Sh. Kuldeep Sharma, New Delhi V. ITO, Ghaziabad

ITA 1/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6746 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 01-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice
• Section: 44AD; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH D NEW DELHI BEFORE : S MT. DIVA SINGH, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 01/DEL./2014 ASSTT. YEAR : 2008 - 09 SH. KULDEEP SHARMA, VS. INCOME - TAX OFFICER, C/O M/S. RRA TAXINDIA, WARD 1(3), GHAZIABAD. D - 28, SOUTH EXTENSION, PART - I, NEW DELHI.(PAN:ANTPS1033P) (APPELLANT) (RESPONDENT) APPELLANT BY : DR. RAKESH GUPTA, ADVOCATE & SH. SOMIL AGARWAL, ADVOCATE RESPOND ENT BY : SH. F.R. MEENA, SR. DR DATE OF HEARING : 21.07.2016 DATE OF PRONOUNCEMENT : 29 .07.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), MUZAFFARNAGAR DATED 30.09.2013 FOR THE ASSESSMENT YEAR 2008 - 09 ON THE FOLLOWING GROUNDS : 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. C I T(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN DISALLOWING AN AGGREGATE AMOUNT OF RS.21 ,82,2507 - UNDER THE HEAD JOB WORK CHARGES PAYABLE, WAGES PAYABLE AND LABOUR CHARGES PAYABLE AND THAT TOO WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING AND WITHOUT CONSIDERING THE SUBMISSIONS AND EVIDENCES AVAILABLE ON RECORD AND BY RECORDING INCORRECT FAC TS AND FINDINGS. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN ITA NO. 01/DEL./2014 2 MAKING ADDITION OF RS.20,000/ - ON ACCOUNT OF ALLEGED UNEXPLAINED CREDIT AND THAT TOO WITHOUT CONSIDERING THE SUBMISSION OF THE ASSESSEE. 3. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, IMPUGNED ADDITION/DISALLOWANCE AND IMPUGNED ASSESSMENT ORDER ARE BAD IN LAW, ILLEGAL, UNJUSTIFIED, CONTRARY TO FACTS & LAW AND BASED UPON RECORDING OF INCORRECT FACTS AND FINDING, WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING, IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THE SAME DESERVES TO BE QUASHED. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN PASSING THE IMPUGNED EX - PARTE ORDER AND THAT TOO WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING AND WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. LD. CIT(A) HAS ERRED I N LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO IN CHARGING INTEREST U/S 234B AND 234D OF INCOME TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR AND HAS FILED RETURN OF INCOME DECLARING AN INCOME OF RS.3 ,96,059/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT TOTAL TURNOVER FOR ASSESSMENT YEAR IS AT RS.45,91,903/ - GIVING G.P. RATE OF 26 .06% AND N.P. RATE OF 9.23% AS AGAINST G.P. RATE OF 25.21% AND N.P. RATE OF 8.17% FOR THE ASSESSMENT YEAR 2007 - 08 WHICH SHOWS AN INCREAS ING TREND. ON SCRUTINY OF BOOKS OF ACCOUNTS , THE ASSESSING OFFICER NOTED THAT THERE WAS OUTSTANDING LIABILITY SHOWN IN T HE BALANCE SHEET FOR A SUM OF RS.11,18,150/ - ON ACCOUNT OF JOB WORK CHARGES PAYABLE, RS.8,79,100/ - AGAINST LABOUR CHARGES PAYABLE AND RS.1,85,000/ - OF WAGES PAYABLE. THE ASSESSEE WAS ASKED TO PRODUCE THE VOUCHERS AND COPY OF ACCOUNT OF CREDITORS. THE ASSE SSEE ITA NO. 01/DEL./2014 3 SUBMITTED VOUCHERS FOR THESE EXPENSES ALONG WITH ITS SUBMISSIONS BEFORE THE ASSESSING OFFICER . AFTER VERIFICATION OF THE SUBMISSIONS OF THE ASSESSEE, THE AO CONCLUDED THAT THESE EXPENSES ARE UNVERIFIABLE AND UNEXPLAINED AND THEREFORE ADDED A SUM OF RS .21,82,250/ - TO THE TOTAL INCOME OF THE ASSESSEE. ON FURTHER SCRUTINY OF BANK PASSBOOK OF THE ASSESSEE, THE AO FOUND SOME CREDIT ENTRIES IN THE BANK PASSBOOK. IN THE PASSBOOK A REMARK WAS GIVEN ON DEPOSIT OF RS.20,000/ - AS ADVANCE FROM RENT AND THE ASSESSE E HAS GIVEN ITS PARTICULARS IN HIS LE T TER AS RECEIVED FROM PRJ. THE AO CONCLUDED THAT THE DETAILS WERE NOT FURNISHED. THEREFORE, RS.20,000/ - REMAINED UNEXPLAINED AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER BE FORE THE LD. CIT(A), WHO UPHELD THE ORDER OF THE AO. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 3. THE LD. AR SUBMITTED THAT SUFFICIENT OPPORTUNITY WAS NOT GIVEN TO THE APPELLANT TO EXPLAIN THE OBJECTIONS OF THE AUTHORITIES BELOW. ALL THE VOUCHERS OF THE EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT WERE PRODUCED BEFORE THE AO. THE CONTRACT WAS COMPLETED IN THE MONTH OF MARCH, THEREFORE, THE AMOUNT WAS NOT RECEIVED FROM THE CONTRACTEE. MOST OF THE EXPENDITURE S W ERE INCURRED IN THE MONTH OF MARCH. THEREFORE, WHATEVER EXPENDITURE WERE OUTSTANDING AT THE END OF MARCH, WERE SHOWN AS EXPENSES PAYABLE IN THE BALANCE SHEET AT LIABILITY SIDE. THE SAID EXPENSES PAYABLE WERE PAID IN THE ITA NO. 01/DEL./2014 4 FOLLOWING MONTHS WHEN PAYMENTS RECEI VED FROM THE CONTRACTEE AGAINST THE WORK DONE. THEREFORE, THERE WAS NO EXPEN DITURE WHICH REMAINED UNPAID. HE FURTHER SUBMITTED THAT THE ASSESSEE, BEING A CIVIL CONTRACTOR, HAS DECLARED THE INCOME AT THE RATE MORE THAN 8% PRESCRIBED U/S. 44AD. IT WAS SUBMIT TED THAT THE ASSESSEE, HOWEVER, FOR WANT OF PROPER OPPORTUNITY OF BEING HEARD, COULD NOT BE ABLE TO ADDUCE SUFFICIENT MATERIAL AND EVIDENCE BEFORE THE LD. CIT(A) WHO HAS DECIDED THE MATTER EX PARTE . THEREFORE, IN THE INTEREST OF JUSTICE, THE APPELLANT SHOU LD BE GIVEN ONE MORE OPPORTUNITY TO PUT ITS CASE ON MERITS AND CORROBORATE THE SAME BY MATERIAL EVIDENCES. 4. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND URGED FOR THEIR SUSTENANCE. 5. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE GONE THROUGH THE ENTIRE MATERIAL ON RECORD INCLUDING THE ORDERS OF THE AUTHORITIES BELOW. IT IS APPARENT FROM THE RECORD THAT THE ASSESSEE HAD FURNISHED VOUCHERS FOR EXPENDITURE CLAIMED BEFORE THE ASSESSING OFFICER. THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS EX PARTE , FOR WHICH THE ASSESSEE HAS CONTENDED THAT PROPER OPPORTUNITY OF HEARING WAS NOT PROVIDED TO IT TO FURNISH THE EVIDENCES AND TO REBUT THE OBJECTIONS OF THE LD. ASSESSING OFFICER WITH RESPECT TO THE EXPENDITURE PAI D BY THE ASSESSEE IN THE MONTHS FOLLOWING TO MARCH. IT IS ALSO ITA NO. 01/DEL./2014 5 NOTABLE THAT THE ASSESSEE HAS DECLARED NET PROFIT AT THE RATE MORE THAN THAT PRESCRIBED U/S. 44AD AND THE NET PROFIT RATE IS PROGRESSIVE AS COMPARED TO THE PREVIOUS YEAR . THE ASSESSEE IS SHOWN TO HAVE DONE WORK OF RS.45,91,903/ - . IF THE TOTAL INCOME ASSESSED BY THE ASSESSING OFFICER AT RS.25,98,312/ - AGAINST THE WORK OF RS.45,91,903/ - DONE BY ASSESSEE DURING THE YEAR IS TAKEN INTO CONSIDERATION, IT WILL GIVE NET PROFIT RATE OF 56.58% WHICH IS QU ITE IMAGINARY IN THE LINE OF APPELLANT S BUSINESS. THE LD. AUTHORITIES BELOW HAVE NOT VIEWED THE MATTER FROM THIS ANGLE ALSO. KEEPING ALL THESE FACTS IN VIEW, WE DEEM IT APPROPRIATE IN THE INTEREST OF JUSTICE TO RESTORE THE ISSUE TO THE FILE OF LD. CIT(A) TO DECIDE THE APPEAL DE NOVO AFTER CONSIDERING ALL THE ABOVE FACTS AND GIVING ONE MORE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO EXPLAIN AND FURNISH CORROBORATING EVIDENCES IN SUPPORT OF ITS CONTENTIONS AND CLAIMS. ACCORDINGLY, THE APPEAL OF THE ASSESS EE DESERVES TO BE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.07.2016 . SD/ - SD/ - ( DIVA SINGH ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29.07.2016 *AKS/ -