ORDER
PRADEEP PARIKH, A.M. :
The assessee is in appeal before us against the order of the learned CIT(A), dt. 20th March, 1990, for asst. yr. 1988-89. The grievance of the appellant is in respect of invoking the provisions of s. 145 and making trading additions in three different types of contracts undertaken by the assessee, namely, transportation of gypsum, loading of gypsum in wagons and the contract work relating to P. H. E. D.
2. In respect of the work relating to transportation of gypsum, the Assessing Officer (AO) observed that the freight slips produced by the assessee were prepared by the assessee itself and were signed by the drivers in token of having received the freight. There was no acknowledgement from the truck owner as regards the freight. Moreover, in some of the slips the freight per ton was mentioned whereas in some it was not mentioned. In view of this the AO invoked the provisions of s. 145 and applied a net profit rate of 10% on the contract receipts.
3. Shri Suresh Ojha very strongly assailed the invoking of the provisions of s. 145. According to him, there were only two reasons given by the AO to apply s. 145, viz., that in some of the slips the rate of freight was not mentioned and that the slips did not bear the signatures of the truck owner or that there was no acknowledgement of the truck owner in any form. As regards the mentioning of freight rate on the slips, Shri Ojha submitted that it was not a defect at all and at worst it could be called merely clerical slips. Moreover, the freight was paid at almost uniform rates during the year and hence, there was no reason to imagine that they were bogus or fictitious. As regards truck owners signature, it was submitted that the same was neither necessary nor practicable. It was not necessary because the gypsum was not transported through transport operator but the assessee itself took the trucks on hire and transported the gypsum. It was not practicable because the owners of trucks may be located at various places and it was difficult to hunt for them to obtain their signatures. Finally, it was contended that neither of the defects rendered the determination of income difficult and hence, the AO had unjustifiably applied s. 145.
4. The learned Departmental Representative not only relied on the orders of the lower authorities, but strongly argued as regards the truck owners signatures. He also vehemently stressed that all the supportings produced by the assessee originated from the assessee itself and that there were no external supportings to substantiate the claim of the assessee, particularly, there should have been challans issued by the transporter.
5. We have given our thoughtful consideration to the rival submissions and the material on record. Lot of arguments flowed from both the sides as regards the challan that the transporter sends with the loaded truck and a copy of which is given to the owner of the goods. This in commercial parlance is known as lorry receipt and constitutes title to the goods. Now we take a case of supplier of goods who transports the goods to the buyer through a transporter. In that case, the supplier will hand over the goods to the transporter. The transporter becomes the bailee, who will issue lorry receipt to the supplier and send a copy of it along with the goods. The supplier will send the lorry receipt to the buyer, who, on the basis of this lorry receipt will claim the delivery of goods. Now we take the case of the assessee. The assessee transports the goods on behalf of Rajasthan State Mineral Development Corporation (RSMDC). Thus, RSMDC is the bailer and the assessee is the bailee. On account of the special nature of assignment, special arrangement is worked out. The bailee, that is the assessee, does prepare the lorry receipt, but since at the destination, the assessee itself has to take delivery for onward loading on wagons, there is no need for it to give a copy of the lorry receipt to RSMDC. Thus, only one copy is sent with the truck, on the basis of which the freight slip is prepared, the freight is calculated at agreed rates, paid over to the driver and his signature obtained. In nutshell, it is not the assessee who is transporting its goods through a transporter, but it itself is a transporter who is transporting goods on behalf of another person, namely, RSMDC. In order to carry out this work the assessee takes trucks on hire. Distinction has to be drawn between “taking truck on hire” and “hiring the services of a transporter”. The case before us is that of taking truck on hire in order to render services as a transporter. Thus, we do not agree with the arguments of the Revenue that signature of the truck owner ought to have been obtained. As regards non-mentioning of rates in certain freight slips, we agree with Mr. Ojha that they are merely clerical slips. The fact as regards total tonnage transported could have been easily verified from RSMDC itself and the contract entered into with it by the assessee could have been verified. No such exercise has been undertaken by the assessee (sic). In effect, no defect has been pointed out which would necessitate the application of s. 145. We, therefore, direct that the results as declared by the assessee with respect to transportation contract be accepted.
6. The ground relating to the loading work of gypsum was not pressed at the time of hearing and hence, the same is rejected as such.
7. The third ground relates to the contract work of PHED. In respect of this contract, the assessee did not dispute the application of s. 145. The AO had applied a net profit rate of 10% which was retained by the learned CIT(A). Considering the various fact and circumstances, in our opinion, application of a net profit rate of 8% would meet the ends of justice and hence, we direct accordingly.
8. In the result, the appeal is partly allowed.