Shri Guru Teg Bahadur Truck Operators Association, Sangrur V. ITO-Ward, Sangrur

ITA 92/CHANDI/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1601 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-01-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 27-01-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Capital Gains; FORM 26AS
• Section: 143(3); 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI R.L NEGI, JUDICIAL MEMBER ./ ITA NOS. 92/CHD/2020 / ASSESSMENT YEAR : 2016-17 SHRI GURU TEG BAHADUR TRUCK OPERATORS ASSOCIATION, C/O VIPUL GUPTA, ADVOCATE, STREET NO. 27, PREM BASTI, DISTRICT SANGRUR -148001 THE ITO, WARD, SANGRUR ./PAN NO: AAHAS3767Q / APPELLANT /RESPONDENT HEARING THROUGH VIDEO CONFERENCING ! /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE ' ! / REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL. CIT # $ % /DATE OF HEARING : 20.01.2021 &'() % / DATE OF PRONOUNCEMENT : 16 .02.2021 / ORDER PER R.L. NEGI, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 18.10.2019 PASSED BY COMMISSIONER OF INCOME TAX (AP PEALS), PATIALA [FOR SHORT THE CIT(A)] PERTAINING TO ASSESSMENT Y EAR 2016-17 VIDE WHICH THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE FILED AGAINST THE ASSESSMENT ORDER PASSED U/S 143(3) OF T HE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT'). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUCK UNION, BEING ASSOCIATION OF PERSONS (AOP) FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS. ITA NO. 92-CHD- 2020- SRI GURU TEG BAHADAUR TRUCK OPERATORS ASSOCIATION, SANGRUR 2 6,11,207/- UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND LONG-TERM CAPITAL GAINS. THE ASSESSING OFFICER REJ ECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND ESTIMATED THE NET PROFIT @ 2% OF THE GROSS RECEIPTS HOLDING THAT THE ASSESSEE HAD NOT AC COUNTED FOR THE RECEIPTS APPEARING IN FORM 26AS. ACCORDINGLY, THE A SSESSING OFFICER MADE THE ADDITION OF RS. 11,01,308/-. IN THE FIRST APPEAL, THE LD. CIT(A) RESTRICTED THE ADDITION TO 1.5% OF THE GROSS RECEIP TS AND UPHELD THE ADDITION TO THE EXTENT OF RS. 8,70,633/-.STILL AGGR IEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER WITH REGARD TO REJECTION OF BOOKS OF ACCOUNTS AND WHICH IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. NOTWITHSTANDING THE ABOVE SAID GROUND OF APPEAL, THE LD. CIT(A) HAS ERRED ESTIMATING THE NET PROFIT RATE OF 1.5% ON THE GROSS RECEIPTS AGAINST 2% APPLIED BY THE ASSESSING OFFICER WITHOUT PIN POINTING ANY DEFECT IN THE RECORDS. 3. THAT ALL THE RELEVANT RECORDS WERE PRODUCED BEFO RE THE ASSESSING OFFICER AS PER PARA 5 OF THE ORDER OF ASS ESSING OFFICER AND THE REPLY REPRODUCED IN PARA-6 OF THE O RDER OF ASSESSING OFFICER HAS NOT BEEN CONSIDERED BY THE WO RTHY ASSESSING OFFICER/CIT(A). 4. NOTWITHSTANDING THE AFORESAID GROUNDS OF APPEAL, THE NET PROFIT OF 1.5% ON GROSS RECEIPTS AS CONFIRMED BY TH E WORTHY CIT(A) IS ON THE HIGHER SIDE, PARTICULARLY WHEN THE ASSESSEE DID NOT OWN ANY TRUCKS OF ITS OWN. ITA NO. 92-CHD- 2020- SRI GURU TEG BAHADAUR TRUCK OPERATORS ASSOCIATION, SANGRUR 3 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DIS POSED OFF. 3. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ASSESSEE IS A TRUCK UNION, FORMED TO FACILITATE THE TRUCK OWNERS / MEMBERS TO PROCURE CONTRACTS FOR TRANSPORTATION OF GOODS FROM DIFFERENT AGENCIES AND THE ENTIRE WORK IS PERFORMED BY THE TR UCK OWNERS AND THE ASSESSEE DOES NOT OWN EVEN A SINGLE TRUCK. THE AMOU NT RECEIVED BY THE UNION IS DISTRIBUTED AMONGST ITS AND ONLY A NOMINAL AMOUNT IS RETAINED BY THE APPELLANT TO MEET THE DAY-TO-DAY EXPENSES. T HE LD. COUNSEL FURTHER SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY U PHELD THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACC OUNT WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN THE BOOKS OF THE APPELLA NT EXCEPT FOR NON- PRODUCTION OF VOUCHERS. THE LD. COUNSEL FURTHER CON TENDED THAT THE LD. CIT(A) HAS WRONGLY SUSTAINED THE ADDITION OF 1.5% O F THE GROSS RECEIPTS ON ESTIMATED BASIS. THE LD. COUNSEL PLACING RELIANC E ON THE DECISION OF THE AMRITSAR BENCH OF THE ITAT IN THE CASE OF THE TRUCK OPERATOR UNION, JAITU VS ITO, FARIDKOT ITA NO. 577/ASR/2013 SUBMITTED THAT IN THE SAID CASE, THE BOOKS OF THE ASSESSEE WERE REJEC TED U/S 145(3) DUE TO NON-PRODUCTION OF VOUCHERS BY THE ASSESSEE. HOWEVER , THE ITAT DELETED THE ADDITION HOLDING THAT THE REJECTION OF BOOKS OF ACCOUNT WITHOUT POINTING OUT ANY SPECIFIC DEFECT IS NOT SUSTAINABLE . ALTERNATIVELY, THE LD. COUNSEL SUBMITTED THAT THE LD. CIT(A) HAS ESTIMATED THE NET PROFIT @ 1.5 OF THE GROSS RECEIPTS OF THE ASSESSEE WHICH IS UNRE ASONABLE AND ON HIGHER ITA NO. 92-CHD- 2020- SRI GURU TEG BAHADAUR TRUCK OPERATORS ASSOCIATION, SANGRUR 4 SIDE. THE LD. COUNSEL PLACING RELIANCE ON THE JUDGM ENTS OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. LAXMINARAIN BADRIDAS 5 ITR170 (SC) AND THE HONBLE RAJASTHAN HIGH COURT IN THE CASE O F CIT VS. GUPTA KN CONSTRUCTION COMPANY, 371 ITR 291(RAJ) SUBMITTED THAT IN VIEW OF THE RATIO LAID DOWN IN THE AFORESAID CASES THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE PAST HISTORY OF NET PROFIT RATE OF T HE ASSESSEE WHILE DETERMINING THE NET PROFIT ON ESTIMATE BASIS. THE L D. COUNSEL FURTHER SUBMITTED THAT IN THE LIGHT OF THE LAW LAID DOWN IN THE AFORESAID CASES, ESTIMATION OF NET PROFIT @ 1.5% OF THE GROSS PROFIT IS UNREASONABLE. THE LD. COUNSEL INVITED OUR ATTENTION TO THE PAGE 1 OF THE PAPER BOOK SHOWING THE PAST HISTORY OF NET PROFIT RATIO OF THE APPELLANT. AS PER CHART FURNISHED BY THE ASSESSEE, THE PERCENTAGE OF GROSS COMMISSION INCOME OF DETAILED RECEIPTS AS PER FORM 26AS ARE AS UNDER; - ASSESSMENT YEAR. 2014-15 - 0.14% ASSESSMENT. YEAR. 2015-16 - 0.17% ASSESSMENT. YEAR. 2016-17 -0.79% 4. ON THE BASIS OF THE AFORESAID FACTS AND THE RATI O LAID DOWN IN THE AFORESAID CASES, THE LD. COUNSEL SUBMITTED THAT THE PERCENTAGE OF PROFITS ESTIMATED BY THE LD. CIT(A) IS UNREASONABLE AND NOT SUSTAINABLE. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) SUBMITTED THAT THE LD. CIT(A) HAS SUSTAINED THE ADD ITION @ 1.5% GROSS PROFITS ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND ON THE ITA NO. 92-CHD- 2020- SRI GURU TEG BAHADAUR TRUCK OPERATORS ASSOCIATION, SANGRUR 5 BASIS OF PAST HISTORY, THE ESTIMATION OF NET PROFIT @1.5% DETERMINED BY THE LD. CIT(A) IS REASONABLE, THEREFORE, NO INTERFE RENCE IS WARRANTED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF PARTIES A ND ALSO PERUSED THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE AUTHORITIES BELOW AND THE LD. COUNSEL FOR THE ASSESSEE. THE GR IEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS WRONGLY SUSTAIN ED THE ADDITION @ 1.5% WITHOUT TAKING INTO CONSIDERATION THE PAST HIS TORY OF THE CASE OF THE ASSESSEE AND THAT THE LD. CIT(A) HAS WRONGLY AFFIRM ED THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE WITHOUT ASSIGNING ANY REASONS. AS POINTED OUT BY T HE LD. COUNSEL, IN THE PAST THREE YEARS, THE GROSS COMMISSION OF THE TOTAL RECEIPTS REMAINED BELOW 1% AND THE LD. CIT(A) HAS DETERMINED THE ADDI TION @ 1.5% AND AS PER SETTLED LAW WHEN THE BOOKS OF ACCOUNT ARE RE JECTED, THE PROFIT IS DETERMINED ON ESTIMATION BASIS AND IN DETERMINING T HE PROFIT ON ESTIMATION BASIS, THE PAST HISTORY PLAYS A VITAL RO LE. AS CONTENDED BY THE LD. COUNSEL, THE NET PROFIT RATE OF 1.5% SUSTAINED BY THE LD. CIT(A) IS ON HIGHER SIDE IN VIEW OF THE PAST HISTORY. HENCE, WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL THAT 1.5% PROFIT RATE ESTIMATED BY THE LD. CIT(A) IS ON HIGHER SIDE. THEREFORE, IN THE INTERES T OF JUSTICE, WE PARTLY ALLOW THE APPEAL OF THE ASSESSEE AND MODIFY THE ORD ER PASSED BY THE LD. CIT(A) AND RESTRICT THE NET PROFIT RATE TO 1% OF TH E GROSS RECEIPTS, WHICH IS MORE THAN THE PERCENTAGE IN THE LAST 3 YEARS. AC CORDINGLY, WE DIRECT ITA NO. 92-CHD- 2020- SRI GURU TEG BAHADAUR TRUCK OPERATORS ASSOCIATION, SANGRUR 6 THE ASSESSING OFFICER TO COMPUTE THE ADDITION @ 1% OF THE GROSS RECEIPTS. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED. ORDER PRONOUNCED ON 16.02.2021. SD/- SD/- ( N.K. SAINI) (R.L.NEGI) / VICE PRESIDENT / JUDICIAL MEMBER DATED : 16. 02.2021 .. '+ ,-.- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , %2 , 34516 / DR, ITAT, CHANDIGARH 6. 157$ / GUARD FILE '+ # / BY ORDER, 8' / ASSISTANT REGISTRAR