TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 1009
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch is sustained by the learned CIT(A) to the extent of Rs.54,53,224/-. 3. The assessee, in the present case, is an individual who is engaged in the business of transportation in the name and style of his proprietary concern M/s. Kandla Cargo Carriers. The return of income for the year under consideration was originally filed by the assessee declaring a total income at Rs.46,85,810/- which was subsequently revised on 13.11.2009 declaring a total income of Rs.87,22,236/-. The said return was selected for scrutiny under CASS and a notice under Section 143(2) of the Income-tax Act, 1961 ["the Act" in short] was issued by the Assessing Officer to the assessee on 18.08.2010. In the balance-sheet filed along with the return of income, the following amounts were shown by the assessee as payable towards transportation charges:- Sr. No. Name Amount 1. Best Haryana Public Roadways Rs.21,54,554/- 2. Baba Dadabhola Road Carriers Rs.13,45,000/- 3. Haryana Kotputlli Roadlines Rs.16,05,796/- 4. Baba Naryandas Transportation Co. Rs.11,45,200/- 5. Agra Ahmedabad Roadlines Rs.14,25,451/- 6. Baba Haridas Transport Co. Rs.17,58,221/- 7. Haryana Public Roadways Rs.15,65,880/- 8....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sactions with the appellant were not confirmed. Under the circumstances, there was heavy onus on the appellant to prove the genuineness of the expenses and the liabilities shown on that count. However, the appellant could only show several possibilities for this happening without being cogent in respect of any of the 8 transporters. It is very much unbelievable and, in the absence of any concrete evidence, quite unacceptable that the appellant had genuine liabilities of Rs.1,22,57,102/- in respect of 8 transporters on account of freight expenses and that the appellant paid them in cash in subsequent year where each individual cash payment was below Rs. 20,000/-. This set of facts is highly improbable on the test of human probabilities and surrounding circumstances. More so, when the payees have also not confirmed this. Under the circumstances, I am of the view that the appellant has failed to discharge the onus in respect of impugned liabilities and corresponding expenses and therefore the A.O. was justified in not accepting the same." 3.3 The learned CIT(A), however, did not accept the methodology adopted by the Assessing Officer while making addition of entire amount to the tota....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... should have been ideally worked out on the basis of expenses rather than liabilities. However, at the same time, it is to be borne in mind that freight income has been accepted and it cannot be denied that for earning freight income, freight expenses have to be incurred. Hence, there cannot be total disallowance of expenses. In my view, section 145 of the Act has been enacted especially to deal with this kind of complex situation wherein the income of an assessee is to be estimated when the same can not be deducted from books of accounts regularly maintained. The facts and findings of the present case clearly suggest that this is a fit case for rejection of books and estimation of income. I, therefore, hold that the books of accounts of the appellant are reliable and it is not possible to determine correct income therefrom. I therefore proceed to determine the income of the appellant. The appellant has reported N.P. Ratio of 1.61% which cannot be accepted in the given situation of large unverifiable freight expenses. I am of the view that N.P. Ratio of 4% would be justified in the appellant's case looking the nature and scale of business. The appellant has declared gross recei....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 17.19 71,85,094 1.68 21,51,47,519 50.25 4.1 Although the learned Counsel for the assessee has submitted that the net profit rate of 1.68% declared by the assessee for the year under consideration was well comparable with the net profit rate of 1.54%, 1.60% and 1.68% declared for AYs 2008-09, 2010-11 and 2011-12 respectively, we find that the GP rate of 11.80% declared by the assessee for the year under consideration was lower than the GP rate declared by the assessee for AY 2008-09, 2010-11 and 2011-12. No doubt, the turnover of the assessee in AY 2008-09 being substantially lower than that of the year under consideration, we are of the view that it would not be fair and proper to take the figures for AY 2008-09 for comparison. Moreover, the issue before us is relating to the claim of the assessee on account of freight/transportation charges and it would, therefore, be fair and proper to consider and compare the freight expenses claimed by the assessee for the immediately succeeding two years i.e. AYs 2010-11 and 2011-12, wherein the turnover of the assessee was comparable to that of the year under consideration. In this regard, it is noted that the freight expenses claimed b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessing Officer on account of the alleged bogus creditors was challenged by the assessee in an appeal filed before the learned CIT(A) and after considering the submissions made by the assessee as well as the material available on record, the learned CIT(A) deleted the said addition for the following reasons given in paragraph No.7.4.1 of his impugned order:- "7.4.1 I have duly considered the above. The main ground for addition by the A.O. is return of notices u/s. 133(6). In the Mumbai ITAT decision in case of national Tiles & Industries Pvt. Ltd. (ITA No. 1074 of 2010) relied upon by the appellant, view has been taken that merely because notices u/s. 133(6) have returned unserved, the creditors cannot be treated as non existing. Further, the appellant has placed on record evidences showing payment to the creditors in the subsequent years through banking channels. The A.O. has not been able to controvert this. Under the circumstances, the contention of creditors being bogus does not survive. I am therefore of the view that the impugned creditors cannot be treated as bogus merely because notices u/s. 133(6) could not be served upon them. There may be several permutations and combi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d no justifiable reason to interfere with the order of the learned CIT(A) on this issue and upholding the same, we dismiss Ground No.4 of the Revenue's appeal. 7. In Ground No.5, the Revenue has challenged the action of the learned CIT(A) in deleting the addition of Rs.3,01,49,768/- made by the Assessing Officer on account of unexplained gift. 7.1 In the capital account of the assessee with his proprietary concern M/s. Kandla Cargo Carriers, a sum of Rs.3,00,69,570/- was credited and the same was described as gift received by the assessee from his son Shri Mohit Sharma. On verification, the Assessing Officer found that there was no corresponding debit entry appearing in the account of Shri Mohit Sharma. In this regard, it was explained by the assessee that two cheques amounting to Rs.2,00,00,000/- and Rs.1,00,69,750/- were received by the assessee from his son during the year under consideration towards gift; and, although the same were accepted by the assessee and entry for the receipt for the same was made, they were not deposited in the bank account. It was also submitted that two cheques for the similar amounts were issued by the assessee to the proprietary concern of his son....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3-2009, the cash and bank balance was Rs. 2,27,12,142/- and therefore cheques on hand of more than 3 crores was not possible. However, the A.O. failed to understand that simultaneously with the receipts, the appellant had issued the cheques of the same amount in favour of the company in which he was a director and passed the accounting entries. Thus, the cheques received were set off by the cheques issued and therefore they were not forming part of the cash and bank balance of the appellant as on 31-03-2009. The another contention of the A.O. that the cash and bank balance as on 31-03-2009 in the company's balance sheet also did not reflect the impugned amount was also erroneous as the entry for the said amount was passed in the Current account of the company which, had credit balance and therefore the same was reflected on the liability side of the company's balance sheet and thus it was not forming part of cash and bank balance of the company. The above events are visible from the accounting entries passed by the appellant in the ledger accounts and bank statements wherein the cheques were cleared on 26-09-2009. It is observed that the A.O. treated the gift as undisclosed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earned CIT(A) deleted the addition made by the Assessing Officer on this issue. At the time of hearing before us, the learned DR has not been able to bring anything on record to rebut or controvert these findings recorded by the learned CIT(A) on appreciation of the details and documents furnished by the assessee and keeping in view the same as well as all the facts of the case, we do not find any justifiable reason to interfere with the impugned order of the learned CIT(A) giving relief to the assessee on this issue; the same is, therefore, upheld and Ground No.5 of the Revenue's appeal is dismissed. 8. In Ground No.6, the Revenue has challenged the deletion by the learned CIT(A) of the addition of Rs.22,56,838/- made by the Assessing Officer on account of unexplained cash credit. 8.1 During the year under consideration, the assessee had accepted unsecured loans from two parties namely Malpani Securities and Shree Ganesh Traders amounting to Rs.15,06,838/- and Rs.7,50,000/- respectively. Although the assessee, during the course of assessment proceedings before the Assessing Officer, furnished a ledger account of the said two parties duly signed by the authorized signatories, he ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve duly considered the above. It is seen that impugned unsecured loans have been repaid in subsequent year through banking channels and there is no adverse findings on record for such repayment. This being so, the Gujarat HC judgment in case of Chandrashekhar Ayachi (supra) squarely applies to the case of the appellant. It has been held by the jurisdictional high court in the said case that where the department had accepted repayment of loan in subsequent year, no addition for the loan can be made in the year of acceptance. The appellant deserves to succeed on this score. The A.O. failed to conduct any inquiries even in the remand proceedings though the relevant material was present before him. In the absence of any adverse findings, the unsecured loans cannot be treated as unexplained. There is also merit in-the alternative argument of the appellant regarding granting of credit of trading addition against the unexplained cash credit as this argument is supported by the jurisdictional High Court judgment in case of Megha Industries (supra). Since I have already confirmed the trading addition of Rs.54,53,224/- in para 5.3.2 hereinbefore, no separate addition in respect of cash credi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n account of disallowance under Section 40(a)(ia) of the Act. 9.1 During the year under consideration, the assessee had made payment on account of dumper hire charges amounting to Rs.9,00,000/-. Since no tax at source was found to have been deducted by the assessee from the said payment, the Assessing Officer invoked Section 40(a)(ia) of the Act and made disallowance of Rs.9,00,000/-. 9.2 The disallowance of Rs.9,00,000/- made by the Assessing Officer under Section 40(a)(ia) of the Act was challenged by the assessee in an appeal filed before the learned CIT(A). During the course of appellate proceedings before the learned CIT(A), additional evidence was filed by the assessee to show that TDS was duly made from the payment of dumper hire charges and the same was also paid before the due date of filing of return. After getting this additional evidence verified from the Assessing Officer, the learned CIT(A) deleted the disallowance made by the Assessing Officer under Section 40(a)(ia) of the Act for the following reasons given in paragraph no.7.7.1 of his impugned order:- "7.7.1 I have duly considered the above. It is observed that the appellant had deducted tax at source from the....