TMI Blog2010 (1) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... ating from the same premises where the assessee-company was operating from. Certain incriminating evidence relating to group concern that it was collecting excess amount from the buyers was collected. By drawing analogy, the Assessing Officer assumed that this assessee-company must be collecting excess amount in the same fashion, and on that basis only the Assessing Officer has made assessment orders in all the three assessment years under section 153C read with section 143(3) of the Act in this assessee's case. The assessee-company before us, in fact, is dealing in the purchase and the sale of two wheelers (sic three wheelers and four wheelers have been mentioned by the Assessing Officer). Consequent upon the action under section 132 in the case of sister-concern, notices under section 153C read with section 153A(1)(a) of the Act, were issued to this assessee-company for which the assessee responded by admitting incomes of Rs. 77,204, Rs. 2,10,349 and Rs.2,06,260 for the assessment years 2004-05, 2006-07 and 2007-08, respectively. The assessee-company mainly purchases and sells two-wheelers to prospective customers. With a view to facilitate the customers in getting these vehicl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges a sum of Rs. 2,560, per vehicle for which official-receipt was also issued. The explanation of the group concern, M/s. Susee Auto Sales and Services Pvt. Ltd. dated October 6, 2008 was that to facilitate their customers in getting a new vehicle registered at the Road Transport Officer's office certain amount was collected towards road tax, registration application form, etc. which also included registration fees and other incidental expenses and that all these receipts are accounted for under the head "Registration income account". It was clarified that this amount was spent towards life-time tax, registration fees, stamping fees, postal expenses, pooja expenses, petrol expenses and for the person entrusted with the job of registering the vehicle. The case as explained by the assessee is that these expenses are incurred on behalf of the parties and the expenses are debited to "administrative income account" and the net of the income over expenditure automatically gets included in the profit and loss account of the company. From the above explanation in group company's case, the Assessing Officer came to an irresistible conclusion that this assessee was also collecting simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added the same to the returned income of that year. Aggrieved with the above additions-addition on account of excess amount collected in all these years and the abovementioned addition made in the assessment years 2004-05 and 2006-07, the assessee preferred separate appeals before the learned Commissioner of Income-tax (Appeals). After churning the issue as per the facts available before him, the learned Commissioner of Income-tax (Appeals) has deleted addition of Rs. 5,00,000 each made out of administrative expenses in the assessment years 2004-05 and 2006-07 and has modified the addition made on account of excess collection on the reasoning that the rate of estimated excess collection has to be taken at Rs. 600 per vehicle as against taken at Rs. 2,000 per vehicle by the Assessing Officer. Aggrieved with the above, both the parties have preferred their respective appeals before us. All these appeals were simultaneously heard. The case of the assessee as put forth by the learned authorised representative, Shri Sridhar is that the assessee-company has not been collecting any excess amount as has been alleged to have been collected in the name of registration and sundry expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery charges account" grouped under the income in the profit and loss account and debited a sum of Rs. 2,763 towards said amount and offered remaining sum of Rs. 547 for taxation. But the Assessing Officer has ignored the debit, although he has himself found this fact during search in group-assessee's case who deals both in four wheelers and two wheelers and has relied mainly on the statements recorded in other cases from the directors who also happen to be the directors of the assessee-company. The main reason for disallowance is that the assessee could not support the remaining expenditure with the bills/vouchers. The learned Commissioner of Incometax (Appeals) has further reduced the addition by making his own estimation. Undisputedly, this addition is based on sheer estimation based on statements, which were never confronted to the assessee-company. Any addition which is based on statements which were never confronted to the assessee cannot be sustained in the eyes of the law. Nobody can deny that in this line of business where the assessee purchases and sells two wheelers, it is in the interest of the assessee's sales as well as in the interest of the customer and more par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenses so collected is pocketed by the assessee-company. So what has been stated is that some extra amount is collected for facilitating the work of registration, road tax, etc. and that too, on behalf of the customers and for the help of customers only. Since the assessee has not pocketed any portion of this amount, it would not be worthwhile to discuss about unlawful expenditure which may have been spent in getting the registration of the vehicle that it has to be allowed or not because we are not on that point as that point is not directly involved in the assessee's case. The Assessing Officer has estimated extra collection at Rs. 2,000 per vehicle on the basis of evidences collected in a different assessee's case and that too, is not relevant because there is no admission of pocketing any portion of this amount by them also. As contrast to the above, the learned Commissioner of Income-tax (Appeals) has come to a different figure. The plea taken by the assessee that the estimation done at Rs. 2,000 per vehicle was in relation to four wheelers and not two wheelers whereas the assessee is undeniably dealing in two wheelers only and this fact has been found to be correct by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded in the profit and loss account of the assessee-company. The learned Commissioner of Income-tax (Appeals) has accepted, to some extent, that certain petty expenses which do not amount to prohibited gifts are incidental to the work in question and have to be legitimately incurred and for that vouchers cannot be obtained. He has accepted the deductibility of such petty expenses. He has estimated Rs. 150 towards necessary expenses and has held them allowable as deduction and balance of Rs. 600 per vehicle has been treated as excess collection for which no corresponding deduction would be available. As stated above, the assessee has collected Rs. 3,310 but has debited only Rs. 2,763. As discussed above, Rs. 2,560 per vehicle has been treated as valid expenditure. Thereafter only Rs. 203 remains to be accounted for. The Assessing Officer has not disputed the books of account of the assessee. The learned Commissioner of Income-tax (Appeals) has estimated Rs. 150 as petty expenses towards pooja, etc., which are treated as permissible. In case, this amount of Rs. 150 is reduced from Rs. 203, Rs. 53 remains with the assessee but because the estimation done by the learned Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal-company of the group was M/s. Susee Auto Sales and Services Pvt. Ltd. and the administrative overheads were totally borne by that company and at the end of each accounting period, the administrative overhead expenses were allocated to each of the group concern based on the number of people employed by each concern and their respective sales turnover. Admittedly, all these group concerns were operating from the same premises and the administrative staff employed was common to all the group concerns. From the ledger account of the principal company it was noticed that administrative overheads allocated to the assessee-company have been shown as receipt from the assessee-company and transferred to the profit and loss account of M/s. Susee Auto Sales and Services Pvt. Ltd. but apparently, the Assessing Officer had not made any further enquiries from the assessee-company. The learned Commissioner of Income-tax (Appeals) has deleted the addition made in this account on the premise that the Assessing Officer did not call for any further enquiry and that in any case no excess administrative expenses has been claimed by the entire group and the break-up or details of specific expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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