2014 (7) TMI 855 - AT - Income Tax

Estimation of net profit from business of truck plying and transport commission Proper verifications not made by AO - Held that - The assessee has initially adopted the figure of turnover shown in the TDS certificate, but during the course of assessment proceedings, the assessee has explained that he has taken the total turnover shown in the TDS certificate wrongly and the turnover for the month of April and May, 2007 were included in the figure of total turnover shown in the TDS certificate - the AO should have verified by making necessary verification from the deductees there was force in the contentions of the assessee - Since this aspect requires proper verification by the AO, the order of the CIT(A) is set aside and the matter is remitted back to the AO for verification Decided in favour of Assessee.

Summary

Issues:
Estimation of net profit in truck plying and transport commission business.

Analysis:
The appellant contested the order of the ld. CIT(A) on various grounds related to the determination of receipts and expenses in the truck plying business. The main contention revolved around the discrepancy in turnover figures and the inclusion of certain amounts in the income calculation. The Assessing Officer estimated the net profit at a higher amount, which was challenged by the appellant. The ld. CIT(A) partially upheld the addition but the appellant remained dissatisfied.

The appellant argued that the turnover figures were mistakenly calculated based on TDS certificates, resulting in an inflated amount. It was explained that certain receipts were included due to errors in TDS certificates, leading to excess turnover. The appellant also highlighted that specific expenses related to the excess turnover should be allowed to determine the accurate net profit. However, the Assessing Officer and ld. CIT(A) did not adequately consider these explanations and rejected the appellant's contentions without proper verification.

Upon careful consideration, the Tribunal found merit in the appellant's contentions and set aside the ld. CIT(A)'s order. The Tribunal directed the Assessing Officer to verify the facts regarding the inclusion of turnover for specific months and corresponding expenses. If the appellant can substantiate these claims, the net profit should be recalculated by either excluding the disputed turnover or allowing the corresponding expenses. The Tribunal emphasized the importance of proper verification in such cases to ensure a fair determination of net profit in line with previous years' practices.

In conclusion, the Tribunal allowed the appeal of the appellant for statistical purposes, indicating a need for a thorough reassessment of the net profit in the truck plying and transport commission business based on accurate turnover figures and allowable expenses.