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TMI Blog2012 (7) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... , Sr. D.R. ORDER PER SHAMIM YAHYA : AM This appeal by the Revenue and Cross Objection by the assessee emanate out of order of the Ld. Commissioner of Income Tax (Appeals) dated 23.3.2010 and pertain to assessment year 2006-07. 2. The grounds raised in the Revenue's appeal read as under:- "i) Ld. CIT(A) erred, in law and on the facts and circumstance of the case, in deleting the addition of Rs. 14,14,000/- made by the AO u/s. 68 of the IT Act. ii) Ld. CIT(A) erred, in law and on the facts and circumstances of the case, in deleting the addition made by the AO by estimating the income at Rs. 83,63,435/- being 10% of gross receipts after rejecting the books of accounts of the assessee. iii) The appellant craves to amend, modify, alter, add or forego any ground of appeal at any time before or during the hearing of this appeal." Apropos issue of share capital 3. In this case assessee company is engaged in the business of transport services i.e. operating and running trucks on hire in addition to outsourcing of transport services. During the financial year 2005- 06 relevant to assessment year 2006-07, the assessee company has raised Rs. 40,00,000/- as share capital in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two companies have been rejected in an improper manner. Ld. CIT(A) further noted that nothing adverse has been pointed out in the remand report by the AO. Accordingly, the addition in relation to these two persons amounting to Rs. 5 lakh was directed to be deleted. For rest of the four share holders, Ld. CIT(A) noted that confirmatory letters, bank statements, income tax particulars of these parties were duly filed before the AO. Ld. CIT(A) observed that it is seen that the issue of share capital increase has come up before various Hon'ble Courts and it has been held if the Assessee produces the relevant documents e.g. PAN, address, copy of return/ acknowledgement, share application documents, confirmation etc., the initial onus is discharged. Accordingly, Ld. CIT(A) directed that the addition should also be deleted. 5. Against the above order the Revenue is in appeal before us. 6. Ld. D.R. placed reliance upon the order of the Hon'ble Delhi High Court in ITA No. 342 of 2011 in the case of C.I.T. vs. Nova Promoters & Finlease (P) Ltd. He contended that in view of the exposition made by the Hon'ble Delhi High Court in above cited order dated 15.2.2012, the addition made by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 47,72,116/- on 1.4.2005, the assessee company spent as much as RS. 45,03,281/- solely for their repair. The assessee company has failed to produce bills of such expenditure even upon persistent requests. In the background of the aforesaid, AO invoked the provision of section 145(3) of the IT Act, 1961, rejecting the books of accounts maintained by the assessee company and calculating the net profit at 10% of the gross receipts (Rs. 8,36,34,348/-). 10. Before the Ld. CIT(A), it was submitted that the net profit rate adopted by the AO is wholly arbitrary and merely a wild guess having no nexus with fact and circumstances of the assessee as the AO has failed to consider:- (a) composition of Gross Receipts of the year under appeal; (b) past history of the appellant itself, wherein the assessment has been made u/s 143(3); and (c) no reason whatsoever for adopting the- said NP Rate are discernable from the assessment order. It was further pleaded by the assessee that the in· the absence of any indication by the AO as to how the said NP Rate of 10% of for estimating the income from gross receipts have been arrived at, it cannot be deemed that interest and depreciation have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard have not been countered by the AO in his remand report. Therefore, the Ld. CIT(A) held that in these circumstances the said objection of the AO does not survive any more. 10.3 Ld. CIT(A) further observed that the other reason given by the AO was that the assessee company has failed to produce bills for repair of vehicles for Rs. 45,03,281/- and particularly when the WDV of trucks is only RS. 47,72,116/- as on 1.4.2005. It was submitted before the Ld. CIT(A) that major portion of these expenses i.e. Rs. 28.44 lacs has been incurred by the assessee by way of cheques at head office itself and rest of the expenses of RS. 16.59 lacs approx. has been incurred through 41 truck drivers for mainly on small repair jobs of trucks, while on the move from one place to another while carrying the cargo. 10.4 Ld. CIT(A) further observed that on query raised, the assessee company furnished the complete detail for expenditure incurred by cheque of Rs. 28,38,584/- and truck wise and month wise detail of expenditure made through trick drivers for the balance sum of Rs. 16,64,697/- in cash in respect of all the 41 trucks. The said compilation was in addition to the ledger account submi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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