×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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31-10-2019,The Hind Ratan Logistics, Section 145, 44AE, Tribunal Indore
The above captioned appeal filed at the instance of assessee pertaining to Assessment Years 2014-15 is directed against the orders of Ld. Commissioner of Income Tax (Appeals)-II (in short ‘Ld.CIT(A)’], Indore dated 22.09.2017 which is arising out of the order u/s 143(3) dated 30.11.2016 framed by ITO-5(3), Indore.
2. Brief facts of the case are that the assessee is a partnership firm engaged in the business of truck plying and providing transport services. Income of Rs.2,32,322/- declared in the income tax return filed on 8.10.2014. Case selected for scrutiny through CASS followed by issuing of notices u/s 143(2) of the Act. During the course of assessment proceedings Ld. A.O observed that there were additions to the capital account of the partners The source of capital was asked. Assessee furnished the reply but they were not sufficient to convince the Ld. A.O, therefore he made the addition of Rs.30,50,000/- for unexplained capital. Ld. A.O. also observed that there is a mismatch in the gross receipts shown by the assessee in the Profit & Loss Account as against the booking commission received by the assessee. Freight receipts from five trucks owned by the assessee were also not appearing in the profit and loss account. The assessee was show caused. It furnished the submissions contending that only the net receipts have been shown. Books of accounts are audited. Ld. A.O however was not satisfied and he rejected the books of accounts observing various defects and made the addition of Rs.18,94,514/- by applying the notional profit rate @5%on the gross receipts of Rs.3,78,90,273/-. Ld. A.O also made addition u/s 44AE of the Act at Rs.3,00,000/- towards the income of the five trucks plyed during the year. After making addition of Rs.52,44,514/- income assessed at Rs.54,76,836/-.
3. Aggrieved assessee preferred appeal before Ld CIT(A) but failed to succeed on any of the grounds.
4. Now the assessee is in appeal before the Tribunal raising following grounds of appeal;
1.That on the facts and circums ances of the case, the AO erred in making the addition of Rs. 30,50,000/- on account of unexplained credit in the capital account of the partners without properly appreciating the facts that the assessee has offered all relevant explanation for the same. The CIT (A) also erred in maintaining the addition.
2. That on the facts and circumstances of the case the AO erred in rejecting books of . accounts U/s 145 of the IT Act, 1961 and applied a notional profit percentage of 5 on the booking commission of Rs.3,78,90,273/ -, making an addition of Rs.18,94,514, despite the fact the books of accounts are duly maintained and audited. The CIT (A) also erred in maintaining the addition.
3. That on the facts and circumstances of the case the AO erred making an addition of Rs.3,OO,OOO/- U/s 44AE of the IT Act, 1961, without appreciating the fact that the books of accounts are duly maintained and audited. The CIT (A) also erred in maintaining the addition.
4.That on the facts and circumstances of the case the AO erred in calculating assessed income. Income shown in the return of Rs.2,32,322/ - was not deducted from the additions made as age of profit, as the assessment order was passed through restoring the provisions of section 145 of the Income Tax Act.
4.Appellant reserve his right to add, alter or amend any grounds of appeal at the time of hearing or before.
5. Apropos to Ground No.1 for unexplained credit of Rs.30,50,000/- in the capital account of the partners Ld. Counsel for the assessee submitted that the partners were having sufficient funds in their hands and the alleged amount was received by the partners from outstanding sundry debtors standing in the individual balance sheet of the partners. These sundry debtors are the amount receivable against lorry receipts which are discounted by the partners, amount paid to the drivers and on the due date of the lorry receipts these amounts were to be collected from the persons availing the transport services. Ld. Counsel for the assessee also referred to the paper book wherein the balance sheet of both the partners are placed for the preceding financial year and current financial year to support the source of capital introduced by the partners.