M/s. Antriksh Engineers Construction Corporation, Delhi V. ACIT, New Delhi

CO 286/DEL/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5295 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-09-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 26-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS PRATIMA KAUSHIK
• Assessee Lawyers: K S CHAUHAN
• Keywords: Business income; Opportunity of being heard; Retraction
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A : NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI C.L. SETHI, JUDICIAL MEMBER I.T.A.NO.3567/DEL/2010 ASSESSMENT YEAR : 2007-08 ASSTT. COMMISSIONER OF INCOME-TAX, M/S. ANTRIKSH EN GINEERS CONSTRUCTION CIRCLE 38(1), NEW DELHI. VS. CORPORATION, 34/C -8, SECTOR-8, ROHINI, DELHI. PAN: AAAFA7875M C.O. NO.286/DEL/2010 (IN I.T.A.NO.3567/DEL/2010) ASSESSMENT YEAR : 2007-08 M/S. ANTRIKSH ENGINEERS CONSTRUCTION ASSTT. COMMIS SIONER OF I. TAX, CORPORATION, 34/C-8, SECTOR-8, VS. CIRCLE 38(1), N EW DELHI. ROHINI, DELHI. (APPELLANTS) (RESPONDENTS) DEPARTMENT BY : MRS. PRATIMA KAUSHIK, SR. DR. ASSESSEE BY : SHR I K.S. CHAUHAN, CA. O R D E R PER C.L. SETHI, JUDICIAL MEMBER. THE REVENUE IS IN APPEAL AGAINST THE ORDER, DATED 2 6.03.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SEC. 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION RELATING THERETO. 2 ITA NO.3567/DEL/2010 2. WE SHALL FIRST TAKE APPEAL FILED BY THE REVENUE. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER:- I) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.1,39,29 ,545/- (RS.1,30,37,171/- + 58,43,759/- - 8035,786/- 50,000 /-) MADE BY THE A.O. AFTER REJECTING THE BOOKS OF ACCOUNTS AND APPLYING NET PROFIT RATE OF 8% TO THE GROSS RECEIPT TO ESTIMATE NET PROFIT. II) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) IS JUSTIFIED IN ACCEPTING THE ASSESSEES CLA IM THAT HE COULD NOT PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE A.O. AS THESE WERE RETAINED BY THE INVESTIGATION WING, WHEN ASSESSEE COULD NOT PRODUCE ANY EVIDENCE OF BOOKS OF ACCOUNTS HAVING BEEN TAKEN POSSESSION BY THE INVESTIGATION WING. III) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS JUSTIFIED IN APPLYING THE PROFIT RATE OF 4.69% WITHOUT THE BOOKS OF ACCOUNTS HAVING BEEN PRODUCED BEFORE H IM AND ASSESSEE HAVING ADMITTED APPLICATION OF 8% TO THE G ROSS RECEIPT FOR ESTIMATING THE NET PROFIT BEFORE A.O. VIDE LETT ER FILED ON 30.12.2009 SIGNED BY THE PARTNER AND THE SAME ADMIS SION HAVING BEEN MADE BY ASSESSEES COUNSEL BEFORE THE A .O. AS PER ORDER SHEET ENTRY DATED 30.12.2009. IV) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) IS JUSTIFIED IN IGNORING THE ADMISSION OF AS SESSEE MADE TWICE THROUGH LETTER OF PARTNER AND ORDER SHEET ENT RY BOTH ON 30.12.2009 ACCEPTING APPLICATION OF RATE OF 8% TO E STIMATE NET PROFIT WITHOUT THERE BEING ANY EVIDENCE TO PROVE TH E ADMISSION TO BE FALSE ESPECIALLY WHEN THERE IS NO RETRACTION BY THE ASSESSEE. V) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE ASSESSEE FROM RETRACTING FROM HIS OWN ADMISSION OF APPLICATION OF 8% TO THE GROSS 3 RECEIPT TO ESTIMATE NET PROFIT WITHOUT THERE BEING ANY CIRCUMSTANCE OR REASON OR EVIDENCE FOR SUCH RETRACT ION. VI) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN INCLUDING THE INTEREST INCO ME OF RS.58,43,759/- AS PART OF BUSINESS INCOME FROM EXEC UTION OF CONTRACT WHEN THIS INCOME WAS EARNED BY INVESTING T HE SURPLUS FUNDS IN FDR AND NOT BY UNDERTAKING EXECUTION OF AN Y CONTRACT. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. 4. IN THIS CASE, THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 31.10.2007 DECLARING TOTAL INCOME AT ` 81,26,463/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SEC.143(2) WAS ISSUED ON 21.07.2008, WHICH WAS SERVED UPON THE ASSESSEE WITHIN THE STIPULATED PERIOD. AFTER HEARING THE ASSESSEE, THE AO THEN COMPLETED THE ASSESSMENT UNDE R SEC. 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT ` 2,04,79,730/- COMPUTED AS UNDER:- (AMOUNT IN RS.) 1. HOUSE PROPERTY INCOME 22,84,004/- LESS: DEDUCTION U/24 (A) 6,85,201/- 15,98,803/- 2. ESTIMATED BUSINESS INCOME 1,31,17,171/- LESS: SALARY PAID TO THE PARTNERS 80,00 0/- 1,30,37,171/- 3. INCOME FROM OTHER SOURCES BANK INTEREST 58,43,759/- 4 TOTAL TAXABLE INCOME 2,04,79,733/- ROUNDED OFF U/S 288A 2,04,79,730/ - 5. THE ASSESSEE FIRM DERIVES INCOME FROM EXECUTION OF CIVIL CONTRACT WORKS. DURING THE YEAR UNDER CONSIDERATION, THE AS SESSEE HAS SHOWN NET PROFIT AT ` 80,35,786/- ON GROSS RECEIPTS OF ` 16,39,64,643/-, WHICH GIVES A NET PROFIT RATE OF 4.9%. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS AND COMPLETE VOUCHERS. IN REPLY THERETO, THE ASSESSEE SUBMITTED THAT THE RELE VANT BOOKS OF ACCOUNT AND VOUCHERS WERE CALLED FOR BY THE INVESTIGATION WING OF THE DEPARTMENT FOR VERIFICATION AFTER SURVEY UNDER SEC. 133A CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 11.11.2008 AND THE BOOKS OF ACCO UNT AND RELEVANT VOUCHERS WERE KEPT BY THE INVESTIGATION WING AND HA VE NOT BEEN RETURNED TILL DATE. THE AO THEN TAKEN A VIEW THAT SINCE THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT AND VOUCHERS OF THE EXPENSES, INCO ME OF THE ASSESSEE WOULD BE ESTIMATED BY APPLYING THE NET PROFIT RATE OF 8% ON GROSS RECEIPTS OF ` 16,39,64,643/-. THE BANK INTEREST INCOME WAS ALSO ASSESSED SEPARATELY AT ` 58,43,759/-. 6. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE CIT(A). THE LEARNED CIT(A) AFTER ADOPTING THE RATE OF NET P ROFIT ACCEPTED IN THE ASSESSEES CASE IN EARLIER YEARS, DIRECTED THE AO T O COMPUTE INCOME 5 ACCORDINGLY IN THE MANNER AS LAID DOWN IN HIS ORDER . HENCE, THE DEPARTMENT IS IN APPEAL BEFORE US. 7. IN THIS CASE THE AO HAS ESTIMATED THE NET PROFIT OF THE ASSESSEE BY APPLYING THE RATE OF 8% SINCE THE ASSESSEE FAILED T O PRODUCE THE BOOKS OF ACCOUNT. ON THE OTHER HAND, THE LEARNED CIT(A) HAS ALLOWED THE RELIEF TO THE ASSESSEE BY ADOPTING THE RATE OF NET PROFIT AS WAS ACCEPTED IN EARLIER YEARS. BUT THE FACT REMAINS THAT BOTH THE AUTHORITIES HAVE FAILED TO EXAMINE AND VERIFY THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS BEEN MAINTAINING REGULAR BOOKS OF ACCO UNT AND THOSE BOOKS OF ACCOUNT WERE LYING WITH INVESTIGATION WING OF THE D EPARTMENT AT THE TIME WHEN THE AO HAS TAKEN UP THE ASSESSMENT TO BE COMPL ETED. IT WAS THUS BEYOND THE ASSESSEES CONTROL TO PRODUCE THE BOOKS OF ACCOUNT BEFORE THE AO. BUT AT THE SAME TIME, THE CIT(A) SHOULD HAVE E XAMINED THE BOOKS OF ACCOUNT OR SHOULD HAVE CALLED FOR A REMAND REPORT F ROM THE AO ON THE EXAMINATION AND VERIFICATION OF THE BOOKS OF ACCOUN T WHICH HAS NOT BEEN DONE. WE THEREFORE, RESTORE THE MATER BACK TO THE FILE OF THE AO FOR FRESH ASSESSMENT AFTER EXAMINING AND VERIFYING THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO SHALL CALL FOR THE BOOKS OF ACCOU NT FROM THE INVESTIGATION WING IN CASE THE BOOKS OF ACCOUNT HAVE NOT IN THE M EANTIME BEEN RELEASED TO THE ASSESSEE, AND THEN EXAMINE AND VERIFY THE SAME AND PASS THE ASSESSMENT 6 ORDER ACCORDINGLY. IN CASE, THE BOOKS OF ACCOUNT H AVE, IN THE MEANTIME, BEEN HANDED OVER BACK BY THE INVESTIGATION WING TO THE ASSESSEE, THE ASSESSEE SHALL BE UNDER DUTY TO PRODUCE THE SAME BE FORE THE AO FOR HIS EXAMINATION AND VERIFICATION SO THAT TRUE AND CORRE CT INCOME OF THE ASSESSEE CAN BE DETERMINED AND ASSESSED. NEEDLESS TO MENTIO N THAT THE AO SHALL PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. WE ORDER ACCORDINGLY. C.O. NO.286/DEL/2010 8. NOW WE SHALL TAKE UP THE CROSS OBJECTION TAKEN B Y THE ASSESSEE. SINCE THE WHOLE ASSESSMENT ORDER HAS BEEN SENT BACK TO TH E FILE OF THE AO FOR HIS FRESH ADJUDICATION, THE ISSUES RAISED IN THE CROSS OBJECTION HAVE BECOME REDUNDANT AT THIS STAGE AND THESE ISSUES SHALL BE E XAMINED FRESHLY BY THE AO AS DIRECTED ABOVE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S TREATED TO BE ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION FI LED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 10. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 12 TH NOVEMBER, 2010. SD/- SD/- (G.E. VEERABHADRAPPA) (C.L. SETHI) VICE PRESIDENT JUDICIAL ME MBER DATED: 12 TH NOVEMBER, 2010. 7 ITA NO.3567/DEL/2010 & CO NO.286/DEL/2010 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.