Rakesh Aggarwal, New Delhi vs Department Of Income Tax

ITA NO. 2929/Del/2011

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH "F", NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. No. 2929/Del/2011 A.Y. : 2007-08 INCOME TAX VS. SH. RAKESH OFFICER, AGGARWAL, WARD 21(1), D-14/103, SECTOR-8, NEW DELHI ROHINI, DELHI (PAN: AFIPA0364G) (APPELLANT) (RESPONDENT)

Department by : Sh. Vikram Sahay, Sr. D.R. Assessee by : NONE

Date of Hearing : 06-01-2015 Date of Order : 09-01-2015

ORDER

PER H.S. SIDHU : JM This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-XXII, New Delhi dated 11.3.2011 pertaining to assessment year 2007-08.

2. The grounds of appeal read as under:-

"The Assessing Officer, Ward 21(1), New Delhi is hereby directed to file an appeal in the above mentioned case before the ITAT, New Delhi on the following grounds of appeal:

1. The CIT(A) erred in law and on the facts and circumstances of the case in restricting the addition 1 ITA NO. 2929/Del/2011

from Rs. 12,79,350/- (Rs. 11,53,350/- + Rs.

1,26,000/- to Rs. 2,96,078/- by computing income from 4 (four) vehicles under section 44AE(7) without cogent reasons and without giving findings that the assessee had only declared his total income of Rs. 1,27,792/- out of gross business receipts of Rs. 7,20,500/- from the business of dairy production in the name and style of M/s Aggarwal Dairy in violation of provisions of Rule 46A(3) of the Income Tax Rules, 1962.

2. The appellant craves leave to amend or alter all or any of the aforesaid grounds of appeal and amend, alter or add any other ground of appeal."

3. The brief facts of the case are that the appellant filed his return of income for the A.Y. 2007-08 on 23.10.2007 at an income of Rs. 1,27,792/-. The Assessing Officer had received AIR information that the assessee had deposited cash amounting to Rs. 11,53,350/- in his saving bank account with the South Indian Bank Ltd., Rohini, Delhi - 110 085 on the basis of which the case was selected for scrutiny. It was observed by the Assessing Officer that the assessee, in his return, had shown only income from dairy business in the name of M/s Aggarwal Dairy. On being asked about the nature and source of cash deposited in his savings bank account, the assessee submitted before the Assessing Officer that he had three vehicles and the cash deposited represented the receipts from running of the vehicles on hire in a business of tour and travel. The Assessing Officer did not find the explanation of the assessee to be satisfactory and made addition u/s. 69A of the I.T. Act of Rs. 11,53,350/- to the income of the assessee. The Assessing Officer also observed that the assessee had not shown any income

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from the three vehicles in his return of income and made a further another addition @ Rs. 3500/- per month per vehicle and added the amount of Rs. 1,26,000/- to the income of the assessee. The assessment proceedings were completed u/s. 143(3) of the I.T. Act at an income of Rs. 14,07,310/-.

4. Against the above order the assessee appealed before the Ld.

CIT(A). Ld. CIT(A) elaborately discussed the issues in his order and

accordingly, restricted the addition from Rs. 12,79,350/- (Rs.

11,53,350/- + Rs. 1,26,000/-) to Rs. 2,96,078/- by partly allowing

the assessee's appeal vide order dated 11.3.2011.

5. Against the above order the Revenue is in appeal before us.

6. The case came up for hearing on 06.1.2015 for which

Registered Notice was sent to the assessee, but nobody appeared

on behalf of the assessee nor any application for adjournment filed

by the assessee. Keeping in view of the facts and circumstances of

the present case, we are of the view that no useful purpose will be

served to issue notice again and again to the assessee and

therefore, we are deciding the appeal exparte qua assessee, after

hearing the Ld. DR.

6.1 Ld. DR relied upon the order of the Assessing Officer.

7. We have heard the Ld. DR and perused the relevant records,

orders of the revenue authorities. We find that The Assessing

Officer had received AIR information that the assessee had

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deposited cash amounting to Rs. 11,53,350/- in his saving bank

account with the South Indian Bank Ltd., Rohini, Delhi - 110 085 on

the basis of which the case was selected for scrutiny. It was

observed by the Assessing Officer that the assessee, in his return,

had shown only income from dairy business in the name of M/s

Aggarwal Dairy. On being asked about the nature and source of cash

deposited in his savings bank account, the assessee submitted

before the Assessing Officer that he had three vehicles and the

cash deposited represented the receipts from running of the

vehicles on hire in a business of tour and travel. The Assessing

Officer did not find the explanation of the assessee to be satisfactory

and made addition u/s. 69A of the I.T. Act of Rs. 11,53,350/- to the

income of the assessee. We find that the Assessing Officer also

observed that the assessee had not shown any income from the

three vehicles in his return of income and made a further another

addition @ Rs. 3500/- per month per vehicle and added the amount

of Rs. 1,26,000/- to the income of the assessee.

7.1 Ld. CIT(A) considered the facts of the case alongwith

assessee's submissions and observed that it is an undisputed fact

that until the assessee was asked to explain the deposits in the bank

account with South Indian Bank, he had made no disclosure in his

income tax returns of the second business of running of vehicles on

hire. Moreover, from the details filed by him during the appellate

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proceedings, it was seen that the assessee had purchased two

vehicles in the FY 2005-06, relevant to AY 2006-07, and had failed to

disclose the income in that year too. The vehicles purchased

amounting to Rs. 1,42,078/- by the assessee during the previous

year under consideration. We find ld. CIT(A) further observed that

as per the provisions of Section 44AE, the income from plying,

hiring or leasing of vehicles, other than heavy goods vehicles, is

deemed to be Rs. 3500/- for every month or part of a month during

which the vehicle is owned by an assessee. Thus the computation

of income from the plying of the 4 vehicles works out ot Rs. 42000/-

for each of the cars purchased in the FH 2005-06, and Rs. 38500/-

and Rs. 31500/- for the cars purchased in May and July, 2006

respectively. The total income to be added in the hands of the

assessee u/s. 44AE works out to Rs. 1,54,000/-. We find that Ld.

CIT(A) further observed that assessee cannot claim lower profits,

having failed to maintain books of account and get them audited

under section 44AB, as laid down in section 44AE(7). The amount of

Rs. 1,42,078/- is to be separately assessed as the investment of the

assessee in purchasing the two vehicles, being the down payments

for obtaining the loans. As the income from running of the vehicles

on hire is computed u/s. 44AE, the addition of Rs. 11,53,350/-,

presumed to be the gross receipts of hire, cannot be sustained. We

further find that Ld. CIT(A) against the addition of Rs. 12,79,350/-

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ITA NO. 2929/Del/2011

(Rs. 11,53,350 + Rs. 1,26,000) confirmed the addition of

Rs. 2,96,078/-. In view of the above, we find that Ld. CIT(A) has

rightly restricted the addition from Rs. 12,79,350/- (Rs. 11,53,350/-

+ Rs. 1,26,000/-) to Rs. 2,96,078/- (Rs. 1,42,078 + Rs. 1,54,000).

We are of the view that that the order of the Ld. CIT(A) is a well

reasoned order which does not require any interference on our part,

accordingly, we upheld the order of the Ld. CIT(A).

8. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Open Court on 09/01/2015.

Sd/- Sd/-

[S.V. MEHROTRA] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER Date 09/01/2015 "SRBHATNAGAR" Copy forwarded to: - 1. Appellant - 2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order,

Assistant Registrar, ITAT, Delhi Benches

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