Income Tax Appellate Tribunal - Jaipur
Banas Sand Toll Tax Collection Jv, ... vs Department Of Income Tax on 27 February, 2015
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k
BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM
vk;dj vihy la-@ITA No. 313/JP/2012
fu/kZkj.k o"kZ@Assessment Year : 2008-09
The A.C.I.T. cuke M/s Banas Sand Toll Tax
Circle-2, Jaipur. Vs. Collection JV, 116, Lav Kush
Nagar, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAFFB 2873 F
vihykFkhZ@Appellant izR;FkhZ@Respondent
izR;k{[email protected]. No. 34/JP/2012
(Arising out of vk;dj vihy la-@ITA No. 313/JP/2012)
fu/kZkj.k o"kZ@Assessment Year : 2008-09
M/s Banas Sand Toll Tax cuke The A.C.I.T.
Collection JV, 116, Lav Vs. Circle-2, Jaipur.
Kush Nagar, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAFFB 2873 F
izR;k{ksid@Objector izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Mrs. Neena Jeph (JCIT)
fu/kZkfjrh dh vksj ls@ Assessee by : Shri G.G. Mundra (C.A.)
lquokbZ dh rkjh[k@ Date of Hearing : 08/12/2014
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/02/2015
2 ITA 313/JP/2012 & CO 34 of 2012_
ACIT Vs. M/s Banas Sand Toll Tax Collection
vkns'k@ ORDER
PER: T.R. MEENA, A.M. The appeal by revenue and cross objection by assessee arise from the order dated 18/01/2012 passed by the learned CIT (A)-I, Jaipur for A.Y. 2008-09. The ground of revenue's appeal and ground of the C.O. are as under:-
Ground in Revenue Appeal.
"Whether on the facts and in the circumstances of the case and in law the learned CIT(A) is justified in law in directing to apply N.P. rate of 25% as against 33.56% applied by the A.O. even after upholding the rejection of books of account."
Ground in Assessee's C.O. "That on the facts and in the circumstances of the case, the learned CIT(A) is wrong, unjust and has erred in law in confirming rejection of books of accounts of the appellant by the Assessing Officer U/s 145(3) of the IT Act, 1961 and in further upholding application of N.P. rate of 25% on declared receipts as against declared N.P. rate of 23.38%."
2. The assessee is engaged in collection of Toll tax on behalf of Government of Delhi and providing space for advertisement. The assessee declared total income of Rs. 3,45,85,250/- during the year under consideration and filed the return on 28/09/2008. The case was scrutinized U/s 143(3) of the Act. The assessee had shown net profit of Rs. 3,23,95,067/- over total turnover of Rs. 13,85,81,164/- with NP rate 3 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection of 23.38% in comparison to NP rate of 34.56% shown in the preceding year i.e. A.Y. 2007-08. The assessee was given reasonable opportunity of being heard on decline of NP, which was availed by the assessee.
After considering the assessee's reply, it has been held that the receipt from toll collection had increased by 1.41% whereas in N.P. was (-)17.59%. The learned Assessing Officer compared the various expenses with A.Y. 2007-08 and found that under the head repair and maintenance expenses, there was increase of 3 times, in staff welfare expenses increase was just double. In toll collection charges, increase was thrice. It is further observed that 99% of the vouchers are paid in cash and not subject to verification likewise the other expenses i.e. staff welfare expenses also paid in cash. The assessee did not produce salary register/wages register for toll verification. The audit report also shows that there was personal expenses amounting to Rs. 59,88,970/- has been debited in the P&L account. The assessee had also given some toll points to other parties to collect revenue on contract, even then the assessee's expenses had been increased. The learned Assessing Officer further observed as under:-
4 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection On examination of the books of account and other records, the following discrepancies/short comings were noticed and communicated to the assessee vide order sheet noting dated 01/12/2010.
1. There is no detail available in the books in respect of the toll points being maintained by the assessee.
2. Primary details of the receipts at each toll points is not available.
3. From the books of account it is not possible to ascertain actual receipts at each of the toll point.
4. 99% of the vouchers are paid in cash and not subject to verification.
5. Staff welfare expenses vouchers amounting to Rs.
14,54,226/- are self made and without any supporting.
6. Salary register/wages register regarding payment of Rs.
3,81,47,525/- not produced for verification.
7. Daily receipts of Naka/toll collection is not available.
Accordingly, he gave show cause notice for rejection of books result U/s 145(3) of the Income Tax Act, 1961 (in short the Act). After considering the assessee's reply and N.P. rate shown in the immediate preceding year, the learned Assessing Officer applied N.P. rate @ 33.56% and made addition of Rs. 1,41,12,772/- in the income of the assessee.
5 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection
3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the learned CIT(A), who had partly allowed the appeal by observing as under:-
"4.3 I have carefully perused the order of the A.O. and submissions of the AR. I do not concur with the submission of the AR in so far that if the books of account of the appellant were accepted in the earlier years then they should also be accepted during this A.Y. since principle of res judicata does not apply to the Income-tax proceedings. Fact of the matter is that the A.O. pointed out specific defects in the maintenance of books of account that the appellant has not been able to explain or rebut satisfactorily. Records are required to be kept for verification. The appellant cannot claim benefit when no evidence is brought to substantiate the claims made by it. No cogent reason was given for non production of wages and receipt registers. Therefore, the decision of the A.O. to reject the books of account of the appellant by invoking provisions of Sec. 145(3) is upheld.
Regarding the estimation of income I have considered the submission that the NP rate for A.Y. 2007-08 on toll tax collection was taken without considering display/hoarding rent receipts. If the rent receipts are removed then the NP rate for A.Y. 2008-09 comes to 13.92% resulting in a fall in 6 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection NP rate on toll tax collection to 3.28% which can be attributed to increase in toll tax collection charges. The increase in toll tax collection expenses from Rs. 39 lacs to Rs. 1,46,95,410/- was on account of payment of collection charges paid to 3 parties as compared to one party in the previous A.Y. The agreements with these parties alongwith TDS deducted were filed. However, no cogent explanation has been furnished for increase in expenditure in other heads like vehicle expenses, repair and maintenance expenses, printing and stationary expenses and staff and welfare expenses. Therefore, the NP is estimated at 25% resulting in confirmation of trading addition to Rs. 22,50,224/-."
4. Now both i.e. Revenue as well as the assessee are in appeal and C.O. before us. The learned Sr.D.R. vehemently supported the order of the Assessing Officer and argued that the Assessing Officer had applied reasonable net profit on the receipt by pointing out various defects in the books.
5. At the outset, the learned A.R. for the assessee had not challenged the validity of rejection of books of account U/s 145(3) of the Act. He further submitted as under:-
"It is submitted that findings given by Ld. A.O. are incorrect. The nature of Toll Tax Collection on various Toll 7 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection Nakas is such that all collection is in cash. The workers employed at Toll Nakas works day - night who resides in nearby villages and work place is on roads and so they are provided tea, coffee & food at work place which is procured from nearby road side dhabas on payment in cash and wages to employees on Toll Naka are also to be paid in cash. However the finding of Ld. A.O. that 99% of vouchers are paid in cash is not correct as except salary/wages, staff welfare expenses and petty expenses mostly payments are through cheques. The nature of accounts in this year is same as in several last years and in all earlier years in assessments completed u/s 143 (3) the books of accounts were accepted looking to nature of business and thus there is no reason not to accept the books of accounts for this year when the same are similarly maintained and are duly audited. The specific issues raised by Ld. A.O. are also not correct as submitted herein under: -
(a) Fall in N.P. rate: In course of assessment proceedings the assessee explained that fall in N.P. rate in the year is due to lesser receipt of display place/hoarding rent. These receipts in earlier year were Rs. 3,24,05,556/- which declined in the year to Rs. 1,52,19,515/-. The Ld. A.O. considered this issue on page 2 of in para V and did not controvert the explanation of assessee firm but in the table the Ld. 8 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection A.O. worked out net profit for these two years without taking display place/hoarding rent i.e. N.P. rate on Toll Tax collection and thereby held that explanation given by assessee is not tenable.
However Ld. A.O. worked out increase/decrease in Toll Tax collection and Net profit in percentage in a misleading manner holding that there is increase in 1.41% in net receipts from toll collection but there is fall of 17.59% in net profit. The N.P. rate for A.Y. 2007-08 on Toll Tax collection without considering rent receipts works to 17.12% (20840242/121644504) while the N.P. rate for A.Y. 2008-09 worked in similar manner comes to 13.92% (17175552/123361649). Thus the fall in N.P. rate on Toll Tax collection works to 3.2% only which is due to increase in Toll Tax collection charges as explained in (b) herein under
(b) increase in expenses:
It is submitted that for collecting said toll tax there are no toll lanes. The firm has set up Kiosks (booths) at the side of specified municipal limit entry point of road to collect toll tax from commercial vehicles. There are no road barrier(s) on any point as other than commercial vehicles such as private cars etc. moves thoroughly and entering commercial vehicles stops by manual signals and pay toll tax while 9 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection commercial vehicles going out of municipal limits not stopped. There are a few points which are on National Highways / express way where NHAI collects Toll tax and on such points there no is no toll booth of firm as per directions of Municipal Corporation and said toll tax of MCD is collected there alongwith Highway toll tax. This is necessary for lesser obstruction on Highway for smooth traffic otherwise vehicles have to stop at two points for payment of tax. These toll booth are managed by NHAI Toll tax collection contractors and they pay collected toll tax to firm after deducting agreed toll tax collection charges (duly approved by MCD).
These contractors are: -
Rajokari Border - NH 8 - M/s D.S. Construction (Jaypee DSC Ventures Ltd.) Noida Expressway - Inter Toll India Consultants P. Ltd.
Badarpur Zone Gazipur Zone - SMS Infrastructure Ltd. Express Highway Dharampet
The main increase in expenses is in Toll Tax collection expenses i.e. from Rs. 39,00,000/- to Rs. 1,46,95,410/-. The toll tax collection charges are paid to other Toll Tax collection concerns who collect Toll Tax on Toll Nakas on behalf of assessee firm. The assessee firm engages these concerns for Toll Tax collection either for administration or 10 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection management exigencies or because those other concerns also collects Toll Tax on those Toll Nakas on Highways from all vehicles on behalf of authorities other than Delhi Municipal Corporation and, therefore, two parallel Toll Nakas cannot be set up for collecting two different Toll Tax. Toll Tax on such Toll Nakas is combinely collected and Toll Tax pertaining to assessee firm is paid to it.
In A.Y. 2007-08 the Toll Tax collection charges amounting to Rs. 39,00,000/- were paid only to M/s Inter Toll India Consultants P. Ltd. while in this year Toll Tax Collection charges were paid as under: -
Rs.
(i) Inter Toll India Consultants P. Ltd. 47,08,318
- As per last year - (charges increased)
(ii) D.S. Construction (Jaypee DSC 76,27,532 Ventures Ltd.) Kashmere Gate, Delhi - 110066 - for collection of Toll Tax at Rajokari Border
(iii) SMS Infrastructure Ltd. Dharampet, 23,59,560 Nagpur - for collection of Toll Tax in Badarpur Zone & Gazipur Zone 1,46,95,410 The payments to these concerns were paid through account payee cheques or adjustments from collected Toll Tax. These payments are fully verifiable from agreements/ correspondence /copy of accounts submitted herewith. This increase in Toll Tax collection expenses resulted in fall in N.P. rate by 11 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection 8.75%. Thus fall in N.P. rate by 3.12% as explained in para (a) above is fully explained and also covers the contention of Ld. A.O. that as the assessee gave some toll points on contract to other parties there should be decrease in other expenses (Point 5 at page - 4 of assessment order). It is also submitted that had there not been increase in Toll collection charges by Rs. 1,07,95,410/- the N.P. rate for the year would have worked to 32.17% which is close to N.P. rate of 33.56% applied by Ld. A.O. The increase in vehicle expenses is due to rise in petrol/diesel prices, increase in staff welfare expenses and printing & stationery expenses is due to increase in prices on account of rising inflation.
The repairs & maintenance expenses are periodical and cannot be judged in terms of percentage as in one year accumulated repairs are got to be done which were not done in one year. In respect to increase in interest the explanation have been submitted hereinafter. Thus increase in expenses are justifiable.
As regards to findings given by Ld. A.O. in respect to nature of expenses it is submitted that the Toll points have been fixed by Delhi Municipal Corporation and 12 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection the receipts at each toll point is on behalf of Delhi Municipal Corporation who verifies it and deducts TDS therefrom and receives its share in receipts of Toll Tax and so the net receipts shown in P & L A/c are verifiable from TDS certificates as well as from Delhi Municipal Corporation. The Ld. A.O. has sought to examine the record of each day of receipts at each toll point for whole year which is impracticable to produce in assessment proceedings and there was no need of it when the same is subject to verification from Delhi Municipal Corporation a Govt. Body. The salary/wages registers are also maintained at several Toll points and so impracticable to produce them at the time of assessment after over two years more so when salary payment are marginally lower than in last year while receipts marginally increased. On these facts of the case it was contended before Ld. CIT (A) that rejection of books of accounts by invoking provisions of Section 145 (3) and estimating profit by applying N.P. rate of 33.56% and making trading addition of Rs. 1,41,12,772/-. The Ld. CIT (A) after considering and analyzing the facts of the case upheld rejection of books of accounts but reduced applied rate of Net Profit to 25% as against 33.56% applied by A.O. The appeal order of CIT (A) has thus 13 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection no infirmity and is correct in law which deserves to be confirmed.
In respect to other issues raised in assessment order by Ld. A.O. for which no separate addition was made the assessee made its submissions before CIT (A) which are dealt by Ld. CIT (A) in appeal order. The assessee relies on its submissions made before CIT (A). Copy of which is submitted herewith and also relies on findings given by CIT (A) in her appeal order as these are not specifically challenged by department.
It is thus submitted that appeal order of CIT (A) has no infirmity and is correct in law which deserves to be confirmed. The appeal filed by department deserves to be dismissed.
Regarding his C.O., the learned A.R. further submitted as under:-
The assessee in its cross objections challenged the order of CIT (A) confirming rejection of books of accounts of assessee by Ld. A.O. by invoking provisions of Section 145 (3) and further upholding application of N.P. rate of 25% on declared receipts as against declared N.P. rate of 23.38%.
14 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection It is submitted that in all the past years books of accounts were accepted which for this year also maintained similarly and, therefore, rejection of books of accounts is unwarranted. The assessee explained all the shortcomings pointed out by A.O. and also submitted cogent verifiable explanations for fall in N.P. rate of this year and, therefore, it is prayed that declared N.P. @ 23.38% deserves to be accepted.
6. We have heard the rival contentions of both the parties and perused the material available on record. There were defects in the books of account of the assessee, therefore, the assessee's income cannot be deduced correctly on the basis of details of vouchers/books maintained by it. The fall in the net profit is substantial. The learned AR argued that the finding given by the Assessing Officer in assessment order was misleading and admitted in fall in N.P. on toll tax collection @ 3.2% only, which was due to increase in toll collection charges. It was explained that the firm has set up Kiosks at the side of specified municipal limit entry point of road to collect toll tax from commercial vehicles. There are no road barrier(s) on any point as other than commercial vehicles such as private cars etc. moves thoroughly and entering commercial vehicles stops by manual signals and pay toll tax 15 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection while commercial vehicles going out of municipal limits not stopped.
The assessee also paid toll collection besides M/s Inter Toll India Consultants P. Ltd. to M/s D.S. Construction and SMS Infrastructure Ltd.. As per policy of the MCD, these payments were made through account payee cheque. The increase in the vehicle expenses was due to rise in petrol and diesel prices. However, the assessee himself admitted that to main each and every day record of toll collection is impracticable to produce in assessment proceedings and there was no need of it when the same is subject to verification from Delhi Municipal Corporation, a government body. The salary/wages registers are also maintained at several toll points and so impracticable to produce them at the time of assessment after over two years more so when salary payment are marginally lower than in last year while receipts marginally increased. It is undisputed fact that the assessee's books result cannot be accepted as such whatever defects pointed out by the Assessing Officer are sufficient to reject the books of account U/s 145(3) of the Act. Now the question remains to be answered what should be the basis of N.P., which has been confirmed by the learned CIT(A) @ 25% as declared by the assessee @ 23.38%. We examined the whole facts of the case and found that the net profit rate determined by the learned 16 ITA 313/JP/2012 & CO 34 of 2012_ ACIT Vs. M/s Banas Sand Toll Tax Collection CIT(A) is reasonable, therefore, we upheld the order of the learned CIT(A).
7. In the result, the revenue's appeal and C.O. of the assessee are dismissed.
Order pronounced in the open court on 27/02/2015.
Sd/- Sd/-
¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½
(R.P.Tolani) (T.R. Meena)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 27th February, 2015
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- The A.C.I.T., Circle-2, Jaipur.
2. izR;FkhZ@ The Respondent- M/s Banas Sand Toll Tax Collection, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 313/JP/2012 & C.O. 34/JP/2012) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar