Sh. Gurinderjit Singh, Sirhind V. DCIT, Circle, Mandi Gobingarh

ITA 971/CHANDI/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4375 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 10-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 143(3); 143(1); 207

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT ITA NOS.969 & 970/CHD/2018 ASSESSMENT YEARS: 2010-11 & 2012-13 SH. PAVITPAL SINGH VS. THE DY. CIT C/O PATIALA BUS SERVICE PVT.LTD. CIRCLE, MANDI GO BINDGARH SIRHIND PAN NO. AGFPS2794E ASSESSEE BY : SH. GUNJEET SINGH SYAL REVENUE BY : SH. MANJIT SINGH, SR. DR ITA NO. 971/CHD/2018 ASSESSMENT YEARS: 2010-11 SH. GURINDERJIT SINGH VS. THE DY. CIT C/O PATIALA BUS SERVICE PVT.LTD. CIRCLE, MANDI GO BINDGARH SIRHIND PAN NO. AGFPS2789H (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. GUNJEET SINGH SYAL REVENUE BY : SMT. NEHA CHAUDHRY, SR. DR DATE OF HEARING : 11/03/2019 DATE OF PRONOUNCEMENT : 14/03/2019 ORDER THESE APPEALS BY THE ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DT. 26/04/2018 OF THE LD. CIT(A), PATIALA. 2. SINCE THE ISSUES INVOLVED ARE COMMON AND THE APP EALS WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. AT THE FIRST INSTANCE I WILL TAKE UP THE APPEAL IN ITA NO. 969/CHD/2018 FOR THE A.Y. 2010-11 WHEREIN ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE & I N LAW, THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE REJECTION OF BOO KS OF ACCOUNTS U/S 145(3) OF THE INCOME TAX ACT, 1961. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE & I N LAW, THE LD. CLT(A) HAS ERRED IN ESTIMATING THE TRUCK INCOME AND WRONGL Y SUSTAINING ADDITION OF RS.10,47,600/ - 3. THAT THE LD. CIT(A) FAILED TO TAKE INTO ACCOUNT THE ORDER DATED 14.06.2016 OF HIS PREDECESSOR IN ASSESSEES OWN CASE, WHERE IN UNDER SIMILAR CIRCUMSTANCES THE ENTIRE ADDITION OF TRUCK INCOME WAS DELETED. 2 4. THAT THE ORDER OF AUTHORITIES BELOW IS ILLEGAL, ARB ITRARY AND AGAINST LAW & FACTS OF THE CASE. 5. THAT PROPER OPPORTUNITY SHOULD HAVE BEEN ALLOWED. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR SUBSTANTIATE ANY OR ALL THE ABOVE GROUNDS OF APPEAL AT ANY TIME BEFO RE OR AT THE TIME OF HEARING OF APPEAL. FROM THE AFORESAID GROUNDS IT IS GATHERED THAT ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE SUSTENANCE OF ADDITION OF RS. 10,47, 600/- OUT OF THE ADDITION MADE BY THE ASSESSING OFFICER. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 30/03/2011 DECLARING AN INCOME OF RS. 30,78,193/ - WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS ACT). LATER ON THE CASE WAS SELECTED FOR SCRUTINY . 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS THE OWNER OF 40 TRUCK S AND FURNISHED MONTH WISE DETAILS OF THE TRUCK INCOME TOTALING TO RS. 20,76,0 00/-. HE FURTHER OBSERVED THAT NO DETAILED P&L ACCOUNT IN RESPECT OF BUSINESS OF O WING OF TRUCKS HAD BEEN FILED BY THE ASSESSEE AND THAT THE RECEIPT HAD BEEN SHOWN EVENLY FOR EVERY MONTH. HE ALSO OBSERVED THAT THE DETAILS OF FREIGHT RECEIP T FROM TRUCKS, EXPENDITURE OF DIESEL, REPAIRS OF VEHICLES MAINTENANCE AND EXPENSE S THEREON, SALARIES OF DRIVERS & HELPERS WERE NOT AVAILABLE, NO BILLS AND VOUCHERS OR SUPPORTING DOCUMENTS HAD BEEN PRODUCED AND NO BASIS OF TRUCK INCOME AS D ECLARED HAD BEEN GIVEN. HE FURTHER OBSERVED THAT THERE WAS DEEP FALL IN THE RECEIPT OF INCOME FROM THE TRUCKS VIS A VIS THE EARLIER YEARS, THEREFORE THE B OOK RESULT DECLARED BY THE ASSESSEE WERE NOT ACCEPTABLE. 6. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCO UNTS MAINTAINED BY THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145( 3) OF THE ACT. HE FURTHER OBSERVED THAT THE BROTHER OF THE ASSESSEE NAMELY SH RI. GURINDERJIT SINGH WAS ALSO DOING THE SAME BUSINESS BUT HE WAS DECLARING BETTER INCOME WHICH RANGED FROM RS. 5000/- TO RS. 8500/- PER TRUCK PER MONTH. THE ASSESSING OFFICER CONSIDERED THE AVERAGE INCOME I.E; RS. 6750 /-(8500 +5000/2)PER TRUCK PER MONTH AND ACCORDINGLY ESTIMATED THE TRUCK INCOME AT RS. 3 2,40,000/- PER ANNUM THUS MADE THE ADDITION OF RS. 11,64,000/-(RS. 32,40,000/ -()RS. 20,76,000/-). 7. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A) AND FURNISHED THE WRITTEN SUBMISSION WHICH HAD BEEN INC ORPORATED IN PARA 3.3 OF THE IMPUGNED ORDER, FOR THE COST OF REPETITION THE SAME IS NOT REPRODUCED HEREIN. 3 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSING OFFICER HAD ESTIMATED THE INCOME WITH A BROAD RANGE OF INCOME AS SHOWN BY THE ASSESSEE AND THAT THE LIMIT UNDER S ECTION 44AE OF THE ACT RELATES TO OWNER OF LESS THAN TEN TRUCKS AND CANNOT BE SAID TO BE APPLIED TO THE ASSESSEE WHO HAD TRUCKS NEARLY FOUR TIMES. HE ALSO OBSERVED THAT THE BROAD ESTIMATION OF RS. 6750/- PER MONTH MADE BY THE ASSE SSING OFFICER APPEARED TO BE REASONABLE BUT THE ONLY RELIEF WHICH COULD HAVE BEEN ENVISAGED WAS THAT TO EXPECT THE TRUCKS WERE NOT OPERATIONAL FOR FULL TWE LVE MONTHS, ON ACCOUNT OF REPAIRS AND MAINTENANCE ETC. HE ALLOWED RELIEF OF 1 0% AND SUSTAINED THE ADDITION OF RS. 10,47,600/-. 8. NOW THE ASSESSEE IS IN APPEAL. 9. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT EVEN I F THE BOOK RESULT WERE TO BE REJECTED THE ASSESSING OFFICER WAS DUTY BOUND TO MA KE A FAIR AND REASONABLE ESTIMATE OF INCOME BASED ON EVIDENCE AND MATERIAL A VAILABLE ON RECORD AND WAS REQUIRED TO MAKE BEST JUDGMENT ASSESSMENT WHICH COULD HAVE BEEN JUSTIFIED ON THE BASIS OF MATERIAL AVAILABLE ON REC ORD. IT WAS STATED THAT THE ASSESSING OFFICER CANNOT MAKE AN ASSESSMENT IN AN A RBITRARY, CAPRICIOUS, VINDICTIVE MANNER. THE RELIANCE WAS PLACED ON THE F OLLOWING CASE LAWS : CIT CENTRAL AND UNITED PRIVINCES VS. LAXMI NARAIN B ADRI DASS 5 ITR 170 (PC) STATE OF ORISSA VS. MAHARAJA B.P. SINGH DEO 76 ITR 690 (SC) CIT VS. RANICHERRA TEA CO. LTD. 207 ITR 979 (CAL) CIT VS. REALEST BUILDERS & SERVICES LTD. (2008) 307 ITR 202 (SC). K. BALIAH VS. CIT 56 ITR 184 10. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN AS PER THE PROVISIONS OF SECTION 44AE OF THE ACT THE INCOME FROM PLYING O F TRUCKS SHOULD HAVE BEEN COMPUTED @ RS. 3500/- AND RS. 5000/- PER MONTH PER TRUCK FOR A.Y 2010-11 AND 2012-13 RESPECTIVELY. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER PROCEEDED TO ESTIMATE THE INCOME OF THE ASSESSEE WI THOUT CONFRONTING WITH ANY COMPARABLE CASE NOR DID HE DEMONSTRATED THAT THE ME THOD OF ACCOUNTING ADOPTED BY THE ASSESSEE RESULTED IN UNDER ESTIMATIO N OF PROFITS. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER WHILE ESTIMATI NG THE INCOME FOR THE EARLIER YEARS CONSIDERED THE PROVISIONS CONTAINED IN SECTIO N 44AE OF THE ACT. IT WAS ALSO 4 SUBMITTED THAT FOR THE PRECEDING ASSESSMENT YEAR 20 09-10 SIMILAR ADDITION WAS DELETED BY THE LD. CIT(A) VIDE ORDER DT. 14/06/2016 , COPY OF THE SAID ORDER IS PLACED AT PAGE NO. 8-12 OF THE ASSESSEES COMPILATI ON. IT WAS FURTHER SUBMITTED THAT IN THE IDENTICAL CIRCUMSTANCES NO ADDITION WAS MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2016-17 WHILE PASSI NG THE ASSESSMENT ORDER U/S 143(3) OF THE ACT, REFERENCE WAS MADE TO PAGE NOS. 14 TO 16 OF THE ASSESSEES PAPER BOOK WHICH IS THE COPY OF THE SAID ORDER DT. 05/12/2018. 11. IN HIS RIVAL SUBMISSIONS THE LD. SR. DR STRONGL Y SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD.CIT(A) AND FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 44AE ARE NOT APPLICABLE WHEN THE ASSESSEE I S OWING MORE THAN TEN TRUCKS. IN HIS REJOINDER THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT IN THE PRECEDING YEAR I.E. A.Y. 2009-10 THE INCOME ACCEPTE D BY THE LD.CIT(A) WAS RS. 5077/- PER TRUCK PER MONTH AND IN THE SUCCEEDING YE AR THE INCOME SHOWN BY THE ASSESSEE WAS RS. 4308/- PER MONTH PER TRUCK. 12. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PR ESENT CASE IT IS NOTICED THAT THE ASSESSING OFFICER POINTED OUT SPECIFIC DISCREPA NCY IN THE MAINTENANCE OF BOOKS OF ACCOUNTS AND REJECTED THOSE BOOKS BY INVOK ING THE PROVISIONS OF 145(3) OF THE ACT. IT IS WELL SETTLED THAT WHEN THE BOOKS OF ACCOUNTS ARE REJECTED THE ONLY WAY TO DETERMINE THE INCOME IS THE ESTIMATION OF INCOME BUT THE SAID ESTIMATE SHOULD HAVE BEEN FAIR AND REASONABLE. IN M Y OPINION IN SUCH CIRCUMSTANCES THE PAST HISTORY OF THE ASSESSEES OW N CASE IS THE BEST GUIDE TO ESTIMATE THE INCOME. IN THE PRESENT CASE THE LD. CO UNSEL FOR THE ASSESSEE HIMSELF ADMITTED THAT IN THE PRECEDING YEAR THE INC OME SHOWN BY THE ASSESSEE AND ACCEPTED BY THE LD.CIT(A) WAS AT RS. 5077/- PER TRUCK PER MONTH. I THEREFORE, DEEM IT APPROPRIATE TO ESTIMATE THE INCO ME BY INCREASING THE SAME BY 10% FROM THE EARLIER YEAR WHICH COMES APPROXIMAT ELY RS. 5585/-. ACCORIDINGLY THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE I NCOME AT RS. 5600/- PER TRUCK PER MONTH INSTEAD OF RS 6075/- DIRECTED BY THE LD. CIT(A). 13. THE FACTS IN ITA NO. 971/CHD/2018 FOR THE A.Y. 2010-11 IN THE CASE OF SH. GURINDERJEET SINGH ARE IDENTICAL VIS A VIS TO THE F ACTS INVOLVED IN THE CASE OF SHRI. PAVITPAL SINGH IN ITA NO. 969/CHD/2018(SUPRA) THER EFORE MY FINDINGS GIVEN IN FORMER PART OF THIS ORDER SHALL APPLY MUTATIS MUTAN DIS. 14. AS REGARDS TO THE ESTIMATION OF INCOME FOR THE A.Y 2012-13 IN ITA NO. 971/CHD/2018 IS CONCERNED, IT IS NOTICED THAT THE A SSESSING OFFICER ESTIMATED THE 5 INCOME AT RS. 8000/- PER TRUCK PER MONTH WHICH THE LD. CIT(A) REDUCED TO RS. 7200/- PER MONTH WHILE THE ASSESSEE HAD SHOWN THE I NCOME AT RS. 5,744/- I.E. RS. 20,67,850/- FROM THIRTY TRUCKS FOR FULL YEAR AND TW O TRUCKS FOR FOUR MONTHS. WHILE THE ASSESSING OFFICER ESTIMATED THE SAME AT RS. 8000/- PER MONTH AND THE LD. CIT(A)AT RS. 7200/-, IN THE EARLIER YEAR I.E. A.Y. 2010-11 IN THE FORMER PART OF THIS ORDER THE INCOME PER TRUCK PER MONTH WAS ESTIMATED AT RS. 5600/- INSTEAD OF RS. 6075/- ESTIMATED BY THE LD. CIT(A). BY FOLLOWING TH E SAME ANALOGY THE INCOME FOR THE YEAR UNDER CONSIDERATION IS ESTIMATED AT RS . 6600/- PER TRUCK PER MONTH INSTEAD OF RS. 7200/- PER TRUCK PER MONTH DIRECTED BY THE LD.CIT(A).THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO MODIFY THE ESTIM ATED INCOME AS POINTED OUT ABOVE. 15. IN THE RESULT APPEALS OF THE ASSESSEES ARE PART LY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 14/03/2019) SD/- (N.K. SAINI) VICE PRESIDENT PLACE: CHANDIGARH DATED : 14/03/2019 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR