ITO, New Delhi V. M/s. Lachman Das Bhatia Hingwala Pvt Ltd., New Delhi

ITA 1005/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4583 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 20-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SHUBHAM SOBTI
• Keywords: Business income; Additional evidence
• Section: 131; 144

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1005/DEL/2014 (ASSESSMENT YEAR: 2007 - 08 ) ITO, WARD - 4(3), NEW DELHI VS. LACHMAN DAS BHATIA HINGWALA PVT. LTD, 5162, KOLHAPUR ROAD, NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ARUN KUMAR YADAV, SR. DR ASSESSEE BY: SHRI SHUBHAM SOBTI, CA DATE OF HEARING 22/06 / 2017 DATE OF PRONOUNCEMENT 04 / 0 9 / 2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS APPEAL IS FILED BY REVENUE A GAINST THE ORDER OF THE LD. CIT(A) IV , NEW DELHI DATED 04/11/2013 FOR ASSESSMENT YEAR 2007 08 IN CASE OF THE ABOVE ASSESSEE COMPANY WHEREIN THE ADDITION MADE OF ON ACCOUNT OF G ROSS PROFIT AT THE RATE OF 15%. 2. THE REVENUE HAS RAISED THE FOLLOWING 3 GROUNDS OF APPEAL. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN ACCEPTING THE ADDITIONAL EVIDENCE UNDER RULE 46(1), WITHOUT RECORDING THE REASONS FOR ITS ADMISSION MEANING T HERE BY VIOLATION OF RULE 46A(2) OF THE I.T. RULES ? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER LD CIT(A) IS PERVERSE IN NATURE IN ACCEPTING THE ADDITIONAL EVIDENCE DESPITE THE FACT THAT CIT(A) IN ITS ORDER HELD THAT A.O. WAS JUSTIFI ED IN COMPLETING THE ASSESSMENT U/S 144 OF THE I.T. ACT ? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING ADDITION MADE BY A.O. BY APPLYING G.P. @15% OF TURNOVER ? 4. THAT THE ORDER OF THE CIT(A) IS ERRONEOUS AND I S NOT TENABLE ON FACTS AND IN LAW. 3. THE BRIEF FACTS OF THE CASES THAT ASSESSEE IS A COMPANY ENGAGED IN THE TRADING IN HING, DRY FRUITS AND KIRANA ITEMS. IT FILED ITS RETURN OF INCOME ON 08/12/2008 SHOWING INCOME OF RUPEES 333022/ . DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, NOBODY PAGE 2 OF 4 ATTENDED DESPITE ISSUE OF SUMMONS UNDER SECTION 131 OF THE INCOME TAX ACT. THEREFORE, THE LD. ASSESSING OFFICER BASED ON THE INFORMATION AVAILABLE ESTIMATED THE GROSS PROFIT AT THE RATE OF 15% ON THE TOTAL SALES OF RS. 52420713/ . THE ASSESSMENT WAS FRAMED UNDER SECTION 144 OF THE INCOME TAX ACT AT RS. 8 146970 WIDE ORDER DATED 04/12/2009 PASSED UNDER SECTION 144 OF THE INCOME TAX ACT. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT A, WHO DELETED THE ADDITION FOR THE REASON THAT ASSESSING OFFICER HAS NOT GIVEN ANY REASON FOR ESTIMATING THE GROSS PROFIT AT THE RATE OF 15% WHEN THE FULL QUANTITATIVE DETAILS OF PURCHASES AND SALES OF VARIOUS ITEMS WERE GIVEN IN THE TAX AUDIT REPORT AS WELL AS IN THE AUDITED ACCOUNTS. IT WAS FURT HER NOTED THAT THE ASSESSING OFFICER IS ACCEPTED THE GROSS PROFIT RATE AT THE RATE OF 2.98%. IN THE IMMEDIATE SUCCEEDING ASSESSMENT YEAR THAT IS ASSESSMENT YEAR 2008 09. THEREFORE, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. REVENUE AGGRIEVED BY THE ORDER OF THE LD. CIT A, HAS PREFERRED APPEAL BEFORE US. 5. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUBMITTED BEFORE US THAT THE ASSESSEE HAS NOT PRODUCED ANY DETAILS BEFORE THE ASSESSING OFFICER AND EVEN THE SUMMONS ISSUED WERE NOT ATTENDED. THE REFORE, THERE WAS NO RECOURSE AVAILABLE WITH THE ASSESSING OFFICER BUT TO ESTIMATE THE PROFIT OF THE ASSESSEE. HE SUBMITTED THAT MERELY THE WRITTEN SUBMISSION OF THE LD. AUTHORIZED REPRESENTATIVE BEFORE THE LD. CIT A WAS CONSIDERED AND APPEAL OF THE ASSESS EE WAS ALLOWED. THE LD. CIT APPEAL HAS NOT CARED TO LOOK INTO THE FACTS OF THE CASE THAT THE ASSESSEE HAS NOT APPEARED BEFORE THE LD. ASSESSING OFFICER DESPITE SEVERAL OPPORTUNITIES GRANTED. HE THEREFORE VEHEMENTLY CONTESTED THAT THE ORDER PASSED BY THE LD . CIT APPEAL WAS NOT LOOKING AT THE OF ACCOUNTS OF THE ASSESSEE, BUT MERELY ON THE WRITTEN SUBMISSION OF THE ASSESSEE. 6. THE LD. AUTHORIZED REPRESENTATIVE RELIED UPON THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY AND REITERATED THE SAME FACTS WHICH WAS SUB MITTED BEFORE THE LD. FIRST APPELLATE AUTHORITY. HE VEHEMENTLY CONTESTED THAT IN THE PAST YEAR THE GROSS PROFIT RATE OF 2.98% WAS ACCEPTED BY THE LD. ASSESSING OFFICER THERE WAS NO ERROR IN THE OPENING AND CLOSING STOCK OF THE ASSESSEE AND THEREFORE HE SUB MITTED THAT ORDER PASSED BY THE LD. CIT A, MAY BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITY. IT IS INTERESTING TO NOTE AT PARA NO. 8.3 OF THE ORDER OF THE LD. 1 ST APPELLATE AUTHORITY WHEREIN IT HAS BEEN STATED THAT AO HAS NOT POINTED OUT ANY DEFECTS IN THE BOOKS OF ACCOUNTS OF THE APPELLANT AND THEREFORE THE LD. ASSESSING OFFICER HAS ERRED IN ESTIMATING THE GROSS PROFIT AT THE RATE OF 15%. WHEN WE READ THE PAGE 3 OF 4 ORDER OF THE LD. ASSESSING OFFICER IT IS NOTED APPARENTLY THAT DESPITE ISSUE OF SEVERAL NOTICES/ SUMMONS BY THE LD. ASSESSING OFFICER, NONE APPEARED BEFORE THE ASSESSING OFFICER THEREFORE, THERE WAS NO REASON TO STATE BY THE LD. FIRST APPELLATE AUTHORITY THAT LD. ASSESSING OFFICER HAS NOT P OINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. WHEN THE BOOKS OF ACCOUNTS WERE NOT PRESENTED BEFORE THE LD. ASSESSING OFFICER, HOW HE CAN POINT OUT ANY DEFECTS IN THE BOOKS OF ACCOUNTS OR ASSESSEE THE INCOME OF THE ASSESSEE. FURTHER AS TH E ASSESSEE HAS NOT APPEARED BEFORE THE LD. ASSESSING OFFICER THEN ASSESSING OFFICER MUST ALSO HAVE LOOKED INTO THE PAST RECORDS OF THE ASSESSEE BEFORE ESTIMATING THE PROFIT. THE PROVISIONS OF SECTION 144 OF THE INCOME TAX ACT DOES NOT GIVE A BLANKET POWER TO THE ASSESSING OFFICER TO ESTIMATE THE PROFIT ACCORDING TO HIS WHIMS. THE LD. 1 ST APPELLATE AUTHORITY HAS FURTHER ERRED IN COMPARING THE PROFITS OF THE PAST YEAR WITH THIS YEAR. IT MAY ALSO BE POSSIBLE THAT IN THAT YEAR THE BOOKS OF ACCOUNTS WERE PRODUCE D BEFORE THE LD. ASSESSING OFFICER AND WHICH MIGHT HAVE BEEN ACCEPTED BY HIM. THEREFORE , IT IS ALWAYS NOT POSSIBLE TO COMPARE THE PREVIOUS YEARS RESULTS WITH THE CURRENT YEARS WHEREIN PECULIAR FACTS ARE MENTIONED BY THE LD. ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS THAT DESPITE SEVERAL NOTICES ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER BY FILING EVEN THE SINGLE DETAIL. HOWEVER, IT IS ALSO TRUE THAT LD. ASSESSING OFFICER MUST ESTIMATE THE PROFIT OF THE ASSESSEE IN SUCH CIRCUMSTANCES, LOOKING AT THE RATE THE COMPARABLE CASES OR THE PAST AND THE FUTURE ASSESSMENT HISTORY OF THE ASSESSEE. OF COURSE, HE MAY MAKE ANY ADJUSTMENT TO SUCH DECLARED RESULTS BECAUSE OF THE NON - COOPERATION OR NON - COMPLIANCE OR PATENT AND PATENT DEFECT IN BOOKS OF ACCOUNTS IS PRODUCED. HOWEVER, ESTIMATING THE GROSS PROFIT AT THE RATE OF 15% WHEREIN IN THE PAST YEARS GROSS PROFIT OF 2.98% IS ACCEPTED IS ALSO NOT ACCEPTABLE. IN VIEW OF THIS, WE SET ASIDE THE WHOLE ISSUE OF DETERMINATION OF THE GROSS PROFIT OF THE ASSESSEE TO THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO REMAIN PRESENT BEFORE THE LD. ASSESSING OFFICER ALONG WITH THE BOOKS AND NECESSARY VOUCHERS WITHIN 3 MONTHS FROM THE RECEIPT OF THIS ORDER, SO THAT SAME CAN BE EXAMINED AND THE CORRECT INCOME OF THE ASSESSEE CAN BE ASSESSED. IF THE ASSESSEE FAILS TO DISCHARGES OBLIGATION WITHIN THE ABOVE SAID PERIOD, THE LD. ASSESSING OFFICER MAY PROCEED TO ASSESS THE INCOME OF THE ASSESSEE ACCORDING TO THE SECTION 144 OF THE INCOME TAX ACT IN ACCORDANCE WITH THE LAW. ACCORDINGLY, WE REVERSE THE FINDING OF THE LD. CIT APPEAL IN DELETING THE GROSS PROFIT ESTIMATED BY THE LD. ASSESSING OFFICER AT 15% OF THE TURNOVER. IN VIEW OF THIS GROUND NO. 1 3 OF THE APPEAL OF THE REVENUE ARE ALLOWED WITH ABOVE DIRECT ION. PAGE 4 OF 4 8. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04 / 0 9 / 2017 . - SD/ - - SD/ - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04 / 0 9 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI