AGARWAL TRANSPORT CORPORATION,CUTTACK vs. JCIT, CUTTACK

ITA 341/CTK/2015Status: DisposedITAT Cuttack29 May 2017AY 2011-125 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the estimation of income at 2% of the gross turnover by the AO and CIT(A). The assessee's failure to produce books of account, even during appellate proceedings, justified the estimation.

What were the facts?

The assessee, engaged in the transport business, failed to produce its books of account before the Assessing Officer (AO). Consequently, the AO completed the assessment under Section 144 of the Income-tax Act, estimating the income at 2% of the gross turnover. The Commissioner (Appeals) partly allowed the appeal.

What were the issues?

Whether the assessment made under Section 144 based on an estimated rate of income is justified when the assessee fails to produce books of account.

Which sections of the Income-tax Act were involved?

Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: SHRI N.S. SAINI & SHRI KULDIP SINGH

For Appellant: Shri D.K. Sheth, AR

For Respondent: Shri D.K. Pradhan, DR

Hearing: 24.04.2017

PER KULDIP SINGH, JUDICIAL MEMBER :

The Appellant, M/s. Aggarwal Transport Corporation

(hereinafter referred to as ‘the assessee’) by filing the aforesaid

appeal sought to set aside the order dated 19.06.2015 passed by the Commissioner of Income-tax (Appeals), Cuttack qua the assessment year 2014-15 on the grounds inter alia that :-

“1. For that on the facts and in the circumstances of the case the assessment as made u/s. 144 is arbitrary, and unjustified and therefore bad-in-law.

For that the addition of Rs.29,60,102/- as made by the learned AO and as sustained by the learned Commissioner under head "Suppressed Income" by way of estimate of Net Profit is unjustified and the income returned should have been accepted.”

Briefly stated the facts necessary for adjudication of the controversy at hand are : assessee is into the transport business and stated to have maintained books of account and cash book ledger

but has failed to produce the same before Assessing Officer.

During assessment proceedings, the assessee produced only bank

statement and resultantly, the AO proceeded to complete the assessment u/s 144 of the Income-tax Act, 1961 (for short ‘the Act’).

Assessee declared gross receipt of Rs.28,65,272/- with net

profit of Rs.14,68,272/- after paying partner interest of Rs.7,63,467/- and partners salary of Rs.5,40,000/- and declared net

income at Rs.14,68,272/- i.e. 0.5123% over gross turnover. AO,

after considering all the facts and transaction of the case, estimated

the rate of income at 2% of the gross turnover which comes to Rs.57,31,841/-.

Assessee carried the matter by way of filing an appeal before

the ld. CIT (A) who has partly allowed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by filing

the present appeal.

We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.

AO, while proceeding u/s 144 of the Act, estimated the rate

of income at 2% of the gross turnover on failure of the assessee to produce the books of account and other supporting documents.

Assessee challenged the addition of Rs.29,60,102/- under the head

“suppressed income” made by the AO on estimate basis @ 2% on the ground that in assessee’s own case for AY 2008-09 in ITA

No.279/CTK/2013 dated 11.06.2013, ITAT, Cuttack has directed

the ACIT to compute the total receipt income at 1% of gross

freight receipt plus receipt of the tipper hiring.

The aforesaid decision rendered by the coordinate Bench of the Tribunal in assessee’s own case for AY 2008-09 was duly

considered by the ld. CIT (A)and found to be distinguishable on facts. In AY 2008-09, undisputedly, the AO himself has estimated

the net profit of assessee @ 1% of its gross turnover but has not allowed salary and interest to the partner by completing the assessment u/s 144 of the Act. AO as well as CIT (A) have reiterated the fact that in the transport business, income used to be from 2% to 5% of the gross turnover.

When the assessee has himself declared huge gross receipt of Rs.28,65,272/- for the year under assessment, it is beyond

comprehension as to why assessee has not produced books of account, ledger, etc. before the AO despite availing numerous

opportunisms and consequently, the AO proceeded u/s 144 of the Act. Even during the appellate proceedings before ld. CIT (A) as well as before the Tribunal, the assessee has not preferred to disclose the real picture by opting to produce the books of account

/ ledger etc. So, in these circumstances, we are of the considered

view that AO as well as CIT (A) have rightly estimated the rate of income @ 2% of the gross turnover. So, finding no illegality or perversity in the findings returned by the ld. CIT (A), present

appeal filed by the assessee is hereby dismissed. Order pronounced in open court 29th day of May, 2017. Dated the 29th day of May, 2017 TS Copy of the order forwarded to: 1.Appellant - M/s. Aggarwal Transport Corporation, Manglabag, Cuttack – 753 001. 2.Respondent - JCIT, Range 2, Cuttack. 3.CIT 4.CIT (A), Cuttack. 5.DR(ITAT), Cuttack. 6.Guard File ////

BY ORDER

SR. PRIVATE SECRETARY, ITAT, CUTTACK

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