Thiruvengatam Vinayagam Vs ITO (ITAT Chennai)
Transport income to be estimated using U/s 44AE as guiding yardstick – Multiple additions deleted; matter partly remanded – ITAT Chennai
In Thiruvengatam Vinayagam vs ITO (A.Y. 2016-17), the assessee, engaged in lorry transport business owning more than ten trucks, faced several additions after special audit u/s 142(2A), including LTCG, unexplained credits u/s 68, investments u/s 69 and disallowances u/s 40(a)(ia), resulting in assessed income of ₹1.51 crore against returned income of ₹8.30 lakh.
The ITAT noted that books and vouchers were destroyed in floods, and earlier coordinate bench decisions in the assessee’s own cases had consistently directed estimation of income using section 44AE as a reasonable guiding principle, even though the provision was not strictly applicable due to ownership of more than ten vehicles.
Holding that estimation of income must be rational and consistent with past precedents, the Tribunal set aside the CIT(A)’s order and directed the AO to recompute transport income by adopting 44AE rates as a benchmark. Consequential additions and disallowances u/s 68, 69 and 40(a)(ia) were deleted as they were subsumed in estimated income, while the LTCG issue was remanded for fresh examination. The appeal was partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
