ORDER
I.S. Verma, J.M.:
In this appeal, the assessee has objected to the order of Commissioner (Appeals), dated 5-2-1996, by way of following grounds :
(i) The Commissioner (Appeals) was wrong in confirming the assessment of total income of Rs. 1,24,770 on reasonable ground while the Income Tax Officer of Ward-4, Gwalior, assessed the abovementioned total income by imposition of the provisions under sections 44AD and 44AE of the Act for single source of business.
(ii) The Commissioner (Appeals) was not justified in upholding the additions made in total income by the Income Tax Officer but rejected the clause of said additions, i.e., section 44AD.
(iii) The Commissioner (Appeals) was wrong in accepting the true position of the assessee, i.e., he was doing only transport business by deploying his own two trucks, but he had twicely assessed under section 44AE of the Act for truck operation and again 8 per cent of gross receipts of transportation business under section 44AD.
(iv) The Commissioner (Appeals) was not justified to accept the assessment order made by the Income Tax Officer of twicely assessed the single source of business.
2. I have heard the counsel for the assessee as well as the learned Departmental Representative.
3. The counsel for the assessee submitted that the assessee had used the trucks for transportation of fertiliser of M/s R.C.F. Ltd., Bhopal, in consequence upon a transportation contract given to the assessee and, therefore, provisions of section 44AD were not applicable. Explaining his position, the counsel further submitted that the income from so called contract could not be estimated @ 8 per cent because the assessee was not a civil contractor. He, therefore, submitted that the income of Rs. 44,000 shown by the assessee from that work should have been accepted.
4. The learned Departmental Representative, onthe other hand, supported the order of Commissioner (Appeals).
5. I have considered the rival submissions and the facts and circumstances of the case.
6. The facts of the case are that the assessee was to transport fertiliser of M/s R.C.F. Ltd., Bhopal, under the contract of transportation and to execute the contract, the assessee used both of his trucks. While furnishing the return of income, the assessee declared an income of Rs. 48,000 from two trucks under section 44AE of the Act on the ground that it was not maintaining books of accounts. At the same time, the assessee declared another income of Rs. 44,000 on the basis of estimate claiming the same to be over and above the limit fixed under section 44AE of the Act.
7. The assessing officer accepted the income from two trucks as declared under section 44AE of the Act but computed the income from contract transport by applying the provisions of section 44AD of the Act.
8. On appeal by the assessee, the Commissioner (Appeals) upheld the order of assessing officer on the ground that technically section 44AD may not be applicable but 8 per cent profit was not an unreasonable profit.
9. I have considered the rival submissions and the facts and circumstances of the case.
10. After careful consideration of the totality of the facts and circumstances of the case I am of the opinion that the assessee having used both the trucks in executing the transport contract, it is quite possible that the assessee might have earned more income than the income to be earned by a truck owner who uses the truck in the business of plying the same on hire and that is because of the whole of the receipts are to be retained by the assessee. In the present case, the assessee could compute its income in any of the following manners :
(i) Consolidated profit from the transport contract after deducting all expenses, but it could be only after having maintained the books of accounts.
(ii) By showing income from trucks under section 44AE of the Act and profit from transport contract on the basis of books of accounts, if so maintained otherwise on estimate basis.
11. In the present case, the assessee declared the income by following the second method because admittedly, he had not maintained the books of accounts. Under these circumstances, the method adopted by the assessee could not be rejected straightway. The only aspect to be seen was the reasonableness of profit of transportation contract.
12. So far as the assessee’s case is concerned, he himself has declared income from transport contract at Rs. 44,000 against gross receipts of Rs. 9,59,640 which comes to about 5 per cent. The. income of Rs. 44, 000, in view of the fact that the assessee had shown income of Rs. 48,000 having been earned from the same gross receipts, in my opinion, was not low because had the contract been only for civil work and the assessee had used the trucks in executing the same, its income could not be more than 8 per cent of the gross receipts as provided under section 44AD of the Act. I am, therefore, of the opinion that the assessee had already declared more income than the statute requires and consequently the same should have been accepted. So far as application of provisions of section 44AD is concerned, I am in agreement with the assessee that the contract being not of civil nature or for supply of labour, the provisions of section 44AD were not applicable.
13. In view of above facts a:nd circumstances, I am of the opinion that the income declared by the assessee was quite reasonable and there was no necessity of making any further addition. Order of Commissioner (Appeals) is, therefore, set aside and assessing officer is directed to accept the returned income.
14. In the result, assessee’s appeal is allowed.