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Applicability of section 44AE is depend upon fulfillment of condition prescribed

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Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
the relevant facts as available from the concerned orders are that the assessee, during the year, was engaged in the business of plying of trucks/tankers to various oil companies and derived income from house property also. He declared income on nine trucks/tankers owned by him under the provisions of Section 44AE of the IT Act. It was claimed that out of eight trucks the assessee held, three had been sold off and four had been purchased during the year, attracting the provisions of Section 44AE of the Act. The Assessing Officer, however, observed that the assessee had eight trucks as on 01.04.2004 and had claimed purchase of four trucks and sale of three trucks during the year; that the assessee had not furnished evidence regarding the sale of three trucks; and that the assessee could not furnish the registration certificates (RCs) of all the trucks and other evidence of owning the trucks. The claim of the assessee that he owned not more than ten trucks was, therefore, rejected by the Assessing Officer and it was held that the provisions of Section 44AE of the Act did not get attracted. The Assessing Officer estimated the profit of the assessee at 10% on the assessee’s gross receipts of ` 79,05,100/-, as it was a case of no books of account. The assessee had declared income of ` 3,78,000/-. The Assessing Officer reduced this from the figure of ` 7,90,500/- and made addition of ` 4,12,500/-.

Citation :
ACIT, Rohtak Circle, Rohtak. (Appellant) Vs. Anil Kumar Arya, Arya Bhawan, Anaj Mandi, Rohtak.PAN: ACGPA1099M (Respondent)

 

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH: A : NEW DELHI

 

BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER

AND

SHRI T.S. KAPOOR, ACCOUNTANT MEMBER

 

ITA No.212/Del/2011

Assessment Year: 2005-06

 

ACIT,

Rohtak Circle,

Rohtak.

(Appellant)

 

Vs.

 

Anil Kumar Arya,

Arya Bhawan,

Anaj Mandi,

Rohtak.

PAN: ACGPA1099M

 (Respondent)

 

Assessee by: Shri Navin Gupta, Advocate

Revenue by: Shri Ram Bilash Meena, Sr.DR

 

ORDER

PER A.D. JAIN, JUDICIAL MEMBER

 

This is an appeal filed by the department for Assessment Year 2005-06 against the order dated 04.11.2010 passed by the CIT (A), Rohtak. The following grounds of appeal have been taken:-

 

“The Ld. CIT (A) has erred in law as well as on facts of the case in deleting the addition of Rs.4,12,500/- without obtaining any authentic documentary evidence from the assessee. It was obligatory on the part of the assessee to furnish necessary authentic documentary evidence in respect of sale of 3 trucks claimed by him. But the assessee has failed to do so.

 

Therefore, the assessee has not discharged his onus.

 

2. The Ld. CIT (A) has erred in law as well as on fats of the case in deleting the addition of Rs.16,73,643/- because the assessee failed to explain sources of deposits made in the bank accounts and utilization of withdrawals made by him. It was obligatory on the part of the assessee to disclose all the necessary facts which were compulsory for the completion of assessment of the assessee. But the assessee has avoided to furnish complete explanation of each and every entry order of his bank accounts. The assessee has failed to furnish authentic documentary evidence regarding sources of deposits in his bank

accounts.”

 

2. Apropos ground No.1, the relevant facts as available from the concerned orders are that the assessee, during the year, was engaged in the business of plying of trucks/tankers to various oil companies and derived income from house property also. He declared income on nine trucks/tankers owned by him under the provisions of Section 44AE of the IT Act. It was claimed that out of eight trucks the assessee held, three had been sold off and four had been purchased during the year, attracting the provisions of Section 44AE of the Act. The Assessing Officer, however, observed that the assessee had eight trucks as on 01.04.2004 and had claimed purchase of four trucks and sale of three trucks during the year; that the assessee had not furnished evidence regarding the sale of three trucks; and that the assessee could not furnish the registration certificates (RCs) of all the trucks and other evidence of owning the trucks. The claim of the assessee that he owned not more than ten trucks was, therefore, rejected by the Assessing Officer and it was held that the provisions of Section 44AE of the Act did not get attracted. The Assessing Officer estimated the profit of the assessee at 10% on the assessee’s gross receipts of ` 79,05,100/-, as it was a case of no books of account. The assessee had declared income of ` 3,78,000/-. The Assessing Officer reduced this from the figure of ` 7,90,500/- and made addition of ` 4,12,500/-.

 

3. The Ld. CIT (A) deleted this addition, giving rise to ground No.1 taken by the department before us.

 

4. In this regard, the Ld. DR has contended that the Ld. CIT (A) has erred in deleting the addition of ` 4,12,500/- correctly made by the Assessing Officer; and that in doing so, the Ld. CIT (A) erred in not obtaining any authentic documentary evidence from the assessee, which it was the obligation of the assessee to furnish regarding the sale of three trucks as claimed by him.

 

5. The ld. counsel for the assessee, on the other hand, has placed strong reliance on the impugned order in this regard. Our attention has been drawn to pages 141-142 of the assessee’s paper book (“APB”, for short). This is a copy of the questionnaire dated 13.10.2007 issued to the assessee by the Assessing Officer. It is pointed out that items (vi) and (vii) at APB page 142 required the assessee to produce the names and complete postal addresses of the persons from whom the trucks had been purchased by the assessee and to whom they had been sold during the year, and copies of RCs in respect of the trucks owned by the assessee, purchased and sold during the year. Then, we have been taken through the assessee’s reply at APB 144-146. It has been pointed out that vide items (vi) at page 145, the assessee has stated to have attached with the said reply, the details of the persons from whom the trucks were purchased and to whom they were sold; that under item (vii), it has been stated that the RCs are legally to be kept with the trucks and, as such, the assessee was unable to produce them before the Assessing Officer.

 

Then, attention has been drawn to APB 146, which contains the details of the trucks sold during the period from 01.04.2004 to 31.03.2005 and the details of the trucks purchased. It has been stated that APB 54 is the assessee’s written submission dated 02.06.2009 before the Ld. CIT (A), along with which at APB 55-139, the copies of RCs of the trucks of the assessee have been appended along with the ITR’s and computations of income of the purchasers of the trucks. The ld. counsel for the assessee has contended that in this manner, the assessee has duly discharged his onus of proving that during the year he had sold three trucks and owned nine trucks, clearly attracting the provisions of Section 44AE of the Act.

6. We have considered the rival contentions of the parties on this issue. It is seen that so far as regards the sale of three trucks during the year, as claimed by the assessee, the assessee had furnished all possible evidence. The names and complete postal addresses of the persons from whom the trucks were purchased and to whom the same were sold, were filed. The Assessing Officer, however, did not carry out any inquiry from these persons. The assessee’s claim was rejected only for the absence of RC’s of the trucks sold. Before the Ld. CIT (A), besides the RCs, the details of purchase and sale, income-tax returns, computations of income of the purchasers of the trucks and affidavits were filed. The Ld. CIT (A) asked for a remand report from the Assessing Officer in this regard. Even in his remand report, the Assessing Officer did not show any examination of the purchasers having been conducted. The Ld. CIT (A), thus, in our opinion, correctly held that the sale of the trucks stood proved from the RCs evidencing the transfer of the trucks and that it was not proper to reject the affidavits of the purchasers without examining them.

 

7. Moreover, as considered by the Ld. CIT (A), in the case of the assessee for Assessment Year 2001-02 dismissing the SLP of the department, the Hon’ble Supreme Court has upheld the applicability of the provisions of Section 44AE of the Act to the assessee.

 

8. In these facts, we find the order of the Ld. CIT (A) on this issue to be a well versed and reasoned order. The department has remained unable to unhinge the findings recorded by the Ld. CIT (A), which we hereby confirm. Ground No.1 raised by the department is, thus, rejected.

 

9. Coming to ground No.2, the Assessing Officer found deposits of ` 95,78,743/- in the three bank accounts maintained by the assessee. The Assessing Officer held that the assessee could not explain the entries in the said deposits. He, therefore, gave credit of the turnover of the assessee of ` 79,05,100/-, derived from TDS certificates, from the total deposits in the bank accounts, amounting to ` 95,78,743/-. The Assessing Officer, thus, added an amount of ` 16,73,643/- as unexplained deposits of the assessee.

 

10. The Ld. CIT (A) deleted this addition also, due to which, ground No.2 has been taken by the department before us.

 

11. The Ld. DR has contended that the Ld. CIT (A) has erred in deleting the addition correctly made by the Assessing Officer; that while doing so, the Ld. CIT (A) failed to appreciate that the assessee had miserably failed to explain the sources of the deposits in his bank accounts and utilization of the withdrawals made by him; that it was obligatory on the part of the assessee to disclose all the necessary facts, but the assessee failed to furnish the complete explanation of each and every entry in his three bank accounts; that the assessee failed to furnish authentic documentary evidence regarding the sources of the deposits in his bank accounts; and that the Ld. CIT (A) has illegally deleted the addition despite these discrepancies in the case of the assessee.

 

12. Per contra, the ld. counsel for the assessee, supporting the impugned order on this issue, has contended that no specific show cause notice with regard to the proposed addition was issued to the assessee by the Assessing Officer; that the assessee is covered under the provisions of Section 44 AE of the Act; that before the Ld. CIT (A), the difference of ` 17 lac was duly explained; that the additional evidence filed by the assessee, i.e., pertaining to confirmation of loan taken, was duly referred by the Ld. CIT (A) to the Assessing Officer; that in the remand report, the Assessing Officer stated that since the assessee could not produce the copy of bank account, the genuineness of the loan remained doubtful; and that the Ld. CIT (A) has duly taken into consideration the correct attending facts.

 

13. Qua this issue, it is seen that the Assessing Officer made the addition for the reason that the assessee could not explain each and every entry regarding the deposits in his three bank accounts. Before the Ld. CIT (A), by way of additional evidence, the assessee filed confirmation of loan of ` 17 lacs, taken from M/s Arya Bulk Carrier. The Assessing Officer, it is seen, as correctly observed by the Ld. CIT (A), just totaled the deposits in the three bank accounts of the assessee and, giving credit for the contract receipts, made addition of ` 16,73,643/- as unexplained deposits. The bank transactions were not properly examined by segregating them. Despite the confirmation filed by the assessee before the Ld. CIT (A) having been referred to him, the Assessing Officer did not deem it proper to examine the creditor. Undisputedly, M/s Arya Bulk Carrier, the creditor of the assessee, was assessed to tax in Rohtak. The Ld. CIT (A) has correctly taken into consideration the fact that credit for the sources of the deposits, i.e., ` 17 lacs received as loan from M/s Arya Bulk Carrier (out of which ` 7 lac was deposited on 19.08.2004 and ` 10 lac was deposited on 15.09.2004 in the SBI Account of the assessee), cheques to the tune of ` 1,08,524/- drawn on ABN Amro Bank, dishonoured due to stop payments, contra entries of ` 80,000/-, posted due to auto sweep facility in ICICI bank, and cash deposits and cash withdrawals in and from the assessee’s bank accounts, of which credits for deposits out of the withdrawals made earlier, amounting to a benefit of total cash withdrawals of ` 12.50 lacs, was not given by the A.O. The department has remained unable to rebut the factual finding recorded by the ld. CIT (A) to the effect that the rental income of the assessee, amounting to ` 1.76 lacs and the assessee’s profit of ` 3.78 las from plying of trucks, as declared u/s 44AE of the Act, were sufficient to cover the deficit arrived at by the Assessing Officer, amounting to ` 16,73,643/-.

 

14. In these facts, again, the order passed by the Ld. CIT (A) on this issue is found to be without any fault and it is hereby confirmed. Accordingly, ground No.2 stands rejected.

 

15. In the result, the appeal filed by the department is dismissed.

 

The order pronounced in the open court on 26.10.2012.

 

Sd/- Sd/-

[T.S. KAPOOR] [A.D. JAIN]

ACCOUNTANT MEMBER JUDICIAL MEMBER

 

Dated, 26.10.2012.

dk

 

Copy forwarded to: -

 

1. Appellant

2. Respondent

3. CIT

4. CIT(A)

5. DR, ITAT

 

TRUE COPY

 

By Order,

Deputy Registrar,

ITAT, Delhi Benches

 

CS Bijoy
on 26 November 2012
Published in Income Tax
Views : 5104
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