9911796707
TMI Blog2020 (2) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... her sources at Rs. 1,25,040/-. Assessee was asked to furnish the details. Assessee submitted that he also carried out transport business in the name of M/s V.K. Transport wherein gross receipts were Rs. 19,88,592/- and expenditure of Rs. 18,63,552/- was incurred, but inadvertently the receipts from M/s. V.K. Transport was not shown along with business carried out in the individual name of which the books of accounts were audited. Ld. AO was not satisfied with this reply and denied the benefit of claiming expenditure u/s 57 of the Act thereby making an addition of Rs. 18,63,552/-. 3. Ld. AO also observed that during the year assessee had received gift of Rs. 10 lacs from his mother-in-law and Rs. 2,50,000/- from his father. Both the donors are relatives of the assessee and it was submitted that they declared gifts on affidavit and both had sufficient source to explain the gift. However there details and submission were not sufficient to convince the assessing officer and he accordingly made the addition for unexplained gift at Rs. 12,50,000/-. Minor addition were also towards disallowance of interest on loan at Rs. 95,247/-, addition u/s 43B of the Act at Rs. 25,977/- and disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h credit/investment resulted into doubt taxation. The addition so made u/s 68 and 69 of the Act, therefore deserved to be quashed. 5. Apropos ground No.1, 2, 3 & 4 Ld. counsel for the assessee vehemently argued referring to the following written submissions: Disallowance of all expenses of M/s. V.K. Transport The appellant derived income from excavation and transportation business under the name and style as "M/s. Vinod Kumar Jain" as well under the name and style as M/s.V.K. Transport. Separate books of accounts were maintained for both, based on which return of income was submitted declaring the same at Rs. 9,21,870/- which was assessed at Rs. 41,81,646/-. Division-wise gross receipts, expenditure and net profit as per books of account were as under :- Particulars Gross receipts including commission Expenditure Net profit Remark M/s. Vinod Kumar Jain Rs. 2,47,40,924/- Rs. 2,38,60,904/- Rs. 8,80,019/- i.e. 3.56% Audit report obtained u/s 44AB of the Act M/s.V.K. Transport Rs. 19,88,592/- Rs. 18,63,552/- Rs. 1,25,040/- i.e. 6.28% Not covered by Tax Audit & offered under the head "Income from other sources". As the transportation work was being carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparately under the head "Income from Other Sources". c) Direct and indirect expenses of M/s. V.K. Transport were already claimed in audited trading account. * The learned Commissioner of Income tax (A) confirmed the disallowance of entire expenditure at page - 4 of the appellate order he observed that both the receipts and expenses of the transport part of the business activity are included in the audited trading account of M/s. Vinod Kumar Jain. Thus, receipts credited in separate set of books of M/s. V.K. Transport was considered as income but expenditure was disallowed on the same grounds stated by the AO vide para-7(g) of the appellate order. While confirming the disallowance he also observed following discrepancies :- i) Gross receipts as per P & L Account of V.K. Transport was Rs. 19,88,592/- whereas as per copy of account of transportation charges it was Rs. 18,04,227/- (Page 34 of P.B). Such observation is incorrect because he did not consider that gross receipts includes excavation charges recovered at Rs. 1,66,365/- separately stated in profit and loss account. (Page 35 of P.B). ii) The bank account in the name of M/s. V.K. Transport maintained with State Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was duly notarized on 01.09.2009 but the same could not be produced before lower authorities because original gift deed executed was misplaced due to change of residential house. The fact regarding gift received was categorically stated during assessment as well appellate proceedings (Page 42 to 44 of P.B). In the absence of such gift deed, the capacity could not be proved before lower authorities whereas the genuineness was proved from the facts and circumstances. Copy of gift deed was found lateron with the father of the appellant. An application under Rule 24 of Income Tax (Appellate Tribunal) Rules 1983 has been filed with request to admit additional evidence. 6. Ld. counsel for the assessee also made an alternate submission though ground No.4 for providing telescopic benefit of Rs. 12.50 lacs submitting as follows: "Additional Ground of Appeal - Telescopic Benefit of Rs. 12.50 lacs: It is humbly submitted that the authorities below disallowed entire expenditure debited in separate profit and loss account of M/s. V.K. Transport amounting to Rs. 18.63 lacs on the ground that such expenses were not incurred at all. Presuming but not admitting such conclusion, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transportation services relating to transport work were provided to various public Limited Company viz. M/s Crompton Greaves Limited and M/s. Dawat Foods Limited, and other concerns. Ledger accounts of various customers of M/s V.K. Transport are placed on record. Assessee does not own any transport vehicle and he carried out this transportation business by hiring trucks/Loory from other concerns for which charges are paid. Major expenses are towards brokerage, diesel expenses, loading services charges, Lorry charges and repairs & maintenance charges. In these given facts and circumstances, assessee having carried out the business of transport cannot be disputed. Since the assessee is carrying out business of providing transport service then certainly expenses incurred for carrying out business needs to be allowed. 11. It is true that assessee has not shown the business receipts and income under the head business income but this reason alone cannot preclude to assessee for claiming incidental expenses incurred for carrying out business. Though, assessee has declared 6.28% net profit rate on the transport business on the gross receipt of Rs. 19,88,592/-, we in the interest of justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 lacs. Accordingly, addition made u/s 68 of the Act for Rs. 10 lacs is direct to be deleted. Thus, ground No.2 of the assessee's appeal is allowed. 15. As regards cash gift of Rs. 2,50,00/- received from assessee's father it has been claimed that his father was deriving income from Kirana and Money Lending business. Since his income was below the taxable limit, return of income was not filed. He being a senior citizen it cannot be denied that he had accumulated savings from land in many years and thus his contribution of Rs. 2,50,000/- as gift to his son for helping him to purchase a residential house cannot be doubted. Gift deed was duly notarized and signed by assessee's father is placed on record. It is also submitted by Ld. counsel for the assessee, that assessee's father has also expired before some time. 16. We, therefore, in the given facts and circumstances of the case and looking to the peculiarity of the facts wherein in the donor has expired after signing an affidavit for the gift given to his son, find no justification in the action of the Ld. AO making the addition for unexplained investment u/s 69 of the Act, since the assessee has duly explained the source of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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