Smt. Praveeta Yadav, Mainpuri V. I.T.O., Ward-2(4), Mainpuri

CO 48/AGR/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7918 (ITAT-AGRA)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 13-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KM ANURADHA
• Keywords: Business income
• Section: 44AD; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.207/AGR/2012 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER (AO) VS. SHRI SURAJ SINGH, WARD-2(4), MAINPURI. PROP. M/S. SURAJ SINGH YAD AV, PACHAURI COMPOUND, OPP. BUS STAND, MAINPURI. (PAN: BPHPS 6572 J). C.O. NO.45/AGR/2012 (IN ITA NO.207/AGR/2012) ASSESSMENT YEAR: 2008-09 SHRI SURAJ SINGH, VS. INCOME TAX OFFICER (AO) PROP. M/S. SURAJ SINGH YADAV, WARD-2(4), MAINPUR I. PACHAURI COMPOUND, OPP. BUS STAND, MAINPURI. (PAN: BPHPS 6572 J). ITA NO.208/AGR/2012 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER (AO) VS. SMT. MEERA SINGH, WARD-2(4), MAINPURI. PROP. M/S. SURAJ TRADERS, RAJA KA BAGH, MAINPURI. (PAN: ARFPM 5428 N). C.O. NO.46/AGR/2012 (IN ITA NO.208/AGR/2012) ASSESSMENT YEAR: 2008-09 SMT. MEERA SINGH, VS. INCOME TAX OFFICER (AO) PROP. M/S. SURAJ TRADERS, WARD-2(4), MAINPURI. RAJA KA BAGH, MAINPURI. (PAN: ARFPM 5428 N). ITA NOS.207, 208, 209 & 210/AGR/2012 C.O. NOS.45, 46, 47 & 48/AGR/2012. 2 ITA NO.209/AGR/2012 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER (AO) VS. SMT. VIMLA DEVI, WARD-2(4), MAINPURI. PROP. M/S. VIMLA DEVI CONTRACTOR, PACHAURI COMPOUND, MAINPURI. (PAN: AHVPD 0816 B). C.O. NO.47/AGR/2012 (IN ITA NO.209/AGR/2012) ASSESSMENT YEAR: 2008-09 SMT. VIMLA DEVI, VS. INCOME TAX OFFICER (AO) PROP. M/S. VIMLA DEVI CONTRACTOR, WARD-2(4), MAINPU RI. PACHAURI COMPOUND, MAINPURI. (PAN: AHVPD 0816 B). ITA NO.210/AGR/2012 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER (AO) VS. SMT. PRAVEETA YADAV, WARD-2(4), MAINPURI. PROP. M/S. ANIBHAI BROTHERS, PACHAURI COMPOUND, MAINPURI. (PAN: ACHPY 2137 K). C.O. NO.48/AGR/2012 (IN ITA NO.210/AGR/2012) ASSESSMENT YEAR: 2008-09 SMT. PRAVEETA YADAV, VS. INCOME TAX OFFICER (AO) PROP. M/S. ANIBHAI BROTHERS, WARD-2(4), MAINPURI. PACHAURI COMPOUND, MAINPURI. (PAN: ACHPY 2137 K). (APPELLANTS) (RESPONDENTS) ITA NOS.207, 208, 209 & 210/AGR/2012 C.O. NOS.45, 46, 47 & 48/AGR/2012. 3 REVENUE BY : KM. ANURADHA, JR. D.R. ASSESSEE BY : SHRI RAJENDRA SHARMA, ADVOCATE DATE OF HEARING : 12.10.2012 DATE OF PRONOUNCEMENT OF ORDER : 19.10.2012 ORDER PER BENCH: THE APPEALS BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEES HAVE BEEN FILED AGAINST DIFFERENT ORDERS, ALL DATED 08.0 2.2012, PASSED BY THE LD. CIT(A), GHAZIABAD FOR THE ASSESSMENT YEAR 2008-09. 2. SINCE THE GROUNDS RAISED IN APPEALS AND CROSS OB JECTIONS ARE BASED ON IDENTICAL SET OF FACTS, THEREFORE, FOR THE SAKE OF CONVENIENCE, ALL THE APPEALS AND CROSS OBJECTIONS ARE DECIDED BY THIS COMMON ORDER. 3. THE ASSESSEE SOUGHT ADJOURNMENT AND THE SAME WAS REJECTED AS THERE WAS NO SUFFICIENT REASON FOR ADJOURNMENT. HOWEVER, AFTER HEARING THE LD. REPRESENTATIVES OF THE PARTIES, THESE APPEALS AND CROSS OBJECTIONS ARE DECIDED ON MERIT AS UNDER:- 4. THE EFFECTIVE COMMON GROUNDS RAISED IN THE APPEA LS FILED BY THE REVENUE ARE THAT THE CIT(A) HAS ERRED IN APPLYING 8% PROFIT RATE INSTEAD OF 50% OF DISALLOWANCE OF EXPENSES BY THE A.O. ITA NOS.207, 208, 209 & 210/AGR/2012 C.O. NOS.45, 46, 47 & 48/AGR/2012. 4 5. IN THE CROSS OBJECTIONS, THE ASSESSEE HAS RAISED GROUND THAT THE A.O. HAS MADE ASSESSMENT UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) WITHOUT APPRECIATING THE FACTS OF THE CASE. THE CIT(A) HAS WRONGLY IGNORED THE AUDIT REPORT MERELY ON THE GROUND THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT. THE ASSESSEE HAS ALSO RAISED GRO UND THAT THE 8% RATE APPLIED BY THE CIT(A) IS EXCESSIVE. 6. SINCE THE FACTS ARE COMMON, THEREFORE, FOR THE S AKE OF CONVENIENCE, THE FACTS NOTED IN THE CASE OF SHRI SURAJ SINGH IN ITA NO.207 /AGR/2012 HAS BEEN CONSIDERED. 7. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN BUSINESS AS PROPRIETOR IN SUPPLY OF CONSTRUCTION MATERIAL. THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS BEFORE THE A.O. THE ASSESSEE DID NOT A PPEAR BEFORE THE A.O. ALSO INSPITE OF NUMBER OF OPPORTUNITIES OF HEARING WERE GIVEN. THE A.O. RELIED UPON VARIOUS ORDERS OF I.T.A.T. AND OTHERS AND DISALLOWE D 50% OF EXPENDITURE. THE PARTY WISE DETAILS OF AMOUNT OF ADDITION BEING 50% OF EXPENDITURE ARE AS UNDER :- 1) IN THE CASE OF SHRI SURAJ SINGH RS.40,18,293/- 2) IN THE CASE OF SMT. MEERA SINGH RS.27,15,811/- 3) IN THE CASE OF SMT. VIMLA DEVI RS.32,23,751/- 4) IN THE CASE OF SMT. PRAVEETA YADAV RS.40.42,698 /- ITA NOS.207, 208, 209 & 210/AGR/2012 C.O. NOS.45, 46, 47 & 48/AGR/2012. 5 8. THE ASSESSEE FILED WRITTEN SUBMISSION BEFORE THE CIT(A) STATING THAT THERE WERE FAMILY DISPUTE AND THE ASSESSEE WAS PREVENTED BY UNAVOIDABLE CIRCUMSTANCES TO APPEAR PERSONALLY OR TO TAKE CARE OF CASES PERSO NALLY ON ACCOUNT OF ADVERSE CIRCUMSTANCES. THE LD. AUTHORISED REPRESENTATIVE D EPUTED FOR THE PURPOSE ALSO APPEARS TO HAVE LOST TRACK OF THE CASE AND WERE THU S NOT PROPERLY REPRESENTED THOUGH COMPLETE BOOKS OF ACCOUNT HAVE BEEN MAINTAIN ED FOR THE BUSINESS ACTIVITIES AND BOOKS OF ACCOUNT ARE AUDITED BY CHARTERED ACCOU NTANT. THE AUDIT REPORT ALONG WITH TRADING AND PROFIT & LOSS ACCOUNT WAS FURNISHE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS ALSO STATED THAT IT WAS THE FIRST YEAR OF ASSESSEES BUSINESS. THE ACCOUNTANT OF THE ASSESSEE DID NOT C O-OPERATE WITH THE ASSESSEE. THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT THE A SSESSEE DECLARED G.P. OF RS.2,79,812/- ON TOTAL SALES OF RS.81,99,080/- INCL UDING CONTRACT RECEIPTS WHICH GAVE PROFIT RATE OF 3.4%. THE ASSESSEE DECLARED PR OFIT OF RS.1,62,494/- GIVING A NET PROFIT RATE OF 2% ON TOTAL TURNOVER OF RS.81,99 ,080/-. 9. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE REI TERATED THE SUBMISSIONS WHICH WERE MADE BEFORE THE CIT(A) AND SUBMITTED THA T IN A.Y. 2009-10 THE A.O. HIMSELF HAS ACCEPTED THE INCOME DECLARED BY THE AS SESSEE MAKING ADHOC TRADING ADDITION OF RS.60,000/- IN CASE OF SHRI SURAJ SINGH , RS.30,000/- IN CASE OF SMT. MEERA SINGH, RS.40,000/- IN CASE OF SMT. VIMLA DEVI AND CASE OF SMT. PRAVEETA ITA NOS.207, 208, 209 & 210/AGR/2012 C.O. NOS.45, 46, 47 & 48/AGR/2012. 6 YADAV HAS NOT BEEN SELECTED FOR SCRUTINY. THUS, TH E INCOME DECLARED IN THE RETURN WAS ACCEPTED. 10. THE CIT(A), AFTER CONSIDERING THE ASSESSEES SU BMISSION, CONFIRMED THE ACTION OF THE A.O. IN COMPLETING THE ASSESSMENT UND ER SECTION 144 OF THE ACT. THE CIT(A) REJECTED THE ASSESSEES CONTENTION ON THE GR OUND THAT NON-PRODUCTION OF BOOKS OF ACCOUNT INSPITE OF SO MANY OPPORTUNITY AND EVEN DURING THE APPELLATE PROCEEDINGS GOES TO IMPLY THAT THE ASSESSEE ONLY RE LIED UPON THE AUDIT REPORT WHICH IS NOT SUFFICIENT. THE CIT(A) HAS ALSO CONSIDERED PROVISIONS OF SECTION 44AD FOR ESTIMATION OF N.P. THE CIT(A) ACCORDINGLY DIRECTED THE A.O. TO APPLY 8% N.P. TO THE TURNOVER DISCLOSED. 11. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE ASSESSEES ARE ENGAGED IN SUPPLY OF BUILDING MAT ERIAL AND CONTRACT WORKS. THE SUMMARY OF FACTS OF TOTAL TURNOVER, G.P. DECLARED, ADDITION MADE, RETURNED INCOME AND RATE OF PROFIT APPLIED BY CIT(A) IN ALL THE FOU R CASES ARE AS UNDER :- ASSESSEE TOTAL TURNOVER G.P. DECLARED BY THE ASSESSEE ADDITION MADE BY THE A.O. RETURNED INCOME N.P. RATE APPLIED BY CIT(A) SHRI SURAJ SINGH 81,99,080/- 2,79,812/- 40,18,293/- * 1,62,494/- 8% SMT. MEERA SINGH 55,76,360/- 3,46,120/- 27,15,811/- * 1,49,950/- 8% SMT. VIMLA DEVI 66,26,000/- 3,88,630/- 32,23,751/- * 1,78,490/- 8% SMT. PRAVEETA YADAV 62,35,870/- 2,74,350/- 40,42,698/- * 1,50,470/- 8% * 50% OF TOTAL EXPENSES ITA NOS.207, 208, 209 & 210/AGR/2012 C.O. NOS.45, 46, 47 & 48/AGR/2012. 7 12. ON PERUSAL OF THE ABOVE TABLE, WE NOTICE THAT T HE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT. THEREFORE, THE BOOKS OF ACCOUNT AMOUNTS TO REJECTION UNDER SECTION 145(3) OF THE ACT. THE ACTION OF THE A.O. IN THIS REGARD IS UPHELD. AFTER REJECTING THE BOOKS OF ACCOUNT, THE NEXT STEP REQUI RED TO BE TAKEN IS ESTIMATION OF INCOME UNDER SECTION 144 OF THE ACT. FOR THE PURPO SE OF ESTIMATION, NO DOUBT THAT THERE IS CERTAIN DEGREE OF GUESS WORK, BUT IT SHOUL D HAVE A REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF THE EAC H CASE. ON CONSIDERATION OF REASONABLE AND FAIR ESTIMATION OF INCOME, WE NOTICE THAT IN THE CASE UNDER CONSIDERATION THE A.O. OUT RIGHTLY DISALLOWED 50% O F EXPENSES. THE CIT(A) ESTIMATED THE INCOME OF ASSESSEE BY APPLYING 8% NET PROFIT RATE. WE FIND THAT THE ESTIMATIONS MADE BY BOTH THE REVENUE AUTHORITIES AR E NOT FAIR AND REASONABLE. THERE IS NO SUCH BUSINESS WHERE 50% PROFIT MARGIN I S THERE, THEREFORE THE DISALLOWANCE OF 50% EXPENSES BY THE A.O. CANNOT BE UPHELD. THE CIT(A) HAS ALSO APPLIED 8% NET PROFIT RATE WITHOUT CONSIDERING THE FACT THAT THERE ARE THREE LADY ASSESSEES, SMT. MEERA SING, SMT. VIMLA DEVI & SMT. PRAVEETA YADAV. AS STATED ABOVE, THE NATURE OF BUSINESS OF THESE LADY ASSESSE ES ARE SUPPLY OF BUILDING MATERIAL AND CONTRACT WORK. THE SCHEME OF THE INCO ME TAX ACT ITSELF HAS ACCEPTED THAT PARTICULARLY LADY ASSESSEES ARE ELIGIBLE FOR S OME CONCESSIONAL BENEFIT, THAT IS WHY, EVEN MINIMUM TAXABLE LIMIT IS PROVIDED TO LADY ASSESSEE FOR SOME HIGHER AMOUNTS. THESE LADY ASSESSEES ARE PROPRIETORS OF T HE BUSINESS. THEREFORE, PROFIT IN BUSINESS CANNOT BE SAID TO BE A PROFIT RATE OF A GE NERAL BUSINESS MAN I.E. 8% N.P. ITA NOS.207, 208, 209 & 210/AGR/2012 C.O. NOS.45, 46, 47 & 48/AGR/2012. 8 RATE. CONSIDERING THE NATURE OF BUSINESS OF THE AS SESSEE AND STATUS OF THE ASSESSEE, THE ESTIMATION OF PROFIT IS REQUIRED TO BE MADE AT FAIR AND REASONABLE. IN THE A.Y. 2009-10, THE A.O. HIMSELF ACCEPTED ADHOC TRADING AD DITION OF RS.30,000/- IN CASE OF SMT. MEERA SINGH, RS.40,000/- IN THE CASE OF SMT . VIMLA DEVI AND IN THE CASE OF PRAVEETA YADAV THE RETURN FILED BY THE ASSESSEE HAS BEEN ACCEPTED AND NOT SELECTED FOR SCRUTINY. THUS, CONSIDERING THE TOTALITY OF TH E FACTS AND PECULIAR FACTS OF THE CASE, IT WILL BE FAIR AND REASONABLE TO BOTH THE SI DES IF THE ADDITION TO THE EXTENT OF RS.50,000/- EACH IN ALL THE THREE CASES, I.E. SMT. MEERA SINGH, SMT. VIMLA DEVI AND SMT. PRAVEETA YADAV, ARE SUSTAINED. WE ACCORDINGLY UPHOLD THE ADDITION TO THE EXTENT OF RS.50,000/- EACH IN THE CASE OF SMT MEERA SINGH, SMT. VIMLA DEVI AND SMT. PRAVEETA YADAV. THE A.O. IS DIRECTED ACCORDIN GLY. 13. IN THE CASE OF SHRI SURAJ SINGH, THE NATURE OF BUSINESS IS SAME AS DISCUSSED ABOVE I.E. SUPPLY OF BUILDING MATERIAL AND CONTRACT WORK. IN THIS CASE ALSO, 50% DISALLOWANCE OUT OF TOTAL EXPENSES MADE BY THE A.O. AND 8% NET PROFIT RATE APPLIED BY THE CIT(A) IS ALSO NOT FAIR AND REASONABLE. IN A.Y. 2009-10 THE A.O. HIMSELF ACCEPTED RS.60,000/- ADHOC TRADING ADDITION. CONS IDERING THE INCOME DECLARED IN THE RETURN AND IN THE LIGHT OF ABOVE DISCUSSION, IT WILL BE FAIR AND REASONABLE IF THE ADDITION TO THE EXTENT OF RS.1,00,000/- IS SUSTAINE D TO COVER UP ALL LAPSES AND DEFICIENCIES WHICH WILL BE FAIR AND REASONABLE IN T HE CASE OF SHRI SURAJ SINGH. ITA NOS.207, 208, 209 & 210/AGR/2012 C.O. NOS.45, 46, 47 & 48/AGR/2012. 9 14. ONE OF THE GROUNDS RAISED IN THE CROSS OBJECTIO N FILED BY THE ASSESSEE IS THAT THE A.O. MADE ASSESSMENT UNDER SECTION 144 OF THE A CT WITHOUT APPRECIATING THE FACTS OF THE CASE. IN THE LIGHT OF THE ABOVE DISCU SSION, WHEN THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT, THE A.O. HAS RIGHTLY ACQU IRED THE POWER UNDER SECTION 145(3) OF THE ACT TO REJECT THE BOOKS OF ACCOUNT AN D ESTIMATE THE INCOME IN PRINCIPLE. THEREFORE, ORDER OF THE A.O. IN THIS RE GARD IS CONFIRMED. HOWEVER, THE ESTIMATION MADE WAS ON HIGHER SIDE OR EXCESSIVE WHI CH HAS BEEN DECIDED AS ABOVE. 15. IN THE RESULT, ALL THE FOUR APPEALS FILED BY TH E REVENUE ARE DISMISSED AND ALL THE FOUR CROSS OBJECTIONS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY