Income Tax Appellate Tribunal - Chandigarh
Sh. Gurinderjit Singh, Sirhind vs Dcit, Circle, Mandi Gobingarh on 14 March, 2019
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. CI T
C/o Patiala Bus Ser vice Pvt.Ltd. Circle, Mandi Gobi ndgarh
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. CI T
C/o Patiala Bus Ser vice Pvt.Ltd. Circle, Mandi Gobi ndgarh
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 Pr onouncement : 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 appeals were heard together so these are being disposed off by this consolidated 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 following grounds:
1. That on the facts and circumstances of the case & in law, the Hon'ble CIT(A) has erred in confirming the rejection of books of accounts u/s 145(3) of the Income Tax Act, 1961.
2. That on the facts and circumstances of the case & in law, the Ld. ClT(A) has erred in estimating the truck income and wrongly sustaining addition of Rs.10,47,600/ -
3. That the Ld. CIT(A) failed to take into account the order dated 14.06.2016 o f his predecessor in assessee's 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, arbitrary and against law & facts of the case.
5. That proper opportunity should have been allowed.
6. That the appellant craves leave to add, alter, amend or substantiate any or all the above grounds of appeal at any time before 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 (hereinafter 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 trucks and furnished month wise details of the truck income totaling to Rs. 20,76,000/-. He further observed that no detailed P&L Account in respect of business of owing 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 receipt from trucks, expenditure of diesel, repairs of vehicles maintenance and expenses 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 declared 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 book result declared by the assessee were not acceptable.
6. The Assessing Officer rejected the books of accounts 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 Shri. 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. 32,40,000/- 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 incorporated in para 3.3 of the impugned order, for the cost of repetition the same is not reproduced herein.
3The 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 section 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 Assessing 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 twelve months, on account of repairs and maintenance etc. He allowed relief of 10% and sustained the addition of Rs. 10,47,600/-.
8. Now the assessee is in appeal.
9. Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that even if the book result were to be rejected the Assessing Officer was duty bound to make a fair and reasonable estimate of income based on evidence and material available on record and was required to make best judgment assessment which could have been justified on the basis of material available on record. It was stated that the Assessing Officer cannot make an assessment in an arbitrary, capricious, vindictive manner. The reliance was placed on the following case laws :
• CIT Central and United Privinces Vs. Laxmi Narain Badri 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 of 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 without confronting with any comparable case nor did he demonstrated that the method of accounting adopted by the assessee resulted in under estimation of profits. It was further submitted that the Assessing Officer while estimating the income for the earlier years considered the provisions contained in Section 44AE of the Act. It was also 4 submitted that for the preceding assessment year 2009-10 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 assessee's compilation. It was further submitted that in the identical circumstances no addition was made by the Assessing Officer for the assessment year 2016-17 while passing the assessment order u/s 143(3) of the Act, reference was made to page nos. 14 to 16 of the assessee's paper book which is the copy of the said order dt. 05/12/2018.
11. In his rival submissions the Ld. Sr. DR strongly 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 is owing more than ten trucks. In his rejoinder the Ld. Counsel for the assessee submitted that in the preceding year i.e. A.Y. 2009-10 the income accepted by the Ld.CIT(A) was Rs. 5077/- per truck per month and in the succeeding year the income shown by the assessee was Rs. 4308/- per month per truck.
12. I have considered the submissions of both the parties and carefully gone through the material available on record. In the present case it is noticed that the Assessing Officer pointed out specific discrepancy in the maintenance of books of accounts and rejected those books by invoking 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 my opinion in such circumstances the past history of the assessee's own case is the best guide to estimate the income. In the present case the Ld. Counsel for the assessee himself admitted that in the preceding year the income 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 income by increasing the same by 10% from the earlier year which comes approximately Rs. 5585/-. Accoridingly the Assessing Officer is directed to estimate the income 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 facts involved in the case of Shri. Pavitpal Singh in ITA No. 969/Chd/2018(supra) therefore my findings given in former part of this order shall apply mutatis mutandis.
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 Assessing 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 income at Rs. 5,744/- i.e. Rs. 20,67,850/- from thirty trucks for full year and two 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 the 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 estimated income as pointed out above.
15. In the result appeals of the assessees are partly 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, The CIT(A), The DR