TMI Blog2018 (10) TMI 1494X X X X Extracts X X X X X X X X Extracts X X X X ..... d sale of scrap. No issue in their respect, as apparent from the orders as well the grounds raised before the first appellate authority, stands raised before the Revenue authorities; the only issue being qua the addition made in assessment. The same, in any case, arising from outside oneself – as is contract receipt, the quantum of income from which source is the subject matter of dispute, is income, as indeed it would be for any other person. Reference in this regard may be made to the decision in Banglore Club v. CIT [2013 (1) TMI 343 - SUPREME COURT] reiterating the settled position of law in the matter with reference to several judicial precedents. We decide accordingly. Assessee’s appeal is partly allowed. - I.T.A. No. 660/Asr/2013 - - - Dated:- 28-8-2018 - Sh. Sanjay Arora, Accountant Member And Sh. N. K. Choudhry, Judicial Member For the Appellant : Sh. Tarun Bansal (Adv.) For the Respondent : Sh. Rajeev K. Gubgotra, (D.R.) ORDER PER SANJAY ARORA, AM: This is an Appeal by the Assessee agitating the Order by the Commissioner of Income Tax (Appeals), Bathinda ( CIT(A)' for short) dated 23.08.2013, partly allowing the assessee s appeal contes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrap sales. The assessee agitated the addition to its returned income in appeal. The ld. CIT(A) noted that despite affording opportunity to produce its books of account for a dozen time by the AO, the assessee did not produce its account books for his examination, who was therefore constrained to estimate the income at the rate of 6% of the total freight receipt . However, as there were decisions by the tribunal as well by himself (listed at pg. 5 of his order), the ld. CIT(A) applied a net profit rate of 2%, further directing the AO to include the income of ₹ 2,83,203/- disclosed by the assessee, which had been, while computing the total income, omitted to the included by the AO inasmuch as he had, on applying the rate of 6%, ignored that returned by the assessee as excess of income over expenditure. Aggrieved, the assessee is in second appeal. 3. We have heard the parties, and perused the material on record. Our first observation in the matter is that the assessee is an AOP, i.e., a person (a term defined u/s. 2(31) of the Act), separate and distinct from the several persons constituting it for the time being. As a reading of the said provision, including Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a matter internal to the assessee, an aspect of the management of its work by it, and which has nothing to do, i.e., per se , with the contractee companies. The assessee claims that it does not retain any part of it, including the TDS component, save the bilty charges of ₹ 10 (per bilty), paying over the entire amount on receipt to the concerned truck operator toward his hire income. The claim, completely unevidenced, has not found favour with the Revenue, which proceeds to estimate the assessee s income therefrom. That is, it is the quantification of the income which is in dispute and is required to be decided by us, which can only be on the basis of the material on record . Continuing further, there is, as afore-noted, nothing to justify its claim, with the assessee admittedly not maintaining any books of account. In fact, the claim of disbursement of even the TDS component stands made before us for the first time; the assessee before the ld. CIT(A) in fact relying on the decision by the tribunal in Mansa Truck Operators Union v. ITO (in ITA No. 296/Asr/2010, dated 15/6/2011 / PB pgs.70-75), wherein the income (from contract receipt) stands estimated at 1.5% t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... centage, to the truck operators, is the maintenance of record, which is completely absent. As such, while a gross revenue of ₹ 361.66 lacs arises to the assessee on account of contract work, it is unable to exhibit the cost thereof, incurred by way of payments, at whatever rate or sum, to the individual truck operators engaged for the purpose. Further still, no case for a set aside has been made by the assessee even before us, as by showing availability of relevant materials, impacting its case favourably, which therefore may need to be admitted and considered. Why, it is this complete absence of any material with the assessee that led the Revenue to estimate its income, and which it does, following the decision by the tribunal in The Truck Union, Sardulgarh (in ITA No. 330/Asr/2010, dated 24.09.2010 / copy on record), at 2% of the gross receipt, also referring to the decision in Warsat Hussain (reported at 171 ITR 405 (Pat)), wherein it stands held that assessment by estimate is one of the processes known to the world of taxation. In fact, the Revenue which is not in appeal against the impugned order, has estimated only the part retained on account of tax deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectus of the case. The same has been taken at 2% following decision by the tribunal cited supra. The rate of tax deduction at source in respect of contract receipt is at 2% thereof (u/s. 194C), implying that the balance 98%, as received, gets disbursed to the truck drivers by way of hire charges, and only the balance retained toward tax liability, is regarded as the income arising to the assessee from the contract work. The same can only be regarded as reasonable. In fact, the Revenue s estimate at 2% (of the contract receipt) agrees with the assessee s contention of the entire amount collected being disbursed inasmuch as the same is only net of TDS. We are conscious of another order by the tribunal, estimating the income, in a similar case, at 1.5%. The matter, it needs to be emphasized, cannot be generalized. In fact, in the very same decision, the tribunal notes of another decision by its Amritsar Bench (in ITA No. 380/Asr/2003, dated 28/4/2006), wherein the profit was estimated at 3%. Why, the assessee has also not disclosed even the admitted income of ₹ 10 per bilty. So, however, the assessee admittedly incurring some expenditure toward running the organization, we, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before the ld. CIT(A). Further, this being a regular source of income, there is no question of two additions, i.e., on account of surplus (Rs.2.83 lacs) and the other as a percentage of the contract receipt. The AO, who estimated the same at 6% of the contract receipt, accordingly, had rightly not included the admitted surplus, which stands therefore wrongly included by the ld. CIT(A) by inferring its exclusion by the AO to be a mistake. The assessee has reported two other incomes, i.e., interest on tax-refund and sale of scrap. No issue in their respect, as apparent from the orders as well the grounds raised before the first appellate authority, stands raised before the Revenue authorities; the only issue being qua the addition made in assessment. The same, in any case, arising from outside oneself as is contract receipt, the quantum of income from which source is the subject matter of dispute, is income, as indeed it would be for any other person. Reference in this regard may be made to the decision in Banglore Club v. CIT [2013] 350 ITR 509 (SC), reiterating the settled position of law in the matter with reference to several judicial precedents. We decide accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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