DCIT Vs Sukhbir Singh Chabra HUF (ITAT Delhi)
ITAT Delhi Upholds 44AE Presumptive Income — Rejects Revenue’s Allegation of Tax Evasion in Related-Party Transport Business
The Revenue appealed against the order of CIT(A) deleting an addition of ₹1.69 crore made as unexplained income in the case of the Assessee-HUF engaged in truck transportation. AO had alleged that Assessee, a related party of ABC Transport Co. Pvt. Ltd., was part of a group arrangement to divert profits using presumptive taxation u/s 44AE & 44AD. He treated 50% of receipts from the related concern (₹3.38 crore) as unexplained income & made an additional ad hoc addition of ₹5.38 lakh as business income.
CIT(A) deleted the additions holding that the Assessee had l
Sukhbir Singh Chabra HUF
egitimately declared presumptive income u/s 44AE/44AD on transport receipts, owning 10 trucks as required under law, & that similar arrangements were accepted in related cases. He found no evidence of bogus transactions & held that tax planning through legitimate means cannot be equated with tax evasion.
Before the Tribunal, Revenue argued that CIT(A) accepted additional evidence in violation of Rule 46A. However, the Bench noted that the Revenue failed to show which evidence was new & that the documents relied upon were already before the AO. Dismissing the objection, the ITAT endorsed the CIT(A)’s reasoning that the Assessee’s business of plying trucks was genuine, & the AO’s inference of colourable device was based merely on suspicion. Referring to A. Raman & Co. (67 ITR 11 SC) & Vodafone International Holdings B.V. v. UOI (341 ITR 1 SC), the Tribunal observed that legitimate tax planning is permissible & cannot be treated as evasion.
