TaxTMI 
TaxTMI 
2018 (12) TMI 1314
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....without rebutting the same because it is settled principle of law that only the profits embedded and not the whole of gross receipts are taxable.' 3.2 The facts of the case qua the said ground are that the assessee, in the business of ginning cotton (narma), was during the course of the assessment proceedings found to be, on the basis of Form 26AS (reflecting, qua each deductee, the particulars of receipts subject to tax deduction at source during the year, and the deposit of the tax deducted to the credit of the Central Government), to be in receipt of a sum of Rs. 15,09,609/- by way of freight charges. The same not finding reflection in the assessee's final accounts or otherwise disclosed per his return of income for the year, filed on 29.11.2014 at an income of Rs. 2.05 lacs, he was show caused in the matter. The assessee, while admitting the said income, not disclosed, claimed, as he does per his Gd. 2 before the Tribunal, allowance of expenditure there-against, viz., on fuel; salary to driver and cleaner; repair and maintenance. The assessee, however, failing to prove the incurring of the said expenditure with any evidence, no deduction for the same could, in the view of the ....
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....f the entire receipt as the assessee's undisclosed income. Aggrieved, the assessee is in second appeal. 4. During hearing, the assessee's principal argument, through his counsel, Sh. P.N. Arora, was that it is only the net income, i.e., gross receipt less expenditure incurred for earning the same, that could be brought to tax as income. The Revenue has not in any manner rebutted the assessee's claim of having incurred expenditure against his stated undisclosed gross receipt of Rs. 15.10 lacs. The income, accordingly, had to be estimated, and toward which the ld. counsel would draw attention to the following decisions, placed on record: (a) Amrit Garg (assessee) for AY 2011-12 (by the first appellate authority) (b) Asst. CIT v. Vijay Roadways (in ITA No. 72/Asr/2010, dated 30.08.2010). (c) ITO v. The Bathinda Truck Operator's Union (in ITA No. 188/Asr/2005, dated 13.04.2007) On going through the same during hearing, it transpired that the base decision is in the case of The Bathinda Truck Operator's Union (supra), which is a case of a Truck Union (Association of Persons), wherein the very basis of the estimation of the income from freight receipt, made at 3% of the gross inc....
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....w that expenditure over and above that claimed, had indeed been incurred, and toward which, as stated by the ld. CIT(A), no shred of evidence stands furnished by the assessee at any stage. The assessee claiming the expenditure, rather, ought to have given the basic facts of his case, i.e., the broad contours of the transport activity undertaken; the transport vehicle deployed for the purpose; whether the same is accounted for or not; the manner of billing and receipt of the freight; the incurring of the expenditure there-against, et. al. Further, also, as to how and why the same is not accounted for (in his regular books of account), which, as it transpires, is a regular feature. There is, however, no mention of any of these, primary, facts of the case, not to speak of any evidence with regard to the expenditure being claimed. In fact, the assessee admits to the absence of such evidence vide his reply dated 15.12.2016 during the assessment proceedings, the relevant part of which stands reproduced at para 2 (pg. 2) of the assessment order. That is, a complete absence of any case being made out. It is this that forms the basis of, the background facts under which, the Revenue denies ....
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....assessee. Rather, if the assessee had indeed incurred the expenditure, and as claimed, to the extent of 97%, with tax deducted at source, which is retained and paid directly to the Central Government, itself being at 2% of the gross receipt, why, one wonders, should the assessee not disclose the receipt in his accounts, duly disclosed by the deductor? Why, the vehicle being duly accounted for in the assessee's accounts, he has clearly claimed the expenditure in respect of interest, if any, relatable to the said undisclosed income, as well as depreciation on the relevant vehicle/s. In sum 6. The non-disclosure of freight receipt (of Rs. 15.10 lacs) being admitted, the only question that arises is if the assessee is, in the facts and circumstances of the case, eligible for being allowed deduction in respect of the expenditure claimed to have been incurred for earning the same, in cash, out of books, and from that received in respect of the said income. Further, the details or otherwise any evidence in respect thereof, i.e., the said expenditure, being admittedly not available with the assessee, he pleads for an estimation thereof and, thus, of the income arising on the said undiscl....
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....terest on borrowed capital qua the said receipt therefore stands already allowed to the assessee, and which ought to be in fact adjusted/reckoned against the same. The next thing that therefore the assessee needs to show is that the expenditure on salary, repair & maintenance, and diesel, i.e., the other expenditure he claims to have incurred outside books, as already claimed and allowed, does not include any expenditure incurred in respect of the said receipt. The details of the said expenditure, duly recorded in the regular books of account and, accordingly, presumably properly vouched, the same should not pose any problem, even as the assessee has, again, preferred to be silent on this. This is most surprising as the assessee has incurred and claims the said expenditure under the relevant heads, so that only he can tell the purpose for what, or on what activity/s, has the same been incurred? The only presumption, in the absence of any case being made out by the assessee, is that the same includes that relatable to the said activity - the expenditure under the aforesaid heads of account as booked being by no means in-significant - which again is to be assessed in relation to the....