TMI Blog2011 (4) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... an occasion to estimate the income earned by the assessee from such trucks. The income earned by the assessee on account of trucks owned by others is to be computed at the rate of 3.5 per cent of the gross receipts being Rs. 7.05 crores. The income relating to the year under appeal needs to be worked out by applying the guidelines laid down by section 44AE at the rate of Rs. 3500 per month per truck. The assessee is not entitled to any claim of depreciation on the said trucks, which is deemed to be allowed while computing the income in view of the provisions of section 44AE - in favour of assessee for statistical purposes. - IT APPEAL NO. 90 (CHD.) OF 2011 - - - Dated:- 27-4-2011 - D.K. SRIVASTAVA, MS. SUSHMA CHOWLA, JJ. Rohit Goel for the Appellant. Smt. Sarita Kumari for the Respondent. ORDER Ms. Sushma Chowla, Judicial Member. The appeal filed by the assessee is against the order of the Commissioner of Income-tax (A), dated 24-9-2010 relating to assessment year 2006-07 against the order passed under section 143(3) of the Income-tax Act. 2. The grounds of appeal raised by the assessee read as under : "(1) That the authorities below have err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoked and net profit be calculated at the rate of 5 per cent of gross freight receipts. The Assessing Officer further noted that the amount of total freight receipts i.e., freight reflected in the TDS certificate furnished along with the return of income and freight actually shown in the Profit Loss Account were different. As per a chart submitted by the assessee, the total freight received amounted to Rs. 11,46,59,126 as against Rs. 2,90,83,962 credited in the Profit Loss Account. As per the TDS certificate, the freight receipts worked out to Rs. 10,21,57,831. The Assessing Officer observed that the receipts were not verifiable as most of the GRs were not produced. The explanation of the assessee regarding difference in freight was that apart from its own trucks, it arranges trucks from various parties to fulfil the terms of contract and the assessee sends the trucks to the consignor on its behalf and make payment to the truck owners from its own pocket. The payment of freight is thus more than as reflected in the TDS certificate/s. The assessee in its reply submitted that it had received payment of Rs. 11,46,59,126 during the year on which TDS of Rs. 20,85,821 was deducted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the provisions of section 44AE of the Act were not applicable as the same are to be applied where the number of trucks owned were up to 10, whereas in the case of the assessee the numbers of trucks were around 30. Further the Assessing Officer pointed out mismatch in the total freight receipts and those reflected in the accounts and in the absence of proper evidence being produced by the assessee, the estimation of income under section 44AE of the Act was held to be not acceptable. Further the Assessing Officer noticed the assessee not to have maintained vouchers pertaining to freight paid to other truck owners to the extent of Rs. 7.05 crores and no TDS was deducted out of said payment. In the circumstances, the commission stated to be shown at the rate of 3.16 per cent was held to be not only quite low but also not reliable due to lack of primary documents. The Assessing Officer further observed that in the case of the assessee itself relating to assessment year 2004-05 a net profit rate of 3.5 per cent on freight collected on behalf of other truck owners was applied vide order passed under section 143(3) of the Act dated 28-12-2006. Keeping in view the increase in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest and salary to the partners to be allowed at Rs. 6,39,090 and total taxable income by the assessee works out to Rs. 26,08,307. The said calculation is placed at page 32 of the Paper Book. The learned A.R. further pointed out to the reconciliation statement with M/s. Bharat Sanchar Inds. and stated that there was a net difference of Rs. 1,39,293, which was explainable. 8. The learned D.R. for the Revenue relying on the orders of the authorities below pointed out that the provisions of section 44AE of the Act were not applicable. 9. We have heard the rival contentions and perused the record. The Assessing Officer elaborately pointed out the defects in the books of account maintained by the assessee which have not been clarified or explained with evidence by the assessee. The assessee has failed to produce the necessary record to be maintained in the course of carrying on transportation business and in the absence of the same, results shown by the assessee cannot be accepted. Further, in the absence of proper vouchers being maintained by it, the assessee has failed to justify the expenditure claimed by it in its Profit Loss Account. The learned A.R. for the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted subject to conditions specified in section 40(b) of the Act. It is further provided that WDV of the assets used for the business shall be deemed to have been calculated as depreciation shall be deemed to have been claimed and allowed for each of the years. The option is given to the assessee to claim lower Profit Gains where he keeps and maintains books of account as prescribed and gets its account audited under the provisions of the Income-tax Act. As per the Explanation under the section it is provided that the goods carriages and heavy goods vehicles shall have the meaning assigned to them in section 2 of the Motor Vehicle Act and further lays down that where an assessee is in possession of a goods carriage, whether taken on hire, purchase or on instalments and for which the whole or part of the amount payable is still due, shall be deemed to be the owner of such goods carriage. 12. In the facts of the present case before us, admittedly the assessee during the year under consideration is owning more than 10 goods carriages. The provisions of section 44AE are not applicable to the facts of the present case. However, in the present set of circumstances where the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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