Commissioner Of Income Tax, Cit-Alwar v. The Truck Operators Union, N.h.8, Behror (Alwar

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 105 / 2010 COMMISSIONER OF INCOME TAX, CIT-Alwar ----Appellant Versus THE TRUCK OPERATORS UNION, N.H.8, BEHROR (ALWAR) ----Respondent _____________________________________________________ For Appellant(s) : Ms. Parinitoo JainFor Respondent(s) : _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGHJudgment 17/07/2017 1.By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal preferred by the assessee modifying theorder of CIT(A) and confirming the order of AO. 2.This Court while admitting the matter has framed thefollowing question of law:- “Whether, after rejection of books of accountsunder section 145(3) and estimating the incomeon the basis of statutory provision given undersection 44 AE of the Act applicable on similarindustry was not justified for calculation ofincome when ex parte assessment under section144 of the Act was carried out by the AssessingOfficer?” seriously committed an error on basis the order on analogy undersection 44AE which cannot be made applicable. However, theTribunal while considering the matter in para 6 observed as under:- “6. We have heard the rival contentions andperused the facts of the case. The assessee is a unionof truck operators and the copy of the constitution isavailable on record (PB 1 to 9) with the aims andobjects as under: (1) To encourage cooperation among the truck ownerof Behrot. (2) To represent before the administrationregarding the problem the truck owners in respect ofoctroi, sales tax etc. 3) To protect the interest of all truck owners byreducing competition and bringing parity in truckfares. (4) For solving the problems of truck owners torepresent before the Govt with unity and cooperation.The assessee union is having the members andmembership fee is charged and accounted for in thereceipt and payment account. Apart from saidmembership fee, it has been submitted that theassessee is charging Rs 10/- per bilty and same isaccounted for declared in the receipt and paymentaccount. The bilties are of two types. The first type isthat the owner of the truck gets the higher chargesfrom the destination directly and no TDS is deductedsince the truck operator gets the payment directly andit was explained before the ld. CIT(A) vide letterdated 29-03-2007 (PB 25-35). The second type ofbilty is such where the truck owner does not get hirecharges directly and the company deduct the tax atsource and the cheque is given to the assessee unionwhich is recorded in the register, cash is withdrawnand payment is made to the truck owner. The saidhire charges/freight is never received in cash butthrough account payee cheque in the bank account atBehror. It was explained with regard to variousqueries and discrepancies pointed out before the ldCIT(A) ie. with regard to difference in the receipts asper bank account amounting to Rs 8,60,54.757/- asper TDS certificate, it was Rs 9,34,91,816. Theexplanation in this regard submitted before the ldCITA) was that this difference is for "to be billed bilty"in which TDS is deducted on the gross amountincluding the advance of the driver whereas truckunion gets the payment after the deduction of theadvance/payment of the driver. As regards thedifference in the gross receipts and receipts from the companies, it has been submitted vide letter dated29-3-2007 before the ld CIT(A) as an arithmeticalmistake of the Accountant (PB 25-26). It wassubmitted that section 44AE is applicable on theassessee who owns not more than 10 goods carrier atanytime during the previous year. In the present casethere is nothing on record that the assessee owns anygoods carrier which is evident from the balance sheetand the record before both the authorities below. Atthe outset, we are convinced with the explanationgiven before the ld.CIT(A) and the argument madebefore us that in the present case, section 44AEcannot be made applicable since the assessee is notthe owner of the goods carrier and the AO is notjustified at the very outset to make a calculation of Rs42,000/- per truck for 185 trucks. No such additioncan be made in the manner which the AO has done.Certainly the assessee has not produced the books ofaccount and in circumstances and facts of the case,the AO has to proceed in making the assessmenttaking into account all relevant materials which theAO has gathered after giving the opportunity of beingheard to the assessee. In the present case, there isno dispute to the fact that the assessee is in receipt ofmembership fees in cash and the bilty charges @Rs10-per Bilty that too in cash. The assessee hasdeclared the bilty receipts @Rs 5,59,100 and themembership fees at Rs 1,36,600 against which theassessee has claimed the expenditure leaving behindthe net profit at Rs 82,512/-. The payments and theexpenses so incurred though are not on verifiable.The gross receipt amounting to Rs.915,70,098 (PB35) which has been disbursed as payment to truckoperators Rs.8,60,54,757- and payment to truckoperators being advance and brokerage charges asRs.55,15,341-. The bilty charges and the membershipfee received by the assessee are not in dispute. It isalso not in dispute that the assessee does not ownany truck. The assessee is running a Union not purelyas a business venture but with the main objectsmentioned hereinbefore. The facts is also not underdispute that the amount received in the bank accounton the bilties (to be billed) are received throughaccount payee cheque and cash is withdrawn. There isnothing on record that such cash withdrawal isunexplained expenditure of the assessee and noparallel unexplained expenditure or investment is onrecord. Therefore when the reciept is made and if thesame is treated as income, the withdrawal has to begiven deduction against such income in the absenceany adverse finding on withdrawals of case by any ofthe authorities below. There is also nothing on recordthat any amount more than Rs.10/- per bilty isretained by the assessee union. Therefore, apparently and in the absence of any adverse facts onrecord, the assessee received bilty charges @ Rs.10/-per bilty apart from membership fees as explained,appear to be correct and convincing. There is also nodispute to the fact that few of the truck owners getsthe freight at the destination directly. Now in suchcircumstances and facts of the case and the materialon record whether income assessed by the authoritiesbelow is correct or not has to be perused. As observedearlier, the assessee is in receipt of Bilty charges andMembership fees and the amount received throughaccount payee cheque from various companies isdisbursed to the truck owners and nothing is retainedby the assessee union. The total receipt for thepurpose of taxaton as declared by the assessee arebilty charges amounting to Rs.5,59,100/- andmembership fees Rs.1,36,600/- totaling toRs.6,95,700/- out of which the assessee has declaredthe expenses amounting to Rs.6,13,188/- leavingbehind Rs.82,512/- as net profit. Therefore, theassessee was having the surplus of Rs.82,512/- in theform of cash available as at the end of the year. Theamount received in the back account as observedearlier is withdrawal from the bank and paid to truckowner. The tax deducted at source as is evident fromthe statement of total income at PB 12, amounting toRs. 19,58,414/- which has been deducted during theimpugned year has not actually been received in thebank account of the assessee and has not beendisbursed to the owner of the trucks during the year.Therefore, the said tax deducted at source in theabsence of anything to the contrary on record, isretained by the assessee is receipt of the assessee.The said TDS as it appears is not passed on the truckowners. lt was argued by the ld. AR that equivalentamount of tax deducted at source is also given to thetruck owners and a separate register is maintained foreach and every TDS receivable and payable to truckowner. The liabilities pay is declared in the balancesheet on record (PB 20). As per availability of findsthe truck owners are given back the equivalentamount of TDS and as at the end of the year theamount of TDS remains payable which is paid as perthe availability of funds with the assessee. But Mr.Poddar has not substantiated his claim with anydocumentary evidence. Therefore, in the circumstanceand facts of the case, in the absence of the books ofaccount or any details, there is every possibility ofleakage of Revenue. To plug the same, the income ofthe assessee is estimated at Rs3.00 lacs which willmeet both the ends of justice. The AO is directed toact accordingly. Thus Ground No. 1 to 4 of theassessee are partly allowed.” 4.We are in complete agreement with the view taken by theTribunal. The issue is required to be answered in favour of theassessee against the department. 5.The appeal stands dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. A.Sharma/66