Sh. Zora Singh, Jind V. ITO, Jind

CO 46/CHANDI/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7155 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-05-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 19-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI H.L. KARWA, V.P. AND SHRI T.R. SOOD, AM ITA NO. 1200/CHD/2010 ASSESSMENT YEAR: 2003-04 ITO , WARD 1 V SHRI ZORA SINGH JIND C/O M/S ZORA SINGH & CO VILLAGE DUMERKHAN KALAN TEHSIL NARWANA JIND PAN: ARBPS 1198 M CROSS-OBJECTIONS NO. 45/CHD/2010 ARISING OUT OF ITA NO. 1200/CHD/2010 ASSESSMENT YEAR: 2003-04 ZORA SINGH V. I.T.O. WARD 1, JIND VILLAGE DUMERKHAN KALAN NARWANA ITA NO. 1201/CHD/2010 ASSESSMENT YEAR: 2004-05 ITO , WARD I, JIND V. ZORA SINGH VILLAGE DUMERKHAN KALAN NARWANA CROSS-OBJECTIONS NO. 46/CHD/2010 ARISING OUT OF ITA NO. 1201/CHD/2010 ASSESSMENT YEAR: 2004-05 ZORA SINGH V. I.T.O. WARD 1, JIND VILLAGE DUMERKHAN KALAN NARWANA (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI N.K. SAINI ASSESSEE BY: SHRI ASHOK GOYAL DATE OF HEARING: 09.05.2012 DATE OF PRONOUNCEMENT: 17.5 .2012 ORDER PER T.R. SOOD, A.M ITA NOS. 1200 AND 1201/CHD/201 0 REVENUES APPEALS - IN BOTH THESE APPEALS THE REVENUE HAS RAISED THE IDENTICAL GROUNDS WHICH ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE ADDITIONS MADE BY ESTIMATING PROFIT @ 6.5% OF TOTAL RECEIPTS BY IGNORING THE FACT THAT IN THE ASS ESSEES CASE FOR THE ASSESSMENT YEAR 2001-02 THE NP RATE OF 6.5% HAS BEE N UPHELD AS A RESULT OF ORDER OF HON'BLE PUNJAB & HARYANA HIGH COURT DATED 13.2.2007. 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN HOLDING THE ACTION OF THE ASSESSING OFFICE R IN REJECTING THE BOOKS OF ACCOUNTS AND ESTIMATING THE PROFITS AS NOT IN ORDER WITHOUT APPRECIATING THAT IN THE REMAND REPORT DATED 28.6.2010, THE ASSESSING OF FICER HAS HIGHLIGHTED THAT THE BOOKS OF ACCOUNT AND VOUCHERS PRODUCED APPEARED TO BE BOGUS, FABRICATED AND ARE NOT RELIABLE. 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 144 AND THE MATTER TRAVELED TO THE TR IBUNAL WHICH WAS REMANDED BACK TO THE FILE OF ASSESSING OFFICER FOR RE-EXAMIN ATION AFTER PROVIDING ADEQUATE OPPORTUNITY AND AFTER EXAMINING THE BOOKS OF ACCOUN T. DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER RAISED THE FOLLOW ING QUERIES: (A) DETAILS OF SALARY AND WAGES PAYABLE SHOWN AT R S. 2,66,400/- WHEN THE CLAIM OF SALARY IS ONLY OF RS. 2,02,600/-. ALSO TO ADDUCE EVIDENCE AS TO THE DATE OF DISCHARGE OF THE AMOUNT PAYABLE WITH EVIDENCE OF PAYMENT. (B) JUSTIFICATION FOR HOUSEHOLD EXPENSES SHOWN IN T HE LIGHT OF THE INFORMATION CALLED FOR IN THE QUESTIONNAIRE ALREADY ISSUED BY THE THEN ASSESSING OFFICER. (C) BASIS AND EVIDENCE FOR EXPENSES CLAIMED AGAINST GROSS RECEIPTS AND EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT . (D) SHOW-CAUSE WHY A RATE AS APPLIED IN THE ASSESSM ENT YEAR 2001- 02 IN HIS CASE, WHICH WAS ALSO UPHELD BY THE LD ITA T SHOULD NOT BE APPLIED IN THE YEAR UNDER CONSIDERATION. (E) TO PRODUCE COMPLETE ACCOUNT BOOKS AND COMPLETE VOUCHERS FORO EXPENSES. IN RESPONSE THE ASSESSEE GAVE REPLY. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNT AND THE VOUCHERS AND IN THE EARLIER ASSESSMENT YEAR 2001-02 THE HON'BLE PUNJAB & HARYANA HIGH COURT HAS ESTIMATED THE PROFIT OF THE ASSESSEE AT 6.5% AN D ACCORDINGLY IN BOTH THE YEARS PROFIT RATE OF 6.5% WAS ESTIMATED. 3. BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNT WHICH HAVE BEEN REJECTED ON FL IMSY GROUNDS. IT WAS POINTED OUT THAT DURING ASSESSMENT YEAR 2001-02 THE FACTS WERE DIFFERENT BECAUSE IN THAT YEAR THE BOOKS WERE LOST AND THE AS SESSEE FILED AN FIR, THEREFORE, THE BOOKS COULD NOT BE PRODUCED. IN VIE W OF THE SUBMISSIONS, THE LD. CIT(A) ASKED FOR THE REMAND REPORT. IN RESPONSE TO WHICH THE ASSESSING OFFICER VIDE HIS REMAND REPORT LETTER DATED 28.6.10 REPORTE D AS UNDER: 3 (I) THE ASSESSEE COULD NOT PRODUCE THE HARD DISC OF THE COMPUTERIZED BOOKS FOR EVIDENCE OF ORIGINAL BOOKS O F ACCOUNT ON THE GROUND THAT IT HAS BEEN DESTROYED. (II) THE ASSESSEE COULD NOT PRODUCE THE ORIGINAL VO UCHERS BEARING SR. NO. ON THE GROUND THAT THE VOUCHERS ARE NOT SERIALL Y MACHINE NUMBERED AS THERE ARE WORKS OF DIFFERENT MANDIES AND DIFFERE NT TYPES OF WORK. (III) THE ASSESSEE COULD NOT PRODUCE THE ACCOUNTANT WHO PREPARED THE BOOKS OF ACCOUNT ON THE GROUND THAT THE ACCOUNTANT LEFT THE SERVICE AND FURTHER DUE TO NOT HAVING GOOD RELATIONS WITH HIM. 4. THE LD. CIT(A) FOUND FORCE IN THE SUBMISSIONS OF THE ASSESSEE AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE VIDE P ARA 9 WHICH IS AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS, PERUSED THE ORD ER OF THE ASSESSING OFFICER AS WELL AS THE MATERIAL REFERRED TO BY THE A.R BEFORE ME AND PROCEED TO DISPOSE OFF THE ISSUE ON THE FOLLOWING L INES. THE BOOKS OF ACCOUNT WERE AUDITED U/S 44AB FOR BOTH THE YEARS. THE ARGUMENT OF THE ASSESSING OFFICER FOR REJECTING THE BOOKS OF ACCOUN T, AS MENTIONED IN THE REMAND REPORT, IS NOT TENABLE AS INSISTING ON PRODU CTION OF HEARD DISC AND THE ACCOUNTANT WHO PREPARED THE BOOKS OF ACCOUNT AF TER MORE THAN 6 YEARS, AS A TEST OF GENUINENESS IS NOT ACCEPTABLE. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DISCREPANCY OR DEF ECT IN THE BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE. IT IS ALSO NOT T HE FINDING OF THE ASSESSING OFFICER THAT THE ACCOUNTS OF THE ASSESSEE WERE NOT COMPLETE. AS REGARDS THE OUTSTANDING WAGES FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSEE FURNISHED 13 AFFIDAVITS IN SUPPORT OF HIS CLAIM. THE ASSESSING OFFICER WAS AT LIBERTY TO SUMMON ANY OR ALL OF THEM IN CASE HE WANTED TO VERIFY THE GENUINENESS OF THE AFFIDAVITS. NO SUCH COURSE OF ACTION WAS, HOWEVER, ADOPTED BY HIM. IT APPEARS THAT THE ASSES SING OFFICER INSTEAD OF APPRECIATING THE BOOKS OF ACCOUNT AND EVIDENCE P RODUCED BY THE ASSESSEE, HAS MISDIRECTED HIMSELF IN REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING THE PROFIT. IT APPEARS THAT THE ORDER O F THE HON'BLE HIGH COURT IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2001-02 WHOSE FACTS ARE DIFFERENT (BOOKS WERE NOT AVAILABLE AND T HEREFORE, NOT PRODUCED, AS MENTIONED ABOVE) HAD AN OVER BEARING I NFLUENCE ON ASSESSING OFFICER IN REJECTING THE BOOKS AND ESTIMA TING THE INCOME FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05. 5. BEFORE US, THE LD. DR FOR THE REVENUE SUBMITTED THAT THE ASSESSEE COULD NOT PRODUCE THE ORIGINAL VOUCHERS BEARING SL NOS. T HE ASSESSEE COULD ALSO NOT PRODUCE THE HARD DISK, THEREFORE, THE BOOKS WERE R IGHTLY REJECTED. IN ANY CASE IN ASSESSEES OWN CASE THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE EARLIER YEARS HAD ESTIMATED THE PROFIT AT 6.5%, THEREFORE, THE PRESENT ESTIMATE OF 6.5% WAS CORRECT. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT ASSESSEE GOT THE ACCOUNTS PREPARED FROM OUTSIDE AGE NCY AND THE AGENCY HAS DESTROYED ITS HARD DISC AFTER A GAP OF 4-5 YEARS. EVEN THE ACCOUNTANT AFTER LONG 4 GAP HAD LEFT AND THAT IS WHY THE HARD DISC AND ACCO UNTANT COULD NOT OBE PRODUCED. THE ASSESSEE WAS ENGAGED IN SUPPLYING LA BOUR IN THE LOCAL MANDIES AND WAS NOT MAKING ANY PURCHASE AND LABOUR EXPENSES WERE IN THE FORM OF PAYMENT TO THE LABOURERS AND OTHER OVER HEADS. WHE N THE PROCEEDINGS WERE SET ASIDE BY THE TRIBUNAL, THE ASSESSEE HAD FIELD 1 3 AFFIDAVITS OF VARIOUS PERSONS TO WHOM THE SALARIES HAVE BEEN PAID. HOWEV ER, THE ASSESSING OFFICER INSTEAD OF EXAMINING OF THESE PERSONS SIMPLY REJECT ED THE BOOKS WITHOUT POINTING OUT ANY DEFECT AND SIMPLY REJECTED THE BOO KS OF ACCOUNT ON FLIMSY GROUNDS AND ESTIMATED THE PROFIT AT 6.5% AS WAS EST IMATED BY THE HON'BLE HIGH COURT IN ASSESSMENT YEAR 2001-02. HE POINTED OUT THAT IN CASE OF ASSESSMENT YEAR 2001-02 THE FACTS ARE TOTALLY DIFFE RENT BECAUSE IN THAT YEAR THE ASSESSEE HAD LOST THE BOOKS AND COULD NOT PRODUCE T HE SAME WHEREAS IN THIS YEAR THE ASSESSEE HAD THE BOOKS OF ACCOUNT WHICH WE RE PRODUCED BEFORE THE ASSESSING OFFICER WHICH COULD NOT BE SIMPLY REJECTE D BY STATING THAT HARD DISC IS NOT PRODUCED AND THE ACCOUNTANT IS NOT PRODUCED. IN THIS BACKGROUND THE IMPUGNED ORDER WAS TOTALLY JUSTIFIED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AN D FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. DE SPITE OF THE MATTER BEING SET ASIDE BY THE TRIBUNAL, THE ASSESSING OFFICER HAS NO T EXAMINED THE BOOKS OF ACCOUNT AND HAS NOT POINTED OUT ANY DEFECT IN THE B OOKS OF ACCOUNT. EVEN THE PERSONS TO WHOM SALARY HAS BEEN PAID AND WHOSE AFFI DAVITS WERE FIELD BEFORE HIM, HAVE NOT BEEN EXAMINED BY HIM. THE BOOKS HAVE BEEN REJECTED MERELY BECAUSE THE HARD DISC WAS NOT PRODUCED, THE ACCOUNT ANT WAS NOT PRODUCED AND THERE IS NO SERIAL NUMBER IN THE VOUCHERS. WE FAIL TO UNDERSTAND HOW THESE ISSUES COULD BE MADE THE BASIS TO REJECT THE BOOKS OF ACCOUNT WITHOUT SHOWING ANY DEFECT IN THE BOOKS. SINCE THIS IS THE SECOND ROUND OF PROCEEDINGS NO FURTHER OPPORTUNITY CAN BE GIVEN TO THE REVENUE. T HE CASE FOR ASSESSMENT YEAR 2001-02 CAN NOT BE FOLLOWED BECAUSE IN THAT YE AR THE ASSESSEE DID NOT HAVE THE BOOKS OF ACCOUNT AND ONLY COURSE LEFT WAS TO ESTIMATE THE PROFITS. 5 THEREFORE, IN OUR OPINION, THE LD. CIT(A) HAS CORR ECTLY ADJUDICATED THE ISSUE AND HIS ORDER DOES NOT CALL FOR ANY INTERFERENCE. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. CROSS-OBJECTIONS NO. 45 AND 46/CHD/2010: ASSESSEES CROSS-OBJECTIONS 9. THE CROSS-OBJECTIONS ARE IN SUPPORT OF THE APPEL LATE ORDER WHICH HAS BEEN CONFIRMED BY US IN THE ABOVE NOTED PARAS AND A CCORDINGLY THE CROSS- OBJECTIONS ARE ALSO ALLOWED. 10. IN THE RESULT, THE CROSS-OBJECTIONS FILED BY TH E ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 17 .05.2012 SD/- SD/- (H.L. KARWA) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 17 .05.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 6