Inderjeet Singh Makhija, Hyderabad v. DCIT, Hyderabad

ITA 91/HYD/2011 | 2003-2004
Pronouncement Date: 28-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 9122514 RSA 2011
Assessee PAN AGQPS2107N
Bench Hyderabad
Appeal Number ITA 91/HYD/2011
Duration Of Justice 6 month(s) 8 day(s)
Appellant Inderjeet Singh Makhija, Hyderabad
Respondent DCIT, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 28-07-2011
Date Of Final Hearing 24-06-2011
Next Hearing Date 24-06-2011
Assessment Year 2003-2004
Appeal Filed On 19-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.91/H/2011 AY : 2002-03 ITA NO.92/H/2011 AY : 2003-04 ITA NO.13/H/2011 AY : 2004-05 ITA NO.14/H/2011 AY : 2005-06 ITA NO.15/H/2011 AY : 2006-07 ITA NO.16/H/2011 AY : 2007-08 ITA NO.17/H/2011 AY : 2008-09 SHRI INDERJE ET SINGH MAKHIJ A HYDERABAD (PAN AGQPS 2107 N) VS THE DCIT CIRCLE 4(1) HYDERABAD APPELLANT RESPONDENT APPELLAN T BY: SHRI P. MURALI MOHAN RAO RESPONDENT BY: SHRI HARILAL NAYAK ORDER PER CHANDRA POOJARI A.M: THESE SEVEN APPEALS PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE CIT(A) V HYDERABA D AND PERTAINS TO THE ASSESSMENT YEARS 2002-03 2003-04 2004-05 2005 -06 2006- 07 2007-08 AND 2008-09. SINCE ISSUES INVOLVED I N ALL THESE APPEALS ARE COMMON IN NATURE THEY ARE CLUBBED TOGET HER HEARD TOGETHER AND DISPOSED OFF VIDE THIS COMMON ORDER FO R THE SAKE OF CONVENIENCE. 2. BRIEF FACTS OF THE ISSUE ARE THAT THE PRESENT ASSES SEE IS ENGAGED IN THE BUSINESS OF AUTO FINANCE AND BROKERA GE. A SURVEY OPERATION U/S 133A WAS INITIATED AGAINST THE ASSESS EE ON 29.11.2007 AND THE SAME WAS CONVERTED INTO SEARCH. IN RESPONSE TO THE NOTICE ISSUED U/S 153A THE ASSESSEE FILED R ETURNS OF INCOME FROM THE ASSESSMENT YEARS 2002-03 TO 2008-09 ON 30. 7.2009. FOR THESE ASSESSMENT YEARS THE ASSESSEE HAS ADMITTED T OTAL INCOME ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 2 YEARS WISE. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT U/S 143A R.W.S. 143(3) BY DETERMINING THE INCOME AS FOLLOWS: ASSESSMENT YEAR AMOUNT DECLARED BY ASSESSEE (RS.) AMOUNT DETERMINED BY ASSESSING OFFICER (RS.) 2002-03 93 500.00 1 81 290 2003-04 98 175.00 13 88 904 2004-05 98 730.00 31 04 512 2005-06 1 05 665 37 05 726 2006-07 1 38 393 1 17 56 967 2007-08 1 63 220 68 00 646 2008-09 1 76 640 77 94 047 3. THE ASSESSING OFFICER WHILE COMPLETING THE ABOVE AS SESSMENT MADE ADDITIONS TOWARDS INCOME ON ACCOUNT OF AUTO FI NANCE UNEXPLAINED CASH AND DISALLOWANCE OF EXPENSES ON CO MMISSION INCOME. FURTHER THE INCOME ON AUTO FINANCE INCLUD ES UNDISCLOSED INCOME AT 24% ON ANNUAL TURNOVER OF AUTO FINANCE AS WELL AS FRESH UNEXPLAINED ADDITIONAL ADVANCE MADE DURING THE YEAR WHICH IS DETERMINED BY THE ASSESSING OFFICER AS FOLLOWS: MONTH ADVANCE GIVEN EMI RECEIVED ACTUAL ADVANCE YEAR ENDING CUMULATIVE BALANCE JUN-02 9000 0 9000 JUL-02 52000 1170 50830 AUG-02 16000 5520 10480 SEP-02 94000 7340 86660 OCT-02 51000 16110 34890 NOV-02 75000 23780 51220 DEC-02 142000 31580 110420 JAN-03 126000 47420 78580 FEB-03 258500 61120 197380 MAR-03 372500 90010 282490 911950 APR-03 336000 124260 211740 MAY-03 356000 156120 199880 JUN-03 228000 204510 23490 JUL-03 427000 228360 198640 AUG-03 517500 267310 250190 SEP-03 226000 302050 -76050 OCT-03 529500 315270 214230 NOV-03 256600 352690 -96390 DEC-03 593000 374280 218720 JAN-04 504500 378915 125585 ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 3 FEB-04 437000 405450 31550 MAR-04 786000 428100 357900 APR-04 686300 470990 215310 MAY-04 955500 513860 441640 JUN-04 783500 579570 203930 JUL-04 1247500 618350 629150 AUG-04 994500 683370 311130 SEP-04 743000 737580 5420 OCT-04 989500 777040 212460 NOV-04 1127000 807320 319680 DEC-04 953800 866830 86970 JAN-05 654200 928560 -274360 FEB-05 646900 934820 -287920 MAR-05 238500 949110 -710610 1152800 APR-05 635000 937905 -302905 MAY-05 1623000 915395 707605 JUN-05 1526000 955103 570897 JUL-05 1192800 995743 197057 AUG-05 1112200 1062158 50042 SEP-05 1631200 1104428 526772 OCT-05 1916000 1188178 727822 NOV-05 1736000 1307738 428262 DEC-05 2972600 1394708 1577892 JAN-06 2966700 1567103 1399597 FEB-06 2052300 1790383 261917 MAR-06 2180800 1906323 274477 6419435 APR-06 2066600 2001133 65467 MAY-06 1848600 2106703 -258103 JUN-06 1416500 2198938 -782438 JUL-06 1927800 2244393 -316593 AUG-06 2679700 2303293 376407 SEP-06 2318850 2426880 -108030 OCT-06 2475800 2505730 -29930 NOV-06 2514600 2607340 -92740 DEC-06 1998700 2688005 -689305 JAN-07 2323200 2715495 -392295 FEB-07 2396200 2733565 -337365 MAR-07 3137700 2840345 297355 -2267570 APR-07 2908500 2974595 -66095 MAY-07 3851000 3135579 715421 JUN-07 3217400 3295624 -78224 JUL-07 3538300 3352184 186116 AUG-07 2989200 3479379 -490179 SEP-07 2709000 3543296 -834296 OCT-07 2362800 3620696 -1257896 NOV-07 124000 3616481 -3492481 DEC-07 10000 3477966 -3467966 -8785600 ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 4 4. THEREAFTER THE INTEREST INCOME WAS COMPUTED AS FOLL OWS: FINANCIAL YEAR ANNUAL TURNOVER OF AUTO FINANCE IN (RS.) UNDISCLOSED INCOME @ 24% PER ANNUM (IN RS.) 2002 - 03 11 96 000 2 87 040 2003 - 04 51 96 800 12 47 232 2004 - 05 1 00 20 200 24 04 848 2005 - 06 2 15 44 600 51 70 704 2006 - 07 2 71 04 250 65 05 020 2007 - 08 2 17 00 200 52 10 448 FINANCIAL YEAR FRESH UNEXPLAINED ADDITIONAL ADVANCES MADE DURING THE YEAR 2002 - 03 9 11 950 2003 - 04 16 59 485 2004 - 05 11 52 800 2005 - 06 64 19 435 2006 - 07 NIL 2007 - 08 NIL 5. FINALLY INCOME WAS DETERMINED ON THE FOLLOWING LIN ES: FINANCIAL YEAR ASSESSM ENT YEAR ANNUAL TURNOVER OF AUTO FINANCE UNDISCLOSED INCOME @ 24% FRESH UNEXPLAINED ADDITIONAL ADVANCE MADE DURING THE YEAR UNACCOUNTED INCOME DURING THE YEAR 6= (4) + (5) 2002-03 2003-04 11 96 000 2 87 040 9 11 950 11 98 990 2003-04 2004-05 51 96 800 12 47 232 16 59 485 29 06 717 2004-05 2005-06 1 00 20 200 24 04 848 11 52 800 35 57 648 2005-06 2006-07 2 15 44 600 51 70 704 64 19 435 1 15 90 139 2006-07 2007-08 2 71 04 250 65 05 020 IGNORED 65 05 020 2007-08 2008-09 2 17 00 200 52 10 448 IGNORED 52 10 448 6. AGAINST THESE ADDITIONS THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 5 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE SUBMITTED THAT THE DISALLOWANCE OF EXPENDITURE ON C OMMISSION INCOME IS NOT CORRECT. THE COMPUTATION OF INCOME O N AUTO FINANCE IS TOTALLY BASELESS AND ALSO WHICH IS VERY HYPOTHET ICAL. THE ASSESSING OFFICER HAS CONSIDERED INCOME AT 24% ON T HE ANNUAL TURNOVER ON AUTO FINANCE AS WELL AS FRESH UNEXPLAIN ED ADDITIONAL ADVANCE WHICH IS NOTHING BUT DOUBLE ADDITION ON THE SAME COUNT. THE ASSESSING OFFICER HAS NO MATERIAL OR BASIS TO C OMPUTE THE INCOME FROM AUTO FINANCE AND THE LOOSE PAPERS/SLIPS AND NOTING ON THE DIARY ARE CONSIDERED FOR MAKING ADDITIONS WITHO UT ANY CORROBORATIVE MATERIAL OR EVIDENCE IN SUPPORT THERE OF AND IT CANNOT BE FORMED BASIS FOR DETERMINING THE UNDISCLOSED INC OME. THE MATERIALS CONSIDERED BY THE ASSESSING OFFICER ARE B EING NOT CORROBORATED BY ANY INDEPENDENT EVIDENCE AND CANNOT BE CONSIDERED AS BASIS OR A PROOF FOR DETERMINING THE UNDISCLOSED INCOME. THE LOOSE SLIPS/PAPER FOUND DURING THE COU RSE OF SEARCH PROCEEDINGS BY THEMSELVES CANNOT LEAD TO CONCLUSION THAT THE ASSESSEE HAS ADVANCED SUCH AMOUNT OF AUTO FINANCE. THE LOOSE PAPERS/DOCUMENTS CANNOT BE CONSIDERED FOR ASSESSMEN T. HE RELIED ON THE FOLLOWING JUDGEMENTS: 1. ATUL KUMAR JAIN VS. DCIT 64 TTJ 786 DEL. 2. CHANDER MOHAN MEHTA VS. ACIT (INVESTIGATION) 65 TTJ 0327 (PUN) 3. MAHENDRA VS. SUSHILA AIR 1965 SC 367 4. KISHANCHAND SOB HARJMAL VS. ACIT 42 TTJ (JP) 423 41 ITD 97 (JP) 5. DEVILALA GHERILALA SHAH VS. DCIT 127 CTR (TRIB) (AH D.) 135 6. CIT VS. SAHIBGANJ ELECTRIC CABLES (P) LTD. 115 ITR 408 (CAL.) 7. CIT VS. SHYAM SUNDER & CO. (18 ITR 187 (CAL.) 8. PRAGATI CONSTRUCTION CO. VS. ITO (60 ITD 201 (DEL.) 9. SK GUPTA VS. DCIT (63 TTJ 0532 ) (DEL.) 8. FINALLY HE SUBMITTED THAT THE ENTIRE ADDITION IS E STIMATED BASIS SHOULD BE DELETED IN ITS ENTIRETY. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITT ED THAT THE ASSESSEE WAS RECEIVING RS.500 TO RS.1000 AS COM MISSION WITH ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 6 RESPECT TO SALE OF ANY MOTOR VEHICLE. THE COMMISS ION INCOME IS NOT ENTERED IN THE REGULAR BOOKS OF ACCOUNT. WITH REGA RD TO FINANCING IT WAS FOUND THAT THE ASSESSEE FINANCES THE VEHICLE S FOR BOTH FIRST HAND AND SECOND HAND BUYERS AND COLLECTS EMIS FROM THEM WHICH INCLUDE BOTH INTEREST AND PRINCIPLE AMOUNTS. THERE FORE THE ASSESSING OFFICER CONCLUDED THAT THE UNACCOUNTED IN COME LINKED WITH AUTO FINANCE IS TO BE BROUGHT TO TAXATION AS I NTEREST RECEIVED ON THE AMOUNTS ADVANCED AND AS UNEXPLAINED ADDITION AL LOANS ADVANCED EACH YEAR OVER AND ABOVE THE EMIS RECEIVED AND RE ADVANCED. ACCORDINGLY BASED ON THE DOCUMENTS SEIZ ED DURING THE COURSE OF SEARCH FROM THE PREMISES OF SEARCH A MON TH WISE AND YEAR WISE DETAIL WAS PREPARED REGARDING ADVANCES GI VEN AS MENTIONED IN THE ASSESSMENT ORDER. 10. THE DR SUBMITTED THAT THE ASSESSEE HAD NOT FURNISHE D ANY DETAILS ABOUT HIS ADVANCES AND RECEIPTS IN AUTO FIN ANCE BUSINESS. HE HAD NOT EVEN RESPONDED TO THE SHOW CAUSE NOTICES . THEREFORE THE ADDITIONS WERE MADE IN VARIOUS YEARS WITH RESPE CT TO INTEREST INCOME FROM AUTO FINANCES AND FRESH ADVANCES IN AUT O FINANCE. 11. THE DR RELIED ON THE FOLLOWING JUDGEMENTS: 1. P.R. METRANI VS. CIT (287 ITR 209) (SC) 2. CIT VS. P.R. METRANI (HUF) 251 ITR 244 (KAR.) 3. RATAN CHAND LODHA VS. CIT (221 ITR 24 (RAJ.) 4. PIONEER PUBLICITY CORPN. VS. DCIT (67 TTJ 471 ) (AT DEL.) 12. THE DR SUBMITTED THAT THE DOCUMENTS SUBMITTED BY TH E ASSESSEE SHOWS THAT THEY ARE NOT DUMB DOCUMENTS AS ARGUED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE. WHAT IS WRITTEN ABOVE IS NOT A CODE OR AIMLESS WRITING. TH E DOCUMENT CLEARLY MENTIONS THE LEDGER ACCOUNTS OF MR. B. PRAV EEN (PRABHU) AND MR. KUIKKALA SWAMI ON 18.12.2006. A TVS VICTOR WAS SOLD TO MR. PRABHU. HE PAID 8 INSTALMENTS OF RS.1 600/- EACH A ND MAROON COLOUR 1998 MODEL ARE MENTIONED WITH RESPECT TO MR. SWAMI. ON ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 7 FURTHER EXAMINATION OF THE SEIZED DOCUMENTS SHOWS T HAT THE ASSESSING OFFICER HAS CORRECTLY COME TO THE CONCLUS IONS AND HAS METICULOUSLY TALLIED EACH AND EVERY ENTRY. THE ASS ESSING OFFICER HAS ALSO GIVEN CREDIT FOR POSSIBLE EXPENSES TO THE ASSESSEE EVEN THOUGH DETAILS OF ALL EXPENSES HAVE NOT BEEN MENTIO NED IN THE SEIZED DOCUMENTS. IN THIS WAY THE ASSESSING OFFIC ER HAS BEEN FAIR TO THE ASSESSEE. FURTHER DURING THE SEARCH OPERAT IONS THE ASSESSEE HAD A CLEAR LOOK AT VARIOUS SEIZED DOCUMENTS INCLUD ING A/ISM/1 AND A/ISM/4. HE EXPLAINED THE VARIOUS ENTRIES AND STATED THAT AS APPEARING IN THE SEIZED ANNEXURE CERTAIN AMOUNTS H AD BEEN ADVANCED BY HIM TO VARIOUS PARTIES LIKE RK CARS ETC . HE ADMITTED THAT HE HAD NOT DISCLOSED ANY INCOME PERTAINING TO ADVANCES. ACCORDINGLY HE MADE A DISCLOSURE OF RS.1.5 CRORES I N ADDITION TO THE NORMAL RETURNED INCOME ON ACCOUNT OF THE UNACCOUNTE D INCOME AS PER THE SEIZED ANNEXURE. 13. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE THERE IS NO MERIT IN THE ARGUMENTS OF THE ASSESSEE COUNSEL T HAT THE SEIZED DOCUMENTS HAVE NO EVIDENTIARY VALUE. ON THE CONTRA RY THE UNACCOUNTED INCOME OF THE ASSESSEE FROM COMMISSION INCOME AND FROM FURTHER ADVANCES IS PROPERLY AND WELL DOCUMENT S. THEREFORE THE CIT(A) CONFIRMED BOTH THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST INCOME ON AUTO FINAN CE AND FRESH ADVANCES IN THE AUTO FINANCING BUSINESS. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIALS AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE CASE LAW CITED BY EITHER PARTY. IN THE PRESENT CASE T HE ASSESSEE IS HAVING NO DISPUTE WITH REGARD TO ADVANCE GIVEN IN E ACH MONTH AND EMI RECEIVED AND HE HAS CONCEDED THE SAME. THERE I S ONLY DISPUTE WITH REGARD TO COMPUTATION OF UNDISCLOSED INCOME AT 24% OF ANNUAL TURNOVER OF AUTO FINANCE AND COMPUTATION OF ADDITIO NAL ADVANCE WHICH IS ONLY ON ESTIMATED BASIS. WE FIND MERIT IN THE ARGUMENT OF THE ASSESSEES COUNSEL. THE ASSESSING OFFICER STRA IGHT AWAY TAKEN ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 8 THE 24% OF THE CUMULATIVE FIGURE OF AUTO FINANCE AS INCOME OF THE ASSESSEE ALONG WITH THE ADDITIONAL ADVANCE MADE BY THE ASSESSEE DURING THE YEAR. BOTH THESE COMPUTATIONS ARE NOT A T ALL CORRECT. THE ASSESSING OFFICER STRAIGHT AWAY APPLIED THE MAT HEMATICAL FORMULA TO ARRIVE THESE FIGURES. THE ASSESSING OFF ICER WHILE MAKING ESTIMATION OF INCOME HE MUST BEAR IN MIND THAT IT IS TO BE A FAIR ESTIMATE OF THE PROPER INCOME OF THE ASSESSEE AND HE MUST TAKE INTO ACCOUNT THE LOCAL SITUATION TRADE PRACTICE A ND THE ASSESSEES FACTS AND CIRCUMSTANCES OF THE CASE AND HIS OWN KNO WLEDGE OF PREVIOUS RETURNS OF THE ASSESSEE IF ANY AND OTHER MATERIAL WHICH HE THINKS WILL ASSIST HIM IN ARRIVING AT A FAIR AND PR OPER ESTIMATE; THOUGH THERE MUST NECESSARILY BE GUESS WORK IN THE MATTER IT MUST BE HONEST. HE MUST NOT ACT DISHONESTLY OR VINDICTI VELY OR CAPRICIOUSLY BECAUSE HE MUST EXERCISE JUDGEMENT IN THE MATTER. THE MERE FACT THAT THE MATERIAL PLACED BY THE ASSES SEE BEFORE THE ASSESSING OFFICER IS UNRELIABLE DOES NOT EMPOWER TH E ASSESSING OFFICER TO MAKE AN ARBITRARY ESTIMATION OR ORDER. THE POWER OF ESTIMATION IS NOT AN ARBITRARY POWER; IT IS AN ESTI MATION ON THE BASIS OF BEST JUDGEMENT AND IT CANNOT BE EXERCISED UNDER THE SWEET WILL AND PLEASURE OF THE ASSESSING OFFICER/CIT(A). THE ESTIMATION SHOULD HAVE REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND MARKET CONDITION AND TRADE PRACTICE. WHILE MAKING ESTIMAT ION HE SHOULD BE GUIDED BY RULES OF EQUITY JUSTICE AND CONSCIOUS NESS. IN THE PRESENT CASE THE ESTIMATION MADE BY THE ASSESSING OFFICER IS IN UTTER DISREGARD OF THE PREVAILING MARKET CONDITION. THE ESTIMATION MADE BY THE ASSESSING OFFICER IS FAR FROM THE REALI TY. IT IS TO BE NOTED THAT THE AMOUNT ADVANCED IN THE MONTH OF APRI L WILL GET FULL 12 MONTH INTEREST. ON THE OTHER HAND THE AMOUNT A DVANCED IN THE MONTH OF MAY WILL GET ONLY 11 MONTHS INTEREST. SI MILARLY THE AMOUNT ADVANCED IN THE MONTH OF MARCH OF THE YEAR W ILL FETCH ONLY ONE MONTH INTEREST. IN OTHER WORDS THE INTEREST I S TO BE CALCULATED MONTH WISELY AND IT IS VARY FROM 24% TO 2 %. INSTE AD OF THIS THE ASSESSING OFFICER UNIFORMLY HAS TAKEN NET INTEREST INCOME AT 24% OF ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 9 THE TOTAL TURNOVER WHICH IS NOT CORRECT. ON THE OT HER HAND IN OUR OPINION IT IS FAIR TO ESTIMATE THE NET INTEREST IN COME AT 1% PER MONTH ON THE CUMULATIVE ADVANCE AND ACCORDINGLY WE HAVE COMPUTED MONTH WISE INTEREST CONSIDERING THE ADVANC E GIVEN AND REPAYMENT WHICH IS AS FOLLOWS: MONTH ADVANCE GIVEN EMI RECEIVED CUMULATIVE NET INTEREST (1%) INTEREST FOR YEAR UN- EXPLAINED. ADVANCE FOR THE YEAR JUN-02 9000 0 9000 90 JUL-02 52000 1170 59830 598.3 AUG-02 16000 5520 70310 703.1 SEP-02 94000 7340 156970 1569.7 OCT-02 51000 16110 191860 1918.6 NOV-02 75000 23780 243080 2430.8 DEC-02 142000 31580 353500 3535 JAN-03 126000 47420 432080 4320.8 FEB-03 258500 61120 629460 6294.6 MAR-03 372500 90010 911950 9119.5 30580.4 881369.6 911950 APR-03 336000 124260 1123690 11236.9 30580.4 616958.7 647539.1 MAY-03 356000 156120 1323570 13235.7 JUN-03 228000 204510 1347060 13470.6 JUL-03 427000 228360 1545700 15457 AUG-03 517500 267310 1795890 17958.9 SEP-03 226000 302050 1719840 17198.4 OCT-03 529500 315270 1934070 19340.7 NOV-03 256600 352690 1837980 18379.8 DEC-03 593000 374280 2056700 20567 JAN-04 504500 378915 2182285 21822.85 FEB-04 437000 405450 2213835 22138.35 MAR-04 786000 428100 2571735 25717.35 216523.6 1443261 1659785 APR-04 686300 470990 2787045 27870.45 216523.6 1010283 1226807 MAY-04 955500 513860 3228685 32286.85 JUN-04 783500 579570 3432615 34326.15 JUL-04 1247500 618350 4061765 40617.65 AUG-04 994500 683370 4372895 43728.95 SEP-04 743000 737580 4378315 43783.15 OCT-04 989500 777040 4590775 45907.75 NOV-04 1127000 807320 4910455 49104.55 DEC-04 953800 866830 4997425 49974.25 JAN-05 654200 928560 4723065 47230.65 FEB-05 646900 934820 4435145 44351.45 MAR-05 238500 949110 3724535 37245.35 496427.2 656372.8 1152800 APR-05 635000 937905 3421630 34216.3 496427.2 459461 955888.2 MAY-05 1623000 915395 4129235 41292.35 JUN-05 1526000 955103 4700132 47001.32 JUL-05 1192800 995743 4897189 48971.89 AUG-05 1112200 1062158 4947231 49472.31 SEP-05 1631200 1104428 5474003 54740.03 OCT-05 1916000 1188178 6201825 62018.25 ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 10 NOV-05 1736000 1307738 6630087 66300.87 DEC-05 2972600 1394708 8207979 82079.79 JAN-06 2966700 1567103 9607576 96075.76 FEB-06 2052300 1790383 9869493 98694.93 MAR-06 2180800 1906323 10143970 101439.7 782303.5 5637132 6419435 APR-06 2066600 2001133 10209437 102094.4 782303.5 3945992 4728296 MAY-06 1848600 2106703 9951334 99513.34 JUN-06 1416500 2198938 9168896 91688.96 JUL-06 1927800 2244393 8852303 88523.03 AUG-06 2679700 2303293 9228710 92287.1 SEP-06 2318850 2426880 9120680 91206.8 OCT-06 2475800 2505730 9090750 90907.5 NOV-06 2514600 2607340 8998010 89980.1 DEC-06 1998700 2688005 8308705 83087.05 JAN-07 2323200 2715495 7916410 79164.1 FEB-07 2396200 2733565 7579045 75790.45 MAR-07 3137700 2840345 7876400 78764 1063007 -3330577 2126014 APR-07 2908500 2974595 7810305 78103.05 1063007 1063007 MAY-07 3851000 3135579 8525726 85257.26 JUN-07 3217400 3295624 8447502 84475.02 JUL-07 3538300 3352184 8633618 86336.18 AUG-07 2989200 3479379 8143439 81434.39 SEP-07 2709000 3543296 7309143 73091.43 OCT-07 2362800 3620696 6051247 60512.47 NOV-07 124000 3616481 2558766 25587.66 574797.5 -7014041 1149595 DEC-07 10000 3477966 -909200 574797.5 574797.5 (BLOCKED FIGURE IS THE ASSESSABLE INCOME IN EACH AY) 15. WE HAVE CONSIDERED THE NET INTEREST INCOME AT 1% PE R MONTH INSTEAD OF 2% PER MONTH ADOPTED BY THE ASSESSING OF FICER SINCE THE AUTO FINANCE IS A VERY RISKY VENTURE AND THE ASSESS EE HAS TO DEAL WITH LOWER STRATA OF SOCIETY AND THE VOLUME OF BAD DEBTS IS VERY HIGH WHICH WAS NOT CONSIDERED BY THE ASSESSING OFFICER. SIMILARLY THE ADDITIONAL UNEXPLAINED ADVANCE HAS TO BE COMPUTED A FTER GIVING DUE WEIGHTAGE TO THE INCOME EARNED. IT MEANS THAT THE INCOME EARNED IS ALSO BE REINVESTED IN A FORM OF FRESH ADVANCES A ND IT IS TO BE GIVEN DUE WEIGHTAGE WHILE ARRIVING THE UNEXPLAINED FRESH ADVANCE. THUS WE HAVE DEDUCTED THE INCOME OFFERED TO TAX IN EACH YEAR FROM THE CUMULATIVE ADVANCE OF THAT YEAR WHILE ARRIVING AT F RESH ADVANCE IN EACH YEAR. WE HAVE OBSERVED THAT THE ASSESSING O FFICER HAS NOT GIVEN DEDUCTION TOWARDS INTEREST INCOME EARNED WH ILE DETERMINING THE FRESH ADVANCE. THE INCOME EARNED IS ALREADY SU BJECTED TO TAX AND IT IS REINVESTED AND DUE DEDUCTION IS TO BE GIV EN WHILE ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 11 ASCERTAINING THE FRESH ADVANCE. ACCORDINGLY WE HA VE DEDUCTED THE INTEREST OFFERED TO TAX WHILE DETERMINING THE FRESH ADVANCE. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE SAME WHILE DETERMINING THE FRESH ADVANCE. WE HAVE ALSO GIVEN DEDUCTION AT 30% TOWARDS BAD DEBTS WHILE DETERMINING THE UNEXPLAINED FRESH A DVANCE AND SAME TO BE GIVEN ON INTEREST INCOME. THUS THE A SSESSING OFFICER IS REQUIRED TO DETERMINE THE TAXABLE INCOME FROM AUTO FINANCE AS FOLLOWS: FINANCIAL YEAR ASSESSM ENT YEAR UNDISCLOSED INCOME * RS. FRESH UNEXPLAINED ADDITIONAL ADVANCE MADE DURING THE YEAR UNACCOUNTED INCOME DURING THE YEAR * 2002-03 2003-04 30 580 6 16 959 6 47 539 2003-04 2004-05 2 16 524 10 10 283 12 26 807 2004-05 2005-06 4 96 427 4 59 461 9 55 888 2005-06 2006-07 7 82 304 39 45 992 47 28 296 2006-07 2007-08 10 63 007 IGNORED 10 63 007 2007-08 2008-09 5 74 797 IGNORED 5 74 797 * BAD DEBTS ON INTEREST INCOME TO BE EXCLUDED BY AS SESSING OFFICER 16. WITH THESE OBSERVATIONS WE SET ASIDE THE ENTIR E ISSUE TO THE FILE OF ASSESSING OFFICER FOR LIMITED PURPOSE O F REFRAMING THE ASSESSABLE INCOME IN EACH ASSESSMENT YEAR AFTER CON SIDERING THE DISALLOWANCE OF EXPENSES ON COMMISSION INCOME IF AN Y AS DISCUSSED IN THE FOLLOWING PARA. 17. REGARDING DISALLOWANCE OF EXPENSES ON COMMISSION IN COME THERE CANNOT BE ANY DISALLOWANCE EXPENSES ON COMMIS SION INCOME ON AD HOC BASIS AND THE ASSESSING OFFICER IS REQUIR ED TO PIN POINT AND SPECIFY THE DISALLOWANCES IF IT IS NOT SUPPORT ED BY PROPER VOUCHERS. ITA NO.91 & 92 13 TO 17/HYD/2011 SHRI INDERJEET SINGH MAKHIJA HYD. 12 18. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT __28 TH JULY 2011 SD/ - G.C. GUPTA SD/ - CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT M EMBER DATED THE 28 TH JULY 2011 COPY FORWARDED TO: 1. SHRI INDERJEET SINGH MAKHIJA C/O. M/S. P. MURALI & CO. C.AS 6-3-655/2/3/ 1 ST FLOOR SOMAJIGUDA HYDERABAD-82. C/O SHRI INDERJEET SINGH MAKHIJA 3-5-45/2 RAMKOTI HYDERABAD. 2. THE DCIT CIRCLE 4(1) HYDERABAD 3. THE CIT(A) V HYDERABAD 4. THE CIT HYDERABAD 5. THE DR ITAT HYDERABAD NP