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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ B ’
Before: SHRI GEORGE GEORGE K & SHRI JASON P BOAZ
Per Shri Jason P Boaz, A.M. : This appeal by the assessee is directed against the order dt.28.3.2017 of the Commissioner of Income Tax (Appeals), Hubli for the Assessment Year 2014-15. 2. Briefly stated, the facts of the case relevant for disposal of this appeal are as under :
2.1 The assessee, Prop. Vijayalaxmi Transport Company is carrying on business as a transport contractor handling unloading from railway wagons and loading them on trucks for delivery at various places as required by customers. For Assessment Year 2014-15, the assessee filed the return of income on 21.10.2014 declaring total income of Rs.16,90,990. The case was taken up for scrutiny and the assessment was completed under Section 143(3) of the Income Tax Act, 1961 (in short 'the Act') vide order dt.24.12.2016, wherein the income of the assessee was assessed at Rs.96,21,146; in view of the Assessing Officer invoking the provisions of Section 44AD of the Act to estimate the assessee's income at 8% of gross turnover i.e. 8% of Rs.12,02,64,322 after observing that the assessee did not submit the details of goods loaded / unloaded by him. 2.2 Aggrieved by the order of assessment dt.24.12.2016 for Assessment Year 2014-15, the assessee preferred an appeal before the CIT (Appeals), Hubli. The learned CIT (Appeals) disposed off the appeal vide the impugned order dt.28.3.2017 allowing the assessee partial relief. In doing so, the learned CIT (Appeals) held that the provisions of Section 44AD of the Act were not applicable to the assessee's case, and placing reliance on the decision of the co-ordinate bench of the Tribunal in the case of Vijayalakshmi B Akki (viz. the assessee's mother) in for Assessment Year 2008-09, reduced the assessee's income on estimate basis to 3% of the assessee's turnover in the year under consideration ; thereby allowing the assessee partial relief to the Rs.60,13,216 by reducing the estimate of assessee's income to Rs.36,07,930. 3. The assessee, being aggrieved by the order of the CIT (Appeals), Hubli dt.28.3.2017 for Assessment Year 2014-15, has preferred this appeal before the Tribunal, wherein it has raised the following grounds :
4. The Grounds at S.Nos.1 & 4 (supra), being general in nature and not urged before us, are dismissed as infructuous.
5. Ground Nos. 2 & 3.
5.1 In these grounds (supra), it is contended that the learned CIT (Appeals) was not justified in estimating the assessee's business income at 3% of turnover which is excessive and requires to be reduced.
According to the learned Authorised Representative of the assessee, the assessee has declared net profit @ 1.44% in respect of transportation business, which works out to Rs.17,42,297. It is submitted that in the course of assessment proceedings the Assessing Officer required the assessee to file certain details and in this regard the assessee produced the books of accounts audited under Section 44AB of the Act and other relevant documents; with which the Assessing Officer found no defects therein, except with expenses incurred for loading and unloading. The learned Authorised Representative referred to the orders of assessment for Assessment Years 2012-13 and 2013-14 in the assessee's own case where there was disallowance of a portion of the expenses i.e. Rs.4,00,000 for Assessment Year 2012-13, and Rs.4,58,403 for Assessment Year 2013-14 @ ½% of expenditure. It was submitted that in view of the above, the CIT (A)’s estimate of income @ 3% of turnover at Rs.36,07,793 is excessive and not justified, as no fault has been pointed out in the books of accounts for rejection of book results. 5.2 Per contra, the learned Departmental Representative supported the impugned order of the learned CIT (Appeals) and invited the attention of the Bench to the order of co-ordinate bench of this Tribunal in assessee's mother’s case in dt.14.8.2014, whch was relied on by the learned CIT (Appeals), for reducing the estimate of assessee's income to 3% of the turnover viz. Rs.36,07,793. 5.3.1 We have heard the rival contentions, perused and carefully considered the material on record. It is not disputed that the assessee
Section 44AB of the Act and were submitted before the Assessing Officer in the course of assessment proceedings along with other details. It is also not in dispute that the assessee was not able to substantiate the expenses claimed under the head loading and unloading charges by filing documents / details to the satisfaction of the Assessing Officer. We find that the nature of the assessee's business is same in this year as in the earlier years, wherein under similar factual circumstances, the assessment proceedings were completed by making adhoc disallowance in respect of these very expenses for want of verifiable vouchers and bills. In these circumstances, we find that there is no reason why the same approach was not followed by the Assessing Officer for the year under consideration as well, when the same factual situation prevails. Even though the learned CIT (Appeals) observed that the provisions of Section 44AB of the Act were complied with, we find that he has proceeded to uphold the application of Section 145 of the Act while determining the assessee's income on estimate basis @ 3% of turnover. In our considered views, the aforesaid contradictory view of the learned CIT (Appeals) are unsustainable. 5.3.2 Taking into account the facts and circumstances of the case, after appraisal of the facts on record before us, we are of the considered opinion that the income of the assessee should be determined on the basis of the books of accounts and the return of income filed and Revenue in the earlier assessment years in the case on hand. We find from the record that while the CIT (Appeals) relied on the decision of the Tribunal in the assessee's Mother case for Assessment Year 2008-09 to estimate the income at 3% of turnover, the Assessing Officer has disallowed an amount of Rs.4 lakhs for Assessment Year 2012-13 and an amount of Rs.4,58,403 for Assessment Year 2013-14 out of loading and unloading expenditure claimed for want of verifiable bills / vouchers. In this factual matrix of the case, as discussed above, we are of the view that the learned CIT (A)’s estimation of the assessee's income at 3% of turnover is factually unsustainable, as the Assessing Officer’s in the immediately preceding Assessment Year 2012-13 has made a disallowance of Rs.4 lakhs out of loading and unloading charges on account of non-production of bills / vouchers and similarly disallowed an amount of Rs.4,58,043 for Assessment Year 2013-14. In this view of the matter, we set aside the order of the learned CIT (Appeals) estimating the assessee's income at 3% of turnover and direct the Assessing Officer to disallow an amount of Rs.5 lakhs out of the expenditure claimed on account of loading and unloading charges for non-verifiable nature of vouchers / bills of certain expenses claimed thereunder; which shall result in the returned income being increased to this extent on this issue. Consequently, ground Nos.2 and 3 of the assessee's appeal are partly allowed.
In the result, the assessee's appeal for Assessment Year 2014-15 is partly allowed.
Order pronounced in the open court on the 3rd day of Nov., 2017.