Income Tax Appellate Tribunal - Kolkata
Gurmit Singh., Hooghly vs Department Of Income Tax on 30 April, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH : KOLKATA
BEFORE HON'BLE SHRI P.K BANSAL, AM & HON'BLE SHRI RAJPAL YADAV, JM
I.T.A No. 57/Kol/2013 A.Y 2009-10
Income Tax Officer Vs. Gurmit Singh
Ward 1(3), Hooghly PAN: ATEPS 3871Q
[Appellant] [Respondent]
Appellant by : Shri Kanhiya Lal Kumar, JCIT/ld.Sr.DR
Respondent by : Shri Miraj D.Shah, FCA, ld.AR
Date of Hearing : 28/04/2015
Date of Pronouncement: 30/04/2015
ORDER
PER BENCH The revenue is in appeal before us against the order of Ld. CIT(A) dated 15.10.2012 passed for assessment year 2009-10.
2. The registry has pointed out that the appeal of the revenue is time barred by 25 days. In order to explain the delay in filing the appeal, the revenue has filed an application for condonation of delay and annexed an affidavit of Shri Arnab Sarkar, Income Tax Officer, Ward 1(3), Hooghly. In the affidavit, it is pleaded that the order of the ld.CIT(A) was received in the office of the Commissioner of Income Tax and the direction of the ld. Commissioner of Income Tax for filing the appeal was received belatedly on 31-12-2012. The appeal ought to be filed on or before 15-12-2012. The ld. ITO further contended that he was on leave during the period from 24-12-2012 till 04-01-2013. The appeal could not be prepared. There was no deliberate delay at the end of the revenue. The delay of 25 days occurred because of the office of the ld. AO situated in mofussil, area which is 40 kms away from Kolkata. Correspondences between ITO Office and the ld. Commissioner of Income-tax's office had made the appeal time barred. Taking into consideration the explanation of the revenue, we are of the opinion that there is no deliberate attempt at the end of any official to make the appeal time barred before the tribunal. The delay has occurred on account of correspondence between the ITO's office and ld. CIT's office, which was not conducted promptly. The revenue will not gain anything by making the appeal time barred. Therefore, considering the explanation, we condone the delay in filing the appeal and proceed to decide the appeal on merit.
3. The revenue has raised four grounds of appeal. But these are not in consonance with rule 8 of ITAT rules 1963. They are descriptive and argumentative in nature.
2 ITA No.57/Kol/2013-JMITO W 1(3),Hoogly Vs. Gurmit Singh
4. In brief the substantial grievance is that the ld.CIT(A) has erred in deleting the addition made by the AO by estimating the income from truck hire charges.
5. The brief facts of the case are that the assessee is running a proprietorship concern in the name and style of M/s. Classic Motors. He has filed his return of income on 29-0-2009 declaring total income of Rs.7,39,093. The case of the assessee was selected for scrutiny assessment and notice u/s. 143(2) was issued and served upon the assessee.
6. On scrutiny of the accounts, it revealed to the AO that the assessee had offered income under following three heads, namely:-
a) Income from spare parts business u/s.44AE Rs.63,511/-
b) Income from plying of 10 trucks @ Rs.3,500 p.m u/s. 44AE Rs.4,20,000/-
c) Income from other truck-commission Rs.2,98,834/-, and
Interest income of Rs.24,841/-
6.1 The AO has not disputed with regard to the income from spare parts and interest income.
The ld.AO has also not made any elaborate discussion with regard to the income offered by the assessee u/s. 44AE qua the trucks owned by him. The assessee had contended that being a transporter he is offering an income u/s. 44AE @ Rs.3,500 p.m per truck. He is not supposed to maintain books of account or any other details under this section. He further contended that the assessee had received Rs.2,34,86,778/- from owners of the goods and after deducting the commission @6% he has paid Rs.2,20,77,572/- to the owners of hired trucks. The assessee had earned a commission of Rs.14,09,206/-. He claimed an expenditure of Rs.11,10,372/-. Thus, net profit on account of hire charges was at Rs.2,98,834/-.
7. The ld.AO has called for various details namely, the list of the persons whose goods were transported with the hire trucks. The assessee has submitted all the details. Somehow, the ld.AO was not satisfied with the details submitted by the assessee. He estimated the income at 15% of the gross receipts including the receipts received by the assessee from own trucks. The discussion made by the AO in this regard read as under:-
"Thereafter a letter dated 14/16.11.2011 was issued to the assessee stating therein as under:-
"Ït is seen that you have shown income from 10 trucks at Rs.4,20,000/- u/s.44AE. At the time you have drawn a P & L account in which you have shown by Hire Charges receipt at Rs.2,34,86,779/- out of which 6% commission has been taken and net profit has been computed at Rs.2,98,835/- after debiting several expenses.
It is also seen that you have submitted a statement mentioning details of TDS certificates in which you have shown to have received an am9ount of Rs.4,32,25,026/- against which you have claimed TDS of Rs.9,52,169/- in your computation.3 ITA No.57/Kol/2013-JM
ITO W 1(3),Hoogly Vs. Gurmit Singh In view of the above you are requested to show cause why the above amount of Rs.4,32,26,026/- against which you have claimed TDS of Rs.9,52,169/- in your computation will not be treated as your receipt in view of Section 198 of the I.T Act, 1961 [Tax deducted is income received]"
In reply to the above letter the assessee submitted a letter dated 22.11.2011 contents of which is as under:-
"1)The assessee's total receipt inclusive of TDS is as under
a) Receive from other truck including TDS Rs.2,34,86,778/-
b) Receive from own truck including TDS Rs.1,97,38,247/-
Total receive Rs.4,32,25,026/-
Out of that TDS deducted Rs. 9,58,769/-
Actual Money Receipt Rs.4,22,66,257/-
Amount of TDS taken in assets side of B/S.
The deduction is taken as the income of an assessee. Provision to Section 198 state that the sum being the tax paid under sub-sec (1A) of sec. 92 for purpose of computing the income of an assessee shall not be deemed to be income received.
In our case income shown including TDS. Therefore, sec 198 is not applicable. TDS shown is assets and Balance Sheet is in agreement means TDS included in receipts otherwise B/S would not be agreement."
The submissions filed by the assessee during the course of assessment proceedings have been considered carefully. It is noted that the accounts of the assessee is audited. The auditor in his report in Form 3CD at Sl.27 has commented "Not applicable". Hence question of deduction of tax (TDS) does not arise.
At the same time it is observed that the assessee has adopted various methods to hide his real receipt by bifurcating his contract receipt as receipt by showing his income u/s. 44AE and by way of hiring other trucks for Rs.2,34,86,778/-. From this amount of Rs.2,34,86,778/- he has calculated his commission @6% on Rs.2,34,86,778/- i.e Rs.14,09,206/- out of which he has debited Rs.11,10,372/- keeping behind Rs.2,98,834/- as net profit.
Under the circumstances the gross receipt of Rs.4,32,25,026/- corresponding to TDS of Rs.9,52,170/- ( as claimed) as per Form 16A submitted by the assessee is considered as the receipt during the year under consideration.
In view of the above I estimate the income of the assessee at Rs.64,83,754/- being 15% of Rs.4,32,25,026/- under the head income form contractual receipt.
Subject to the above total income of the assessee is computed as under:
Income from Resale of Spare parts Rs. 63,511/-
Add- As discussed above
On account of own trucks and other trucks Rs.64,83,754/-
Gross Total Income Rs.65,47,265/-
Less- Deduction under Chapter VIA Rs. 68,093/-
Total income Rs.64,79,172/-
Rounded off to Rs.64,79,170/-
8. On appeal, the ld.CIT(A) has accepted the contention of the assessee. However, the ld.1st Appellate Authority has disallowed the claim of the assessee to the extent of 50% out of the 4 ITA No.57/Kol/2013-JM ITO W 1(3),Hoogly Vs. Gurmit Singh expenses claimed for carrying out truck hire charges. After the ld.CIT(A)'s order the net profit rate from the hired truck would come to 3.6% as against 1. 6% disclosed by the assessee.
9. With the assistance of the ld. Representative, we have gone through the record carefully, as far as determination of income by estimation is concerned, there is no dispute between the parties because the assessee has not challenged the order of the ld.CIT(A). The dispute is whether the income of the assessee is to be computed @15% of gross receipts i.e the receipts received from his own trucks and from the trucks hired by him. The ld.DR has contended that no doubt 15% may be a higher figure for determining the income of the assessee. The ld.AO has not substantiated his assessment order by any other material for adopting this figure. But if this Tribunal take note of the rates prevalent in the market, then it would be seen that rate shown by assessee at 6% of the gross receipts is very much on lower side. He further contended that under the I.T Act, 1961, if assessee is carrying on certain business namely contract work, plying of truck and failed to achieve a particular turnover then they are not supposed to maintain books of account, but profit would be estimated @ 8%. Strictly, even if it is not applicable in the present situation then also for guidance purpose this section i.e 44AE may be applied on the receipt received by assessee on truck hired by him.
10. On the other hand, the ld. Counsel for the assessee submitted that profit shown by the assessee at 6% is not on the lower side. For buttressing his contention he relied upon the order of the ITAT Chanidgarh passed in ITA No.90/Chd/2011 in the case of M/s. Haryana Kashmir Transport Carriers Vs. The JCIT. In this case the AO has applied the net profit rate at 5% on the gross freight receipts. The Tribunal has accepted the contention of the assessee that income was to be computed @3.5% of the gross receipts. In the case of present respondent, after the order of the ld.CIT(A) the income would be @ 3.6%, which is better than the one accepted by the ITAT, Chandigarh. He further relied upon the order of the ITAT, Delhi in ITA No.1093/Del/2012 in the case of ACIT, Cir-2, Ghaziabad Vs. Pradeep Kumar Goel. In this case also the AO has rejected the books of account and adopted the net profit rate at 5% for estimating the income. The ld. 1st Appellate Authority has reduced the net profit rate to 2.5%. The appeal of the revenue has been dismissed by the ITAT Delhi. The ld. Counsel for the assessee in this way submitted that in these two cases the ITAT has upheld the rate of profit at 3.5% and 2.5% respectively. The rate in the case of assessee after the order of the ld.CIT(A) would be at 3.6%.
11. Section 145 of the I.T Act 1961 contemplates that income chargeable under the head, "profits and gains of business or profession", or "income from other sources" shall subject to the provisions of sub-section 2, be computed in accordance with either cash or mercantile system of 5 ITA No.57/Kol/2013-JM ITO W 1(3),Hoogly Vs. Gurmit Singh accounting regularly employed by the assessee. Sub-section 2 of section 145 provides that Central government would notify the accounting standard required to be followed by any class of assessee or in respect of any class of income. Sub-section 3 contemplates that if the AO is unable to deduce the true income from the accounts of the assessee then he will reject the accounts and estimate the income as per the procedure provided in section 144 of the I.T Act, 1961.
12. We have extracted the order of the ld.AO. The assessee has submitted the details whenever called upon by the ld.AO. The ld.AO has no where pointed out from those details, as to how the income cannot be deduced. He has estimated the income @ 15%, but nowhere disclosed how he came to the conclusion that profit in these activities would be @ 15%. As far as ld.1st Appellate Authority is concern, it has appreciated these facts and circumstances and thereafter arrived at a conclusion that the income shown by the assessee from commission on hiring of trucks is reasonable one and expenditure claimed on these activities can be disallowed on estimate basis. The ld. 1st Appellate Authority has disallowed the expenditure to the extent of 50%. Whenever any income has to be determined on an estimate basis then element of guess work will be involved. It is quite difficult for the adjudicator to fix a particular amount, but efforts are to be made to estimate the income closure to the real income from that activity. We could appreciate the ld.AO, if he had made reference to the cases of any similarly situated assessee. On the other hand, the ld. Counsel for the assessee has placed on record two orders of the ITAT, wherein the cases of transporter, the net profit rate @ 3.5 & 2.5% of the gross receipts has been upheld. The ld. first appellate authority has exercised its discretion and adopted profit rate on an estimate basis. The Tribunal, being second appellate authority will not be justified in interfering in the opinion of ld.CIT(A), unless it is pointed out that estimation of profit rate is based on extraneous reasons. It is not advisable at the end of second appellate authority to replace the estimation of income determine on an adhoc rate basis by another adhoc opinion. Therefore, taking into consideration all these facts and circumstances and the orders of the co- ordinate benches of the ITAT, we do not find any error in the impugned order of the ld.CIT(A). We uphold the same.
13. In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 30 -04-2015
Sd/- Sd/-
[ P.K BANSAL] [ RAJPAL YADAV]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 30 -04-2015
6
ITA No.57/Kol/2013-JM
ITO W 1(3),Hoogly Vs. Gurmit Singh
Copy of the order forwarded to:
1. Appellant- I.T.O W 1(3), Aaykar Bhavan, G.T Rd, Khadina More, P.O Chinsurah, Dist:Hooghly PIN 712 101.
2 Respondent : Shri Gurmit Singh 137 G.T Road, Manicktala, Serampore,Dist:
Hooghly 712201.
3. CIT,
4. CIT(A),
5. DR, Kolkata Benches, Kolkata *PP/SPS True Copy] By order, Asstt Registrar