TMI Blog2018 (10) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In our view, each industry has its own method of accounting. AO has to understand the system of the particular industry. In this case, the ld. CIT(A) has verified the system himself and found to be proper. We are in agreement with the findings of ld. CIT(A). Addition u/s 68 - Held that:- We notice that assessee maintains cash book for all these ventures and wherever there is requirement in all three ventures, he utilizes the funds. In that process, in the hands of the assessee, he controls the same in his capital account. AO has accumulated the whole year transactions and came to the conclusion that there is huge capital introduced. In the day to day activities, the requirement of capital is across the venture/business may not be to that extent. It is the maximum utilization of available funds as per the method suitable to the assessee. AO cannot determine how the cash should be utilized in the business. Ld. CIT(A) has already verified the method of accounting and he has satisfied with the method. AO has not even tried to understand the method followed by the assessee and we are in agreement with the findings of ld. CIT(A). Accordingly, we uphold the action of the CIT(A) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be verified, that full particulars of hire charges paid such as name and address of the person to whom hire charges had been paid was not available, that a substantially large amount of expenses on lorry hire, loading - unloading, brokerage etc. was supported merely by vouchers, that the vouchers for hire charges and other expenses did not contain names and addresses of recipients, and that in the absence of the details, the entries of expenditure were not capable of verification. She, therefore, concluded that the books of accounts could not be relied upon to reflect the correct profits from business and therefore rejected the books and estimated the income of the assessee at 5% of gross receipts of ₹ 30,34,71,576/-, which comes to ₹ 1,01,73,579/-. 7. Before the CIT(A), the AR of the assessee submitted that the major part of the expenditure consisted of lorry hire charges for which the following documents were maintained. i) An advance voucher is prepared at the loading place for payment of advance. The said voucher contains the lorry number, LR number, the product transported and the signature of the lorry driver. ii) A lorry hire pay order is prepared in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... z. 02.04.2008. After examining these bills and vouchers, the CIT(A) found from these records produced before him that the bills and vouchers maintained by the assessee to record the lorry numbers in each case and are also capable of cross-verification. The system of record-maintenance described in para 7. above is exhaustive and comprehensive. He, therefore, held that there is no reason to hold that the entries in the books are not amenable to verification and to reject the books and accordingly, set aside the estimation of income by the AO at 5% and directed the AO to accept the profit returned by the assessee. 8. Before us, ld. DR submitted that the assessee has offered to tax only 1.8% of the gross receipts and AO has clearly brought on record that assessee has not maintained proper records for payment of huge lorry hire charges and loading/unloading charges. He submitted that the entries in the books are not traceable and, therefore, the AO was right in estimating the income. 9. The ld. AR submitted that the assessee follows different method for transport business transaction, for each transaction assessee maintains the voucher system on each day/trip wise. He submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The proprietor owns 6 goods vehicles (trucks) runs on hire the revenues received by him in given to new Mahindra Road Ways cash for short adjustment of paying lorry hire by the firm, whenever the firm receives funds it will be paid back to him. Whatever paid to New Mahindra Road Ways in paid back to proprietor (in cash) and the account was nil at the end of 31.3.2009. 11.2 The AO did not accept this explanation. She noted that M/s. New Mahindra Road Ways and M/s. Mathosri Road Lines were two separate proprietary concerns of the assessee, that books of accounts were maintained for M/s. New Mahindra Road Ways wherein income of ₹ 2,52,000/- from Mathosri Road Lines was admitted u/s. 44AE, that the total receipts from plying of the six own vehicles of M/s. Mathosri Road Lines was ₹ 79,51,759/- against which expenses of ₹ 77,51,149/- had been claimed and net profit from commission was declared at ₹ 2,00,610/-. She also wondered how the assessee had claimed expenditure towards hire charges when the vehicles were owned by him. She concluded that in any event, M/s. Mathosri Road Lines did not have cash availability, after meeting its expenses, for making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48/- has been debited as advance lorry hire paid for coal which includes a sum of ₹ 6,748/- paid for the assessee's own lorry AP 29 TA 1017. There are further such payments included in the lorry hire paid on this day as per the cash book. 8.8 It is thus seen that the assessee is following a method of accounting wherein payments made to himself are also recorded in the books of New Mahindra Road Ways. While this method of accounting may be considered unusual, it cannot be held unacceptable or objectionable. The addition made by the Assessing Officer appears to have been a result of failure to understand this peculiarity in the assessee's books. As stated by the assessee, the assessee has three distinct businesses. Books of account are maintained only for New Mahindra Road Ways and Mathosri Road Ways. The income from the business of own lorries (which does not have a trade-name) has been returned u/s. 44AE. The assessee is entitled to do so. Since, the profit claimed by him is not less than the amount specified in sub.sec 1 and 2 of Sec. 44AE, the assessee was not required to maintain books of account or to get his accounts audited u/s. 44AB. The books for M/s. New ..... X X X X Extracts X X X X X X X X Extracts X X X X
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