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Income Tax Officer, Income Tax Officer, Ward----19(2),, New Delhi. Vs.. Shri Sandeep Aggarwal, B----3/6, Ashok Vihar, Phase 3/6, Phase----II,,,, Delhi 110 052.
May, 03rd 2014
                                `G' : NEW DELHI
                    DELHI BENCH `G

                        G.D.AGRAWAL, VICE PRESIDENT AND
                           SUDHIR, JUDICIAL MEMBER
                 SHRI I.C. SUDHIR,

                          ITA No.
                       Assessment Year : 2006-

Income Tax Officer,             Vs.    Shri Sandeep Aggarwal,
Ward-19(2),                                                Phase-II,
                                       B-3/6, Ashok Vihar, Phase-
New Delhi.                             Delhi ­ 110 052.
                                       PAN : AAKPA5638A.
     (Appellant)                           (Respondent)

             Appellant by        :    Smt. Renuka Jain Gupta, CIT-DR.
             Respondent by       :    Shri P.K. Misra, CA.


      This appeal by the Revenue is directed against the order of
learned CIT(A)-XXII, New Delhi dated 4th November, 2009 for the AY

2.    The Revenue has raised the following grounds of appeal:-

      "1. The ld.CIT(A) erred in law and on facts in deleting the
      disallowance of Rs.35,95,655/- made by the Assessing
      Officer on account of bogus lorry hire expenses.

      2.     The ld.CIT(A) erred in law and on facts in deleting the
      disallowance of Rs.35,95,655/- as the assessee had failed
      to produce any document to substantiate his claim of
      expenses of Rs.35,95,655/- in respect of various parties
      from whom information u/s 133(6) had been called for."

3.    The facts of the case are that the assessee derives income from
transportation business.    During the year under consideration, the
assessee has shown the receipt at `90,22,307/- on which the net loss
of `2,92,367/- was declared. In the books of account, the assessee has
                                    2                        ITA-150/Del/2010

claimed an expenditure of `83,49,215/- on account of lorry hire
expenses.     During the course of assessment proceedings, the
Assessing Officer called for information under Section 133(6) from the
brokers through which trucks were booked. As per the details given in
the assessment order at pages 1 & 2, in 21 cases, no reply was
received while in 12 cases, the letter issued to the brokers was
received back unserved. In the two cases, the Assessing Officer found
certain differences.    The Assessing Officer disallowed the entire
payment of `35,95,655/- made to the above 36 persons in respect of
whom either no reply was received or the letter issued was received
back unserved. He disallowed the amount of difference in the case of
remaining persons.     On appeal, learned CIT(A) deleted the entire
addition of `35,95,655/- with the following finding:-

      "5.3 As understood from the submission and the practice
      in transportation business, there may not be necessarily
      financial transactions with the broker. The utility of broker
      is to make arrange availability to the interested parties, of
      trucks coming to Delhi from different part of country to
      deliver goods.     The broker is a surety who cam be
      contacted in case of any mis-happening. Payments are not
      routed through brokers but made directly to drivers and
      broker gets payment from drivers on spot. When the
      brokers are not in the financial loop, their likelihood of
      responding to IT notices asking for confirmation of account
      is quite remote. Further most of them are not permanently
      located at one place and shift according to business
      prospect from place to place.

      It is found that all receipts from various parties have been
      subjected to TDS for whom the appellant has arranged
      transportation. The AO has not rejected the books of
      account u/s 145(2). It is beyond comprehension that out of
      total receipt of Rs.90,22,352/- the appellant had booked
      bogus expenditure to the tune of Rs.35,95,655/-. The
      appellant has shown me the total corresponding receipts of
      Rs.37,85,785/-. The AO while declaring the expenditure as
      bogus should have done something more to establish his
      case. Mere return of letters and non-response of parties
      are not adequate to establish the case of AO. AO's
      observation that the appellant is not left with a single
                                   3                          ITA-150/Del/2010

     penny is misconceived because the hire charges received
     from different clients are not recorded on challans and
     what is there on lorry challan is rate and payments to be
     made to truck drivers on spot.            Concerning the
     observations of AO at para 4.2, it appears that they are
     more in the nature of doubts than inferences. The addition
     made out of disallowance of expense cannot sustain the
     judicial scrutiny hence deleted."

4.   At the time of hearing before us, learned DR relied upon the
order of the Assessing Officer and he stated that the Assessing Officer
has issued the notice calling for the information under Section 133(6)
from the broker through whom the trucks were booked. That in most
of the cases, either the reply was not received or the notice itself was
received back unserved.     The above facts were confronted to the
assessee but he also did not produce any documentary evidence to
justify the payment of lorry hire charges to those parties.              He,
therefore, submitted that the order of learned CIT(A) should be
reversed and that of the Assessing Officer may be restored.

5.   Learned counsel for the assessee, on the other hand, stated that
in the transportation business, the assessee booked the trucks through
the brokers. However, payment of truck hire charges is made to the
drivers directly. That the broker is concerned with his brokerage only
and the payment of hire charges are not routed through him.
Therefore, the question of giving any reply by broker confirming the
payment of hire charges does not arise. He pointed out that the total
hire charges received by the assessee were `90,22,307/-, against
which, hire charges paid by the assessee were `83,49,215/-.             The
assessee has furnished the details before the learned CIT(A) pointing
out that in respect of the hire charges of `35,95, 655/- paid by the
assessee, there was a corresponding receipt of `37,85,785/-.             He,
therefore, submitted that the order of learned CIT(A) should be
                                       4                            ITA-150/Del/2010

6.       We have carefully considered the arguments of both the sides
and perused relevant material placed before us. We find that out of 36
cases quoted by the Assessing Officer at pages 1 & 2 of the
assessment order, in respect of 34 cases, no reply has been received
from the parties or the letter issued was received back unserved. In
our opinion, if the broker has not replied to the letter of the Assessing
Officer, no adverse inference can be drawn against the assessee
because, as pointed out by the assessee's counsel, the payment is not
routed through the broker and, therefore, he is not in a position to
reply.    Similar would be the position where the letter issued to the
broker is returned unserved.        Merely because the broker has shifted
from one place to another or has closed his business or has not
received the letter, no adverse inference can be drawn against the
assessee. Now, we are left with only two cases where the confirmation
has been received from the parties but they have claimed to have
received lesser amount than what is debited by the assessee in its
books of account, the details of which as given in the assessment order
reads as under:-

S.No.      Name of the party         Amount        Remarks
35.        Krishna Transport Co.     7000          Amt.      of        Rs.69269/-
                                                   confirmed      by   the   party
                                                   whereas        assessee     has
                                                   claimed an expenditure of
                                                   Rs.76269/-.     Thus there is
                                                   difference of Rs.7,000/-.
36.        Dasmesh Golden Tpt.Co.    5000          Amt.      of        Rs.24,000/-
                                                   confirmed      by   the   party
                                                   whereas        assessee     has
                                                   claimed an expenditure of
                                                   Rs.29000/-.     Thus there is
                                                   difference of Rs.5,000/-.

7.       No satisfactory explanation has been given by the assessee in
respect of the above difference either before the lower authorities or
                                   5                         ITA-150/Del/2010

before us.   Therefore, in our opinion, learned CIT(A) ought to have
sustained the disallowance of lorry hire expenses of `12,000/-.
Accordingly, we partly modify the order of learned CIT(A) and sustain
the disallowance out of lorry hire expenses amounting to `12,000/-.

8.   In the result, the appeal of the Revenue is partly allowed.
     Decision pronounced in the open Court on 2nd May, 2014.

                 Sd/-                                 Sd/-
          (I.C. SUDHIR)                       (G.D.AGRAWAL)
        JUDICIAL MEMBER                       VICE PRESIDENT

Dated : 02.05.2014

Copy forwarded to: -

1.   Appellant  : Income Tax Officer,
                  Ward-19(2), New Delhi.
2.   Respondent : Shri Sandeep Aggarwal,
                  B-3/6, Ashok Vihar, Phase-
                  B-                  Phase-II,
                  Delhi ­ 110 052.

3.   CIT
4.   CIT(A)
5.   DR, ITAT

                             Assistant Registrar
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