Triloksing G.Dhillion, Ahmedabad vs Department Of Income Tax
- CitationITA. No.1096/Ahd/2011
Ratio decidendi
The rule this decision rests on
Where the Assessing Officer's addition rests on a document the assessee has explained, and that explanation is accepted on the record, the addition cannot stand on the strength of the document alone; the amount in question is not part of the assessee's receipts where the assessee's own written explanation, consistent with the books, shows it to be only a commission element, and the Revenue's reliance on the AIR figures without addressing that explanation does not sustain the addition beyond the 2% commission the assessee himself offered to have added. Where the Assessing Officer has not pointed to any defect in the books of account, not rejected them, and found no expenditure to be bogus, an estimated addition to income made merely because the net profit ratio has fallen compared with earlier years is unsustainable, since there is no basis on which the profit is estimated.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
The ITO, Ward-9(4), Ahmedabad Appellant
Vs.
Shri Triloksing G. Dhillon Prop. Maharashtra Lorry Service 4, Parasnagar, Vibhag-2, Isanpur Vatva Road, Isanpur, Ahmedabad Respondent
PAN: AFDPD6472M
अपीलाथ क ओर से /By Appellant : Shri Roopchand, Sr. D.R. ू यथ क ओर से/By Respondent : Shri U. S. Bhatti, A.R. सुनवाई क तार!ख/Date of Hearing : 19.02.2015 घोषणा क तार!ख/Date of Pronouncement : 26.02.2015 ITA No. 1096/Ahd/11 A.Y. 06-07 [ITO vs. Shri Triloksing G. Dhillon] Page 2
ORDER
PER SHAILENDRA KUMAR YADAV, J.M:
This appeal has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals)-XI, Ahmedabad, dated June 02.02.2011 for A.Y. 2006-07 on the following grounds:
"1) The ld. Commissioner of Income-tax (A)-XI, Ahmedabad has erred in law and on facts in deleting the addition of Rs. 10,05,755/- made by the Assessing Officer on account of transport charges.
2) The ld. Commissioner of Income-tax (A)-XI, Ahmedabad has erred in law and on facts in deleting the addition of Rs. 1,85,993/- made by the Assessing Officer on account of Net Profit."
2. Assessee is engaged in the business of freight booking. Assessing Officer made addition by observing as under:
"Further as per the AIR details generated from ITD, the assessee has received Rs.14,08,794/- towards contract receipts from various parties. However from the perusal of the TDS certificates attached with the return of income and further details furnished by the assessee it is noticed that the assessee has not accounted for receipts of Rs.10,26,280/- with the total receipts shown by the assessee. The assessee vide letter dated 13.10.2008 has admitted the said fact that the assessee has carried out the work of the said parties but not accounted from in the total receipts. Accordingly, an amount of Rs.10,26,280/- is added to total income of the assessee."
ITA No. 1096/Ahd/11 A.Y. 06-07 [ITO vs. Shri Triloksing G. Dhillon] Page 3
Assessing Officer observed that assessee vide his letter dated 13.10.2008 admitted the said receipts. However, during course of appellate proceeding, stand of assessee has been that observation of Assessing Officer is totally incorrect. He furnished free English translation of the letter dated 13.10.2008 addressed to Assessing Officer which is reproduced below:
"With respect, we inform you regarding your internal enquiry of Gahir Paper Mills and other parties, we inform that we have not claimed TDS of the said companies and we have not recovered TDS from the companies.
It is necessary to give you the clarification in writing. Our business is commission work. We are getting 2% commission from this work. Due to that we request you to add 2% commission amount to our income."
On perusal of assessment records, above contention was found correct by CIT(A). Therefore, assessee's contention that impugned amount is not part of receipts, it is only commission @ 2% received by him, which was accounted for in the books that no claim for TDS on the said amount was made which remain uncontroverted. However, assessee himself agreed for further addition of commission @ 2%, which comes to Rs.20,525/-, was upheld and balance amount was deleted. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same.
ITA No. 1096/Ahd/11 A.Y. 06-07 [ITO vs. Shri Triloksing G. Dhillon] Page 4
3. Next issue is with regards to addition of Rs.1,85,993/- on account of Net Profit. According to Assessing Officer, assessee has shown ne profit ratio of 5.11% as against 16.53% of immediately preceding year. The receipts of assessee has been increased to Rs.38,01,633/- as against Rs.4,59,565/-. Asssessee did not furnish any supporting documentary evidences to substantiate the fall in net profit. Therefore, Assessing Officer made addition of Rs.1,85,993/-.
4. Matter was carried before the First Appellate Authority, wherein it was submitted on behalf of assessee that Assessing Officer was not justified in making ad hoc addition of Rs. 1,85,993/- merely on the ground that rate of net profit during year under consideration is lower as compared to that of earlier years. Assessing Officer found no discrepancy in the books of account maintained by assessee. Assessee also maintained transport charges details, therefore, no ad hoc addition can be made just because of low net profit. In nature of transport business, net profit ratio can not be ascertained with comparisons of previous years. CIT(A) having considered the submission on behalf of assessee observed that Assessing Officer has neither pointed out any defects in books of account nor did he reject the books. No expenditure was found to be bogus. There was no basis on which net profit was estimated, hence, the impugned addition was deleted. This reasoned ITA No. 1096/Ahd/11 A.Y. 06-07 [ITO vs. Shri Triloksing G. Dhillon] Page 5
finding of CIT(A) needs no interference from our side. We uphold the same.
5. As a result, appeal filed by the Revenue is dismissed.
Pronounced in the open Court on this the 26th day of February, 2015.
Sd/- Sd/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 26/02/2015 True Copy S.K.SINHA
आदे श क ूितिल'प अमे'षत / Copy of Order Forwarded to:-
1. राजःव / Revenue
2. आवेदक / Assessee
3. संबंिधत आयकर आयु0 / Concerned CIT
4. आयकर आयु0- अपील / CIT (A)
5. 'वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड9 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।
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