TMI Blog2017 (7) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... -06 at ₹ 9,571/- which is not possible. Keeping in mind the principles of natural justice, we direct the Assessing Officer to adopt the average profit per Rikshaw in the hands of assessee in assessment years 2001-02 to 2003-04 @ ₹ 6000/-, for assessment years 2004- 05 and 2005-06, the same may be adopted @ ₹ 6,500/- and for assessment years 2006-07 to 2008-09 @ ₹ 7,000/- per vehicle. - ITA No s.932 to 939/PN/2012 - - - Dated:- 21-11-2016 - MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM For The Appellant : Smt. Deepa Khare For The Respondent : Shri Anil Chaware ORDER PER SUSHMA CHOWLA, JM: This bunch of appeals filed by the assessee are against separate orders of CIT(A)-Central, Pune, all dated 29.02.2012 relating to assessment years 2001-02 to 2008-09 against respective orders passed under sections 143(3) r.w.s. 147, 143(3) r.w.s. 153A and 143(3) of the Income Tax Act, 1961 (in short the Act ). 2. This bunch of appeals relating to the same assessee on identical issue were heard together and are being disposed of by this consolidated order for the sake of convenience. However, reference is being made to the facts and issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for purchase of Auto Rikshaws by different buyers through M/s. Sagar Auto which was a proprietary concern of the assessee. The assessee claimed receipt of gross commission of ₹ 1,68,259/- during the instant assessment year, in the return of income. Whereas, in the return filed in response to notice under section 148 of the Act, the assessee declared gross commission of ₹ 1,75,301/-. The Assessing Officer from the seized records noted that the assessee had arranged loans for 275 Autos through Mahesh Sahakari Bank, Karve Nagar Branch, Karve Nagar, Pune. The Assessing Officer further noted that during the course of search and post search enquiries revealed that the assessee had earned commission of at least ₹ 7,023/- per vehicle. The assessee was show caused to explain as to why the said commission amount per vehicle should not be considered to arrive at the total commission earned for the year under consideration. The assessee vide written submissions explained as under:- i) The expenditures mentioned on the statement of assessee dated 05-07- 2007 are genuine and compulsorily incurred in any proposal and hence, they should be considered while arriving at the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee from sale of Autos by arranging loans through banks on the basis of information received from the banks and seized documents and yearwise profit worked out as under:- A.Y. Number of proposals arranged Total profit Average profit per vehicle 2003-04 26 Rs.1,82,600/- Rs.7,023/- 2004-05 15 Rs.1,07,415/- Rs.7,161/- 2005-06 37 Rs.3,54,162/- Rs.9,571/- 2006-07 133 Rs.11,82,191/- Rs.8,888/- 9. The Assessing Officer thus, held that the assessee had earned an average profit of ₹ 7,023/- per Rikshaw as net commission. Thus, the total income for the year under appeal from the said business was worked out at ₹ 19,31,325/- i.e. ₹ 7,023/- x 275. As against the same, the assessee had only declared income of ₹ 1,75,300/-. The Assessing Officer thus, held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorized Representative for the assessee and found that the said case laws were given in different context and were with reference to different set of facts. The next contention of assessee that income could not be computed on estimate basis on presumption and assumption, was also brushed aside as the assessee was not maintaining books of account and post judgment assessment had to be completed on the basis of certain degree of guess work. Another contention of assessee that the profit / income could not be estimated on the basis of documents / information of part of the year was also not found to be justified as in various Judicial Rulings, extrapolation on the basis of documents found for part period had been upheld. Reliance in this regard was placed on the ratio laid down by the Pune Bench of Tribunal in Khopade Kisanrao Manikrao Kisanrao reported 74 ITD 25. The CIT(A) observed that even though the said decision related to charging of on-money in a transaction relating to immovable property, the said principle was equally applicable to the case of assessee. Where it was found on the basis of evidence that the assessee had received on-money in respect of one unit sold, which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he next objection of assessee before the CIT(A) related to non-allowance of deduction of expenses which as per the CIT(A), could be broadly divided into two categories, which read as under:- i) These expenses which are related to the following items will be referred to as expenses of First Category hereinafterwards. i. Meter Passing and petrol, ii. Hood Fitting, navar patti, side plywood, iii. A/R fitting, bar cutting, side bar, frame, glass fitting, iv. Yellow colour, radium patti, v. Assignment charges / commission ii) The other deductions which included losses suffered in some deals, commission to agents / sub-agents / other parties and other expenses will be referred to as Other Expenses herein afterwards. 13. In respect of first category of expenses, the assessee contended that the documentary evidence in respect of the same were found for assessment years 2004-05 to 2008-09 during the course of search operation. ₹ 3,900/- was claimed to have been incurred in respect of these expenses. The assessee mentioned that the said fact was brought to the notice of Assessing Officer, however, the Assessing Officer allowed the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces were found. Since assessment year 2007-08 falls in between the same, the figure of expenses of first category of ₹ 3,900/- per Rikshaw was allowed in respect of all Rikshaws in assessment year 2007-08. Where the figure of commission in assessment year 2005-06 was in the vicinity of this figure of commission in assessment year 2006- 07, the CIT(A) held that the figure of expenses of first category could be taken @ ₹ 3,900/- per Rikshaw in assessment year 2005-06. He further allowed 40% of the amount of commission for assessment years 2001-02 to 2004-05. The CIT(A) thus, re-worked the commission income in the hands of assessee on account of expenses to be allowed of First Category per Rikshaw. The tabulated details of relief on account of said expenses of First Category for various assessment years are tabulated at page 27 of the appellate order. 14. Then, coming to the other expenses, which included non-allowance of losses suffered by the assessee in some of the deals, non-allowance of other expenses and payment of commission to agents / sub-agents / other parties, the CIT(A) observed that the Assessing Officer had dealt with the said objections effectively. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in respect of disallowance of bad debts or losses incurred by the assessee as guarantor or surety. She further pointed out that the issue raised in all the appeals was same i.e. the first issue of reopening of assessment and the second issue of estimation of income. She fairly pointed out that the issue raised on re-assessment is not pressed in any of the year but the issue of estimation of income is strongly pressed in all the years. 17. The learned Departmental Representative for the Revenue placing reliance on the orders passed by the authorities below pointed out that the statement of assessee was recorded during the course of search and the assessee had given break-up of expenses on which basis the Assessing Officer worked out the net commission in the hands of assessee. Then before the Assessing Officer and the CIT(A), the list of additional expenses was given and in the absence of any books of account, the claim made by the assessee was rejected. He placed reliance on the ratio laid down by the Hon ble Delhi High Court in CIT Vs. Chetan Das Lachman Das (2012) 25 taxmann.com 227 (Delhi), wherein it was held that where the assessment is to be made pursuant to search and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be allowed in the hands of assessee. During the course of search, certain evidences were found on account of expenditure incurred by the assessee which related to assessment years 2006-07 and 2008-09. On the basis of the said evidence found, the Assessing Officer had allowed the expenses only to the extent of evidence found. However, the CIT(A) in respect of First Category of expenses allowed the claim of assessee @ ₹ 3,900/- per Rikshaw. The said expenses were allowed in the hands of assessee for assessment years 2005-06 to 2008-09. For the earlier years 2001- 02 to 2004-05, expenditure @ 40% of commission income was allowed which worked out to ₹ 2,809/- in assessment years 2001-02 to 2003-04 and ₹ 2,864/- for assessment year 2004-05. The second claim of assessee was in respect of other expenses i.e. non-allowance of losses suffered by the assessee in some of deals, non-allowance of other expenses and payments to commission agents. In the first instance, the assessee by way of ground of appeal No.5 had raised the issue against disallowance of bad debts or losses incurred by the assessee as guarantor or surety. The assessee has not pressed the said ground of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 7,023/- for the instant assessment year. The assessee pointed out that the said estimation even on the basis of seized diary found during the course of search was higher since the seized diary itself reveals that the same was less than the estimation made by the Assessing Officer. The second claim made by the assessee was in not allowing ₹ 3,900/- as deduction for earlier years and in restricting the same to ₹ 2,809/- and ₹ 2,864/-. The issue by way of ground of appeal No.5 i.e. disallowance of bad debts or losses incurred by the assessee as guarantor or surety at Nil was not pressed and hence, the claim of assessee of other expenses does not survive. The basis for adopting average profit per vehicle at ₹ 7,023/- by the Assessing Officer was on the basis of entries in the diaries / seized documents for assessment year 2003-04. The Assessing Officer had received information in respect of 26 proposals arranged wherein the total profit worked out to ₹ 1,82,600/- and the average profit per vehicle was determined at ₹ 7,023/-. Further, in assessment year 2004-05 on the basis of similar evidence, the average profit was taken at ₹ 7,161/-, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute the income. 24. In assessment years 2003-04 and 2004-05, the grounds of appeal No.1 and 2 are identical to the grounds of appeal No.3 and 4 in ITA No.932/PN/2012 and following the same parity of reasoning, the Assessing Officer is directed to recompute the income in the hands of assessee. The ground of appeal No.3 raised by the assessee is not pressed and hence, the same is dismissed as not pressed. The grounds of appeal raised by the assessee are thus, partly allowed. 25. Coming to assessment years 2005-06 and 2006-07, the ground of appeal No.2 raised is not pressed and hence the same are dismissed as not pressed. The ground of appeal No.1 is against the estimation of commission income at ₹ 9,571/- which is identical to the ground of appeal No.3 in ITA No.932/PN/2012 and following the same parity of reasoning, the Assessing Officer is directed to recompute the income in the hands of assessee. 26. In assessment year 2007-08, the grounds of appeal No.1 and 2 are against estimation of commission at an average profit is identical to the issue vide ground of appeal No.3 in ITA No.932/PN/2012 and following the same parity of reasoning, the Assessing Officer is direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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