9911796707
TMI Blog2015 (9) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... eight of Rs. 22,24,36,643/- and payment of freight of Rs. 2,17,98,232/- thereby declared gross profit of Rs. 6,38,411/-. After claiming expenses of Rs. 5,32,176, net profit of Rs. 1,37,965/- giving net profit rate of 0.61% had been declared. The assessee has claimed above expenses of Rs. 2,17,98,232/- on account of freight payment for the trucks engaged from sub-contractors. Voluminous details have been obtained and placed on file. After examining the records produced by the assessee during the course of assessment proceedings and books of account following position emerged:- The assessee's contention that freight received from parties has been passed on to sub-contractors after deducting commission is factually incorrect for the reason that :- (a) That the assessee has not issued / maintained any receipt / voucher regarding receiving of fixed commission. Therefore, it is not verifiable from the records maintained by the assessee that commission booked in the books of account is correct. (b) At the time of making payment to various subcontractors / truck drivers assessee does not obtain any receipt vide order sheet entry dated 25-11-2010, assessee's A/R was communicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssive payment on account of freight. The assessee has tried to justify that the entire freight received has been passed on to the truck owners and he has received commission of Rs. 300/- to Rs. 550/- per truck, which is factually incorrect. This stand is supported with the fact that assessee has not obtained any receipt regarding payment from various truck operators. Assessee himself and various truck drivers/ owners have admitted in their statement recorded during the course of assessment proceedings that their signatures are not obtained by the assessee while paying the payments. To verify the above facts, A/R was asked to produce the assessee himself. Summon u/s 131 of the I.T. Act, 1961 were issued to various truck owners namely Shri Ramesh Soni, Shri Ramesh Chand and Shri Babu Lal Yadav. Statement of assessee and Shri Ramesh Soni were recorded on 02-12-2010. Shri Ramesh Chand Yadav and Shri Babu Lal did not attend on the given date. In reply to Q.No. 2 of the statement recorded during the course of assessment proceedings on 02-12-2010, assessee Shri Om Prakash Bansal has replied that as and when the truck owner/ driver produce the receipt of unloading of goods, we pay freigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Section 145(3) of the I.T. Act, 61. This same is added to the total income of the assessee." 3.2 Aggrieved, the assessee preferred first appeal where the ld. CIT(A) confirmed the order of the AO and dismissed the appeal of the assessee by following observations:-. "(B) I find that the AO has estimated the income of the appellant applying net profit rate of 4% on gross receipts following the decision of Hon'ble I.T. Act Jaipur Bench in the case of similar nature of nearby place of Shri Ram Niwas Yadav Prop. Shree Krishana Freight, Bansur (ITA No. 26/JP/2010 dated 03-09-2010) and has made a trading addition of Rs. 7,59,500/- The AR submitted that the AO neither discussed the entire facts of the comparable case with the appellant nor he brought this fact to the knowledge of the assessee. A copy of the said order of Hon'ble Income Tax Appellate Tribunal was made available to the A.R. for his comments. It higher side been submitted that in the case of Shri Ram Niwas Yadav only bilty charges was credited in the profit and loss account. In that case party-wise details of receipt and the payments were not maintained. The appellant has credited gross freight receipts i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, in the cases of civil contractors or transporters modified gross profit is usually considered which is nothing but the net profit rate subject to the deduction of depreciation, salary to others/ partners and interest. In the instant case the declared GP rate is 2.85% however, after deducting indirect expenses of Rs. 5,32,176/- the net profit came to Rs. 0.614%. The lower authorities instead of considering the gross profit rate wrongly considered the net profit rate. In the next year i.e. assessment year 2009-10, the gross profit rate shown by the assessee is at 2.411% as against 2.5% in the impugned year. Therefore, there was no justification in the estimation of net profit rate. Ld. CIT(A) erred in confirming 4% net profit rate as if indirect expenses are added back the net profit rate of the assessee is comparable. Shri Ramesh Chand Soni, Shri Ramesh Chand Yadav and Shri Babu Lal Yadav are owners of the trucks and are income tax assessees and the truck owners are not able to earn more than 3% net profit rate. If 4% net profit rate is adopted then the commission per truck comes to higher figure of Rs. 1,275/- The assessment for the assessment year 2009-10 was framed u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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