ON THE TOTAL FREIGHT. THE LEARNED A.R. FOR THE ASSESSEE DREW OUR ATTENTIO N TO THE COMPUTATION OF INCOME AND IN RESPECT OF THE TRUCKS OWNED BY THE ASSESSEE INCLUDING THOSE PURCHASED/SOLD DURING THE YEAR BY APPLYING PR OVISIONS OF SECTION 44AE OF THE ACT WHICH WOULD WORKED OUT TO RS.7,77,0 00/- AS PER TABULATION AT PAGE 31 OF THE PAPER BOOK. IN RES PECT OF THE CALCULATION OF INCOME ON ACCOUNT OF FREIGHT RECEIPTS ON BEHALF OF OTHER TRUCK OWNERS, EVEN WHERE FREIGHT RECEIPTS AS WORKED OUT BY THE AS SESSING OFFICER IS ADOPTED, BY APPLYING A RATE OF 3.5%, THE COMMISSION WOULD WORKED OUT TO RS.24,70,397/-. THE GROSS INCOME THUS WOULD BE ABOUT RS.32,47,397/- OUT OF WHICH DEDUCTION ON ACCOUNT OF INTEREST AND S ALARY TO THE PARTNERS TO BE ALLOWED AT RS.6,39,090/- AND TOTAL TAXABLE IN COME BY THE ASSESSEE WORKS OUT TO RS.26,08,307/-. THE SAID CALCULATION IS PLACED AT PAGE 32 OF THE PAPER BOOK. THE LEARNED A.R. FURTHER POINTE D OUT TO THE RECONCILIATION STATEMENT WITH M/S BHARAT SANCHAR IN DS. AND STATED THAT THERE WAS A NET DIFFERENCE OF RS.1,39,293/-, WHICH WAS EXPLAINABLE. 8. THE LEARNED D.R. FOR THE REVENUE RELYING ON THE ORDERS OF THE AUTHORITIES BELOW POINTED OUT THAT THE PROVISIONS O F SECTION 44AE OF THE ACT WERE NOT APPLICABLE. 7 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSING OFFICER ELABORATELY POINTED OUT THE DEFEC TS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE WHICH HAVE NOT B EEN CLARIFIED OR EXPLAINED WITH EVIDENCE BY THE ASSESSEE. THE ASSES SEE HAS FAILED TO PRODUCE THE NECESSARY RECORD TO BE MAINTAINED IN TH E COURSE OF CARRYING ON TRANSPORTATION BUSINESS AND IN THE ABSENCE OF TH E SAME, RESULTS SHOWN BY THE ASSESSEE CANNOT BE ACCEPTED. FURTHER, IN T HE ABSENCE OF PROPER VOUCHERS BEING MAINTAINED BY IT, THE ASSESSEE HAS F AILED TO JUSTIFY THE EXPENDITURE CLAIMED BY IT IN ITS PROFIT & LOSS ACCO UNT. THE LEARNED A.R. FOR THE ASSESSEE HAS RAISED THE OBJECTIONS WIT H REGARD TO THE ESTIMATION OF INCOME. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE UPHOLD THE REJECTION OF BOOKS OF ACCOUN T AND ADOPTION OF PROVISIONS OF SECTION 145(3) OF THE ACT IN ORDER TO DETERMINE THE INCOME OF THE ASSESSEE. 10. THE SECOND ASPECT OF THE ISSUE IS THE INCOME TO BE COMPUTED IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING AN INCOME OF RS.5,37,326/-. THE ASSESSIN G OFFICER HAD COMPUTED THE INCOME ON THE GROSS FREIGHT RECEIPTS B Y APPLYING THE NET PROFIT RATE OF 5%. THE INCOME WAS ASSESSED AT ABOU T RS.51 LACS AFTER ALLOWING DEDUCTION ON ACCOUNT OF SALARY AND INTERES T TO THE PARTNERS. 11. THE ISSUE ARISING BEFORE US IS THE ESTIMATION O F INCOME IN THE HANDS OF THE ASSESSEE. ONCE THE BOOK RESULTS SHOWN BY TH E ASSESSEE ARE NOT BACKED BY PROPER EVIDENCE AND THE SAME ARE REJECTED UNDER THE PROVISIONS OF SECTION 145(3) OF THE ACT, THE NEXT S TEP IS TO ESTIMATE THE INCOME FROM BUSINESS IN THE HANDS OF THE ASSESSEE. WHILE ESTIMATING THE INCOME RESORT IN SUCH CIRCUMSTANCES IS TO BE MADE T O THE SURROUNDING ASPECTS OF THE BUSINESS BEING CARRIED ON BY THE ASS ESSEE. WHILE ESTIMATING THE INCOME IT IS PARAMOUNT THAT A FAIR E STIMATION OF THE 8 INCOME EARNED SHOULD BE MADE ON THE BASIS OF THE SU PPORTING EVIDENCE AVAILABLE. ONE SUCH EVIDENCE IS THE PROVISIONS OF THE INCOME-TAX ACT. SECTION 44AE OF THE ACT LAYS DOWN SPECIAL PROVISION S FOR COMPUTING PROFIT & GAINS OF BUSINESS OF PLYING/HIRING OR LEAS ING OF GOODS CARRIAGE BY AN ASSESSEE. THE SECTION PROVIDES THAT WHERE TH E ASSESSEE, WHO OWNS NOT MORE THAN 10 GOODS CARRIAGES, IS ENGAGED IN SUC H BUSINESS, THE INCOME FROM SUCH BUSINESS UNDER THE HEAD PROFIT & GAINS OF BUSINESS SHALL BE DEEMED TO BE A SUM EQUAL TO RS.3500/- FOR EVERY MONTH OR PART OF MONTH BEING OF A HEAVY GOODS VEHICLE AND A SUM O F RS.3150/- FOR A GOODS CARRIAGE OTHER THAN HEAVY GOODS VEHICLE. SUB -SECTION (3) OF SECTION 44AE FURTHER PROVIDES THAT THE DEDUCTION AL LOWABLE UNDER THE PROVISIONS OF SECTION 32 TO 38 SHALL BE DEEMED TO H AVE BEEN GIVEN EFFECT TO AND NO FURTHER DEDUCTION IS TO BE ALLOWED. SECT ION 32 OF THE ACT DEALING WITH DEPRECIATION OF VEHICLES IS INCLUDIBLE IN SAID SECTION. THE PROVISIONS UNDER THE SAID SUB-SECTION FURTHER PROVI DES THAT WHERE THE ASSESSEE IS A FIRM, THE SALARY AND INTEREST PAID TO ITS PARTNERS SHALL BE DEDUCTED FROM THE INCOME COMPUTED SUBJECT TO CONDIT IONS SPECIFIED IN SECTION 40(B) OF THE ACT. IT IS FURTHER PROVIDED T HAT WDV OF THE ASSETS USED FOR THE BUSINESS SHALL BE DEEMED TO HAVE BEEN CALCULATED AS DEPRECIATION SHALL BE DEEMED TO HAVE BEEN CLAIMED A ND ALLOWED FOR EACH OF THE YEARS. THE OPTION IS GIVEN TO THE ASSESSEE TO CLAIM LOWER PROFIT & GAINS WHERE HE KEEPS AND MAINTAINS BOOKS OF ACCOUNT AS PRESCRIBED AND GETS ITS ACCOUNT AUDITED UNDER THE PROVISIONS OF TH E INCOME-TAX ACT. AS PER THE EXPLANATION UNDER THE SECTION IT IS PROVIDE D THAT THE GOODS CARRIAGES AND HEAVY GOODS VEHICLES SHALL HAVE THE M EANING ASSIGNED TO THEM IN SECTION 2 OF THE MOTOR VEHICLE ACT AND FURTHER (B) LAYS DOW N THAT WHERE AN ASSESSEE IS IN POSSESSION OF A GOODS CARRIAGE, WHET HER TAKEN ON HIRE, 9 PURCHASE OR ON INSTALLMENTS AND FOR WHICH THE WHOLE OR PART OF THE AMOUNT PAYABLE IS STILL DUE, SHALL BE DEEMED TO BE THE OWNER OF SUCH GOODS CARRIAGE. 12. IN THE FACTS OF THE PRESENT CASE BEFORE US, ADM ITTEDLY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS OWNING MORE THAN 10 GOODS CARRIAGES. THE PROVISIONS OF SECTION 44AE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HOWEVER, IN THE PRESENT SET OF CIRCUMSTANCES WHERE THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN REJE CTED THERE IS AN OCCASION TO ESTIMATE THE INCOME EARNED BY THE ASSES SEE FROM SUCH TRUCKS. THE ASSESSMENT RELATING TO ASSESSMENT YEAR 2006-07 IN THE CASE OF MAJHA PAHALWAN TRANSPORT CARRIER, YAMUNANAGAR WAS COMPLET ED UNDER SECTION 143(3) OF THE ACT AND THE BOOKS OF ACCOUNT WERE REJ ECTED UNDER SECTION 145(3) OF THE ACT IN VIEW OF VARIOUS DEFECTS/DISCRE PANCIES AS IN THE PRESENT YEAR. THE ASSESSING OFFICER AFTER SHOW CA USING THE ASSESSEE TABULATED THE INCOME FROM TRUCKS OWNED BY THE ASSES SEE INCLUDING THOSE PURCHASE/SOLD DURING THE YEAR TOTALING 66 AND COMPU TED THE INCOME OF EACH TRUCK BY APPLYING THE PROVISIONS OF SECTION 44 AE @ RS.3500/- PER TRUCKS PER MONTH. THEREAFTER THE COMMISSION ON BOO KING WAS ACCEPTED AND THE NET PROFITS FOR THE YEAR WERE DETERMINED. THE LEARNED A.R. FOR THE ASSESSEE HAS PLACED ON RECORD COPY OF THE ASSES SMENT ORDER PASSED IN THE CASE OF MAJHA PAHALWAN TRANSPORT CARRIER AND PO INTED OUT THAT THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE HAD A DOPTED THE AFORESAID RESULTS. 13. THE LEARNED A.R. FURTHER POINTED OUT THAT IN AS SESSEES OWN CASE THE ASSESSMENT RELATING TO ASSESSMENT YEAR 2004-05 WAS COMPLETED BY THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT VIDE O RDER DATED 28.12.2006 WHEREIN THE INCOME FROM TRUCKS OWNED BY ASSESSEE BE ING 17 TRUCKS WERE ESTIMATED BY APPLYING THE PROVISIONS OF SECTION 44A E OF THE ACT AND THE 10 INCOME FROM OUTSIDE TRUCKS WAS COMPUTED @3.5% OF TH E TOTAL GROSS FREIGHT RECEIPTS. 14. IN VIEW OF THE ABOVE SAID PRECEDENT BEING REFER RED TO BY THE ASSESSEE WE ARE OF THE VIEW THAT THE INCOME RELATIN G TO THE YEAR UNDER APPEAL NEEDS TO BE WORKED OUT BY APPLYING THE GUIDE LINES LAID DOWN BY SECTION 44AE OF THE ACT @ RS.3500/- PER MONTH PER T RUCK. SIMILARLY, THE INCOME EARNED BY THE ASSESSEE ON ACCOUNT OF TRU CKS OWNED BY OTHERS IS TO BE COMPUTED @3.5% OF THE GROSS RECEIPTS BEING RS.7.05 CRORES. THE ASSESSEE HAS TABULATED INCOME FOR THE YEAR UNDE R CONSIDERATION AT PAGES 31 AND 32 OF THE PAPER BOOK WHICH REVEALS THE ASSESSEE TO HAVE BEEN PURCHASED OR SOLD SOME TRUCKS DURING THE YEAR ITSELF. THE NECESSARY DETAILS IN THIS REGARD ARE NOT AVAILABLE AND HENCE WE DEEM IT FIT TO RESTORE THE LIMITED ISSUE OF VERIFYING THE CLAIM OF ASSESSEE AND CONSEQUENT COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE, TO THE FILE OF THE ASSESSING OFFICER. ACCORDINGLY, WE DIRECT T HE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE IN RESPECT OF N UMBER OF TRUCKS OWNED DURING THE YEAR UNDER CONSIDERATION AND COMPUTE THE INCOME @ RS.3500/- PER MONTH PER TRUCK EVEN FOR TRUCKS WHICH ARE PARTI ALLY OWNED BY THE ASSESSEE DURING THE CAPTIONED YEAR. FURTHER THE IN COME @ 3.5% OF GROSS RECEIPTS OF RS.7.05 CRORES IS TO BE INCLUDED ON ACC OUNT OF INCOME RECEIVED FROM OTHER TRUCKS. THE ASSESSEE IS ENTITL ED TO THE CLAIM OF DEDUCTION ON ACCOUNT OF INTEREST AND SALARY PAID TO THE PARTNERS AT RS.6,39,090/-. THE ASSESSEE IS NOT ENTITLED TO AN Y CLAIM OF DEPRECIATION ON THE SAID TRUCKS, WHICH IS DEEMED TO BE ALLOWED W HILE COMPUTING THE INCOME IN VIEW OF THE PROVISIONS OF SECTION 44AE OF THE ACT. A REASONABLE OPPORTUNITY OF HEARING SHALL BE ALLOWED TO THE ASSESSEE IN THIS 11 REGARD. THE GROUND OF APPEAL RAISED BY THE ASSESSE E IS THUS ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DAY OF APRIL, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH APRIL , 2011 RATI COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH