M/s Reethu Singh Cheema, Patiala V. ACIT, Patiala

CO 42/CHANDI/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2690 (ITAT-CHANDIGARH)
• Duration Of Justice: 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 21-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: DEEPINDER SINGH
• Section: 40A(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO.1207/CHD/2016 (ASSESSMENT YEAR : 2012-13) THE A.C.I.T., VS. SH.REETHU SINGH CHEEMA, CIRCLE PATIALA. #59-B, BHADSON ROAD, PATIALA. SARABHA NAGAR, PATIALA. PAN: AEKPC8430Q AND C.O.NO.42/CHD/2016 IN ITA NO.1207/CHD/2016 (ASSESSMENT YEAR : 2012-13) SH.REETHU SINGH CHEEMA, VS. THE A.C.I.T., #59-B, BHADSON ROAD, CIRCLE PATIALA. SARABHA NAGAR, PATIALA. PATIALA. PAN: AEKPC8430Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEEPINDER SINGH DEPARTMENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 16.01.2016 DATE OF PRONOUNCEMENT : 17.01.2017 O R D E R PER N.K. SAINI, A.M . : THE APPEAL BY THE DEPARTMENT AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST ORDE R OF 2 LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PATIALA, DATED 26.9.2016 RELATING TO ASSESSMENT YEA R 2012-13. 2. FOLLOWING GROUNDS HAS BEEN RAISED IN THIS APPEAL : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D. CIT(A)HAS ERRED IN DELETING THE ADDITION OF RS.59,97,751/- MADE BY THE AO BY APPLICATION OF NET PROFIT RATE OF 12% ON GROSS RECEIPTS AFTER REJECTIN G THE BOOKS OF ACCOUNTS U/S145(3) OF THE INCOME TAX ACT, 1961. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A)HAS ERRED IN DELETING THE ADDITION OF RS.L1,82,950/- ON ACCOUNT OF DISALLOWANCE OF BLASTING EXPENSES. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. C IT(A) HAS ERRED IN DELETING THE ADDITION OF RS.8,41,395/- ON ACCOUNT OF DISALLOWANCE OF EARTH MOVING EXPENSES. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS.59,37,760 /- ON ACCOUNT OF DISALLOWANCE OF PAYMENTS MADE TO SUB-CONTRACTORS. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS.L 6,78,000/- O N ACCOUNT OF DISALLOWANCE OF CAPITAL INTRODUCED. 3 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS.32,09,084/- ON ACCOUNT OF DISALLOWANCE OF STAFF WELFARE, TEA AND ENTERTAINMENT EXPENSES. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,14,802/ - ON ACCOUNT OF DISALLOWANCE OF CASH MADE IN EXCESS OF RS.20,000/- TO A SINGLE PERSON IN A SINGLE DAY. 8. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 9. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FI NALLY DISPOSED OF. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED E-RETURN ON 30.9.2013 DECLARING INC OME AT RS.68,10,000/-, WHICH WAS PROCESSED UNDER SECTIO N 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). LATER ON, THE CASE WAS SELE CTED FOR SCRUTINY. THE ASSESSING OFFICER REJECTED THE B OOKS OF ACCOUNT AND APPLIED NET PROFIT RATE OF 12%. HE ALSO MADE OTHER ADDITIONS AMOUNTING TO RS.1,30,63,991/- OF VARIOUS EXPENSES AND ASSESSED THE INCOME AT RS.1,98,73,991/-. SINCE THE ADDITION BY APPLYING T HE NET PROFIT RATE WORKED OUT TO RS.89,34,003/- WAS LE SS IN COMPARISON TO ADDITIONS OUT OF EXPENSES AT RS.1,30,63,991/-. THE ASSESSING OFFICER BY CONSIDER ING THIS FACT THAT THE ADDITION BY DISALLOWING THE EXP ENSES 4 WAS HIGHER THAN THE ADDITION MADE AFTER APPLYING NE T PROFIT RATE OF 12%, MADE SEPARATE ADDITION OUT OF T HE VARIOUS EXPENSES AMOUNTING TO RS.1,30,63,991/-. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT (APPEALS), WHO BY FOLLOWING T HE DECISION OF THE I.T.A.T., CHANDIGARH BENCH DATED 29.5.2014 FOR ASSESSMENT YEAR 2009-10 IN ASSESSEES OWN CASE DIRECTED THE ASSESSING OFFICER TO APPLY TH E NET PROFIT RATE OF 7.5% AND ACCORDINGLY SUSTAINED T HE ADDITION TO THAT EXTENT. THE OTHER ADDITIONS MADE BY THE ASSESSING OFFICER WERE DELETED BY THE LD. CIT (APPEALS) BY FOLLOWING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT AND VARIOUS BENCHES OF TH E TRIBUNAL BY OBSERVING AS UNDER : SINCE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF TH E CASE AND THE APPLICABLE LEGAL POSITION, REJECTION OF BOOKS OF AC COUNT HAS BEEN UPHELD AND ESTIMATION OF INCOME BY APPLYING A RAT E DETERMINED BY THE HON'BLE ITAT HAS BEEN DIRECTED TO BE MADE, THE ASSESSING OFFICER IS PRECLUDED FROM INVOKI NG ANY OTHER PROVISIONS OF THE INCOME TAX ACT TO MAKE OTHE R ADDITIONS. IN TEJA CONSTRUCTION VERSUS ACIT [39 SOT 1 3] THE HYDERABAD TRIBUNAL HAS OBSERVED THAT 'THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS NOT RELIED, IT WAS REJECTED BY T HE ASSESSING OFFICER AND THE SAME WAS CONFIRMED BY THE CIT(A) AS WELL AS BY US. NOW, BASED ON THE RELIANCE ON THE S AME BOOKS, FOR THE PURPOSE OF INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IS IMPROPER. THE ESTIMATION OF INCOME TAKES CARE OF 5 THE IRREGULARITIES COMMITTED BY THE ASSESSEE. FURTHER ADDITION BY INVOKING SECTION 40 (A) (IA) AMOUNTS TO PUN ISHING THE ASSESSEE FOR SAME OFFENCE ON DOUBLE OCCASIONS, WH ICH IS NOT PERMITTED BY LAW'. THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF CIT V SMT. SANTO SH JAIN (2008) 296 ITR 324 (P&H) HAS HELD THAT 'WHEN INC OME OF THE ASSESSEE WAS COMPUTED BY APPLYING GROSS PROFIT RA TE, THERE WAS NO NEED TO LOOK INTO THE PROVISIONS OF SEC TION 40A(3) OF THE ACT, AS APPLYING THE GROSS PROFIT RATE TAKES CARE OF EXPENDITURE OTHERWISE BY WAY OF CROSSED CHEQUES ALSO. 'ON THE SAME ANALOGY, THE AO IS ALSO PRECLUDED FROM MAKING DISALLOWANCE OF ANY OTHER EXPENDITURE FOR WANT OF PROOF. BY RAISING GROUND NO. 2(D), THE APPELLANT HAS AGITATED THE ADDITION OF RS. 16,78, 000/-ON ACCOUNT OF INTRODUCTION OF CAPITAL BY THE APPELLANT. DURING THE Y EAR UNDER CONSIDERATION, THE APPELLANT HAD SHOWN THE SOURC E OF CAPITAL OF RS.16,78,000/- AS RECEIVED FROM HIS WIFE SM T. MOHINDER KAUR. THE AO FOUND THE EXPLANATION OF THE AP PELLANT UNTENABLE AS 'THE BANK ACCOUNTS FROM WHICH CASH WAS WITHDRAWN WAS OPENED ONLY DURING THE ASSESSMENT YEAR AND USED ONLY TO PROVIDE COLOUR OF GENUINENESS TO THE TRA NSACTION OF RS. 15 LACS. NORMAL BALANCE IN THIS ACCOUNT MAINTAIN ED BY THE ASSESSEE IS AROUND RS.5,000/-. THIS FACT INDICAT ES THAT THIS ACCOUNT WAS OPENED WITH THE ONLY MOTIVE TO USE BANKING CHANNELS TO DISGUISE THAT THE TRANSACTIONS W ERE GENUINE. ASSESSEE HAS ALSO NOT SUBMITTED THE ITR OF HIS WIFE FOR THE RELEVANT PERIOD. FURTHER, ONUS IS ON ASSESSE E TO PROVE THE SOURCE OF CAPITAL INTRODUCED DURING THE YEAR, BUT ASSESSEE HAS TOTALLY FAILED TO PROVE THE CREDITWORTHI NESS OF THE LENDER/INVESTOR AND GENUINENESS OF TRANSACTION.' THUS, THE ENTIRE SUM WAS CONSIDERED UNDISCLOSED INCOME OF THE APPELLANT. 6 IN HIS DEFENCE AT THE APPELLATE STAGE, THE APPELLANT HAS RELIED ON THE DECISION OF HE HON'BLE I.T.A.T., DELHI BENC H G IN THE CASE OF SANDEEP MANGLA VERSUS ITO WARD-21 (3), N EW DELHI WHEREIN RELYING ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF CIT VERSUS AGARWAL ENGINEERING COMPANY (2008) 302 ITR 246 (P&H), THE HON'BLE ITAT HAS HELD THAT 'WHILE THE BOOKS OF ACCOUNTS OF ASSESSES HAS BEEN REJECTED AND NET PROF IT OF ASSESSEE WAS ESTIMATED BY THE AUTHORITIES BELOW THEN NO FURTHER ADDITION UNDER SECTION 68 OF THE ACT WOULD VALIDLY BE MADE ON ACCOUNT OF UNEXPLAINED CASH'. I HAVE PERU SED THE ORDERS OF BOTH AUTHORITIES AND FIND THE CONTENTI ONS OF APPELLANT CORRECT. RESPECTFULLY, FOLLOWING THE DECISION O F THE HON'BLE ITAT WHICH IS BASED ON THE DECISION OF THE HON 'BLE JURISDICTIONAL HIGH COURT, IT IS HELD THAT THE AO IS NOT JUSTIFIED TO MAKE THE IMPUGNED ADDITION. ACCORDINGLY, THE SAME IS ORDERED TO BE DELETED. 5. NOW, THE DEPARTMENT IS IN APPEAL. THE LD. DR SUBMITTED THAT THE LD. CIT (APPEALS) WAS NOT JUSTIF IED IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICE R OUT OF VARIOUS EXPENSES, PARTICULARLY WHEN INCOME WAS N OT DETERMINED BY THE ASSESSING OFFICER BY APPLYING NET PROFIT RATE. 6. IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ISSUE UNDER CONSIDERATI ON IS SQUARELY COVERED BY THE EARLIER DECISION OF THIS BE NCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10 IN ITA NO.284/CHD/2014, ORDER DATED 29.5.20 14. 7 COPY OF THE SAID ORDER WAS FURNISHED, WHICH IS PLAC ED ON RECORD. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVA ILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT AND THEREAFTER MADE SEPARATE ADDITIONS OUT OF THE EXPEN SES. THE LD. CIT (APPEALS) BY FOLLOWING THE DECISION OF THE I.T.A.T. IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009- 10 DIRECTED THE ASSESSING OFFICER TO RESTRICT THE A DDITIONS BY APPLYING THE NET PROFIT RATE OF 7.5%. IT IS NOT ICED THAT IDENTICAL ISSUE WAS A SUBJECT MATTER OF THE DEPARTM ENTAL APPEAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2 009- 10 IN ITA NO.284/CHD/2014 WHEREIN ON THE APPEAL OF THE DEPARTMENT THE NET PROFIT RATE OF 7.5% WAS DIRECTED TO BE APPLIED INSTEAD OF 6% APPLIED BY THE LD. CIT (APPEA LS) AND 10% APPLIED BY THE ASSESSING OFFICER. SINCE THE LD . CIT (APPEALS) DECIDED THE ISSUE BY FOLLOWING THE ORDER OF THE I.T.A.T. FOR ASSESSMENT YEAR 2009-10 IN ASSESSEES OWN CASE WHEREIN THE FACTS WERE SIMILAR TO THE FACTS IN VOLVED FOR THE YEAR UNDER CONSIDERATION. THEREFORE, WE DO NOT SEE ANY INFIRMITY IN THE IMPUGNED ORDER AND ACCORDINGLY , DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 8. AS REGARDS TO THE CROSS OBJECTION FILED BY THE ASSESSEE, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT HE HAS INSTRUCTION NOT TO PRESS THE SAME AND GAVE I N WRITING AS UNDER : 8 C.O. WITHDRAWN DATED 16.1.2017 SD/- DEEPINDER SINGH, ADVOCATE 9. IN VIEW OF THE ABOVE, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS WITHDRAWN. 10. IN THE RESULT, THE APPEAL OF THE DEPARTMENT AN D CROSS OBJECTION OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.01.2017. SD/- SD/- (C.M.GARG) (N.K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17 TH JANUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 9