IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES `B' CHANDIGARH
BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND
SHRI SANJAY GARG, JUDICIAL MEMBER
ITA No. 649/CHD/2013
Assessment Year: 2008-09
The AC IT Vs. Sh. Vikas Thakur,
Circle S/o Sh. Ram Lal Thakur
Mandi Bilaspur
PAN No. AANPT9914F
&
C.O. No. 23/CHD/2013
(In ITA No. 649/CHD/2013)
Assessment Year: 2008-09
Sh. Vikas Thakur, Vs. The AC IT
Bilaspur Circle
Mandi
PAN No. AANPT9914F
(Appellant) (Respondent)
Appellant By : Sh. J.S. Nagar
Respondent By : Sh. Pankaj Soni
Date of hearing : 24/04/2014
Date of Pronouncement : 13.5.2014
ORDER
Per Sanjay Garg, Judicial Member
2. With this common order we will dispose off the above appeal of the
Revenue as well as Cross Objections of the assessee preffered against the
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order dated 01/03/2013 of CIT(A), Shimla relating to assessment year
2008-09.
First, we will take up the appeal of the Revenue:-
ITA No. 649/Chd/2013 Revenue's appeal
3. Through the grounds of appeal, the Revenue has agitated the
deletion of addition of Rs. 20,80,000/- out of the total addition of Rs.
31,20,000/- which was made b y the Assessing Officer u/s 40(a)(ia) of the
Act for the failure of the assessee to deduct TDS on hiring charges which
were claimed as expenditure b y the assessee.
4. The brief facts of the case are that during assessment proceedings,
the Assessing Officer noticed that the assessee had claimed an amount of
Rs. 31,20,000/- as expenditure incurred towards running expenses of the
vehicles in relation to his proprietorship concern M/s Vikas Construction.
It was mentioned that the said charges were vehicle hiring charges but
the assessee had not deducted TDS on payment of above charges. The
assessee explained that in fact theses charges were vehicle running
charges and no vehicle hiring charges were paid b y the assessee during
the year. Hence the provisions of section 40(a)(ia) were not attracted.
However, the Assessing Officer was not satisfied with the explanation
given b y the assessee. He therefore, made an addition of Rs. 31,20,000/-
into the income of the assessee u/s 40(a)(ia) of the Act.
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5. During the first appeal, the Ld. CIT(A) though observed that the
finding of the Assessing Officer that said expenditure on account of
payment of hiring of the vehicles was based on presumptions and there
was not evidence in this respect. However, she observed that the
expenditure so claimed b y the assessee was not commensurate with the
business turn over of assessee and the assessee had failed to properl y
explained the business needs of the assessee towards the said expenditure.
She, therefore, taking into the consideration the overall facts and
circumstances of the case disallowed 1/3 r d of the above expenses
amounting to Rs. 10,40,000/- allowed the remaining expenses of Rs.
20,80,000/-. The Revenue is thus in appeal before us.
6. We have considered the rival submissions of both the Ld.
Representatives of the parties.
7. The Ld. CIT(A), while appreciating the facts on the file as per her
detailed discussion on the issue, has rightl y observed that there was no
evidence that the assessee had paid an y hiring charges. The Assessing
Officer had not been able to bring an ything on record through an y
independent enquiries or evidence that the assessee had actually taken an y
vehicle on hire and had paid the hiring charges. The Assessing Officer
had made the above observation in disregard to the accounts maintained
assessee in this regard. The Ld. C IT(A), after further going through
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the details of the expenditure claimed b y the assessee and taking into
consideration the explanation given b y the assessee had restricted the
disallowance to the extent of 1/3 r d of the total disallowance made b y the
Assessing Officer. We do not find any infirmit y in the well reasoned
order of the C IT(A) which has been made after going through factual
details and accounts of the assessee. Accordingl y, the order of the
CIT(A) is hereb y upheld and the appeal of the Revenue is hereb y
dismissed.
Cross Objection NO. 23/Chd/2013.
8. The assessee has filed the following Cross objections vide C.O. No.
23/Chd/ 2013.
1. That the LD CIT(A) has allowed expenditure of Rs.
20,80,000/- out of total expenditure of Rs. 31,20,0000/- made
by the Ld. AO u/s 40(a)(ia) of the Income Tax Act, 1961.
2. That the LD CIT(A) has allowed expenditure of Rs.
20,80,000/- out of total expenditure of Rs. 31,20,0000/- (i.e.
1/3 of said expenditure disallowed) on the ground that Ld. AO
has not bought any evidence on record that the assessee had
actually taken hire-basis certain vehicles and paid the hire
charges for the same.
3. The LD. CIT(A) has erred in law while upholding
depreciation on tippers & JCB @ 15% as tippers and JCB are
entitled to depreciation @ 30% u/s section 32 of the Income
tax Act, 1961 since these vehicles are used them on hire.
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4. The Ld. CIT(A) had erred in law while upholding the addition
of Rs. 500,000/- made by the Ld. Assessing Officer on
arbitrary and hypothetical manner.
9 The Ld. AR of the assessee at the outset had stated at bar that as per
instructions of his client he does not press the Cross objection Nos. 1 to 3
above. Hence, the Cross objections Nos. 1 to 3 are hereby dismissed
being not pressed.
10. Vide Cross Objection No.4, the assessee has agitated an addition of
Rs. 5 lakhs made by the Assessing Officer assessing the income of the
assessee in relation to his concern M/s Vikas Service Station.
11. The brief facts of the case are that the assessee has been running a
Petrol Pump under the name and st yle of M/s Vikas Service Station. The
Assessing Officer noticed that the assessee had debited various expenses
in the profit and loss account of the said concern, hence claming net loss
of Rs. 14,147/- against the gross profit of Rs. 9,92,132/- from the sale of
the oil. He also noticed that assessee had failed to furnish the necessary
details, vouchers, evidence etc. in respect of such expenditure. He,
therefore, assessed the income of the assessee from M/s Vikas Service
Station at Rs. 5 lakhs and added back the same to the income of the
assessee.
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12. In the first appeal, the Ld. CIT(A) also noted that the assessee had
failed to submit the details of various expenses and had failed to establish
the genuineness of the expenditure claimed. She, therefore, held that
action of the Assessing Officer in estimating the net income of the
assessee from the above concern at Rs. 5 lakhs was justified. She
therefore, confirmed the addition so made b y the Assessing Officer.
13. We have heard the Ld. Representatives of both the parties and have
also gone through the records.
The Ld. AR of the assessee has submitted that the estimation of the
income of the assessee from M/s Vikas Service Station was based on
estimate and presumptions. There was no evidence on the file that the
assessee had earned the above income as esteemed b y the Assessing
Officer. The income has been assessed b y the Assessing Officer totall y
ignoring the audited accounts of the assessee. He has further submitted
that the assessee had mistakenl y claimed the depreciation on JCBs in
relation to M/s Vikas Service Station whereas the JCBs were mainl y used
in Vikas Construction, another proprietorship concern of the assessee. If
the mistake is rectified, the loss of M/s Vikas Service Station shown at
Rs. 14,147/- would get converted into of Rs. 1,88,435/-. He has further
submitted that even otherwise the estimate of income at Rs. 5 lakhs
was on much higher side.
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14. On the other hand, the Ld. DR supported the orders of the
authorities below.
15. We have heard the rival submissions of the Ld. Representatives of
the parties.
There is no denial of the fact that the assessee had credited the income
from various other activities into the profit and loss account of M/s Vikas
Service station and has also debited the related expenditure. After
debiting expenses under various heads of profit and loss account, the
assessee declared net loss of Rs. 14,147/- against the gross profit of Rs.
9,92,132/- from the sale of oil/running of Petrol pump. Though the books
of account of the assessee have been audited but the assessee, when called
for producing the necessary details, it had failed to justify the said
expenditure with the bills / vouchers etc. Hence, we do find an y fault
with the action of the lower authorities in rejecting the claim of the
assessee declaring loss of Rs. 14,147/- from the above Petrol Pump.
However, it has also to be noticed that the Assessing Officer estimated the
income at Rs. 5 lakhs on presumption basis which is also not supported
with an y evidence or other basis. We find force in the contention
of the Ld. AR that the estimation of income at Rs. 5 lakhs made b y the
Assessing Officer was on the higher side. So, keeping in view the overall
facts and circumstances of the case, the estimation of income is restricted
to Rs. 3.5 lakhs against Rs. 5 lakhs confirmed b y the CIT(A). Thus, the
assessee gets relief of Rs. 1.5 lakhs towards estimation of income from
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M/s Vikas Service Station. Thus, the Cross objections of the assessee are
partl y allowed.
16. In the result, the appeal of the Revenue is hereb y dismissed whereas
the cross objection of the assessee are partl y allowed.
Order Pronounced in the Open Court on this _13.5.2014.
Sd/- Sd/-
(T.R. SOOD) (SANJAY GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 13 t h May, 2014
RKK
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR
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