2016 (7) TMI 334 - AT - Income Tax

Accrual of income - Addition on account of undisclosed transportation receipts - hiring v/s ownership - Held that - The balance sheet of the assessee shows that the assessee has no fixed assets in the form of trucks. Therefore, the contention of the assessee seems to be correct whereby he has submitted that he has been hiring the trucks from the truck operators/truck owners and providing them on rent to the company namely Ruchi Soya. The accounts of the assessee have duly been examined and it reveals that neither the maintenance nor the other charges for running of the trucks have been debited to the accounts of the assessee. In our view, the addition sustained by the ld CIT(A) are required to be deleted as the amount were received by the assessee on behalf of the truck owners and therefore the entire amount cannot be treat as income of the assessee. However, since the assessee is claiming commission on each builty to the extent of ₹ 500/- is confirmed. The Assessing Officer is directed to calculate the receipt of the assessee @ ₹ 500/- per builty for the trucks supplied to Ruchi Soya Industries. We hereby clarify that the assessee shall not be entitled to any deduction on account of brokerage, commission, telephone expenses, employees expenses or any other expenses whatsoever against the income so calculated by the ld Assessing Officer. The assessing officer is further directed to give the benefit of any payment made by the assessee (one during the proof of payment) to the truck owners who have supplied the trucks to M/s Ruchi Soya. - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of action taken under Sections 147 and 148.
2. Addition of ?11,72,124/- on account of unexplained/undisclosed transportation receipts.
3. Charging of interest under Sections 234A, 234B, and 244A.
4. Deletion of ?14,37,582/- out of total addition of ?26,09,706/- on account of undisclosed transportation receipts.
5. Acceptance of undisclosed receipts of ?15,54,400/- related to assessment year 2008-09 without giving the Assessing Officer an opportunity under Rule 46A of the I.T. Rules, 1962.

Detailed Analysis:

1. Legality of Action under Sections 147 and 148:
The assessee challenged the jurisdiction and legality of the action taken under Sections 147 and 148, claiming it was "bad in law without jurisdiction and being void ab-initio." The assessee requested that the assessment framed under Sections 144/148 be quashed. However, the tribunal did not find sufficient grounds to quash the action taken under these sections.

2. Addition of ?11,72,124/- on Account of Unexplained/Undisclosed Transportation Receipts:
The Assessing Officer observed a discrepancy between the transportation receipts shown in the assessee's P&L account and the receipts as per TDS certificates and Form 26AS. The discrepancy amounted to ?26,09,706/-, which the assessee claimed included ?15,54,400/- related to the previous assessment year 2008-09. The CIT(A) partially accepted the assessee's explanation and reduced the addition to ?11,72,124/-. The tribunal further examined the reconciliation and found that the balance of ?11,72,124/- primarily related to undisclosed amounts from M/s Ruchi Soya Ltd. The tribunal confirmed the addition of ?11,72,124/- but directed that only the net profit on the undisclosed turnover should be added to the income of the assessee.

3. Charging of Interest under Sections 234A, 234B, and 244A:
The assessee contested the charging of interest under Sections 234A, 234B, and 244A, denying any liability for such interest. However, the tribunal did not provide specific relief on this issue, implying that the interest charged was consequential and in accordance with the provisions of law.

4. Deletion of ?14,37,582/- out of Total Addition of ?26,09,706/-:
The CIT(A) had deleted ?14,37,582/- out of the total addition of ?26,09,706/- on account of undisclosed transportation receipts. The tribunal upheld the CIT(A)'s decision, noting that the reconciliation prepared by the assessee showed that the difference related to the year under consideration was only ?11,72,124/-. The tribunal confirmed the addition of ?11,72,124/- and directed the Assessing Officer to delete the balance addition of ?14,37,582/-.

5. Acceptance of Undisclosed Receipts of ?15,54,400/- Related to Assessment Year 2008-09:
The revenue challenged the CIT(A)'s acceptance of undisclosed receipts of ?15,54,400/- related to the assessment year 2008-09 without giving the Assessing Officer an opportunity under Rule 46A. The tribunal found that the CIT(A) had properly appraised the facts and that the receipts pertained to the previous assessment year. The tribunal also noted that the rectification order for the assessment year 2008-09 had been passed, giving the benefit of the receipt for that year, and thus, no fresh addition could be made for the assessment year 2009-10.

Conclusion:
The tribunal partly allowed the assessee's appeal by confirming the addition of ?11,72,124/- but directed that only the net profit on the undisclosed turnover should be added to the income. The tribunal dismissed the revenue's appeal, noting that the amount in question was below the tax limit stipulated by the CBDT. The assessee's appeal was partly allowed, and the revenue's appeal was dismissed.