Income Tax Appellate Tribunal - Chandigarh
Sh. Hans Raj Thakur, Mandi vs Assessee on 23 August, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'B', CHANDIGARH
BEFORE Ms. SUSHMA CHOWLA, JUDICIAL MEMBER
AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER
ITA No.504/Chd/2012
(Assessment Year : 2007-08)
Sh.Hans Raj Thakur, Vs. The Income Tax Officer,
Transporter, Vill.Manjkhetar, Sunder Nagar (HP).
PO Taleli, Tehsil Sundernagar,
Distt. Mandi.
PAN: AHIPR3657F
ITA Nos.505 & 506/Chd/2012
(Assessment Year : 2008-09)
Sh.Hans Raj Thakur, Vs. The Income Tax Officer,
Transporter, Vill.Manjkhetar, Bilaspur (HP).
PO Taleli, Tehsil Sundernagar,
Distt. Mandi.
PAN: AHIPR3657F
(Appellant) (Respondent)
Appellant by : Shri Vishal Mohan
Respondent by : Shri Akhilesh Gupta, DR
Date of hearing : 23.08.2012
Date of Pronouncement : 28.08.2012
ORDER
PER SUSHMA CHOWLA, J.M, :
Out of three appeals filed by the assessee two are against the order of the Commissioner of In come-tax(Appeals), Shimla dated 0 9 . 0 3 . 2 0 1 2 r e l a t i n g t o a s s e s s m e n t ye a r s 2 0 0 7 - 0 8 a n d 2 0 0 8 - 0 9 a g a i n s t t h e order passed under section 144 of the Income Tax Act, 1961. The third appeal is against the order of Commissioner of Income-tax(Appeals), S h i m l a d a t e d 2 0 . 0 3 . 2 0 1 2 r e l a t i n g t o a s s e s s m e n t ye a r 2 0 0 8 - 0 9 c o n f i r m i n g 2 the penalt y levied under section 271A of the Income Tax Act, 1961 (in short 'the Act').
ITA No.504/Chd/2012 :
2. The assessee has raised the following grounds of appeal:
That in the facts and circumstances of the case the Ld. C1T(A) is not justified in upholding the assessment framed by Ld.A.O. u/s 144 of the Income Tax Act,1961. The proceedings under section 144 of the Income Tax Act are bad in law and facts.
That in the facts and circumstances of the case the Ld. CIT(A) is not justified in upholding the additions of Rs 441387/-by estimating the net income from plying of three buses. The estimation is not sustainable in the eyes of law That in the facts and circumstances of the ease the Ld. CIT(A) is not justified in not admitting the evidence under rule 46A of the Income Tax Act, 1961.
That the order of Ld.CIT(A) is bad in law."
3. In respect of ground No.1 i.e. assessment framed under section 144 of the Act the learned A.R. for the assessee placed reliance on the submissions made before the CIT (Appeals).
4. The learned D.R. for the Revenue placed reliance on the order of the CIT (Appeals).
5. We have heard the rival contentions and perused the record. The assessment in the case was completed under section 144 of the Act due to non attendance of the proceedings by the assessee in response to various notices under sections 142(1)/143(2) of the Act. The CIT (Appeals) has considered the issue at length vide para 4.1 of pages 3 to 5 of the appellate order, which reads as under:
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4. The rival submissions have been carefully considered with reference to the facts of the case, the documents furnished by the appellant during the course of Appellate proceedings, the assessment order, the report of the ld. A.O. and the case relied upon, it is noted that the assessment had to be framed u/s 144 of the Act because of the total failure on the part of the appellant to respond to any of the notices issued u/s 142(1) and 143(2) by the Ld.A.O. from time to time. It clearly emerges from the assessment order that a number of opportunities were granted to the appellant to furnish his reply as well as the supporting evidence.- All the notices were sent to the appellant through the registered post and none was received back by the A. O. It is further noted that a refund of Rs. 2 lacs for the year under consideration was sent by the Id. A.O. to the appellant on the same address as given in the return which was duly received by the appellant. The appellant did not make any effort to intimate the Income-tax authorities about the change in his address, if any. It is further noted that in his application for condonation of delay in filling the appeal for the A. Y. 2007-08. the appellant has mentioned that he procured the copy of the assessment order from the Income Tax Office, Sundernagar on 13.01.2010 as soon as he came to know about the impugned order. The assessment order was passed on 10.11.2009. This means that within a period of two months only the appellant came to know about the assessment order. Further, in the application for condonation of delay for the assessment year 2008-09, the appellant has mentioned that the assessment order was sent to him by registered post by the Ld. A.O. which was received by him on 28.12.2010. The said order was passed on 13.12.2010. Thus this order was received by the appellant within 15 days through registered post at the very same address. These submissions of the appellant clearly indicate that the appellant was regularly getting intimation about his income tax proceedings. It is pertinent to note further that in his submissions made in submitted that the assessment was framed u/s 144 of the I. T.Act because of the non-appearance of his C.A. This statement of the appellant is a clear admission of the fact that all the notices u/s 143(2) and 142(1) were duly received by the appellant and that he had directed his C.A. to attend the income tax proceedings. Thus the intentional default in complying with the notices leading to ex-parte assessments stands fully established. All these facts give every reason to believe that 4 the appellant deliberately did not respond to the notices sent to him repeatedly by the Ld. A.O. u/s 143(2) and 142(1). Thus it is the appellant who is clearly in default and is not, therefore, justified in arguing now that the assessment u/s 144 was made without any valid service of notice and without affording him a due opportunity. The appellant's reliance on the case of Valukutty is misplaced as the facts of the appellant's case are totally different. The Id. A.O. has framed the assessment on the basis of the material available on record and on the basis of the material he could reasonably gather u/s 133(6)."
6. In view of the above said findings of the CIT (Appeals) under which it has been noted that though several opportunities were granted to the assessee but there was total non compliance by the assessee during the assessment proceedings, the Assessing Officer had no alternative but to complete the assessment under section 144 of the Act. However, the r e f u n d o f R s . 2 l a c s i s s u e d f o r t h e ye a r u n d e r c o n s i d e r a t i o n a n d s e n t t o the same address of the assessee was received by the assessee. In the absence of any alternate address for communication being intimated by the assessee, we find no merit in ground No.1 raised by the assessee. Upholding the order of the CIT (Appeals) we dismiss ground No.1 raised by the assessee.
7. The issue in ground No.2 raised by the assessee is against the e s t i m a t i o n o f n e t i n c o m e f r o m p l yi n g o f t h r e e b u s e s b y t h e a s s e s s e e .
8. The brief facts relating to the case are that the assessee in its r e t u r n o f i n c o m e h a d d e c l a r e d i n c o m e f r o m p l yi n g o f t h r e e b u s e s o n presumptive basis in view of the provisions of section 44AE of the Act. Both the authorities below were of the view that the provisions of section 44AE of the Act were not applicable to the assessee as the same were to be applied, where the person was engaged in the business of p l yi n g , h i r i n g o r l e a s i n g o f g o o d s c a r r i a g e s .
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9. The learned A.R. for the assessee fairly admitted that the provisions of section 44AE of the Act were not applicable to the a s s e s s e e . T h e a s s e s s e e h a d n o t m a i n t a i n e d b o o k s o f a c c o u n t f o r t h e ye a r under consideration. The Assessing Officer during the course of assessment proceedings collected certain data in respect of receipt of the assessee and other expenses and show caused the assessee as to why the income should not be computed in the following manner:
Gross receipts of Hire Charges of two buses = Rs.12,73,896-00 Less:-i) Fuel Charges reimbursed by NTPC = Rs. 4,61,320-00
ii) Depreciation on buses @ 30% = Rs. 1,48,318-00
iii) Salary to 2 Drivers and 2 Conductors = Rs. 2,16,000-00
iv) Other Misc. Expenses = Rs. 70,00-00 Net Income from two buses = Rs.3,78,258-00 Net income of one bus works out to Rs.189129 (378258/2) and thus net income from plying of three buses works out to Rs.567387/-
(189129x3 buses)
10. The assessee failed to appear before the Assessing Officer and hence the income of the assessee was assessed in the above said manner and addition of Rs.4,41,387/- was made by the Assessing Officer, which has been confirmed b y the CIT (Appeals). The assessee before the CIT (Appeals) had raised the issue of allowability of expenditure of repair and maintenance amounting to Rs.3,20,350/-, which was rejected by the CIT (Appeals) as the said documents appeared to be freshly prepared and hence were rejected.
11. The contention of the assessee before us was allowance of the expenditure in the hands of the assessee being on lower scale vis-à-vis e x p e n d i t u r e a l l o w e d i n t h e s u c c e e d i n g ye a r . T h e a s s e s s e e i n t h e p r e s e n t year under appeal had not produced complete books of account and vouchers before the authorities below, leading to assessment of income 6 in the hands of the assessee on the basis of data collected by the Assessing Officer during the assessment proceedings by way of receipts received from NTPC and other expenses reimbursement by NTPC, with whom the said buses were engaged. The Assessing Officer in all fairness has allowed fuel expenses, salary of drivers & conductors and also depreciation on buses. The Assessing Officer further allowed miscellaneous expenses to the extent of Rs.35,000/- per bus. In fairness we are of the view that the said miscellaneous expenditure allowed by the Assessing Officer is on the lower side and to meet the end of justice we direct the Assessing Officer to further allow expenditure of Rs.2 lacs in the hands of the assessee resulting in restriction of addition in the hands of the assessee to Rs.2,41,387/-. Thus ground No.2 raised by the assessee is partly allowed.
12. The ground No.3 raised by the assessee against the violation of provisions of Rule 46A of the Income Tax Rules. The said ground was not pressed by the assessee and hence the same is dismissed as not pressed.
ITA No.505/Chd/2012 :
13. The assessee has raised the following grounds of appeal:
1. That in the facts and circumstances of the case the Ld. C1T(A) is not justified in upholding the assessment framed by Ld.A.O. u/s 144 of the Income Tax Act,1961 as valid assessment. Fact of the matter is that the said proceedings are bad in law.
2. That in the facts and circumstances of the case the Ld. CIT(A) is not justified in upholding the disallowance of depreciation of Rs 142500/- and adding back the same.7
3. That in the facts and circumstances of the ease the Ld. CIT(A) is not justified in upholding the disallowance of 25% of the expenses claimed under the head power, fuel and repairs and thereby sustaining an addition of Rs.492157/-.
4. That in the facts and circumstances of the case the Ld. C1T(A) is not justified in upholding the disallowance of deduction claimed u/s 80C of the Income Tax Act, 1961.
5. That in the facts and circumstances of the case the Ld. C1T(A) is not justified in upholding the disallowance of depreciation of Rs.11032.
6. That in the facts and circumstances of the case the Ld. C1T(A) is not justified in not admitting the evidence under rule 46A of the Income Tax Act, 1961."
14. The issue in ground No.1 raised by the assessee is identical to the issue raised in ITA No.504/Chd/2012. The assessee failed to appear before the Assessing Officer despite several opportunities afforded by way of issue of notices under sections142(1) & 143(2) of the Act from time to time. In line with our decision in paras hereinabove vis-à-vis the assessment framed under section 144 of the Act, we dismiss ground No.1 raised by the assessee.
15. The issue in ground No.2 raised by the assessee is against the d i s a l l o w a n c e o f d e p r e c i a t i o n o n n e w b u s e s p u r c h a s e d d u r i n g t h e ye a r . The said claim of depreciation was disallowed in the hands of the assessee for non production of evidence of purchase of the said asset by the assessee. The claim of depreciation under section 32 of the Act in respect of the fixed asset is allowable where the assessee is the owner of an asset, which is put to use in the business of the assessee. The assessee is entitled to the claim of depreciation as per the rules prescribed in the Schedule to the In come Tax Act. We find that the assessee during the year under consideration had maintained its books of 8 account and had furnished list of fixed asset before the Assessing Officer, in which it had reflected the aforesaid addition in the fixed asset. The assessee, however, failed to produce the evidence for purchase of the said asset before the authorities below and hence the said claim was rejected. We are of the view that the assessee is entitled to the aforesaid claim of depreciation in case it owns the said asset and had put the same to use. Where the receipts of hiring vis-à-vis the said b u s e s h a v e b e e n d e c l a r e d b y t h e a s s e s s e e i n i t s t o t a l r e c e i p t s f o r t h e ye a r under consideration, the claim of depreciation merits to be allowed in the hands of the assessee subject to verification. In view thereof, we remit the issue back to the file of the Assessing Officer to verify the claim of assessee and if found to be correct, to allow depreciation on the said asset as prescribed under Schedule to Act. Ground No.2 is allowed for statistical purposes.
16. The ground No.3 raised by the assessee is same to ground No.2 raised by the assessee in ITA No.504/Chd/2012. The assessee had failed to produce the books of account during the course of assessment proceedings and in view thereof 25% of the total expenses claimed were disallowed by the Assessing Officer. The Assessing Officer noted the assessee to have made huge claim of expenditure amounting to Rs.24,89,459/- in addition to the depreciation and had returned income of Rs.1,05,560/-. The assessee however, failed to file documentary evidence in support of its claim except for the self serving evidence filed in the form of Profit & Loss Account and Balance Sheet and freshly prepared vouchers. The CIT (Appeals) further noted that the disallowance made by the Assessing Officer of Rs.4,92,157/- being 19.7% of the total expenses by the Assessing Officer merits to be upheld. Similar issue has been raised in ITA No.504/Chd/2012 and we 9 have upheld the disallowance of expenses in the hands of the assessee. However, in order to meet the ends of justice, the said addition is restricted to Rs.2,92,157/- in the hands of the assessee resulting in deleting of addition of Rs.2 lacs. The ground No.3 raised by the assessee is thus partly allowed.
17. The assessee vide ground No.4 had claimed allowance of deduction under section 80C of the Act on account of LIC premium. However, the a s s e s s e e h a s f a i l e d t o p r o d u c e a n y e v i d e n c e i n r e s p e c t o f p a ym e n t o f L I C and hence, ground No.4 raised by the assessee is dismissed.
18. Ground Nos. 5 and 6 raised by the assessee are not pressed and consequently the same are dismissed.
ITA No.506/Chd/2012 :
19. The only issue raised in the present appeal is against levy of penalty under section 271A of the Act amounting to Rs.25,000/-. The assessee claimed to have maintained the books of account during the year under consideration and had furnished books of account and Profit & Loss Account alongwith return of income, which were based on the books of account and vouchers maintained by the assessee. However, the assessee failed to appear before the Assessing Officer despite several notices issued under sections 142(1) and 143(2) of the Act. The assessee also failed to produce the said books of account before the Assessing Officer. C o n s e q u e n t l y, t h e A s s e s s i n g O f f i c e r l e v i e d p e n a l t y u n d e r section 271A of the Act for non-maintenance of the books of account under section 44AA of the Act and imposed penalty of Rs.25,000/- on the assessee under the provisions of section 271A of the Act.
20. In the appellate order against the order of assessment the plea of the assessee was that though it had maintained the books of account but 10 the Chartered Accountant had failed to produce the books of account before the Assessing Officer and further it was the Chartered Accountant who had not returned him the books of account, though the same were duly maintained. During the course of appellate proceeding i.e. against the quantum order, the assessee produced copy of Balance Sheet and Profit & Loss Account and some freshl y prepared loose papers in the nature of in-house vouchers, and some freshly generated computer prints of ledger accounts. The findings of the CIT (Appeals) were that the assessee failed to produce any such books of account which could be said to have been maintained on a regular basis in the due course of the assessee's business. The plea of the assessee that he had prepared balance sheet does not prove the fact that he had actually maintained his books of account. The perusal of the so-called balance sheet shows that the same could be easily prepared even without any regular books of account. In the absence of any regular books, the genuineness and the accuracy of the given books of account was also highly doubtful.
21. In view thereof, where the assessee has failed to maintain the prescribed books of account under the provisions of section 44AA of the Act merel y because it had produced a Balance Sheet and Profit & Loss Account before the CIT (Appeals) during the appellate order against the quantum addition alongwith certain loose papers being the ledger account, does not establish the case of the assessee of maintenance of books of account. In view thereof, we are in conformity with the orders of the authorities below that the assessee is exigible to levy of penalty under section 271A of the Act. We uphold the said levy of penalty under 11 section 271A of the Act amounting to Rs.25,000/-. Thus, ground of appeal raised b y the assessee in ITA No.506/Chd/2012 is dismissed.
22. In the result, the appeal of the assessee in ITA Nos.504 & 505/Chd/2012 are partl y allowed and the appeal in ITA No.506/Chd/2012 is dismissed.
Order Pronounced in the Open Court on 28th day of August, 2012.
Sd/- Sd/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 28th August, 2012 *Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
Assistant Registrar, ITAT, Chandigarh