Income Tax Appellate Tribunal - Agra
Kamla Bus Service, Guna vs Assessee on 18 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA BENCH, AGRA
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND
SHRI A.L. GEHLOT, ACCOUNTANT MEMBER
ITA No.236/Agr/2009
Assessment Year: 2004-05
M/s Kamla Bus Service, vs. Income Tax Officer,
A.B. Road, Guna (M.P.) Guna.
(PAN : AADFK 7251 N).
(Appellant) (Respondent)
Appellant by : Written Submission
Respondent by : Shri Sohail Akhtar, Jr. D.R.
Date of Hearing : 18.04.2012
Date of Pronouncement : 27.04.2012
ORDER
PER A.L. GEHLOT, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order dated 12.01.2009 passed by the Ld. CIT(A), Gwalior for the Assessment Year 2004-05 on the following grounds :-
"1. That in the facts and circumstances of the case the learned A.O. erred in rejecting the Book results without recording any findings u/s 145 of I.T. Act.
2. That the learned A.O. erred in applying the G.P. rate of 20% and further erred in not allowing the deduction of expenses such as 2 ITA No.236/Agr/2009 A.Y. 2004-05 interest, repairs, and other establishment expenses except Depreciation Amount.
3. That the learned A.O. erred in charging personal interest u/s. 234B and 234C of I.T. Act.
4. That the entire order is based on guess work and surmises and deserves to be set-aside.
5. That the appellant seeks permission to amend, alter add or substitute the grounds of appeal at the time of hearing."
2. The brief facts of the case are that earlier this appeal was dismissed in limine vide order dated 01.03.2011. The said order has been recalled by I.T.A.T. in M.A. No.09/Agr/2011 vide order dated 23.03.2012 read with Corrigendum issued therein. While allowing the Miscellaneous Application, the date of hearing of the appeal was given, i.e. 18.04.2012, specifically mentioning that no separate notice will be sent. However, none was present on behalf of the assessee at the time of hearing. Therefore, we proceed to decide the appeal after hearing the Ld. Departmental Representative and after considering the written submissions available on record.
3. The assessee filed return declaring income of Rs.52,000/-. The assessee firm is a bus operator. The assessee firm owns 12 buses and 1 jeep. The Assessing Officer noticed certain discrepancy in the books of account. The Assessing Officer also recorded statement under section 131 of the Income Tax Act, 1961 ('the Act' 3 ITA No.236/Agr/2009 A.Y. 2004-05 hereinafter). The Assessing Officer rejected the books of account of the assessee and estimated the income estimating receipt of 12 buses at Rs.1,00,00,000/- and calculated the gross profit before depreciation by applying 20% and finally assessed at income of Rs.8,73,560/- after allowing interest and remuneration to the partners. The CIT(A) held as under :-
"Considering the foregoing, it is evident that the Assessing Officer at no stage has held if the receipts of the appellant from truck plying was under stated. The observations made by him related to the claim of some expenses. As regards the bills of auto repairs in the names of sister concerns are concerned the same aggregated to Rs.32,084/- which are held as clearly disallowable out of the expenses claimed by the appellant assessee. In view of learned ITAT's judgment relied upon by the Assessing Officer and also in view of no adverse finding to suggest suppression of receipts by the appellant, I hold that in the absence of some missing vouchers as has been observed by the Assessing Officer, it would be reasonable to apply Net Profit rate of 20% on the receipts shown by the appellant which are stated at Rs.92,25,648/- before depreciation. Depreciation including the depreciation on body building is separately allowable from Net Profit so arrived at @ 20% in accordance with the provisions of law along with the allowance of interest and remuneration paid to partners. The Assessing Officer is directed to compaute the net income accordingly."
4. On perusal of records, it has been noticed that after rejecting books of account similar rate of net profit 20% was applied in 1980-81 & 1981-82. The I.T.A.T. sustained addition of Rs.20,195/- in the Assessment Year 1980-81 and the addition in the Assessment Year 1981-82 was deleted and directed the Assessing Officer to accept income shown by the assessee. We notice that the assessee did 4 ITA No.236/Agr/2009 A.Y. 2004-05 not maintain proper books of account including bus-wise receipts, expenditures, vouchers etc. We, therefore, find that under the facts and circumstances, the Assessing Officer has rightly rejected the books of account and the CIT(A) has also rightly upheld the same. However, in respect of estimation of income, we notice that the CIT(A) relied upon the order of I.T.A.T. in the Assessment Years 1980-81 & 1981-82. But, subsequently there is change in the Act for assessment of partnership firm w.e.f. 01.04.1993. Therefore, order of the I.T.A.T. for Assessment Years 1980-81 & 1981-82 cannot be followed in the year under consideration. In the year under consideration the partners are entitled to interest and remuneration as per law. This is a case of estimation of income. The assessee filed return of income declaring Rs.52,000/- and the Assessing Officer has assessed the income at Rs.8,73,560/- after allowing interest and remuneration to the partners of the assessee firm. As per the order of CIT(A), calculation of estimation of income comes as under :-
20% of Rs.92,25,648 = 18,45,129/-
Less: interest and depreciation (80,754/- + 7,30,076) = 8,10,830/-
10,34,299/-
Less: interest and remuneration to partners 4,12,517/-
6,21,782/-
5. Since it is a case of estimation of income, considering the facts and circumstances of the case one may consider presumptive tax provided in the statute under section 44AE of the Act. We are aware that under the facts and 5 ITA No.236/Agr/2009 A.Y. 2004-05 circumstances the said section 44AE of the Act is not directly applicable but it can be considered for the purpose of estimation of the income. In the light of the fact that the assessee is having 12 buses and if we estimate Rs.5,000/- per bus per month, the total net profit for the year subject to interest and remuneration to partners comes to Rs.7,20,000/-. After reducing the interest and remuneration to partners at Rs.4,12,517/- the balance comes to Rs.3,07,483/-. On consideration of above three estimations, i.e. estimation made by the Assessing Officer, estimation made by the CIT(A) and estimation of income as provided under section 44AE of the Act, we find that in the interest of justice and in the interest of the parties the estimation of net income of Rs.7,20,000/- subject to interest and remuneration to the partners at Rs.4,12,517/- is reasonable estimation and to that extent the addition made by the Assessing Officer and sustained by the CIT(A) is confirmed. The Assessing Officer is directed to recalculate the computation of total income accordingly.
6. The other grounds relating to charging of interest is consequential in nature. The Assessing Officer is directed accordingly.
7. In the result, appeal of the assessee is partly allowed.
(Order pronounced in the open Court on 27.04.2012) Sd/- Sd/-
(BHAVNESH SAINI) (A.L. GEHLOT)
Judicial Member Accountant Member
Date: 27th April, 2012
6 ITA No.236/Agr/2009
A.Y. 2004-05
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