Commissioner Of Income Tax, Bikaner v. Pawan Sharma (D.b.income Tax Appeal

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPURJUDGMENT COMMISSIONER OF INCOME TAX, BIKANERVS.PAWAN SHARMA(D.B.INCOME TAX APPEAL NO.3/12) Date of Judgment :- 13.7.2012. HON'BLE THE CHIEF JUSTICE MR.ARUN MISHRAHON'BLE MR.JUSTICE SANGEET LODHA Mr. K.K.Bissa, for the appellant. BY THE COURT:(PER HON'BLE MR. SANGEET LODHA,J.) 1.This appeal u/s 260 A of Income Tax Act, 1961 ( for short“the Act”) is directed against the order dated 21.9.11 of theIncome Tax Appellate Tribunal(ITAT), Jodhpur Bench,Jodhpurpassed in ITA No.600/JDP/2008, whereby the appeal filed by therespondent-assessee against the order dated 28.8.08 ofCommissioner of Income Tax(Appeal) [CIT(A)], Jodhpur allowingthe appeal preferred by the respondent-assessee against theassessment order dated 28.12.07 passed by the AssessingOfficer(AO) for assessment year 2005-06 and deleting theaddition of Rs.34,14,910/-, stands dismissed. 2.Briefly the facts giving rise to the appeal are that theassessee runs a proprietorship concern namely, M/s AkashGanga Cargo Movers, which is engaged in the work oftransportation of the goods. The assessee used to transportinsulators which were procured from local firms namely, PremierSanitaryware, Rani Bazar, Bikaner and Taruna Dec Home Pvt.Ltd., Bikaner. The assessee does not own any truck andtherefore, he had used trucks available in the market fortransportation of the goods. During the relevant assessmentyear assessee filed return of income on 26.10.05 declaring totalincome of Rs.3,35,440/-. The return was processed by the AOunder Section 143(3) of the Income Tax Act, 1961 ('the Act'). 3.During the relevant assessment year, the assessee hasreceived freight charges a sum of Rs.1,23,41,750/-, againstwhich a sum of Rs.1,18,97,227/- was paid as freight. In thebalance sheet, outstanding liabilities of Rs. 34,14,910/- wereshown. On query being made by AO, the assessee furnished thedetails of outstanding liabilities showing these to be liabilitiesrepresenting outstanding truck freights. The AO collected theaddresses of the truck owners from the Regional TransportAuthority and issued summon to them. The statement of some ofthe truck owners were recorded and out of them a few weresubjected to cross examination on behalf of the assessee. 4.After considering the explanation furnished by the assessee and the material on record, AO arrived at the finding that notrade liability as disclosed in the balance sheet by the assessee isexisting, the outstanding liabilities of Rs.34,14,910/- remainunexplained and accordingly, while passing the assessment orderdated 28.12.07, the same was added back to the total income ofthe assessee. 5.Aggrieved by the assessment order dated 28.12.07 , therespondent-assessee preferred an appeal before the CIT(A). TheCIT(A) found that the respondent-assessee during theassessment proceedings requested the AO to call all the 21 truckowners, whose statements were recorded u/s 131 of the Act forcross examination but except three, none of the truck ownersturned up for cross examination inspite of issuance of notice tothem. The CIT(A) observed that the respondent-assessee hasbeen deprived of the basic right of confrontation . The statementof three truck owners who were cross examined were also notfound relevant in view of the apparent contradiction and nondenial of the outstanding dues. The CIT(A) arrived at the findingthat on the basis of the material on record, AO has erred indrawing inference that outstanding liabilities of the appellantagainst truck payments are not genuine. Accordingly, whileallowing the appeal preferred by the respondent-assessee, theCIT(A) deleted the addition made by AO as aforesaid. 6.On appeal by the Revenue, ITAT has affirmed the order passed by CIT(A) . Hence, this appeal. 6.On appeal by the Revenue, ITAT has affirmed the order passed by CIT(A) . Hence, this appeal. 7.Learned counsel for the appellant submitted that thefindings recorded by the tribunal are contrary to facts and lawand ex facie perverse. Learned counsel submitted that ITAT hasfailed to appreciate the evidence on record in correctperspective. Learned counsel submitted that the respondent-assessee was under an obligation to explain the outstandingliabilities of Rs.34,14,910/-, however, the same remainunexplained and therefore, AO was justified in making additionof the said amount to the total income of the assessee. Learnedcounsel submitted that the truck owners who were examined byAO have categorically denied the outstanding payments shownby the respondent-assessee and therefore, AO has committed noerror in drawing the inference that the liabilities shownoutstanding are not existing. Accordingly, it is submitted that theaddition made cannot be faulted with. 8.We have considered the submissions of the learned counseland perused the material on record.and perused the material on record. 9.Indisputably, the respondent-assessee does not own anytruck and he had transported the goods by using the trucksavailable in the market. The dispute raised by AO was regardingthe outstanding liabilities of Rs.34,14,910/- disclosed by theassessee in his balance sheet. A perusal of the assessment orderpassed by AO reveals that the inference regarding outstanding liabilities disclosed by the respondent-assessee being fake hasbeen drawn by AO basically on the basis of the statements of 21truck owners examined by him. It is pertinent to note that out of21 truck owners examined by AO, the respondent-assessee hadnot shown any liability towards 6 persons. The assesseerequested for cross examination of remaining 15 persons andaccordingly, the notices were issued by AO to all the 15 persons,however, only 3 appeared for cross examination. Having gonethrough the cross examination of 2 persons namely, ShriRamkishan and Harishchander, ITAT opined that these truckowners were not maintaining books of accounts and they mustbe offering the tax on their income , if any, u/s 44 AE of the Actand they may not be under an obligation to maintain theaccounts. The ITAT opined that a perusal of their crossexamination suggest their irresponsible attitude . It is pertinentto note that in the first instance, during the examination inchief , they categorically denied relationship with the assesseeand any payment outstanding to him as on 31.3.05. But then, incross examination, one of the truck owner Ramkishan whenconfronted with the documentary evidence regarding the truckowned by him being engaged by the respondent-assessee forthe transportation of his goods, he accepted that the goods weredelivered to his truck. Similar was the position with regard toother truck owner put to cross examination. Obviously, the Aditya/- statement of various witnesses recorded by AO at the back ofthe respondent-assessee cannot be used against him. Thestatement of the truck owners who appeared for crossexamination before AO are not found to be creditworthy by theappellate authorities. If the statement of these witnesses areexcluded from the consideration , there is no material on recordwhich could justify doubting of the entries by AO. In consideredopinion of this court, the addition made by AO drawing inferencethat the outstanding liabilities of the respondent-assesseeagainst the freight payable to the truck owners are not genuine,solely on the basis of statements of a few truck owners recordedas aforesaid, is absolutely unjustified. In any case, theconcurrent findings recorded by the appellate authority asaforesaid remain the findings of fact which cannot be said to becapricious or perverse and therefore, no substantial question oflaw arises in this appeal for consideration of this court.