2013 (12) TMI 1413 - AT - Income Tax

Tribunal upholds CIT (A) in tax case on transportation income, disallowing expenses and applying net profit rate.

PRAKASHKUMAR DEVSHIBHAI DHARODIYA Versus INCOME TAX OFFICER RAJKOT

PRAKASHKUMAR DEVSHIBHAI DHARODIYA Versus INCOME TAX OFFICER RAJKOT - TMI Issues:1. Addition of unaccounted income based on truck freight charges.2. Disallowance of office and fuel expenses.3. Application of net profit rate on gross receipts.Issue 1: Addition of Unaccounted IncomeThe assessee, engaged in transportation activities, was found to have suppressed receipts, claiming Tax Deducted at Source (TDS) credit without reflecting corresponding income. The Assessing Officer treated unaccounted truck freight charges as the assessee's income, leading to additions in the total income. The assessee's explanation as a commission agent was not accepted due to discrepancies in TDS certificates and lack of proper accounting. The CIT (A) directed the application of a net profit rate of 7% on gross receipts, resulting in a partial relief to the assessee. The Tribunal upheld the CIT (A)'s decision, considering the assessee's role as a mediator and the nature of commission income.Issue 2: Disallowance of Office and Fuel ExpensesThe Assessing Officer disallowed 40% of office and fuel expenses due to the absence of vouchers and verification. The CIT (A) confirmed these disallowances, stating that the assessee failed to substantiate the expenses or prove their genuineness. The Tribunal upheld the CIT (A)'s decision, emphasizing the lack of submissions or evidence provided by the assessee to support the expenses claimed, resulting in the dismissal of the grounds challenging the disallowances.Issue 3: Application of Net Profit Rate on Gross ReceiptsThe CIT (A) directed the Assessing Officer to apply a net profit rate of 7% on the gross receipts, considering the assessee's role as a commission agent and mediator in transportation activities. The Tribunal found no infirmity in this direction, upholding the CIT (A)'s decision based on the factual background of the case. The Tribunal distinguished the case from the one cited by the assessee and confirmed the application of the 7% net profit rate on gross receipts, leading to the dismissal of the related appeal ground.In conclusion, the Tribunal dismissed the appeal filed by the assessee, upholding the decisions of the CIT (A) regarding the addition of unaccounted income, disallowance of office and fuel expenses, and the application of a 7% net profit rate on gross receipts. The Tribunal found no merit in the challenges raised by the assessee, resulting in the confirmation of the CIT (A)'s orders.