Agarwal Cargo Carriers, Gandhidham v. The ITO, Ward - 1,, Gandhidham

ITA 82/RJT/2007 | 2003-2004
Pronouncement Date: 02-12-2011 | Result: Partly Allowed

Appeal Details

RSA Number 8224914 RSA 2007
Assessee PAN AAEFA6749B
Bench Rajkot
Appeal Number ITA 82/RJT/2007
Duration Of Justice 4 year(s) 10 month(s)
Appellant Agarwal Cargo Carriers, Gandhidham
Respondent The ITO, Ward - 1,, Gandhidham
Appeal Type Income Tax Appeal
Pronouncement Date 02-12-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 02-12-2011
Date Of Final Hearing 19-09-2011
Next Hearing Date 19-09-2011
Assessment Year 2003-2004
Appeal Filed On 01-02-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.79/RJT/2007 (ASSESSMENT YEAR 2003-04) ITO WD.1 VS M/S AGARWAL CARGO CARRIER GANDHIDHAM SHOP NO.D-70-71 MAIN MARKET GANDHIDHAM PAN : AAEFA6749B (APPELLANT) (RESPONDENT) I.T.A. NO.82/RJT/2007 (ASSESSMENT YEAR 2003-04) AGARWAL CARGO CARRIER VS THE ITO WD.1 GANDHIDHAM GANDHIDHAM (APPELLANT) (RESPONDENT) DATE OF HEARING : 04-11-2011 DATE OF PRONOUNCEMENT : 02-12-2011 REVENUE BY : SHRI AVINASH KUIMAR ASSESSEE BY : SHRI VIMAL DESAI O R D E R PER T.K. SHARMA (JM) THESE CROSS APPEALS ARE FILED AGAINST ORDER DATED 29-11-2006 OF CIT(A) RAJKOT FOR THE ASSESSMENT YEAR 2003-04. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE IS A FIRM DOING THE TRANSPORTATION BUSINESS. FOR THE ASSESSMENT YEAR U NDER APPEAL IT FILED THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS.1 39 660. T HE ASSESSING OFFICER FRAMED THE ASSESSMENT U/S 143(3) ON 23-03-2006 AT TOTAL IN COME OF RS.29 81 450. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DISALLO WED RS.28 41 797 OUT OF TRUCK ITA NO.79/RJT/2007 ITA NO.82/RJT/2007 2 RUNNING REPAIR AND DIESEL AND MAINTENANCE EXPENSES. ON APPEAL THE LD.CIT(A)- II RAJKOT VIDE ORDER DATED 29-11-2006 RESTRICTED TO THE DISALLOWANCE TO RS.5 68 360 BEING 20% OF RS.28 41 797. FOR REMOVAL OF DOUBTSN IN THIS ORDER THE LD.CIT(A) ALSO STATED THAT DISALLOWANCE OF RS.5 68 360 WOULD COVER AND INCLUDE THE AMOUNT OF RS.1 48 199. TO SUM UP THE ADDITION OF RS.5 68 360 IS MADE INSTEAD OF RS.28 41 797 MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE AFORESAID ORDER OF LD.CIT(A) BOTH THE SIDES ARE IN APPEAL BEFORE THE TRIBUNAL. 3. THE ITAT IN ASSESSEES APPEAL IN ITA NO.82/RJT/2 007 VIDE ORDER DATED 18- 11-2008 RESTRICTED THE DISALLOWANCE TO RS.2 84 180. IN THE REVENUE APPEAL THE TRIBUNAL VIDE ORDER DATED 18-12-2008 IN ITA NO.79/R JT/2007 DISMISSED THE APPEAL OF THE REVENUE ON THE GROUND THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES APPEAL VIDE ORDER DATED 18-11-2008 WHEREBY THE DISALLOWANCE IS RESTRICTED TO RS.2 84 180. AGAINST THE AFORESAID ORDER OF THE TRIBUNAL BOTH THE SIDES PREFERRED APPEAL U/S 260A O F THE I.T. ACT 1961. THE HONBLE GUJARAT HIGH COURT IN ASSESSEES APPEAL IN ITA NO.1505 OF 2009 VIDE ORDER DATED 18-04-2011 HELD THAT THE TRIBUNAL IN AS SESSEES APPEAL WITHOUT RECORDING ANY REASON WHATSOEVER ALLOWED THE APPEAL OF THE ASSESSEE. THEREFORE THE HONBLE HIGH COURT REMANDED THIS ISS UE TO THE FILE OF THE TRIBUNAL FOR FRESH CONSIDERATION. IN REVENUES APPEAL ALSO VIDE SEPARATE ORDER DATED 18- 04-2011 THE HONBLE HIGH COURT IN TAX APPEAL NO.222 1/RJT/2010 REMANDED THE PROCEEDINGS FOR FRESH CONSIDERATION TO THE TRIBUNAL . IN VIEW OF THESE TWO ITA NO.79/RJT/2007 ITA NO.82/RJT/2007 3 SEPARATE ORDERS OF THE TRIBUNAL THE CROSS APPEALS WERE RESTORED AND ARE BEING DECIDED BY THIS COMMON ORDER. 4. AT THE TIME OF HEARING BEFORE US ON BEHALF OF T HE ASSESSEE SHRI VIMAL DESAI APPEARED AND POINTED OUT THAT THERE IS NO JUS TIFICATION WHATSOEVER FOR REJECTION OF BOOK RESULTS U/S 145(3). HE POINTED O UT THAT THE BOOK RESULTS WERE REJECTED ON THE GROUND THAT THE EXPENSES OF RS.1 48 199 WERE SUPPORTED BY VOUCHERS. HE POINTED OUT THAT THEE EXPENSES WERE S UPPORTED BY INTERNAL VOUCHERS BUT EXTERNAL PARTY BILLS / VOUCHERS WERE N OT AVAILABLE. THESE EXPENSES CONSIST OF FOLLOWING EXPENSES: 1. LOADING EXPENSES RS. 54 700 2. U.P. ENTRY EXPENSES RS. 60 700 3. PUNJAB ENTRY EXPENSES RS. 31 500 4. DIESEL EXPENSES RS. 1 299 ----------------- TOTAL RS.1 48 199 ----------------- THE COUNSEL OF THE ASSESSEE ALSO DREW OUR ATTENTION TO THE SUBMISSIONS DATED 17-03-2006 FILED BEFORE THE ASSESSING OFFICER WHERE IN IT WAS EXPLAINED THAT THE TOTAL EXPENSES WHICH WERE NOT SUPPORTED BY EXTERNAL BILLS / VOUCHERS CONSISTS VERY SMALL FRACTION OF TOTAL EXPENSES OF RS.2 07 66 8956 (I.E. RS.1 57 03 450 OF DIRECT EXPENSES AND RS.50 63 406 OF INDIRECT EXPENS ES. ALL THE REMAINING ITA NO.79/RJT/2007 ITA NO.82/RJT/2007 4 VOUCHERS WERE DULY SUPPORTED BY BILLS. THE BOOKS O F ACCOUNTS ARE AUDITED AND THE SAME WERE PRODUCED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER RETAINED COPIES OF SOME VOUCHERS. FOR SOME EXPENSE S SUCH AS LABOUR CHARGES FOR LOADING / UNLOADING MINOR REPAIR AND MAINTENAN CE DURING THE TRIP TEA / COFFEE / SNACKS DURING THE TRIP EXPENSES FOR LOCAL ASSIST ANCE FOR ROUTE MEDICINES PAID BY THE DRIVERS IT IS NOT PRACTICALLY POSSIBLE TO H AVE EXTERNAL BILLS DUE TO THE INHERENT NATURE OF THE EXPENSES. THIS SORT OF EXPE NSES WERE PASSED BY THE SUPERVISORS OF THE ASSESSEE AFTER DUE SCRUTINY THER EOF. THOUGH EXTERNAL BILLS WERE NOT AVAILABLE FOR THESE EXPENSES THE VOUCHERS WERE DULY SIGNED BY THE DRIVERS AND SUPERVISORS. THE ASSESSING OFFICER DIS BELIEVED THE AFORESAID SUBMISSION IN THE ABSENCE OF EXTERNAL VOUCHERS OBSE RVING THAT INTERNAL VOUCHERS ARE ONLY SELF SERVING. THE ASSESSING OFFICER FURTH ER STATED IN THE ASSESSMENT ORDER THAT THESE EXPENSES WERE CLAIMED TO AVOID TAX AND IN THE ABSENCE OF BILLS / VOUCHERS THE EXPENSES CANNOT BE ALLOWED. HE POINTE D OUT THAT ONLY IN RESPECT OF THESE EXPENSES THE BOOKS OF ACCOUNT CANNOT BE REJE CTED. AT THE MOST THE EXPENSES TO THE EXTENT OF RS.1 48 199 CAN ONLY BE D ISALLOWED. 5. WITH REGARD TO THE DISALLOWANCE OF RS.28 41 797 OUT OF TRUCK RUNNING REPAIRS DIESEL AND MAINTENANCE EXPENSES BY RESTRIC TING THE SAME AT AN AVERAGE OF 62% THE COUNSEL OF THE ASSESSEE POINTED OUT THA T THE ASSESSING OFFICER MADE THE DISALLOWANCE BY REJECTING BOOKS U/S 145(3) OF T HE ACT. THE REJECTION OF BOOKS OF ACCOUNT IS NOT AT ALL JUSTIFIED THEREFORE THER E IS NO JUSTIFICATION WHATSOEVER FOR MAKING ADHOC DISALLOWANCE BY RESTRICTING THE SAME A T 62%. THE COUNSEL OF THE ITA NO.79/RJT/2007 ITA NO.82/RJT/2007 5 ASSESSEE ALSO POINTED OUT THAT WORKING OF ASSESSING OFFICER FOR ESTIMATING 62% IS BASED ON THE AVERAGE BY SIX TRUCKS HAVING LOW EXPEN SES. THE ASSESSING OFFICER IS NOT JUSTIFIED IN HIS ACTION OF TAKING SIX PARTIC ULAR TRUCKS HAVING NO EXPENSES INSTEAD OF ACTUAL EXPENSES INCURRED ON 19 TRUCKS. THERE WAS NO EVIDENCE TO SHOW THAT THE EXPENSES CLAIMED BY THE APPELLANT WER E NOT INCURRED. WHEN THE FACT THAT THE EXPENSES HAVE BEEN INCURRED IS NOT DI SPROVED THE ACTION OF RESTRICTING THEM TO AN ARBITRARY FIGURE IS NOT JUST IFIED. THERE IS NO ADVERE FINDING REGARDING GP OR NP OF THE ASSESSEE. IN VIEW OF THI S ALSO THERE REMAINS NO GROUND FOR QUESTIONING THE TRUCK RUNNING EXPENSES. A CHART SHOWING G.P. AND N.P. FOR IMMEDIATELY PRECEDING YEAR AND SUCCEEDING YEAR IS ENCLOSED HEREWITH ALONG WITH THE AUDIT REPORTS FOR THE RELEVANT YEARS . IF THE AVERAGE PERCENTAGE OF ALL TRUCKS IS CALCULATED FROM THE CHART ON PAGE 2 O F THE ASSESSMENT ORDER IT COEMS TO AROUND 76%. SIMILAR AVERAGE IN IMMEDIATEL Y PRECEDING YEAR WAS AROUND 80% AND IN THE SUCCEEDING YEAR WAS AROUND 77 %. A CHART SHOWING THE SAME IS ENCLOSED. THIS CLEARLY SHOWS THAT THE EXPE NDITURE CLAIMED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION WAS REASON ABLE AND NOT EXCESSIVE. 6. ON THE BASIS OF AFORESAID SUBMISSIONS THE COUNS EL OF THE ASSESSEE PLEADED THAT IT MAY BE HELD THAT THERE IS NO JUSTIF ICATION FOR REJECTING THE BOKS OF ACCOUNT U/S 145(3) OF THE ACT. AT THE MOST THE DI SALLOWANCE CAN BE MADE OF RS.1 48 199 IN RESPECT OF WHICH EXTERNAL SUPPORTING VOUCHERS ARE NOT AVAILABLE. ITA NO.79/RJT/2007 ITA NO.82/RJT/2007 6 7. SHRI AVINASH KUMAR APPEARED ON BEHALF OF THE REV ENUE AND HEAVILY RELIED UPON THE REASONING GIVEN BY THE ASSESSING OFFICER N THE ASSESSMENT ORDER AND CONTENDED THAT THE BOOKS OF ACCOUNT WERE RIGHTLY RE JECTED. HE POINTED OUT THAT ON TEST CHECK BASIS THE ASSESSING OFFICER FOUND TH AT BILLS / VOUCHERS OF RS.1 48 199 WERE NOT AVAILABLE. FURTHER THE ASSES SEE HAS SHOWN ABNORMAL TRUCK RUNNING REPAIR AND DIESEL AND MAINTENANCE EX PENSES. THEREFORE THE DISALLOWANCE OF RS.28 41 797 BY RESTRICTING THE EXP ENSES TO 62% WAS REASONABLE AND THE CIT(A) HAS NOT JUSTIFIED IN RESTRICTING THE SAME TO 20%. 8. HAVING HEARD BOTH SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDER OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT TH E BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED U/S 44AB OF THE I.T. ACT 1961 . THE ASSESSEE HAS MAINTAINED CASH BOOK BANK BOOK LEDGER JOURNAL ET C. THE LD.CIT(A) CALLED THE REMAND REPORT. IN THIS REMAND REPORT THE ASSESSIN G OFFICER HAS STATED THAT THERE IS FALL IN GROSS PROFIT AND NET PROFIT BY 1.07% AND 0.09%. HOWEVER ON PAGE 11 OF THE PAPER BOOK THE ASSESSEE HAS FURNISHED GROSS PR OFIT AND NET PROFIT CHART. AS PER THIS CHART THE GROSS PROFIT DECLARED IN THE AS SESSMENT YEAR UNDER APPEAL IS 24.30% AS AGAINST 20.20% IN THE IMMEDIATELY PRECEDI NG ASSESSMENT YEAR. THE NET PROFIT IN THE ASSESSMENT YEAR UNDER APPEAL IS 0 .67% AS AGAINST 0.39% IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. BE THAT IT MAY FROM THE PERUSAL OF THE ENTIRE ASSESSMENT ORDER THE ONLY COGENT REASON GIV EN BY THE ASSESSING OFFICER FOR REJECTING THE BOOKS OF ACCOUNT IS NON-AVAILABIL ITY OF EXTERNAL VOUCHERS OF ITA NO.79/RJT/2007 ITA NO.82/RJT/2007 7 RS.1 48 199. LOOKING TO THE VOLUME OF BUSINESS TH E NON AVAILABILITY OF VOUCHERS OF RS.1 48 199 ARE INSIGNIFICANT. FOR THESE REASON S IN OUR CONSIDERED OPINION THE BOOKS OF ACCOUNT CANNOT BE REJECTED BY INVOKING THE PROVISIONS CONTAINED IN SECTION 145(3) OF THE I.T. ACT 1061. 9. IN VIEW OF THE FOREGOING WE HOLD THAT THERE IS N O JUSTIFICATION FOR REJECTING THE BOOKS OF ACCOUNT BY INVOKING PROVISIONS CONTAIN ED IN SECTION 145(3) OF THE I.T. ACT 1961. ONLY VOUCHERS TO THE EXTENT OF RS. 1 48 199 WERE NOT AVAILABLE. THE ASSESSING OFFICER CAN DISALLOW ONLY RS.1 48 199 . WE ACCORDINGLY RESTRICT THE DISALLOWANCE TO RS.1 48 199 INSTEAD OF RS. 28 41 79 7 DISALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 10. IN THE RESULT FOR STATISTICAL PURPOSE THE APP EAL OF THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED ON THE DATE AS MENTI ONED ABOVE. SD/- SD/- (A.L. GEHLOT) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 02 ND DECEMBER 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-II RAJKOT 4. THE CIT-I RAJKOT 5. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT