The Commissioner Of Income Tax, Patiala v. S. Harjit Singh

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income Tax Appeal No. 703 of 2009 DATE OF DECISION: January 22, 2010 The Commissioner of Income Tax, Patiala .........APPELLANT(S) VERSUS S. Harjit Singh ......RESPONDENT(S) CORAM:HON'BLE MR. JUSTICE M.M. KUMARHON'BLE MR. JUSTICE JITENDRA CHAUHAN Present:Ms. Urvashi Dhuggal, Advocate,for the appellant. Notes: 1)To be referred to the Reporters or not? 2)Whether the judgment should be reported in the Digest? M.M. KUMAR, J. The revenue has filed the instant appeal under Section 260-A ofthe Income Tax Act, 1961 (for brevity 'The Act') challenging order dated30.06.2009 passed by the Income Tax Appellate Tribunal, ChandigarhBench, Chandigarh in ITA No. 488/Chd/2008. It has claimed that twosubstantive questions of law would emerge from the order of the Tribunalwhich are as under:- “(i)Whether the ITAT is justified in upholdingthe order of the CIT(A), ignoring that the assessee havingfailed to maintain and on demand produce before the AO, the details pertaining to the receipts of the business, which he waslegally obliged to, the AO, u/s 114 of the Indian Evidence Act,was justified in taking an adverse view. (ii)Whether the ITAT is justified in upholdingthe order of the CIT(A) ignoring the estimate made by the AO,which was more scientific being based on the finding of theIncome Tax Settlement Commission for the Assessment Years1993-94 to 1995-96, as against the mere guess work of theCIT(A). The assessee had filed his return in respect of assessment year2001-02. On scrutiny, assessment was completed on 16.01.2004 by theAssessing Officer under Section 144 of The Act. The income of theassessee-respondent was estimated at Rs. 87,655/- by making the orderdated 02.09.2002 passed by the Settlement Commission for the assessmentyear 1993-94 to 1995-96. The assessing officer had also alloweddepreciation, hire charges and interest out of the same. The assessee filedappeal before the Commissioner of Income Tax and vide his order dated01.11.2004, he estimated the income per truck at Rs. 22,000/-. Feelingaggrieved, the revenue filed further appeal and the Tribunal, vide its orderdated 30.03.2006, set aside the order of the Assessing Officer and restoredthe issue on the file of the CIT (A) for passing a speaking order. Onremand, the CIT (A), vide its order dated 20.03.2008, assessed the incomeper truck at Rs. 45,000/-. Both assessee as well as the revenue challengedthe order of the CIT (A) before the Tribunal against the order dated20.03.2008. The Tribunal dismissed both sets of appeals by observing thatin the absence of books of accounts, there cannot be any cut and dry formula to estimate the income per truck. Accordingly, the order passed bythe CIT (A) was upheld. We have heard Ms. Urvashi Dugga, learned counsel for therevenue at a considerable length and find that no question of law much lessa substantive question of law under Section 260 (A) would arise fordetermination of this Court. In respect of the assessee-respondent, the CIT(A) has observed while referring to the application filed before theSettlement Commission that assessee used to declare additional incomefrom all sources although main source of his income has been from trucks.The following sources have been mentioned by the CIT (A) in its ordernamely:- “(i)The efforts to arrange finance to the other transporters / truck owner. (ii)By helping the other transporters to procure route permits. (iii)To extend help to the other transporters for running transportation business. We have heard Ms. Urvashi Dugga, learned counsel for therevenue at a considerable length and find that no question of law much lessa substantive question of law under Section 260 (A) would arise fordetermination of this Court. In respect of the assessee-respondent, the CIT(A) has observed while referring to the application filed before theSettlement Commission that assessee used to declare additional incomefrom all sources although main source of his income has been from trucks.The following sources have been mentioned by the CIT (A) in its ordernamely:- “(i)The efforts to arrange finance to the other transporters / truck owner. (ii)By helping the other transporters to procure route permits. (iii)To extend help to the other transporters for running transportation business. The CIT (A) has further noticed that assessee has been doingthe business of plying of truck for a number of years and had gained richexperience. It did not bifurcate the gross income declared before theSettlement Commission head-wise by including income from his mainbusiness of plying of trucks. The Settlement Commission concluded thatkeeping in view the past history of the case, nature of assessee's business,income offered by the assessee before the Settlement Commission andincome declared from truck business by other family members of theassessee the only basis for ascertaining his income would be a fair estimation of income per truck. Naturally, there could not have been anymathematical formula with the assessing officer nor the appellate authoritycould arrive at the estimation of income per truck especially when there areno books of accounts maintained by the assessee. CIT (A) then proceededto conclude as under:- “10. After considering the facts of the case, and further that assessee has not given any bifurcation of headwisereceipts as declared before the Hon'ble Commissions it wouldbe fair if the receipts are taken at Rs. 45,000/- each in respectof 50 trucks. However, in respect of 2 trucks the receipts aretaken by the assessee himself at Rs. 1,50,000/- each. Thus thetotal receipts would workout to Rs. 25,50,000/- i.e. {45,000 x50) + (1,50,000 x 2). However depreciation and interestincluding hire charges have to be allowed. The A.O. isdirected to work out the total receipts accordingly. 11.It may be submitted that two other family members of the assessee namely S/Sh. Kesar Singh and FatehSingh were also in the same business i.e. the business ofplying of trucks / transportation. The average receipts inrespect of 42 trucks in the case of Sh. Kesar Singh and 34truck in the name of Sh. Fateh Singh has been adopted @55,000/- each. However from the figure of depreciationclaimed by these two persons (Rs. 13,29,244 in the case ofKesar Singh & Rs. 6,90,825/- in the case of Fateh Singh) itappears that the trucks owned by these two family members ofthe assessee that the trucks owned by these two family members of the assessee were comparatively of lower age asin the case of the assessee as the assessee has claimeddepreciation of Rs. 3,99,240/- in respect of total 52 trucks.This shows that the vehicles owned by the assessee were oldas compared to the vehicles owned by the other two familymembers of the assessee named above. And this is a basisconsidered for adopting the average truck receipts @ Rs.45,000 per truck in respect of 50 truck in the present case.” members of the assessee were comparatively of lower age asin the case of the assessee as the assessee has claimeddepreciation of Rs. 3,99,240/- in respect of total 52 trucks.This shows that the vehicles owned by the assessee were oldas compared to the vehicles owned by the other two familymembers of the assessee named above. And this is a basisconsidered for adopting the average truck receipts @ Rs.45,000 per truck in respect of 50 truck in the present case.” The revenue approached the Tribunal against the aforesaidview of the CIT (A). The appeal of the revenue has been dismissed byholding that when there is an estimation of income because of absence ofbooks of accounts then a difference in opinion is liable to result. In order toput an end to the litigation, the Tribunal upheld the order of the CIT (A) anddismissed the appeal filed by the revenue namely ITA No. 488/CHD/2008in respect of assessment year 2001-02. The basic reason is that the matterhad already been remanded and the CIT (A) had almost estimated doubleamount of income per truck as compared to the amount worked out earlier. The only argument raised by learned counsel for the revenue isthat the rate of income per truck worked out by the Settlement Commissionshould have been made the basis as was done by the assessing officer. Theaforesaid argument overlook the fact that the assessee used to declareadditional income from all other sources apart from income from mainsource i.e. plying of trucks. In that regard, reference has been made by theCIT(A) to the application filed by the assessee which shows that incomefrom three other sources also used to be claimed namely income fromconsultation services to the other transporters/truck owners, income from other transporters for the help rendered to procure route permits and incomefrom the help rendered to other transporters for running transportationbusiness. It was on the basis of the aforesaid factors that the total incomeworked out by the Settlement Commission was not taken into account and,therefore, the argument raised by the revenue is devoid of merit. In a caseof this nature, there cannot be any legal formula for working out the incomeand the Tribunal has taken correct view by adopting the opinion expressedby the CIT(A). We find that no substantive question of law would arisewarranting admission of the appeal. Accordingly, the appeal fails and the same is dismissed. (M.M. KUMAR)JUDGE 22.01.2010shivani (JITENDRA CHAUHAN)JUDGE