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Income Tax Appellate Tribunal, KOLKATA ‘B(SMC
Before: Shri P.M. Jagtap
Date of concluding the hearing : May 26, 2016 Date of pronouncing the order : May 27, 2016
O R D E R These two appeals filed by the assessee are directed against two separate orders both dated 18.03.2015 passed by the ld. Commissioner of Income Tax (Appeals)-7, Kolkata for the assessment years 2005-06 and 2006-07. Since the issues involved in these appeals are common and inter-linked, the same have been heard together and are being disposed of by a single consolidated order.
Both the appeals are time barred by 61 days and on the basis of application dated 10.05.2016 filed by the ld. counsel for the assessee, we condone the delay on merit and the appeals are admitted.
The solitary issue involved in the appeal of the assessee for A.Y. 2005-06 relates to the addition of Rs.42,000/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of income allegedly earned by the assessee from the business of plying of truck as determined by applying the provisions of section 44AE of the Act. & 1065/KOL./2015 Assessment years: 2005-2006 & 2006-2007 Page 2 of 7
The assessee in the present case is an individual, who filed her return of income for the year under consideration on 25.01.2006 declaring total income of Rs.1,12,995/-. The said return was initially processed by the Assessing Officer under section 143(1) on 30.01.2006. Subsequently he noticed from the balance-sheet of the assessee that she was the owner of truck during the previous year relevant to the assessment year 2004-05, but no income from the said truck was offered to tax in the return of income. The assessment for the year under consideration was re-opened by the Assessing Officer and a notice under section 148 was issued by him to the assessee on 17.10.2008. In reply, a letter dated 24.08.2009 was filed by the assessee requesting that the return as originally filed by her on 25.01.2006 may be treated as return filed in response to notice under section 148. During the course of assessment proceedings, the assessee was called upon by the Assessing Officer to explain as to why the income from plying of truck owned by her should not be added to her total income as per the provisions of section 44AE at Rs.3,500/- per month, i.e. Rs.42,000/-. Since no explanation whatsoever was offered by the assessee in this regard despite sufficient opportunity afforded by him, the Assessing Officer proceeded to complete the assessment under section 143(3) read with section 147 and 144 of the Act, wherein he made addition of Rs.42,000/- to the total income of the assessee on account of income from plying of truck as computed as per the provisions of section 44AE.
Against the order passed by the Assessing Officer under section 143(3) read with section 147 and 144, an appeal was preferred by the assessee before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), the following submission was made by the assessee in writing:- & 1065/KOL./2015 Assessment years: 2005-2006 & 2006-2007 Page 3 of 7
“(1) The only dispute in this year is estimation of income from plying of a truck u/s 44AE at Rs.42,000/-. (2) However, application of section 44AE depends on two major factors, viz. The assessee should be owner of the goods carriage and he should be engaged in the plying, hiring or leasing of such goods carriage. (3) The appellant is owner of the vehicle but she has not played the same. The vehicle (mini truck 407 of Tata) was given to one Shri Shymapada Das, a Driver residing in the same village of Chaitanyapur. (4) A copy of Shri Das’s Driving License No. DL-117/91(T) and the English version of a statement given by Shri Das in Bengali are enclosed herewith. A copy of the finance certificate issued by M/s. Lexus Motor Limited (Tata Group) indicating the monthly instalment Rs.11,900/- (Rupees eleven thousand and nine hundred) is also enclosed for the kind perusal of your honour. (5) Under the circumstances, section 44AE is not applicable in this case as the appellant has not derived any income from the vehicle at all”.
The above submission of the assessee along with the additional evidence filed was forwarded by the ld. CIT(Appeals) to the Assessing Officer for the later’s comments. In the remand report submitted to the ld. CIT(Appeals), the Assessing Officer offered his comments as under:-
“During the assessment proceedings for the A. Y. 2005-06, it was found that the assessee was plying an oil tanker, the income of which was not reflected in her total income. Accordingly, the income of the truck was estimated as per provision u/s 44AE @Rs.3,500/- per month which came to Rs. 42,000/- and added back to the total income of the assessee.
It has been contended by the assessee in. appellate proceedings that she was the owner of the vehicle bur she had not played the same, rather it was given to Shri Shyamapada Das a driver residing in the same village of Chaitanyapur. In the said statement it was claimed by the driver that Shri Subharashree Maiti had never taken any money from her, but he was supposed to pay the instalments due to the finance company. It was also claimed by the driver that he had failed to pay up the dues of the finance company in time and that is why the mini truck was seized by the Tata Finance Company w.e.f. 17.10.2004.
& 1065/KOL./2015 Assessment years: 2005-2006 & 2006-2007 Page 4 of 7
The assessee has submitted the copies of statement an driving license. Since the above explanation was not produced at the time of assessment, the same was to be treated as additional evidences in terms of Rule 46A(3) of the I.T. Rules which needed verification by the Assessing Officer.
As per your direction r.w. rule 46A a letter was issued to the assessee vide this office letter dtd. 05.01.2015 requesting him to substantiate his contention raised before your honour. But, no one appeared on such date. Again, a letter was issued to the assessee vide this office letter dated 20.02.2015 to appear before the undersigned on 27.02.2015. Again, the assessee failed to appear. However, Sri Bibekananda Maiti, husband of Smt. Subhrashree Maiti appeared on 02.03.2015 on behalf of his wife and asked for further adjournment. From the repetitive non- appearance in the hearing and further seeking adjournment, it may be implied that the assessee has no genuine proof of evidence in support of his contention.
Thus, the purported documents produced by the assessee seem to be self serving documents which have little evidentiary value. It can be easily established from the fact that the assessee was not able to prove the claim made by him during the appellate stage. Hence, the essence of reasonableness is very much lacking in this case. Accordingly, it is my considered opinion that the then AO was justified in making addition and come to the conclusion as depicted in the present assessment order”.
The remand report submitted by the Assessing Officer was confronted by the ld. CIT(Appeals) to the assessee and since no satisfactory explanation could be offered by the assessee thereon, the ld. CIT(Appeals) confirmed the addition of Rs.42,000/- made by the Assessing Officer on account of income from the business of plying of truck. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.
I have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the claim of having given the truck owned by her to one driver for plying was made by the assessee for the first time before the ld. CIT(Appeals) and when the & 1065/KOL./2015 Assessment years: 2005-2006 & 2006-2007 Page 5 of 7 matter was remanded by the ld. CIT(Appeals) to the Assessing Officer for verifying the said claim in the light of the additional evidence filed by the assessee, the assessee failed to substantiate her claim by availing the opportunity given by the Assessing Officer in the remand proceedings. A perusal of the remand report submitted by the Assessing Officer to the ld. CIT(Appeals) clearly shows that sufficient and specific opportunity was given by the Assessing Officer to the assessee in this regard but the assessee failed to avail the same. At the time of hearing before me, the ld. counsel for the assessee has sought one more opportunity by sending the matter once again to the Assessing Officer for verification. However, keeping in view all the facts of the case, I find merit in the contention raised by the ld. D.R. that the assessee has already been given sufficient opportunity to substantiate her claim and having failed to avail the same, there is no case of giving one more opportunity. I, therefore, uphold the impugned order of the ld. CIT(Appeals) confirming the addition of Rs.42,000/- made by the Assessing Officer to the total income of the assessee on account of the income from business of plying of truck and dismiss the appeal of the assessee for A.Y. 2005-06.
As regards the appeal of the assessee for A.Y. 2006-07, it is observed that there are two issues involved in this appeal, one relating to the addition of Rs.37,800/- (Rs.3,150/- per month x 12 months) made on account of income of the assessee from the business of plying of truck as per the provisions of section 44AE and the other relating to addition of Rs.60,527/- on account of profit on sale of truck.
As regards the addition made on account of profit on sale of truck, it is observed that the profit on sale of truck amounting to Rs.60,527/- was shown by the assessee herself in the return of income, but the same was not included in the total income. In this regard, no explanation whatsoever was offered by the assessee before the Assessing Officer and, & 1065/KOL./2015 Assessment years: 2005-2006 & 2006-2007 Page 6 of 7 therefore, the addition of Rs.60,527/- was made by him to the total income of the assessee, which the ld. CIT(Appeals) confirmed. At the time of hearing, the ld. counsel for the assessee has submitted that the amount of Rs.60,527/- actually represented the salvage value of the truck, which was wrongly shown by the assessee as profit on sale of truck. The respective orders of the Assessing Officer and the ld. CIT(Appeals) also do not contain any details or working showing the basis of profit on sale of truck as arrived at Rs.60,527/-. Neither the relevant details such as the sale consideration as well as written down value of truck nor the date of sale are available on record. I, therefore, consider it fair and proper and in the interest of justice to restore this issue to the file of the Assessing Officer with a direction to decide the same afresh after verifying the relevant details. The assessee is directed to furnish the said details along with the relevant documentary evidence for the verification of the Assessing Officer.
As regards the issue of addition made on account of the income from the business of plying of truck by applying the provisions of section 44AE, I have already decided the similar issue while disposing of the appeal of the assessee for A.Y. 2005-06 and following the conclusion drawn in A.Y. 2005-06, I uphold the applicability of section 44AE for computing the income of the assessee from the business of plying of truck. As already noted, the date of sale of truck, however, is not available on record. The Assessing Officer, therefore, is directed to ascertain the exact date of sale of truck and re-compute the income of the assessee from the business of plying of truck by applying the provisions of section 44AE only for the period for which the truck was owned by the assessee during the previous year relevant to A.Y. 2006-07. The appeal of the assessee for A.Y. 2006-07 is thus treated as partly allowed. & 1065/KOL./2015 Assessment years: 2005-2006 & 2006-2007 Page 7 of 7
In the result, the appeal of the assessee for A.Y. 2005-06 is dismissed, while the appeal of the assessee for A.Y. 2006-07 is partly allowed.
Order pronounced in the open Court on May 27, 2016.