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The ACIT Circle Mandi Bilaspur Vs. Sh. Vikas Thakur, S/o Sh. Ram Lal Thakur
May, 20th 2014
       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
                                                                           2


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.
                                                                                  3





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
                                                                                   4


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.
                                                                           5


      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.
                                                                           6


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.
                                                                          7





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
                                                                          8


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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