M/S MULTIPURPOSE ACTION FOR RURAL DEVELOPMENT SANSTHAN, BHARATPUR V. INCOME TAX OFFICER (EXEMPTION), ALWAR

ITA 1005/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2043 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 19-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset converted into stock in trade; Non compliance
• Section: 143(3); 142(1); 5(2); 145; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 1005/JP/2017 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2012-13 M/S MULTIPURPOSE ACTION FOR RURAL DEVELOPMENT SANSTHAN, E-19, RANJEET NAGAR, BHARATPUR-321001 (RAJ) CUKE VS. INCOME TAX OFFICER, (EXEMPTIONS), WARD- ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABTM 6785 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJENDRA AGRAWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH (JT.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/02/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 28/02/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER OF THE LD. CIT(A), ALWAR DATED 03/10/2017 FOR THE A.Y. 2 012-13. 2. THE ASSESSEE WAS E-FILED ITS RETURN OF INCOME DECL ARING TOTAL INCOME OF RS. 6,500/-. THE CASE WAS SELECTED FOR SCRU TINY. THE ASSESSING OFFICER WAS PASSED ASSESSMENT ORDER U/S 144 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) BY ASSESSING TOTAL INCOME O F RS. 11,88,821/-. THE LD. CIT(A) HAS UPHELD THE ORDER OF THE ASSESSING OFFICER. ITA 1005/JP/2017 MULTIPURPOSE ACTION FOR RURAL DEVELOPMENT SANSTHAN VS. ITO 2 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY T AKING FOLLOWING GROUNDS OF APPEAL: 1. THERE ARE NO OBVIOUS DISCREPANCIES AS PER THE LAW IN SERVING NOTICE U/S 156 AND ASSESSMENT ORDER U/S 144 OF THE IT ACT, 1961 ON 04/04/2015 AFTER THE EXPIRY OF STIPULATED T IME ON 31/3/2015. 2. CONFIRMING INVOKING THE PROVISIONS OF SECTION 14 5(2) OF THE IT ACT, 1961. 3. CONFIRMING APPLYING A NET PROFIT RATE OF 12% OF THE GROSS RECEIPT AND MAKING ADDITION OF RS. 11,81,821/-. 4. NOT DECIDING THE GROUND OF APPEAL IN REGARD TO I NITIATING PENALTY U/S 271(1)(C) AND 271(1)(B) OF THE IT ACT, 1961. 4. GROUNDS NO. 1 AND 4 OF THE APPEAL WERE NOT PRESS ED BY THE ASSESSEE, THEREFORE, THE SAME STANDS DISMISSED AS N OT PRESSED. 5. IN THE GROUND NO. 2 AND 3 OF THE APPEAL, THE ISS UES INVOLVED ARE CONFIRMING THE PROVISIONS OF SECTION 145(2) OF THE ACT AND CONFIRMING THE ADDITION OF RS. 11,81,821/- BY APPLYING 12% OF THE NP RATE. THE LD. CIT(A) HAS DECIDED THE ISSUE BY HOLDING THAT THE ASS ESSEE DID NOT COOPERATE WITH THE DEPARTMENT DURING ASSESSMENT PROC EEDINGS. NO BOOKS OF ACCOUNT HAVE BEEN PRODUCED NOR ANY SUBMISS ION GIVEN. THE ASSESSEE IS TRYING TO JUSTIFY ITS CONDUCT BY RAISIN G FRIVOLOUS GROUNDS WHICH ARE NEITHER TENABLE NOR REASONABLE. THEREFORE, HE DISMISSED THE GROUNDS OF APPEAL OF THE ASSESSEE. ITA 1005/JP/2017 MULTIPURPOSE ACTION FOR RURAL DEVELOPMENT SANSTHAN VS. ITO 3 6. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LD AR OF THE ASSESSEE HAS SUBMITTED AS UNDER: THE ASSESSEE IS CARRYING ON THE BUSINESS OF PROVIDI NG OF PLACEMENT SERVICES TO VARIOUS GOVERNMENT DEPARTMENTS AND BANK S IN ACCORDANCE TO THE OBJECTS OF THE INSTITUTION. THE A SSESSEE IS A REGISTERED SOCIETY UNDER THE SOCIETIES REGN. ACT, 1 958 VIDE REGN.NO.55/BHART./2002-03 VIDE CERTIFICATE OF REGIS TRATION DT. 20.7.2000 (PB-37). IN TERMS OF THE CONSTITUTION OF THE SOCIETY (PB-39) NO PROFIT ELEMENT IS INVOLVED IN THE FULFILLMENT OF THE OBJECTS OF TH E SOCIETY. THE ITR-V, COMPUTATION OF INCOME, AUDIT REPORT AUDITED RECEIPT S AND PAYMENTS ACCOUNT, INCOME AND EXPENDITURE ACCOUNT AND BALANCE SHEET (PB- 1 TO 15) HAVING THE COMPLETE AND DETAILS PARTICULARS OF INCOME HAVE BEEN FILLED BY THE ASSESSEE. THE LD.AO VERY ARBITRARILY INVOKED THE PROVISIONS O F SECTION 145(2) OF THE I.T.ACT,1961 IN THE ABSENCE OF NON COMPLIANCE O F NOTICES U/S 142(1) MADE BY THE ASSESSEE ALLEGING THAT THE CORRE CTNESS OF THE BOOK RESULTS AS DISCLOSED IN THE RETURN ARE NOT SUB JECT TO VERIFICATION, WHILE IN TERMS OF SUB-SECTION (2) OF SECTION 145 OF THE I.T.ACT,1961 THE CENTRAL GOVERNMENT MAY NOTIFY IN THE OFFICIAL GAZETTER FROM TIME TO TIME ACCOUNTING STANDARDS TO BE FOLLOWED BY ANY CLASS OF ASSESSES OR IN RESPECT OF ANY CLASS OF INCOME, WHILE THE LD .AO HAS NOT POINTED OUT ANY ACCOUNTING STANDARD WHICH HAS NOT B EEN FOLLOWED BY THE ASSESSEE. IN NO WAY THE PROVISIONS OF SECTION 145(2) OF THE I .T.ACT, 1961 WARRANTS THE LD.AO TO REJECT THE BOOKS OF ACCOUNT, WHERE THE LD.AO NEVER EXAMINED THE BOOKS OF ACCOUNTS OF THE ASSESSE E. ITA 1005/JP/2017 MULTIPURPOSE ACTION FOR RURAL DEVELOPMENT SANSTHAN VS. ITO 4 THE LD.CIT (A) VERY ARBITRARILY DISMISSED THIS GROU ND OF APPEAL STATING THAT IT IS VERY OBVIOUS THAT THE ASSESSEE DID NOT CO-OPERATE WITH THE DEPARTMENT DURING ASSESSMENT PROCEEDINGS. NO BOOKS OF ACCOUNTS HAVE BEEN PRODUCED NOR ANY SUBMISSION GIVE N. NOW, THE APPELLANT IS TRYING TO JUSTIFY ITS CONDUCT BY RAISI NG FRIVOLOUS GROUNDS WHICH ARE NEITHER TENABLE NOR REASONABLE, WHILE TH ERE IS NO FRIVOLOUS GROUND RAISED IN THE APPEAL. THE GROUNDS RAISED IN THE APPEAL ARE AS PER THE ACT AND NOT OTHERWISE. DURING THE YEAR CONCERNED AS EVIDENT FROM THE INCOM E AND EXPENDITURE ACCOUNT (PB-13) THE ASSESSEE GOT THE FOL LOWING INCOMES:- AID FROM GOVT. OF RAJASTHAN- FOR KALA JATHA RS. 335630/- FOR MEDICAL HEALTH RS. 85269/- FOR LEPROSY SAMITEE RS. 127821/- FOR BLINDNESS SOCIETY RS. 108544/- DONATIONS RS. 1705456/- BANK INTEREST RS. 3071/- CONTRACT RECEIPTS FOR JOB PLACEMENT RS. 7511527/- RS. 9877318/- THE LD. AO WITHOUT APPLYING HIS MIND AND EVEN WITHO UT KNOWING THE EXACT NATURE OF PARTICULAR RECEIPT AND NATURE OF EX PENDITURES AVAILABLE IN THE INCOME AND EXPENDITURE ACCOUNT, VER Y ARBITRARILY APPLIED NET PROFIT RATE OF 12% OF THE GROSS RECEIPT S AND MADE A HUGE ADDITION OF RS. 11,81,821/- WITHOUT CONSIDERING ANY COMPARATIVE RESULT OF THE IDENTICAL ASSESSEE OR CONSIDERING THE PAST HISTORY OF THE ASSESSEE. THE COMPARATIVE NET PROFIT RESULTS OF THE ASSESSEE FOR LAST 3 ASSESSMENT YEARS ARE AS UNDER:- ITA 1005/JP/2017 MULTIPURPOSE ACTION FOR RURAL DEVELOPMENT SANSTHAN VS. ITO 5 DESCRIPTION A.Y.2009 - 10 A.Y.2010 - 11 A.Y.2011 - 12 TOTAL RECEIPTS NET PROFIT NP RATE 18.02 LAC 0.13 LAC 0.72% 29.45 LAC 0.01 LAC 0.03% 56.75 LAC 0.01 LAC 0.02% THE COMPARATIVE NET PROFIT RESULTS OF THE ASSESSEE FOR LAST 3 ASSESSMENT YEARS ARE AS UNDER:- AVERAGE NP RATE OF LAST THREE ASSESSMENT YEAR COMES TO 0 . 26 % OF THE TOTAL RECEIPTS. VIDE ASSESSMENT ORDER U/S 143(3) DT. 13.12.2016 (PB -16 TO 22) FOR THE A.Y.2014-15 THE LD.AO HIMSELF AFTER CONSIDERING THE N.P. RATE @ 0.04% IN A.Y.2012-13, 0.42% IN A.Y.2013-14 AND 0.38 % IN A.Y.2014-15 (PB-18) MADE AN AD HOC ADDITION OF RS. 1,00,000/- (PB- 21) IN THE NET PROFIT OF RS.49,925/- DECLARED BY TH E ASSESSEE ON THE TOTAL RECEIPTS OF RS. 1,37,16,553/- (PB-19), WHICH COMES IN TUNE OF 1.09% (1,49,925/1,37,16,553). HENCE KEEPING IN VIEW OF THE ABOVE SUBMISSIONS THE HUGE ADDITION OF RS. 11,81,821/- MADE BY THE LD.AO APPLYING HUGE NP RATE @12% IS UNJUSTIFIED, UNLAWFUL AND ILLEGAL AND NEEDS TO BE D ELETED. THE LD.CIT (A) WITHOUT CONSIDERING THE ABOVE FACTS AND SUBMISSIONS VERY ARBITRARILY DISMISSED THIS GROUND OF APPEAL ST ATING THAT IT IS VERY OBVIOUS THAT THE ASSESSEE DID NOT CO-OPERATE WITH T HE DEPARTMENT DURING ASSESSMENT PROCEEDINGS. NO BOOKS OF ACCOUNTS HAVE BEEN PRODUCED NOR ANY SUBMISSION GIVEN. NOW, THE APPELLA NT IS TRYING TO JUSTIFY ITS CONDUCT BY RAISING FRIVOLOUS GROUNDS WH ICH ARE NEITHER TENABLE NOR REASONABLE, WHILE THERE IS NO FRIVOLOU S GROUND RAISED IN THE APPEAL. THE GROUNDS RAISED IN THE APPEAL ARE AS PER THE ACT AND THE ABOVE FACTS AND DETAILS AND NOT OTHERWISE. ITA 1005/JP/2017 MULTIPURPOSE ACTION FOR RURAL DEVELOPMENT SANSTHAN VS. ITO 6 7. ON THE OTHER HAND, THE LD DR HAS VEHEMENTLY SUPP ORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSUE . WE HAVE ALSO CONSIDERED THE RELEVANT MATERIAL AVAILABLE ON THE R ECORD. THE PROVISIONS OF SECTION 145(2) OF THE ACT WERE INVOKED AND THE PR OFIT WAS ESTIMATED @ 12% OF THE TURNOVER OF THE ASSESSEE. WE AGREE WITH THE FINDINGS OF THE LOWER AUTHORITIES THAT THE ASSESSEE HAS NOT COOP ERATED IN FINALIZATION OF THE ASSESSMENT PROCEEDINGS AND NO BOOKS OF ACCOU NT PRODUCED IN SUPPORT OF VARIOUS CLAIMS MADE. THE MAJOR RECEIPTS O F THE ASSESSEE IS FROM PROVIDING OF PLACEMENT SERVICES TO VARIOUS GOV ERNMENT DEPARTMENTS AND BANKS. THE ASSESSEES CLAIM THAT THE SOCIETY IS A REGISTERED SOCIETY AND IT IS WORKING ON NO PROFIT NO LOSS METHOD, IS NOT ESTABLISHED. THE FACTS ON RECORD SHOWS THAT THE SOCIE TY IS VERY MUCH ENGAGED IN THE BUSINESS WITH THE AIM TO EARN PROFIT FROM THE BUSINESS OF PROVIDING PLACEMENT SERVICES TO VARIOUS GOVERNMENT DEPARTMENTS AND BANKS. NORMALLY IN PROVIDING SUCH SERVICES, THE MAR GIN OF THE SERVICE PROVIDER IS AROUND 10%. THEREFORE, AFTER CONSIDERING ALL THE RELEVANT FACTS, WE SUSTAIN THE INVOCATION OF PROVISIONS OF SE CTION 145(2) OF THE ACT AND DIRECT TO ESTIMATE THE NET PROFIT @ 10%. ITA 1005/JP/2017 MULTIPURPOSE ACTION FOR RURAL DEVELOPMENT SANSTHAN VS. ITO 7 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/02/2018. SD/- SD/- FOT; IKY JKO HKKXPAN (VIJAY PAL RAO) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28 TH FEBRUARY, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S MULTIPURPOSE ACTION FOR RURAL DEVELOPMENT SANSTHAN, BHARATPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO (EXEMPTIONS),WARD- ALWAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1005/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR