Income Tax Appellate Tribunal - Delhi
Bharat Singh Bisht, Almora vs Assessee on 16 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'A
'A' : NEW DELHI
BEFORE SHRI G.D.AGRAWAL,
G.D.AGRAWAL, VICE PRESIDENT AND
SHRI A.D.JAIN,
A.D.JAIN, JUDICIAL MEMBER
ITA No.5213/Del/2012
No.5213/Del/2012
Assessment Year : 2009-
2009-10
Shri Bharat Singh Bisht, Vs. Income Tax Officer-
Officer-1,
Jakhan Devi, Almora.
Almora.
PAN : AASPB0785F.
AASPB0785F.
(Appellant) (Respondent)
Appellant by : Shri S.K.Chaturvedi, CA.
Respondent by : Shri Bhim Singh, Sr.DR.
ORDER
PER G.D.AGRAWAL, G.D.AGRAWAL, VP :
This appeal by the assessee is directed against the order of learned CIT(A)-II, Dehradun dated 16th July, 2012 for the AY 2009-10.
2. The assessee has raised various grounds. However, at the time of hearing before us, it is stated by the learned counsel for the assessee that ground Nos.2 & 3 of the assessee's appeal may be adjudicated and the other grounds may be treated as not pressed because they are either of general nature or involving small additions/disallowances which the assessee does not want to contest.
3. Ground Nos.2 & 3 of the assessee's appeal read as under:-
"2. That the ld.Commissioner of Income Tax (Appeals), Dehradun has erred in law and on facts of the case vide Para 4 of his order 16-07-2012 by not taking into consideration the bank interest of Rs.4,32,848/- which was disallowed by the ld.A.O. without considering the fact of the case.
2 ITA-5213/Del/2012
3. That the learned Assessing Officer has made an addition of Rs.19,66,735/- to the income of assessee by applying profit rate of 63% on gross receipts of trucks and has not accepted the income worked out by the assessee as per provisions of section 44AE of I.T.Act 1961 on these trucks. However, in the first appeal, the ld.Commissioner of Income Tax (Appeals)-II, Dehradun has given relief to the assessee vide his appellate order dated 16.07.2012 reducing the profit rate to 20%."
4. With regard to ground No.2, it is stated by the learned counsel that the Assessing Officer has disallowed the entire interest paid by the assessee to the bank on the ground that the assessee has given some loan to the relatives during the accounting year relevant to assessment year under consideration. He referred to the balance sheet of the assessee as on 31st March, 2008 and pointed out the loan taken from State Bank of India and also loans and advances given to the relatives. He stated that no disallowance of interest was made in the AY 2008-09 in which there was a borrowing from State Bank of India and loans given to the relatives. He further pointed out that the total loan taken from the bank was `32.82 lakhs while the loans and advances to the relatives were only `15.19 lakhs. Still, the Assessing Officer disallowed the entire interest paid to the bank. He also pointed out that from the balance sheet of the assessee, it is evident that the opening capital of the assessee was `30 lakhs. That the loan given to the relatives is much less than `30 lakhs. No nexus has been pointed out by the Revenue between the borrowing and advance given to the relatives. Therefore, if any inference is to be drawn, the inference would be that the borrowed money has been utilized for the purpose of business and the advance to the relatives was out of capital of the assessee, specially when in the year of advance, this fact has been accepted by not disallowing the interest.
5. The learned DR, on the other hand, relied upon the orders of authorities below and stated that the assessment of the immediately 3 ITA-5213/Del/2012 preceding year was completed under Section 143(1) and, therefore, it is during the accounting year relevant to assessment year under consideration, the Assessing Officer, for the first time, got an opportunity to examine the utilisation of borrowed money. He, therefore, submitted that the order of lower authorities should be sustained.
6. We have carefully considered the arguments of both the sides and perused the material placed before us. The assessee has given the balance sheet as on 31st March, 2008 as well as on 31st March, 2009. That the position of loans and advances as on 31st March, 2008 was as under:-
Loans & Advances Digvijay Singh 1,053,012 Dinesh Bora 100,000 Govind Singh 366,000 Total : 1,519,012
7. That the secured loan taken from the bank as on 31st March, 2008 was as under:-
Secured Loan S.B.I. C/C A/c-351 864,896 S.B.I. C/C A/c-8479 2,127,774 SBI T/L-525 43,313 Total : 3,035,983
8. That as on 31st March, 2009, the position of loans and advances to the relatives is identical and not a single Rupee has changed while the position of loan from the bank is as under:-
4 ITA-5213/Del/2012 Secured Loan S.B.I. C/C A/c-351 760,680 S.B.I. C/C A/c-8479 2,521,830 Total : 3,282,510
9. From the above, it is evident that not a single Rupee has been advanced during the year under consideration. The entire money was advanced during the accounting year relevant to AY 2008-09 in which no disallowance of interest was made. Thus, the Assessing Officer accepted that the money borrowed from State Bank of India was utilized for the purpose of business. Whether such acceptance was after scrutiny of the assessee's return or otherwise is irrelevant. The fact remains that the claim of interest paid to the bank stood allowed. In the year under consideration, the Assessing Officer merely on the basis of presumption held that the borrowed money has been utilized for giving interest free advances to the relatives and disallowed the entire interest. The finding of the Assessing Officer is without any basis and without pointing out any nexus between the borrowed money and the amount advances to the relatives. In fact, the borrowed money is `32,82,410/- while the loans and advances to the relatives are only `15,19,012/-. This itself shows that the Assessing Officer made the disallowance without proper application of mind. Further, from the analysis of the balance sheet for the year ended on 31st March, 2008 which is placed at page 7 of the assessee's paper book, it is found that in that year, there was an opening capital of `6,12,576/- and other receipt which was credited to capital account was `23,80,133/-. In that year, the advance given to the relatives was `15,19,012/- which was much more than the receipt by the assessee which was credited to the capital account. Considering the totality of above facts, we are of the opinion that the disallowance of interest on the ground that the borrowed money has been utilized for giving advances to the relatives is without any basis and, therefore, the same 5 ITA-5213/Del/2012 cannot be sustained. Accordingly, the disallowance of interest of `4,32,848/- is deleted and ground No.2 of the assessee's appeal is allowed.
10. With regard to ground No.3, it was pointed out by the learned counsel that the assessee owns five trucks, out of which, two trucks are being utilized for transporting gas cylinders of Indian Oil Corporation. That the assessee is also in the business of sale of cement and cold drinks. That the assessee is maintaining regular books of account with regard to its business of sale of cement, cold drinks and he also keeps complete accounts with regard to contract receipts from transporting of cylinders. However, with regard to three trucks, the assessee does not maintain any books of account and offered the income as per the provision of Section 44AE of the Income- tax Act, 1961. That the Assessing Officer has not disputed the income shown from two trucks for which regular books of account have been maintained. However, in respect of remaining three trucks, he allowed the deduction of only 37% of the receipt and thus, net profit subject to depreciation was estimated at 63%. That on appeal, learned CIT(A) reduced the rate of net profit to 20%. He, however, stated that when the Income-tax Act has provided the method for computation of income from truck, the same should be computed in the same manner as provided in Section 44AE and there is no justification for estimation of any net profit rate as done by the Assessing Officer or learned CIT(A). In support of this contention, he relied upon the decision of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Anil Kumar Arya - (2009) 310 ITR 205 (P&H) and of ITAT, Ahmedabad Bench in the case of Kesharbhai Ghamarbhai Chaudhary Vs. ITO - (2012) 23 taxmann.com 273 (Ahd.).
11. Learned DR, on the other hand, stated that the assessee is following a peculiar system. It is owning five trucks but is maintaining 6 ITA-5213/Del/2012 the books of account and offering the income as per the books of account only in respect of two trucks and for the remaining three trucks, it is not maintaining any books. That the assessee can either follow Section 44AE or should offer the income as per the books of account. He cannot choose a mixed method of maintaining accounts for some trucks and offering the income from other trucks as per Section 44AE. He, therefore, submitted that the order of learned CIT(A) is quite fair and reasonable, which has substantially reduced estimation of income made by the Assessing Officer. Therefore, the same should be accepted.
12. In the rejoinder, it is stated by the learned counsel that in respect of two trucks in which the assessee has maintained the accounts, the assessee has offered the income much more than what is provided by Section 44AE. He has no objection if the income of entire five trucks is estimated as per Section 44AE. However, it will reduce the returned income.
13. We have carefully considered the arguments of both the sides and perused the material placed before us. In principle, we agree with the submission of the learned DR that if an assessee is having five trucks, ideally, he should either maintain the regular books of account, get the accounts audited and offer the income as per books of account, or, offer the income of all the five trucks as per presumptive rate of income provided under Section 44AE of the Act. However, the fact remains that the assessee is following a peculiar system of maintaining the accounts in respect of receipt and expenses from two trucks only and offering the income of three trucks as per Section 44AE. In the past years, the same system has been accepted. Moreover, in respect of two trucks where accounts are maintained, it is claimed by the assessee that the income offered by him is more than what is prescribed under Section 44AE. Further, the limited dispute in this 7 ITA-5213/Del/2012 appeal before us is with regard to estimation of income of three trucks where the assessee has applied Section 44AE. The Assessing Officer himself has not disturbed the income of two trucks offered by the assessee as per books of account. Therefore, the limited dispute in this appeal before us is with regard to estimation of income of the three trucks. The assessee has offered the income of three trucks at `42,000/- from each truck as per Section 44AE while the Assessing Officer has estimated the same at 63% of the receipt and learned CIT(A) at 20% of the receipt. We find that on these facts, the decision of ITAT, Ahmedabad Bench in the case of Kesharbhai Ghamarbhai Chaudhary (supra) would be squarely applicable wherein one of us is a party. In that case, the ITAT, Ahmedabad Bench held as under:-
"4. We have carefully considered the arguments of both the sides and perused the material placed before us. It is not in dispute that the assessee was plying the goods carriages which were four. Therefore, the number of goods carriages plied by the assessee were well within the ambit of the s. 44AE. The AO has rejected the book result and has estimated the income by making various disallowance out of the expenses claimed by the assessee. He also enhanced the receipt shown by the assessee. The estimated disallowance made by the AO was partly reduced by the CIT(A). Therefore, undisputedly, in the assessee's case, the actual dispute is only with regard to estimation of the income from trucks plying business. In our opinion, when the legislature has provided some formula for estimation of income in the case of a transporter, who owns less than ten goods carriages, there would not be any justification for not estimating the income of the assessee as per the formula prescribed in s. 44AE. It is irrelevant whether the revised return furnished by the assessee is valid or not. When the question of estimation of the income of a transporter comes, s. 44AE is a good guideline in the case of transporter who owns less than ten goods carriages. In view of the above, we direct the AO to determine the income of the assessee as per the s. 44AE of the IT Act."
14. Identical question is in dispute before us i.e. with regard to estimation of profit. The ITAT, Ahmedabad Bench in the above case 8 ITA-5213/Del/2012 has held that when the legislature has provided some formula for estimation of income in the case of a transporter who runs less than ten goods carriages, there would not be any justification for not estimating the income of the assessee as per the formula prescribed in Section 44AE. Similar view is also taken by Hon'ble Punjab & Haryana High Court in the case of Anil Kumar Arya (supra). Therefore, respectfully following the above decision of Hon'ble Punjab & Haryana High Court and ITAT, Ahmedabad Bench, we direct the Assessing Officer to accept the income offered by the assessee from three trucks as per Section 44AE of the Income-tax Act, 1961. Accordingly, ground No.3 of the assessee's appeal is also allowed.
15. The other grounds of appeal raised by the assessee were not pressed. Accordingly, the same are rejected.
16. In the result, the appeal of the assessee is partly allowed.
Decision pronounced in the open Court on 22nd February, 2013.
Sd/- Sd/-
(A.D.JAIN)
A.D.JAIN) (G.D.AGRAWAL)
JUDICIAL MEMBER VICE PRESIDENT
Dated : 22.02.2013
VK.
Copy forwarded to: -
1. Appellant : Shri Bharat Singh Bisht,
Jakhan Devi, Almora.
2. Respondent : Income Tax Officer-
Officer-1, Almora.
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar