COMMISSIONER OF INCOME TAX Vs. B.L. PASSI

JUDGEMENT

(1.) THESE are three appeals under Section 260A of the Income Tax Act, 1961 (in short "the" Act"), arising out of the decisions of the Income Tax Appellate Tribunal (in short "the Tribunal") in ITAs Nos. 2537/Delhi of 1990 and 627/Delhi of 1993 (assessment year 1986 -87), ITAs Nos. 1013/Delhi of 1991 and 3891/Delhi of 1991 (assessment year 1987 -88) and ITA No. 1014/Delhi of 1991 (assessment year 1988 -89).

(2.) THE issue involved being common to all the years, this order will govern all the three appeals. Since the issue has been discussed in greater detail in the Tribunal's order for the assessment year 1986 -87, we will refer to the facts of that year, as illustrative. The following questions have been posed for adjudication.

(3.) The respondent -assessed is running a proprietary concern under the name and style of Pasco Automobiles, which mainly deals in sales of Maruti cars on commission basis. He also derives share income from two other firms. Both the firms are dealing in purchase and sales of Telco tracks. For the relevant assessment year, the assessed filed his return of income declaring an income of Rs. 37,79,520. In his profit and loss account, the assessed had claimed depreciation of Rs. 10,29,581 on trucks. During the course of assessment proceedings, the Assessing Officer noticed that the assessed had earned commission income of Rs. 36,02,999 on the sale of Maruti cars and Rs. 6,30,848 on the sale of other vehicles as against the commission income of Rs. 6,50,000 earned during the preceding year. Suspecting that the claim of depreciation of Rs. 10,29,581 against the commission of Rs. 36,02,999 was a device to reduce his tax liability to the extent of the depreciation claimed, the Assessing Officer undertook investigation into the said claim. It was found that the assessed had shown to have procured ten trucks from its sister concern during the period between March 3, 1986, and March 15, 1986, without making any payment and these trucks were claimed to have been given on hire to Bombay Okara Cargo Limited and Bombay Okara Carriers Movers Registered at Rs. 300 and Rs. 290 per day, respectively. The hire charges amounting to Rs. 14,850 were shown to have been received from the said concerns. The Assessing Officer asked the assessed to furnish particulars regarding purchase, registration, fabrication of body on chassis and evidence of receipt of hire charges. He also recorded the statement of one Vijay Kumar, accountant of the aforesaid transport companies. Not being satisfied with the Explanation furnished by the assessed, the Assessing Officer disallowed the depreciation on the ground that the assessed had failed to establish the user of the trucks.