Income Tax Appellate Tribunal - Ahmedabad
Nitin S.Garg, Surat vs Department Of Income Tax
आयकर अपीलीय अिधकरण,
अिधकरण, अहमदाबाद Ûयायपीठ ''B'', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD,
"B" BENCH
सव[ौी ौी जी.
जी.सी.
सी.गुƯा,
ा माननीय उपाÚय¢,
उपाÚय¢, एवं तेज राम मीणा,
मीणा, लेखा सदःय के
सम¢ ।
BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND
TEJ RAM MEENA, ACCOUNTANT MEMBER)
IT(SS)A No.06 to 12/Ahd/2010
[Asstt.Year : 2001-2002 to 2007-2008]
ACIT, Cent.Cir.4 बनाम/Vs. Shri Nitin Shyamsundar Garg
Surat. 19, Dwarka Nandan Society
Alkapuri, Vadodara.
PAN : ABHPG 8630Q
(अपीलाथȸ / Appellant) (ू×यथȸ / Respondent)
राजःव कȧ ओर से/ : Shri B.K.S. Pandya
Revenue by
िनधा[ǐरती कȧ ओर से/ : Shri S.N. L. Agarwal
Assessee by
सुनवाई कȧ तारȣख/ : 31st May, 2012
Date of Hearing
घोषणा कȧ तारȣख/ : 02-07-2012
Date of Pronouncement
आदे श / O R D E R
PER G.C. GUPTA, VICE-PRESIDENT: These seven appeals
by the Revenue for the assessment years 2001-2002 to 2007-2008 are
directed against the orders of the Commissioner of Income Tax
(Appeals)-II, Ahmedabad. These are being disposed of with this
consolidated order.
IT(SS)A No.06 to 12/Ahd/2010
2. The grounds raised in all these appeals are similar except
difference in figure of addition. However, in
IT(SS)A.No.10/Ahd/2010 for A.Y.2005-2006, three more grounds
were raised, which will be adjudicated separately in this order.
3. The ground nos.1 to 3 in IT(SS)A.No.06 to 9 and 11 &
12/Ahd/2010 and ground no.1 & 2 in IT(SS)A No.10/Ahd/2010
are similarly worded except difference in figure of addition,
therefore, we reproduce the common grounds raised in
IT(SS)A.No.6/Ahd/2010 for the sake of convenience as under:
"1. The ld.CIT(A) has erred in deleting the additions of
Rs.24,88,499/- made on account of rejection of claim u/s.44AE
of the Act, ignoring that the accounting soft ware file tally 54
seized from the business premises of the assessee reflects 12
vehicles during the course of search and survey on 31.05.2006,
even after a long gap of three F.Ys.in which assessee is alleged
to have sold seven vehicles and acquired 4 new vehicles.
2. The ld.cIT(A) has erred in law and on facts in holding
that assessee is entitled for claim u/s.44AE of the Act, ignoring
that assessee is having the legal ownership of 12 vehicles and
no evidence has been furnished by the assessee to show that the
transfer is effected on the record of the RTO and therefore
assessee still has legal ownership of all the seven vehicles
alleged to have been sold out.
4. The learned CIT-DR submitted that the claim of the assessee to
assess the income from plying of trucks under Section 44AE of the
Act was rightly rejected by the AO as the assessee was the owner of
12 trucks during the relevant period and the beneficial provision of
Section 44AE does not apply to the cases where number of trucks are
more than 10. He referred to page no.5 and 6 of the assessment order
wherein the AO has reproduced the table of 12 trucks with their
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IT(SS)A No.06 to 12/Ahd/2010
registration number, engine numbers, chassis numbers etc. in support
of the case of the Revenue that the assessee was the owner and in
possession of 12 trucks and that he has transferred some vehicles on
paper only as a colourable device to fit into the requirements of
section 44AE. He submitted that the CIT(A) has in a summary
manner allowed the appeal of the assessee without any material
brought on record to hold that the number of trucks plied by the
assessee never exceeded the maximum of 10 trucks as prescribed
under Section 44AE of the Act. He relied on the order of the AO.
5. The learned counsel for the assessee submitted that the
computer file seized by the department during the search action
pertained to the assessment year 2004-2005 and out of 12 vehicles in
the table reproduced by the AO in the assessment order, the assessee
has sold 7 and acquired 4 during the financial year 2002-2003. He
submitted that the sale proceeds from these vehicles were recorded in
the bank account of the assessee. He submitted that the allegation of
the AO that the assessee has held the sold vehicles in benami names
was without any evidence and basis. He submitted that the AO has
not examined the purchasers of these vehicles although copy of the
sale deed in respect of the vehicles was filed before the Revenue
authorities. The learned counsel for the assessee further submitted
that even during the search proceedings or otherwise no evidence was
found that the assessee has plied or incurred expenses on plying of
any such sold vehicles or has received any transport receipts on them.
He submitted that there is no evidence to show that the assessee has
provided funds for investments to the persons who purchased the
vehicles sold by the assessee. The learned counsel for the assessee
further submitted that even if the provisions of Section 44AE are not
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IT(SS)A No.06 to 12/Ahd/2010
applied to the trucks owned by the assessee and an average GP rate is
applied, the assessee shall be entitled to deduction of depreciation
thereon and by doing so, the incomes comes to lower than the
returned income of the assessee, and therefore, there is no revenue
gain whatsoever.
6. We have considered rival submissions carefully and have
perused the orders of the AO and the CIT(A) and the copies of various
documents filed in the compilation on behalf of the assessee. We find
that the computer files seized by the department during the search
operation pertained to the A.Y.2004-2005 and out of 12 vehicles
mentioned therein, the assessee has sold 7 and acquired 4 during the
financial year 2002-2003. The vehicle owned by the assessee
remained not more than the figure of 10 vehicles, and therefore the
provisions of section 44AE are applicable to the case of the assessee
for estimating the income of the assessee for plying of trucks. We
find that no evidence to prove the charge of benami trucks owned by
the assessee could be brought on record by the Revenue. The AO has
not summoned the purchasers of these vehicles although their
complete addresses were evident from the copies of the sale deed in
respect of these vehicles filed by the assessee. The sale proceeds from
these vehicles were recorded in the bank account of the assessee and
the value of the block of assets was reduced by the amount of sale
proceeds of these vehicles. Even during the course of search
proceedings no incriminating evidence were found by the department
to suggest that the vehicles even after the sale thereof in fact belonged
to the assessee and that the assessee owned them as benami and was
actually the owner of the more than 10 trucks in any of the relevant
assessment years. We find that there is no evidence to establish that
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IT(SS)A No.06 to 12/Ahd/2010
the assessee has transferred the vehicles in question on paper only as a
colourable device to fit his case into the requirement of Section 44AE
of the Act. In these facts of the case we decide the issue in favour of
the assessee and confirm the order of the CIT(A) in applying the
provisions of Section 44AE of the Act to the case of the assessee.
7. As far as the other action of the AO in applying the GP rate for
estimating the income from plying of trucks, we find that there is no
basis for the estimation of transportation income and applying GP rate
of 41.47% on the assumed turnover of the assessee. We find that
where the income is estimated by taking GP on the turnover of the
assessee, the deprecation has to be allowed to the assessee in order to
arrive at the taxable income of the assessee. In this case, the CIT(A)
has given a finding that when the AO has applied the GP rate, he has
also to allow the depreciation thereafter and by doing so, the income
becomes lower than the returned income of the assessee. We find that
in reply to a specific question from the Bench, the learned CIT-DR
admitted that in case the depreciation is allowed out of the income
arrived at by applying the GP rate on the turnover of the assessee, the
taxable income in the hands of the assessee will be lower than the
returned income of the assessee and there will be no revenue gain.
However, in view of our finding that the provisions of section 44AE
of the Act is applicable to the case of the assessee, we find that there
is no merit in the grounds of the appeals of the Revenue and
accordingly, the grounds of appeal of the Revenue in all the appeals
are dismissed.
IT(SS)A No.10/Ahd/2010 (A.Y.2005-2006)
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IT(SS)A No.06 to 12/Ahd/2010
8. The grounds of appeal nos.1 & 2 of the Revenue have been
dismissed in the foregoing paras of this order.
9. The remaining ground of the above appeal of the Revenue for
adjudication read as under:
"3. The ld.CIT(A) has erred in law and on facts in deleting
the additions made on account of unaccounted income of
rs.1,61,207/- on account of unexplained entries in page no.31 to
33 of the loose paper file annexure A-2 (enclosed as Annexre-
A) seized during the course of search and survey on 31.05.2006
by the AO accepting the plea of the assessee that there is no
such entry on the loose paper file so seized, ignoring that the
total of petty amounts written on the reverse side of the page
no.31 to 33 of the loose paper file annexure A-2 by pencil was
Rs.1,61,207/- for which assessee had not submitted any
explanation either before the AO or before the ld.CIT(A)."
10. The learned CIT-DR relied on the order of the AO and the
learned counsel for the assessee has relied on the order of the CIT(A).
We have considered rival submissions and perused the orders of
the AO and the CIT(A). We find that the addition was made on
account of some entries written by pencil on the loose paper seized by
the department by holding them as unexplained expenditure. The
assessee has claimed that no such entry of Rs.1,61,207/- during the
period 12.10.2004 to 31.10.2004 was found on the seized paper. The
AO has made addition by observing that "the claim of the assessee in
vague and nebulous and hence unacceptable". We find that the
CIT(A) has given a finding that there is no such entry in the seized
paper and therefore the AO was not justified in making the addition
and the same is deleted. In the absence of any evidence before us to
controvert the findings given by the CIT(A), we hold that no
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IT(SS)A No.06 to 12/Ahd/2010
interference is called for in the order of the CIT(A) on this issue,
which is accordingly confirmed and the Ground No.3 of the Revenue
is dismissed.
11. The Ground No.4, 5 and 6 of the appeal of the Revenue are as
under:
4) The Ld CIT(A) has erred in law and on facts in deleting
the additions made on account of unexplained expenditure of
Rs.5,51,000/- on account of entries in the loose paper file
annexure A-3 on page no.72, (Enclosed as Annexure-B) seized
during the course of search and survey on 31.05.2006, by the
A.O. accepting the plea of the assessee that the said payment is
made for purchase of marble, ignoring that during the course of
assessment proceedings, the assessee had taken different stand
that the said payment was made to one Mr.Ravi Sharma, truck
driver.
5) The Ld CIT(A) has erred in law and on facts in deleting
the additions made on account of unexplained expenditure of
Rs.5,51,000/- on account of entries in the loose paper file
annexure A-3 on page no.72, (Enclosed as Annexure-B) seized
during the course of search and survey on 31.05.2006, by the
A.O, accepting the plea of the assessee that the said payment is
made for purchase of marble, which was new plea before the
CIT(A) and could not have been entertained by CIT(A) under
rule 46A unless the AD was given an opportunity in respect of
the same.
6) The ld.CIT(A) has erred in law and on facts in deleting
the additions made on account of unexplained expenditure of
Rs.5,51,000/- on account of entries in the loose paper file
annexure A-3 on page no.72 (enclosed as Annexure-B) seized
during the course of search and survey on 31.05.2006, by the
AO accepting the plea of the assessee that the said payment is
made for purchase of marble, even when the assessee neither
furnished any bills to show that these were payments for
purchase of marble, nor was the claim believable on account of
the fact that the entries were very small entries and could not
have been for purchase of marble."
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IT(SS)A No.06 to 12/Ahd/2010
12. The learned CIT-DR relied on the order of the AO and the
learned counsel for the assessee relied on the order of the CIT(A).
13. We have considered rival submissions and perused the orders of
the AO and the CIT(A). We find that the addition was made under
Section 69C as unexplained expenditure on the basis that some seized
loose paper (Annexure-A3) on which some petty cash advances on
different dates given to Shri Ravi Varma were written. The assessee
has explained in his statement that he was not provided the copies of
the seized paper and therefore he had by mistake stated that the
amount was provided to tanker driver Ravi Varma. The assessee
explained during the course of assessment proceedings itself that the
amounts mentioned in the seized paper advanced to Shri Ravi Varma
were for supply of marbles for house construction and were recorded
in the regular books of accounts of the assessee. The case of the
assessee is that the AO has wrongly rejected the explanation of the
assessee which was supported by the regular books of accounts. We
find that the AO has not, on merit, found the explanation of the
assessee as wrong. The CIT(A) has given the finding that these
amounts were for supply of marbles for house construction and they
are recorded in the regular books of accounts and this explanation
could not be rejected only on the ground that in the statement at the
time of search it was stated that the amount was given to tanker driver,
Shri Ravi Sharma. The CIT(A) further found that the amount in
question tallies with the regular books of accounts for expenses of
marbles supply and the explanation of the assessee is acceptable and
deleted the addition made by the AO. We find that since the entries
mentioned in the loose paper tallies with the regular books of accounts
of the assessee, there remains no valid reason for making any addition
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IT(SS)A No.06 to 12/Ahd/2010
under section 69C of the Act, and therefore there being no merit in the
grounds of the Revenue, we confirm the order of the CIT(A) on this
issue and the ground nos. 4, 5 and 6 of the appeal of the Revenue are
dismissed.
14. In the result, all the Revenue's appeals are dismissed.
Order pronounced in Open Court on the date mentioned
hereinabove.
Sd/- Sd/-
तेज राम मीणा / TEJ RAM MEENA)
(ते जी.
जी.सी.
(जी सी.गुƯा/G.C.
ा GUPTA)
लेखा सदःय /ACCOUNTANT MEMBER उपाÚय¢ /VICE-PRESIDENT
Copy of the order forwarded to:
1) : Appellant
2) : Respondent
3) : CIT(A)
4) : CIT concerned
5) : DR, ITAT.
BY ORDER
DR/AR, ITAT, AHMEDABAD -9-