Income Tax Appeal No. 703 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income Tax Appeal No. 703 of 2009 DATE OF DECISION: January 22, 2010 The Commissioner of Income Tax, Patiala .........APPELLANT(S) VERSUS S. Harjit Singh ......RESPONDENT(S) CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Ms. Urvashi Dhuggal, Advocate, for the appellant. Notes: 1) To be referred to the Reporters or not? 2) Whether the judgment should be reported in the Digest? M.M. KUMAR, J. The revenue has filed the instant appeal under Section 260-A of the Income Tax Act, 1961 (for brevity 'The Act') challenging order dated 30.06.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh in ITA No. 488/Chd/2008. It has claimed that two substantive questions of law would emerge from the order of the Tribunal which are as under:- “(i) Whether the ITAT is justified in upholding the order of the CIT(A), ignoring that the assessee having failed to maintain and on demand produce before the AO, the Income Tax Appeal No. 703 of 2009 2 details pertaining to the receipts of the business, which he was legally obliged to, the AO, u/s 114 of the Indian Evidence Act, was justified in taking an adverse view. (ii) Whether the ITAT is justified in upholding the order of the CIT(A) ignoring the estimate made by the AO, which was more scientific being based on the finding of the Income Tax Settlement Commission for the Assessment Years 1993-94 to 1995-96, as against the mere guess work of the CIT(A). The assessee had filed his return in respect of assessment year 2001-02. On scrutiny, assessment was completed on 16.01.2004 by the Assessing Officer under Section 144 of The Act. The income of the assessee-respondent was estimated at Rs. 87,655/- by making the order dated 02.09.2002 passed by the Settlement Commission for the assessment year 1993-94 to 1995-96. The assessing officer had also allowed depreciation, hire charges and interest out of the same. The assessee filed appeal before the Commissioner of Income Tax and vide his order dated 01.11.2004, he estimated the income per truck at Rs. 22,000/-. Feeling aggrieved, the revenue filed further appeal and the Tribunal, vide its order dated 30.03.2006, set aside the order of the Assessing Officer and restored the issue on the file of the CIT (A) for passing a speaking order. On remand, the CIT (A), vide its order dated 20.03.2008, assessed the income per truck at Rs. 45,000/-. Both assessee as well as the revenue challenged the order of the CIT (A) before the Tribunal against the order dated 20.03.2008. The Tribunal dismissed both sets of appeals by observing that in the absence of books of accounts, there cannot be any cut and dry Income Tax Appeal No. 703 of 2009 3 formula to estimate the income per truck. Accordingly, the order passed by the CIT (A) was upheld. We have heard Ms. Urvashi Dugga, learned counsel for the revenue at a considerable length and find that no question of law much less a substantive question of law under Section 260 (A) would arise for determination of this Court. In respect of the assessee-respondent, the CIT (A) has observed while referring to the application filed before the Settlement Commission that assessee used to declare additional income from all sources although main source of his income has been from trucks. The following sources have been mentioned by the CIT (A) in its order namely:- “(i) The efforts to arrange finance to the other transporters / truck owner. (ii) By helping the other transporters to procure route permits. (iii) To extend help to the other transporters for running transportation business. The CIT (A) has further noticed that assessee has been doing the business of plying of truck for a number of years and had gained rich experience. It did not bifurcate the gross income declared before the Settlement Commission head-wise by including income from his main business of plying of trucks. The Settlement Commission concluded that keeping in view the past history of the case, nature of assessee's business, income offered by the assessee before the Settlement Commission and income declared from truck business by other family members of the assessee the only basis for ascertaining his income would be a fair Income Tax Appeal No. 703 of 2009 4 estimation of income per truck. Naturally, there could not have been any mathematical formula with the assessing officer nor the appellate authority could arrive at the estimation of income per truck especially when there are no books of accounts maintained by the assessee. CIT (A) then proceeded to conclude as under:- “10. After considering the facts of the case, and further that assessee has not given any bifurcation of headwise receipts as declared before the Hon'ble Commissions it would be fair if the receipts are taken at Rs. 45,000/- each in respect of 50 trucks. However, in respect of 2 trucks the receipts are taken by the assessee himself at Rs. 1,50,000/- each. Thus the total receipts would workout to Rs. 25,50,000/- i.e. {45,000 x 50) + (1,50,000 x 2). However depreciation and interest including hire charges have to be allowed. The A.O. is directed to work out the total receipts accordingly. 11. It may be submitted that two other family members of the assessee namely S/Sh. Kesar Singh and Fateh Singh were also in the same business i.e. the business of plying of trucks / transportation. The average receipts in respect of 42 trucks in the case of Sh. Kesar Singh and 34 truck in the name of Sh. Fateh Singh has been adopted @ 55,000/- each. However from the figure of depreciation claimed by these two persons (Rs. 13,29,244 in the case of Kesar Singh & Rs. 6,90,825/- in the case of Fateh Singh) it appears that the trucks owned by these two family members of the assessee that the trucks owned by these two family Income Tax Appeal No. 703 of 2009 5 members of the assessee were comparatively of lower age as in the case of the assessee as the assessee has claimed depreciation of Rs. 3,99,240/- in respect of total 52 trucks. This shows that the vehicles owned by the assessee were old as compared to the vehicles owned by the other two family members of the assessee named above. And this is a basis considered for adopting the average truck receipts @ Rs. 45,000 per truck in respect of 50 truck in the present case.” The revenue approached the Tribunal against the aforesaid view of the CIT (A). The appeal of the revenue has been dismissed by holding that when there is an estimation of income because of absence of books of accounts then a difference in opinion is liable to result. In order to put an end to the litigation, the Tribunal upheld the order of the CIT (A) and dismissed the appeal filed by the revenue namely ITA No. 488/CHD/2008 in respect of assessment year 2001-02. The basic reason is that the matter had already been remanded and the CIT (A) had almost estimated double amount of income per truck as compared to the amount worked out earlier. The only argument raised by learned counsel for the revenue is that the rate of income per truck worked out by the Settlement Commission should have been made the basis as was done by the assessing officer. The aforesaid argument overlook the fact that the assessee used to declare additional income from all other sources apart from income from main source i.e. plying of trucks. In that regard, reference has been made by the CIT(A) to the application filed by the assessee which shows that income from three other sources also used to be claimed namely income from consultation services to the other transporters/truck owners, income from Income Tax Appeal No. 703 of 2009 6 other transporters for the help rendered to procure route permits and income from the help rendered to other transporters for running transportation business. It was on the basis of the aforesaid factors that the total income worked out by the Settlement Commission was not taken into account and, therefore, the argument raised by the revenue is devoid of merit. In a case of this nature, there cannot be any legal formula for working out the income and the Tribunal has taken correct view by adopting the opinion expressed by the CIT(A). We find that no substantive question of law would arise warranting admission of the appeal. Accordingly, the appeal fails and the same is dismissed. (M.M. KUMAR) JUDGE (JITENDRA CHAUHAN) JUDGE 22.01.2010 shivani