M/s. Pilot Cabs & Tours, CHENNAI V. ITO, CHENNAI

ITA 919/CHNY/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6495 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 09-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R VISWANATHAN
• Assessee Lawyers: K MEENAKSHISUNDHARAM
• Keywords: Depreciation; Corroborative evidences
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER) .. I.T.A. NO. 919/MDS/2010 ASSESSMENT YEAR : 2005-06 M/S PILOT CABS & TOURS, PRO: SHRI C. BALASUBRAMANIAN, NO.18, CHOCKALINGAM NAGAR, TEYNAMPET, CHENNAI 600034. PAN : AAGFP2090M (APPELLANT) V. THE INCOME TAX OFFICER, BUSINESS WARD XV(2), CHENNAI 600 034. (RESPONDENT) APPELLANT BY : SHRI K. MEENAKSHISUNDHARAM RESPONDENT BY : SHRI R. VIS WANATHAN O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVANC ES RAISED THROUGH NINE GROUNDS ARE (I) AGAINST ACTUAL SALE VALUE AGGREGATING ` 4,88,500/- OF FOUR CARS, THE AMOUNT DEDUCTED FROM OPENING WRITTEN DOWN VALUE OF CARS WAS ` 8,00,000/-; (II) PURCHASE OF NEW CARS FOR ` 11,00,000/- WAS NOT CONSIDERED FOR ALLOWING DEPRECI ATION AND (III) SUMMARY DISALLOWANCE OF 10% OF DIESEL, OIL, REPAIRS , I.T.A. NO. 919/MDS/10 2 MAINTENANCE, SALARIES, WAGES, TELE-PHONE PAGER AND CELLPHONE EXPENSES WERE MADE. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE, IN THE BU SINESS OF CAB OPERATION, HAD FILED RETURN FOR THE IMPUGNED ASSESS MENT YEAR, DECLARING TOTAL INCOME OF ` 51,930/-. DURING THE COURSE OF SCRUTINY PROCEEDINGS, ASSESSEE WAS REQUIRED TO PRODUCE A COP Y OF PARTNERSHIP DEED, BANK ACCOUNT STATEMENTS, ASSESSMENT PARTICULA RS OF PARTNERS, EVIDENCE FOR PURCHASE AND SALE OF CARS, ETC. THOUG H INITIALLY AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, SHRI K. MEENAKSHISUNDHARAM APPEARED ON 20.9.2007, IT SEEMS THERE WAS NO APPEARANCE THEREAFTER BY THE ASSESSEE OR ITS REPRES ENTATIVE. A.O., THEREFORE, MADE A PROPOSAL FOR ASSESSMENT UNDER SEC TION 144 OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT) AND AS PE R THE SAID PROPOSAL, HE INTENDED TO ESTIMATE THE SALE PRICE OF FOUR CARS AND DEDUCT SUCH SALE PRICE FROM THE OPENING WDV. AS PE R THE A.O., ASSESSEE HAD DEDUCTED ONLY THE WDV OF EACH OF THE F OUR CARS AND NOT THE SALE PRICE REALIZED. THE TOTAL WDV DEDUCTE D BY THE ASSESSEE WAS ` 4,85,846/- AGAINST WHICH ASSESSING OFFICER PROPOSE D TO CONSIDER ` 8,00,000/-. AGAINST ASSESSEES CLAIM FOR DEPRECIA TION FOR THREE NEW CARS COSTING ` 14,65,000/-, A.O. PROPOSED DISALLOWANCE FOR I.T.A. NO. 919/MDS/10 3 FOR FAILURE TO PRODUCE EVIDENCE IN SUPPORT OF THE P URCHASE. A.O. ALSO FOUND THAT THE ASSESSEE HAD NOT PRODUCED VOUCHERS F OR MAJOR EXPENSES. HE, THEREFORE, PROPOSED TO RE-WORK THE D EPRECIATION OF THE ASSESSEE AS AFORESAID AND ALSO TO MAKE A DISALLOWA NCE OF 10% ON VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. THERE WA S NO RESPONSE TO THE NOTICE ISSUED TO THE ASSESSEE IN THIS REGARD AND HENCE, THE ASSESSMENT WAS COMPLETED AS PROPOSED BY THE A.O. IN THE NOTICE ISSUED UNDER SECTION 144 OF THE ACT. 3. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ASSESSEE FILED DETAILED SUBMISSIONS ALONG WITH FRESH EVIDENCE. ASSESSEE WA S REPRESENTED BY SHRI K. MEENAKSHISUNDHARAM, ITP BEFORE LD. CIT(A PPEALS). LD. CIT(APPEALS) SOUGHT REMAND REPORT FROM THE A.O. I N THE REMAND REPORT, A.O. STATED THAT ASSESSEE HAD NOT MAINTAINE D ANY BOOKS FOR THE RELEVANT PREVIOUS YEAR. FURTHER AS PER THE A.O ., THE SALE RECEIPTS OF THE CARS PRODUCED BY THE ASSESSEE AND DELIVERY N OTES SIGNED BY THE CONCERNED PARTIES DID NOT GIVE MODEL NAME, ENGI NE NUMBER OR CHASSIS NUMBER. AS PER THE A.O., THE PHONE NUMBERS MENTIONED THEREIN, WHEN TRIED TO REACH, WERE UNANSWERED. IN SO FAR AS PURCHASE OF CARS WERE CONCERNED, THE A.O. NOTED THAT THESE C ARS WERE IN THE INDIVIDUAL NAME OF ONE SHRI C. BALASUBRAMANIAN, PAR TNER OF THE I.T.A. NO. 919/MDS/10 4 ASSESSEE-FIRM AND IN NONE OF THE PAPERS, THE NAME O F ASSESSEE-FIRM WAS MENTIONED. THE A.O. ALSO NOTED THAT ASSESSEES REPRESENTATIVE SHRI K. MEENAKSHISUNDHARAM HAD APPEARED WITHOUT POW ER AND THE BOOKS OF ACCOUNT AND SUPPORTING EVIDENCES WERE NEVE R PRODUCED. 4. WHEN THE REMAND REPORT WAS SHOWN TO THE ASSESSEE , THE REPLY OF THE ASSESSEE WAS THAT ITS AUTHORIZED REPRESENTAT IVE SHRI K. MEENAKSHISUNDHARAM WAS NOT GIVEN A PROPER HEARING E ITHER BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS OR AT THE TIME OF REPAND PROCEEDINGS. ACCORDING TO ASSESSEE, THE ASSESSING OFFICER WAS TRYING TO BY-PA SS SHRI K. MEENAKSHISUNDHARAM AND CONTACT THE AUDITOR OF THE A SSESSEE DIRECTLY. AS PER THE ASSESSEE, IT COULD NOT PRODUC E BILLS, VOUCHERS, ETC. SINCE THESE WERE LOST WHEN CERTAIN RENOVATION WORK WERE CARRIED OUT. FURTHER, ASSESSEE ALSO POINTED OUT THAT SALE OF A SECOND HAND CAR WOULD NEVER FETCH ` 2,00,000/- AND IN THE SECOND HAND CAR MARKET ONLY AMOUNTS MUCH LESSER THAN THE WDV COULD BE RECE IVED. VIS-- VIS THE CONCERNED BUYERS BEING NOT CONTACTABLE IN T HE NUMBERS GIVEN, EXPLANATION OF THE ASSESSEE WAS THAT THESE WERE ALL CELLPHONE NUMBERS AND THE SALES HAD TAKEN PLACE THREE YEARS P RIOR. IN SO FAR AS OBJECTION OF THE ASSESSING OFFICER THAT CARS WERE I N THE NAME OF I.T.A. NO. 919/MDS/10 5 MANAGING PARTNER OF THE ASSESSEE, SUBMISSION OF THE ASSESSEE WAS THAT ASSETS COULD BE OWNED IN THE NAME OF MANAGING PARTNER AND DEPRECIATION COULD BE CLAIMED SINCE THE CARS WERE U SED FOR THE PURPOSE OF BUSINESS OF THE FIRM. AS PER THE ASSESS EE, THE CARS WERE APPEARING IN THE BALANCE SHEET OF THE FIRM AND HENC E, THE PURCHASES WERE DONE BY THE FIRM ONLY. 5. LD. CIT(APPEALS) WAS NOT APPRECIATIVE OF THESE C ONTENTIONS. ACCORDING TO HIM, ASSESSEE HAD NOT UTILIZED OPPORTU NITIES GIVEN TO IT BY THE ASSESSING OFFICER FOR FURNISHING PURCHASE IN VOICES, DELIVERY NOTES, ETC. DURING THE COURSE OF SCRUTINY PROCEEDIN GS. HE HELD THAT ASSESSING OFFICER WAS JUSTIFIED IN RECOMPUTING THE DEPRECIATION OF CARS. HE ALSO REFUSED TO INTERFERE IN THE ORDER OF THE A.O. WITH REGARD TO DISALLOWANCE OF 10% OF CLAIM ON EXPENSES. 6. NOW BEFORE US, LEARNED A.R. SUBMITTED THAT ASSES SEE WAS NOT GIVEN A REASONABLE OPPORTUNITY BY THE ASSESSING OFF ICER EITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE COURSE OF REMAND PROCEEDINGS, TO PESENT ITS CASE. AS PER LEA RNED A.R., THOUGH THE ASSESSEE DID NOT HAVE BOOKS OF ACCOUNT, IT HAD SUFFICIENT RECORDS TO PROVE THE PURCHASE AS WELL AS SALE OF CARS. LEA RNED A.R. I.T.A. NO. 919/MDS/10 6 SUBMITTED THAT THERE WAS ADMITTEDLY AN ERROR IN THE DEPRECIATION TABLE FURNISHED BY THE ASSESSEE WHEREIN REDUCTION IN THE VALUE OF THE CARS SOLD WERE NOT TAKEN AT THE SALE PRICE REALIZED ON T HE SALE BUT ON WDV. NEVERTHELESS, ACCORDING TO HIM, THIS COULD NO T BE A REASON FOR DENYING THE ASSESSEE CORRECT DEPRECIATION DUE TO IT . FURTHER, ACCORDING TO HIM, ASSESSEE HAD CONCRETE EVIDENCE TO SHOW THE PURCHASE OF TWO CARS AND REGISTRATION OF CARS WAS N OT PERMITTED IN THE NAME OF FIRMS, BUT ONLY IN THE NAME OF INDIVIDUALS. ACCORDING TO HIM, GIVEN ANOTHER CHANCE, ASSESSEE WILL BE ABLE TO PROD UCE SUFFICIENT RECORDS TO SATISFY THE A.O. REGARDING ITS VARIOUS C LAIMS. 7. PER CONTRA, LEARNED D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THERE WAS UTTER FAILURE ON THE PART OF THE ASSESSEE IN PRESENTING ITS CASE PROPERLY BEFORE THE A.O. AS WELL AS LD. CIT(APPEALS). 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 144 OF THE ACT. NEVERTHELESS, AT PARA 1 OF THE ASSESSMENT ORDER, IT IS MENTIONED THAT ASSESSEE WAS REPRESENTED BY ITS AUTHORIZED REPRESEN TATIVE SHRI K. MEENAKSHISUNDHARAM, ITP AND HE HAD FILED POWER OF A TTORNEY ALSO. I.T.A. NO. 919/MDS/10 7 NO DOUBT, ASSESSEE MIGHT NOT HAVE FURNISHED DIFFERE NT DETAILS CALLED FOR BY THE A.O. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS. NEVERTHELESS, IT WAS ABLE TO PRODUCE BEFORE LD. CIT (APPEALS) EVIDENCE IN THE NATURE OF SALE RECEIPTS SIGNED BY I TS MANAGING PARTNER SHRI C. BALASUBRAMANIAN AND DELIVERY NOTES SIGNED B Y THE CONCERNED PARTIES. ASSESSING OFFICER HAD SUBSTITUTED A SUM O F ` 2,00,000/- PER CAR ON ESTIMATE BASIS AS THE SALE PRICE AND MADE LI KE ADJUSTMENTS IN THE DEPRECIATION. VIS--VIS PURCHASE OF TWO CARS, THE DEPRECIATION WAS NOT ALLOWED ONLY FOR A REASON THAT THE SAID CAR S WERE HELD IN THE INDIVIDUAL NAME OF SHRI BALASUBRAMANIAN. IN THE RE MAND REPORT, THE A.O. STATED THAT ASSESSEES REPRESENTATIVE SHRI K. MEENAKSHISUNDHARAM HAD APPEARED BEFORE HIM, BUT HAD NOT FILED HIS POWER OF ATTORNEY. THIS IS QUITE CONTRARY TO OBSER VATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WHERE HE ADMITTED FILING OF POWER OF ATTORNEY BY SHRI K. MEENAKSHISUNDHARAM. C OURSE OF EVENTS AS UNFOLDED, WOULD CLEARLY SHOW THAT THE ASSESSEE W AS NOT GIVEN SUFFICIENT OPPORTUNITY BY THE A.O. AND LD. CIT(APPE ALS). WE ARE, THEREFORE, OF THE OPINION THAT IN THE INTEREST OF J USTICE, THE MATTER REQUIRES TO BE RE-VISITED BY THE A.O. WE, THEREFOR E, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMIT THE ISSUE S BACK TO THE FILE OF I.T.A. NO. 919/MDS/10 8 A.O. FOR CONSIDERATION DE NOVO . ASSESSEE SHALL CO-OPERATE WITH THE ASSESSING OFFICER AND PRODUCE RECORDS SUFFICIENT TO HIS SATISFACTION FOR JUSTIFYING ITS CLAIM OF SALE OF CARS, PURCHASE OF C ARS AND EXPENSES. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE THIRTIETH DAY OF JUNE, 2011. SD/- SD/- (U.B.S. BEDI) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 30 TH JUNE, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-XII, CHENNAI-34 (4) CIT, CHENNAI-X, CHENNAI (5) D.R. (6) GUARD FILE