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Facts
The assessee, engaged in transport business, received two credit entries of Rs. 5 lakh each, totaling Rs. 10 lakh, claiming it was from the sale of a truck. The Assessing Officer (AO) treated this as Short Term Capital Gain due to insufficient proof of purchase, while the CIT(A) reclassified it as unexplained cash credit under Section 68 of the Income Tax Act, 1961.
Held
The Tribunal found that the assessee provided comprehensive evidence of the truck's purchase and sale through banking channels, establishing it as a genuine business transaction. As the purchase price exceeded the sale price, the assessee incurred a Short Term Capital Loss, negating any basis for addition. Consequently, Ground of Appeal No. 2 was allowed, and Ground No. 1 was dismissed as not pressed.
Key Issues
Whether a credit entry from the sale of a truck by a transport business owner should be treated as Short Term Capital Gain, unexplained cash credit under Section 68, or a genuine business receipt, given the assessee's evidence of purchase and sale transactions.
Sections Cited
250, 143(3), 143(1), 142(1), 68, 44AE
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
Assessee by : Shri Pramod S. Shingte : Shri Vinod Pawar Revenue by Date of hearing : 26.12.2024 Date of pronouncement : 06.01.2025 आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal pertaining to Assessment Year 2021- 22 at the instance of assessee is directed against the order dated 14.10.2024 passed by CIT(A), Pune-11 u/s.250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) which in turn is arising out of Assessment Order dated 30.12.2022 passed u/s.143(3) of the Act. Suhel Inayatulla Punekar
Assessee has raised the following grounds of appeal :
“1. In the facts and circumstances of the case and in law the CIT(A), NFAC, erred in not accepting the contention of the appellant that the addition made by the Deputy Commissioner of Income Tax (Central Circle), Kolhapur (Hereinafter referred to as the 'AO) is bad in law inasmuch as the same is made without issuing any show cause in respect thereof during the entire assessment proceedings and thus the addition is in violation of mandatory guideline of CBDT in this respect. The appellant prays that it be held accordingly.
2. On the facts and circumstances of the case and in law the CIT(A) NFAC erred in making addition of Rs. 10,00,000 under section 68 as Unexplained Credit' as against addition of the same amount by the AO as 'Short Term Capital Gain' thus enhancing the tax liability of the appellant without giving any notice of the same to the appellant as required u/s 250 of the Act. The appellant prays that the AO be directed to deleted the addition. The appellant craves leave to add to, amend, alter, delete or modify all or any of the above ground of appeal or raise a new ground of appeal before or at the time of hearing.”
Before me, Ld. Counsel for the assessee has not pressed Ground of appeal No.1. The said ground is therefore dismissed as ‘Not Pressed’.
4. As far as second ground is concerned, the facts in brief are that the assessee is an individual and is engaged in Transport business. Income of Rs.10,46,180/- was declared in the income furnished for the A.Y. 2021-22. On the basis of some information received from the Assessing Authority, the case was Suhel Inayatulla Punekar selected for scrutiny and valid notices u/s.143(1)/142(1) of the Act were served. In the details of the bank account held by the assessee with IDBI and HDFC banks, ld. AO noticed that there is credit entry of Rs.5.00 lakh each on 11.08.2020 and 10.08.2020. It was claimed by the assessee that the said amount is on account of sale of Truck No.MH09EM 5892. However, in absence of furnishing of any proof for purchase of Truck, ld. AO treated Rs.10.00 lakh as Short Term Capital Gain and assessed the income at Rs.20,46,180/-. Then the assessee carried the matter before ld.CIT(A) and the assessee still could not place any evidence of proof for purchase of the Truck. The ld.CIT(A) though confirmed the addition but invoked section 68 of the Act alleging that the sum of Rs.10.00 lakh is unexplained cash credit.
Now the aggrieved assessee is in appeal before the Tribunal.
The ld. Counsel for the assessee referring to the paper book containing 73 pages brought my attention to the confirmation letter of Sumayya Enterprises who are agents for purchase and sale of Trucks. He further submitted that the assessee made payment through banking channel during F.Y. 2019-20 for purchasing the Truck through Sumayya Enterprises. He also submitted the copies of the Registration Suhel Inayatulla Punekar Certificate, RC Book, Copy of RTO receipt, proves that the assessee has purchased the Truck. Further, he referred to the bank statements where the consideration from sale of Truck has been received. He also submitted that during the year the assessee has sold 3 vehicles and for the two Trucks ld. AO has accepted the assessee’s contention. The ld. Counsel also submitted that the assessee is a partner in M/s. IRC Logistics and regularly carrying on this business. He also submitted that the assessee declared the individual income from Transport business u/s.44AE of the Act. He thus prayed that the alleged addition deserves to be deleted.
On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the authorities below.
I have heard the rival contentions and perused the record placed before me. On careful circumspection of the details, I notice that credit entry of Rs.5.00 lakh each appearing in the bank account of the assessee held with IDBI and HDFC bank are the bone of contention. Ld. AO alleged it to be a Short Term Capital Gain as the assessee could not place proof for purchase of the Truck which has been sold during the year. Ld.CIT(A) went step ahead treating the alleged credit as unexplained cash credit u/s.68 of the Act. I have also perused the documents Suhel Inayatulla Punekar placed in the paper book which have also been furnished before the lower authorities and notice that the assessee is into the Transport business and also is a partner in partnership firm M/s. IRC Logistics for purchase of Truck No. MH09EM5892 through Auction. The truck was purchased through Sumayya Enterprises, Mumbai and payment was made through banking channel on 30.09.2010 at Rs.10,30,000/- and commission was paid to Sumayya Enterprises at Rs.30,000/-. The assessee also incurred vehicle taxes, insurance, spare parts, labour charges and in total paid Rs.11,96,646/- for purchasing this Truck. The assessee has also furnished copy of Insurance Cover in the name of Indusind Bank Ltd. copy of RC smart card in the name of Indusind Bank Ltd. since the vehicle was pledged with Indusind Bank Ltd. I also notice that the confirmation letter of Sumayya Enterprises giving details of purchase has been furnished and also the sale consideration received against sale of the Truck is through banking channel. A perusal of bank account running from page 10 to page 49 of the paper book, clearly indicate that the assessee is into regular business of Transport. Even for the sake of argument if it is not considered to be receipt from sale of Truck, then also it will be part of Transport business for which the assessee is already covered under the Presumptive Taxation Scheme u/s.44AE of the Act. Even to bring it under the category of business receipt, there is Suhel Inayatulla Punekar no observation of the Revenue authorities to this effect. I therefore under the given facts and circumstances of the case find that the assessee entered into genuine transaction of purchase and sale of Truck and the assessee received consideration from sale of Truck of Rs.10.00 lakh through banking channel, therefore, the said receipt is duly explained and cannot be treated as unexplained cash credit u/s.68 of the Act. Since the purchase details have also been furnished, it shows that the purchase price is more than the sale price and the assessee has finally incurred Short Term Capital Loss, therefore, no addition is called for. Finding of ld.CIT(A) is set aside and Ground of appeal No.2 raised by the assessee is allowed.
In the result, the appeal of the assessee is partly allowed.