Smt. Shalu Prop. Dev Traders, Mainpuri V. I.T.O., Ward-2(4), Mainpuri

CO 65/AGR/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8294 (ITAT-AGRA)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 21-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Section: 44AD

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. 472/AGRA/2012 ASSTT. YEAR : 2008-09 INCOME-TAX OFFICER, VS. SMT. SHALU, WARD 2(4), MAINPURI. PROP. DEVI TRADERS, PACHAURI COMPOUND, MAINPURI (PAN: BPHPS 4981 K) C.O. NO. 65/AGRA/2012 (ITA NO. 472/AGRA/2012) ASSTT. YEAR : 2008-09 SMT. SHALU, VS. INCOME-TAX OFFICER, PROP. DEVI TRADERS, WARD 2(4), MAINPURI. PACHAURI COMPOUND, MAINPURI. (APPELLANT) (RESPONDENT). REVENUE BY : SHRI K.K. MISHRA, JR. D.R. ASSESSEE BY : NONE DATE OF HEARING : 14.02.2013 DATE OF PRONOUNCEMENT OF ORDER : 15.02.2013 ORDER PER BHAVNESH SAINI, J.M.: THE DEPARTMENTAL APPEAL AS WELL AS THE CROSS OBJEC TION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A), GHAZIABAD DATED 09.07.2012 FOR THE ASSESSMENT YEAR 2008-09. ITA NO. 472 & C.O. NO. 65/AGRA/2012 2 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME AT RS.1,57,740/-. THE CASE WAS SELECTED FOR SCRUTINY A ND SEVERAL STATUTORY NOTICES WERE ISSUED AGAINST THE ASSESSEE FOR COMPLETION OF ASSES SMENT, BUT NONE WERE COMPLIED WITH. THE AO ALSO ISSUED SPECIFIC NOTICE THAT IN DE FAULT OF THE ASSESSEE WHY 50% OF THE EXPENDITURE CLAIMED SHOULD NOT BE DISALLOWED. T HE AO ALSO ISSUED 144 NOTICE TO THE ASSESSEE, BUT NO COMPLIANCE HAS BEEN MADE. T HE AO FOUND THAT THE GROSS RECEIPTS OF THE ASSESSEE ARE ABOVE RS.40,00000/-, S O, THE PROVISIONS OF SECTION 44AD ARE NOT APPLICABLE IN HER CASE. THE ASSESSEE H AS NOT PRODUCED THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS BEFORE THE AO DESPITE A SKED FOR. THE BOOK RESULTS WERE, THEREFORE, REJECTED AND EXPARTE ORDER U/S. 14 4 OF THE IT ACT WAS PASSED DISALLOWING 50% OF THE EXPENDITURE CLAIMED BY THE A SSESSEE AND ADDITION OF RS.20,52,960/- WAS MADE COMPUTING THE TOTAL INCOME OF ASSESSEE AT RS.22,10,700/-. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) AND WRITTEN SUBMISSION WAS FILED, WHICH IS INCORPORATED IN THE APPELLATE ORDER. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE CONFIRM ED THE EXPARTE ORDER U/S. 144 OF THE ACT BECAUSE THERE WAS CONTINUOUS NON-COMPLIANCE OF THE STATUTORY NOTICES. THE LD. CIT(A), HOWEVER, FOUND THAT THE DISALLOWANCE OF 50% OF THE EXPENSES IS EXCESSIVE AND RIDICULOUS AND EVEN IF NO BOOKS OF AC COUNT HAVE BEEN PRODUCED, THE PROVISIONS OF SECTION 44AD WOULD APPLY IN THE CASE OF ASSESSEE AND ACCORDINGLY, ITA NO. 472 & C.O. NO. 65/AGRA/2012 3 DIRECTED THE AO TO APPLY THE PROFIT RATE OF 8% AND ASSESSED THE INCOME OF THE ASSESSEE ACCORDINGLY. THE APPEAL OF THE ASSESSEE WA S ACCORDINGLY PARTLY ALLOWED. 3. THE REVENUE HAS RAISED GROUND NO. 1 & 2 IN THE D EPARTMENTAL APPEAL, CHALLENGING THE ORDER OF THE LD. CIT(A) IN DELETING THE SPECIFIC ADDITION BECAUSE NO BOOKS OF ACCOUNT AND VOUCHERS FOR EXPENSES WERE PRO DUCED BEFORE THE AO AS WELL AS BEFORE THE LD. CIT(A). THE ASSESSEE IN THE CROSS OBJECTION HAS CHALLENGED THE EXPARTE ORDER AND ALSO SUBMITTED THAT IT WAS THE FI RST YEAR OF THE BUSINESS AND THEREFORE, ADOPTION OF THE RATE OF 8% IS HIGHLY EXC ESSIVE AND SHOULD BE REDUCED ACCORDINGLY. 4. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIAL O N RECORD AND THE FINDINGS OF THE AUTHORITIES BELOW. HOWEVER, NONE-APPEARED ON BE HALF OF THE ASSESSEE DESPITE NOTIFYING THE DATE OF HEARING THROUGH REGISTERED PO ST. THE LD. DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT SINCE THE GROSS RECEIPTS OF THE ASSESSEE WERE ABOVE RS.40,00,000/-, THEREFORE, THE PROVISIONS OF SECTION 44AD WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. 5. ON CONSIDERATION OF THE FACTS OF THE CASE IN THE LIGHT OF SUBMISSIONS BY THE LD. DR, WE ARE OF THE VIEW THE LD. CIT(A) WAS JUSTI FIED IN HOLDING THAT THE EXPARTE ITA NO. 472 & C.O. NO. 65/AGRA/2012 4 ORDER U/S. 144 OF THE IT ACT WAS RIGHTLY PASSED BEC AUSE THERE WAS A CONTINUOUS NON-COMPLIANCE OF THE STATUTORY NOTICES BY THE ASSE SSEE. GROUND NO. 1 OF THE CROSS OBJECTION IS ACCORDINGLY DISMISSED. HOWEVER, AS REG ARDS THE REMAINING GROUNDS OF CROSS OBJECTION AND THE GROUNDS OF DEPARTMENTAL APP EAL ON MERITS, WE ARE OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT TH E LEVEL OF THE LD. CIT(A). THE AO HAS SPECIFICALLY NOTED IN THE ASSESSMENT ORDER THAT GROSS RECEIPTS OF THE ASSESSEE ARE ABOVE RS.40,00,000/-, THEREFORE, THE PROVISIONS OF SECTION 44AD ARE NOT APPLICABLE. THIS FACT HAS NOT BEEN DISPUTED BEFORE THE LD. CIT( A) EVEN IN THE WRITTEN SUBMISSIONS. MORE SO, WHEN THE ASSESSEE CLAIMED EXP ENDITURE OF RS.41,05,920/-, THE GROSS RECEIPTS OF THE ASSESSEE ARE BOUND TO BE MORE THAN RS.40,00,000/-. THE PROVISO TO SECTION 44AD PROVIDES THAT NOTHING CONTA INED IN THIS SUB-SECTION SHALL APPLY IN CASE THE GROSS RECEIPTS PAID OR PAYABLE EX CEED THE AMOUNT OF FORTY LACS RUPEES. THUS, THE LD. CIT(A) WAS NOT JUSTIFIED IN D IRECTING THE AO TO APPLY THE PROVISIONS OF SECTION 44AD IN THE CASE OF ASSESSEE AND DIRECTING THE AO TO COMPUTE THE INCOME BY APPLYING THE PROFIT RATE OF 8 %. THE LD. CIT(A) SHOULD HAVE EXAMINED THE ISSUE OF DISALLOWANCE OF EXPENSES RAIS ED IN THE APPEAL OF THE ASSESSEE OR HE SHOULD HAVE COMPUTED THE REASONABLE PROFIT CO NSIDERING THE FACTS OF THE CASE ON MERITS. WE, THEREFORE, FIND THAT THE LD. CIT(A) HAS DEVIATED FROM THE CORE OF THE ISSUE BEFORE HIM. THEREFORE, THE MATTER REQUIRES RE CONSIDERATION AT THE LEVEL OF THE LD. CIT(A). WE, ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ITA NO. 472 & C.O. NO. 65/AGRA/2012 5 ISSUE ON MERITS TO HIS FILE WITH THE DIRECTION TO R E-DECIDE THE APPEAL OF THE ASSESSEE ON MERITS BY GIVING REASONABLE AND SUFFICIENT OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL IS ALLOWE D FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS ALSO ALLOWED PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY