Income Tax Appellate Tribunal - Chandigarh
Sh. Sudhir Sood, Kangra vs Assessee
Author: G.S.Pannu
Bench: G.S.Pannu
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'B' CHANDIGARH
BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER
AND MS SUSHMA CHOWLA, JUDICIAL MEMBER
ITA No. 998 to 1000/Chd/2009
Assessment Years: 2002-03 to 2004-05
Shri Sudhir Sood, Vs. The ITO,
Proprietor. Shivam Petro Deals, Dharamshala
Kangra (H.P)
PAN No. ADNPS 7527G
(Appellant) (Respondent)
Appellant By : Shri Ashwani Kumar
Respondent By: Smt. Jaishree Sharma
ORDER
PER SUSHMA CHOWLA, JM
These three appeals by the assessee are against the order of CIT(A), Shimla dated 26.3.2009 relating to assessment years 2002-03 to 2004-05 against the order passed under section 143 (3) / 147 of the I.T. Act.
2. The assessee has raised the following common grounds of appeal in all the appeals:-
i) That the order of CIT(A) is against law and facts on the file.
ii) That the CIT(A) is not justified in confirming the action of the Assessing Officer, who has made an addition of Rs.
9,44,242/- (assessment year 2002-03), Rs. 3,01,110/- (assessment year 2003-04) and Rs. 2,45,514/- (assessment year 2004-05) for respective Assessment Years on account of payment made by the assessee to Shri Udya Sood, whose truck was hired by the assessee for the carriage of diesel and petrol for his filling station. The vehicle was hired as per agreement signed with Indian Oil Corporation. The payments were made through books of account from time to time.
Necessary evidence to this effect was placed on record during 2 assessment proceedings and before the first appellate authority also.
.
iii) The order of the Assessing Officer deserves to be quashed as the same is not based on facts, illegal and bad in law.
3. All these appeals having common grounds of appeal were heard together and are being disposed off by this consolidated order for the sake of convenience.
4. The identical issue raised in the appeals filed by the assessee are against the additions made on account of payments received against truck hire charges.
5. The appeals in ITA Nos. 998 to 1000/Chd/2009 have been filed by the assessee after a delay of 31 days. The assessee has moved an application for condonation of delay in furnishing the appeals before us belatedl y after a delay of 31 days. The affidavit of the assessee is also filed on record under which it was explained that because of certain legal problems, this license was cancelled two years ago by IOC and the petrol pump was assigned to some other person. The assessee further claimed that his entire mail was sent to the old address of the petrol pump. Since there was no business, he had no funds to pay the Tribunal fee and the filing of the appeal was further delayed. In view of the reasons advanced by the assessee, we condone the delay of 31 days in filing the appeals belatedl y and proceed to take the same on record.
6. The facts in all the appeals before us are identical, However,, a reference is being made to the facts in ITA No.998/Chandi/2009 relating to assessment year 2002-03 for adjudicating the issue. The brief facts of 3 the case are that the assessee was carryi ng on the business of running of petrol pump at Jawalamukhi. The re-assessment proceedings were initiated u/s 147/148 of the Act. The Assessing Officer noted the assessee to be in receipt of tanker freight receipts. From the perusal of the copy of TDS certificates issued by IOC, Ambala Cantt, attached with the return of income, the Assessing Officer noted that the amounts paid to the assessee through cheques on account of tanker freight receipts amounted to Rs.25,14,340/-. The Assessing Officer on the examination of books of account found the assessee to have credited receipts of Rs.15,70,098/- onl y. The assessee was show caused to explain why the entire receipts should not be assessed in his hands as it had claimed credit of entire TDS as well expenses of Rs.8,15,605/- under the head tanker running expenses, depreciation of Rs.2,33,123/- and interest on bank loan of Rs.4,85,982/- was also debited. The explanation of the assessee was that the tanker of his brother was attached with the IOC as per their requirement, but due to some technical difficulties the TDS certificates of freight receipts were issued by the IOC in the name of the assessee. The Assessing Officer observed that the assessee failed to furnish any such evidence from the IOC as to under what circumstances the tanker of Shri Uday Sood, his brother has been attached with IOC and why the TDS certificate was not issued in the name of Shri Uday Sood. The assessee during the course of assessment proceedings filed the ledger account appearing in its books of account regarding tanker No.HP 382530, which is in the name of Shri Uday Sood. As per the assessee cheques were issued to Shri Uday Sood after apportioning the total receipts from the IOC between the assessee and Uday Sood. The assessee also explained that the oil had been used in the tanker of Shri Uday Sood and the charges for such oil were debited to his account and also the charges of t yres / tubes borne by the assessee 4 were debited to the account of Shri Uday Sood. The Assessing Officer observed that the assessee had borne the expenses but has failed to file any detail of any agreement between the assessee and Shri Uday Sood or between Uday and IOC. The Assessing Officer held that in view the assessee claiming expenditure of Rs.10,48,729/- plus interest, he was bound to declare the total receipts in his hands and also as it had claimed the credit of entire TDS in its returns, the said receipts should have been declared by the assessee. The plea of the assessee that Shri Uday Sood had filed its return under the provisions of Section 44AE of the Act was not accepted by the Assessing Officer. The Assessing Officer held that in case the said receipts were included in the gross receipts of the assessee tax would have been paid by the assessee @ 30%. However, no tax was paid by Shri Uday Sood. This was held to be a case of diversion of receipts/income and the receipt of Rs.9,44,242/- were included as income of the assessee. The CIT(A) upheld the order of the Assessing Officer in view of no agreement between the parties and no confirmation/bank account of Uday Sood being filed to prove the receipts of payment from the assessee. Further, it was held by the CIT(A) mere entries in the books of account of the assessee does not prove the payment made by the assessee and the same being not supported by corroborated evidence, the onus placed upon the assessee has not been discharged. Accordingl y, the additions made by the Assessing Officer were upheld.
7. The Ld. AR for the assessee pointed that no expenditure on account of diesel used in the tanker belonging to Shri Uday Sood was accounted for in the profit & loss account of the assessee. Onl y expenditure incurred on the tanker of the assessee was accounted for and claimed an expenditure. The Ld. AR for the assessee pointed out that the assessee 5 had included tanker income of Rs.15,70,098 and the TDS credit was availed by the assessee by including the amount of TDS in its return of income. The Ld. AR for the assessee further pointed out that the proof of ownership of the tanker of Shri Uday Sood i.e HP 382530 was filed before the C IT(A). Our attention was drawn to the order of the C IT(A) wherein Assessing Officer in remand proceedings verified the stand of the assessee that it had not claimed the expenses on account of tanker owned by Shri Uday Sood and the books of account were produced before the Assessing Officer. The Assessing Officer was also asked to verify the return of income filed by Shri Uday Sood u/s 44AE of the Act. The Ld. DR for the Revenue pointed that the entire hire charges were paid to the assessee by the IOC and the TDS certificate was also issued in the name of the assessee. However, the assessee had not accounted for such receipts and the difference in receipts not accounted for by the assessee was diversion of income and the same are to be included in the hands of the assessee. In rejoinder, the Ld. AR for the assessee clarified that in assessment proceedings no books of account were produced, However, in remand proceedings before Assessing Officer, complete books of account were produced. The Ld. AR for the assessee further claimed that the entire receipts could have been shown in the hands of the assessee and the income relating to Shri Uday Sood be excluded. His further contention was that even if there was an accounting error, the receipts could not be held of the assessee.
8. We have heard the rival contentions and perused the record. The assessee was carrying the business of running of petrol Pump at Jwalamukhi. During the year, in addition, the assessee had shown income from tanker hire charges. The claim of the assessee was that it had 6 attached two tankers to IOC out of which one belongs to his brother Shri Uday Sood. Separate bills were raised for the two tankers and separate accounts were appearing in the books of account for both the tankers. The assessee claims that the freight received from the hired tanker of Shri Uday Sood was credited to his account. The balance receipts were credited to the account of the assessee and were reflected as his income in the profit & loss account. The assessee claims to have filed the proof of ownership of tanker No.HP 382530 before the C IT(A) as noted by the CIT(A) at page-3 of the appellate order. The next plea of the assessee was that the expenditure claimed in the profit & loss account was in relation to the tanker owned by the assessee and no expenditure relating to the tanker owned by Shri Uday Sood was claimed by the assessee. Even if any expenditure was incurred on behalf of Udhay Sood, the same was debited to his account. During the appellate proceedings, the Assessing Officer was directed to verify the facts regarding the payment made by the assessee to Shri Uday Sood and submit his report. The assessee produced the books of account for the year under appeal before the Assessing Officer in Remand Proceedings and the Assessing Officer vide letter dated 23.3.2009, reported as under :-
"In continuation of the above noted letter it is submitted that above not assessee alongwith his counsel attended this office on 18.3.2009 and produced his account books from the assessment years 2002-03, 2003-04 & 2004-05 before the undersigned. I have personally verified from the ledgers of the assessee copies of account for the three years in respect of Shri Udhay Sood as appearing in the books of account of the assessee Shri Sudhir Sood. I have also taken extracts of accounts of Shri Udhay Sood for the three years. Copies of the same are hereby submitted for your kind perusal. The accounts of Shri Uday Sood as appearing in the books of account of the assessee for the three assessment years (supra) tally with those produced by the assessee during the assessment proceedings.7
It is further submitted the counsel of the assessee had stated that Shri Uday Sood owner of the tank Reg No. HP-38-2530, is not maintaining account books regarding his receipts from the assessee for the above noted A. years Shri Udhay Sood is filing his return u/s 44AE of the Income Tax Act, 1961. As such, he is not maintaining his books of account. However, it is apparent that Shri Udhay Sood is getting benefit from the assessee with regards to running & maintenance of his tanker. So his claim to compute his taxable income u/s 44AE, appeals to be erroneous under the circumstances."
9. Assessing Officer vide letter dated 25.3.2009 further submitted before CIT(A) as under :
"It is submitted that Shri Uday Sood is an existing income tax assessee having PN-AANPS-7525-E. The person had filed his income tax return for assessment years 2003-04 and 2004-05 declaring his total income at Rs. 54,570-/- and Rs. 55,890/- respectively. Shri Udhay Sood has computed his income u/s 44AE of the Income Tax Act, 1961 arising on account of plying his tanker bearing Reg No. HP-38-2530. The assessee had not filed his return of income of assessment year 2002-03 as his income during the year was below taxable limit. Photocopies of the receipts of return for assessment years 2003-04 and 2004-05 are submitted herewith. It is also submitted that Uday Sood has not mentioned in his computation that his income is on account of receipts for hire of his tanker with Shri Sudhir Sood."
10. The CIT(A) rejected the claim of the assessee in the absence of an agreement deed between the assessee and Shri Uday Sood and also the confirmation to prove the receipt of payment by Shri Uday Sood from the assessee. In the facts and circumstances of the present case, the assessee was the owner of one tanker and the proof of the ownership of the other tanker belonging to his brother Shri Uday Sood was furnished on record, as noted by the CIT(A). Both the said tankers were attached with M/s IOC and the assessee has furnished on record an indemnit y Bond executed in favour of IOC in which he undertakes that the tanker No. HP 382530, registered in the name of Shri Uday Sood would be attached to his transport company by the said registered owner and the same would be 8 under his control and supervision and shall be subjected to the same terms & conditions, which would be applicable to the tanker owned by his company. The CIT(A) had directed the Assessing Officer to verify the facts regarding the payments made by the assessee to Shri Uday Sood from the books of account of the assessee and submit his report. The Assessing Officer had verified the stand of the assessee and reported that the accounts of Shri Uday Sood as appearing in the books of account of the assessee for the three assessment years tallied with those produced by the assessee during the assessment proceedings. The factum of Shri Uday Sood filing his return of income u/s 44AE of the Act was also reported by the Assessing Officer in the said report filed before CIT(A) . The onl y objection of the Assessing Officer was that the income declared by Shri Uday Sood arising on account l ying of his tanker was below taxable limit and he had not mentioned the fact of receipt of hire of his tanker with the assessee, in his computation of income.
11. In the totalit y of facts and circumstances of the case, we find no merit in the stand of the authorities below in view of the verification exercise carried by the Assessing Officer in remand proceeding vis-à-vis the books of account produced by assessee. The stand of the assessee that it had made the payments to Shri Uday Sood against the hiring of his tanker was verified from the ledger of the assessee and no discrepancy was found in the same by the Assessing Officer in the remand proceedings. The income from the said hire charges of the tanker has been declared by Shri Uday Sood though under the provisions of Section 44AE of the Act. The expenditure on running the said tankers is also debited to the account of Uday Sood. The assessee had declared the receipts of his tankers and after claming the expenditure thereon, reflected the income in 9 his hands. Though the company IOC has issued TDS certificate in respect of payments due to assessee and Uday Sood, but the receipts relatable to Uday Sood are to be excluded. In the present set of facts and circumstances, the income relating to the tanker owned by Shri Uday Sood is not includible in the hands of the assessee and we direct the Assessing Officer to exclude the same. Accordingl y, we set aside the order of CIT(A) and direct the Assessing Officer to delete the addition of Rs.9,44,242/- relating to assessment year 2002-03. As the facts in assessment years 2003-04 & 2004-05 are identical to the facts in assessment year 2002-03, following our order, we direct the Assessing Officer to delete the addition of Rs.3,01,110/- in assessment year 2003-04 and Rs.2,45,514/- in assessment year 2004-05. The Grounds of appeal raised by the assessee are allowed.
12. In the result, the appeals of the assessee are allowed.
Order Pronounced in the Open Court on this 19 t h day of October, 2010.
Sd/- Sd/-
(G.S.PANNU) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 19 t h October, 2010
Rkk
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR