Sh. Om Prakash Thakkar, Uttar Pradesh V. ITO, Uttar Pradesh

ITA 1018/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6348 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 23-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 19-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SH. SUDHANSHU SRIVASTAVA, J.M. ITA NO. 1018 /DEL/201 3 A.Y. 200 9 - 10 SH.OM PRAKASH THAKKAR VS. ITO, WARD 1 PROP. M/S DAYAL CHAND & SONS U.P. MORE GANJ, SA HARANPUR, UP PAN: AAGPTO770J (APPELLANT) (RESPONDENT) APPELLANT BY : SH. AKASH GARG, ADV. RESPONDENT BY : SH.P. DAMKANUNJNA, SR.D.R ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LD.CIT(A), MUZAFFARNAGAR DATED 26.11.2012 PERTAINING TO THE ASSESSMENT YEAR (A.Y.) 2009 - 10. 2. FACTS IN BRIEF: - THE FACTS OF THE CASE AS NARRATED BY THE LD.CIT(A) FROM PARA 2 TO 2.3 OF HIS ORDER, ARE EXTRACTED FOR READY REFERENCE. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING IN COME FROM WHOLE SALE TRADING OF PULSES. RETU RN DE CLARING INCOME AT RS.L,35,279/ - WAS E - FILED ON 26 - 09 - 2009. THE ASSESSEE HAD MAINTA INED SAHARANPUR AS HE AD OFFICE AND DELHI AS BRANCH OFFICE. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE A O ISSUED NOTICES U/S 143(2) 142(1) HOWEVER THE ASESSE TIME AND AGAIN SOUGHT ADJOURNMENTS BUT NO COMPLIANCE WAS MADE . THE A O HAS DISCUSSED THE SAME IN DETAIL IN THE ASSESSMENT ORDER WHICH IS NOT REPEATED HERE FOR THE SA KE OF BREVITY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSE SSEE FURNISHED COPY OF FIR LO D GED WITH THE POLICE STATION PRASANT VIHAR , NEW DELHI . THE AO ISSUED LETTER TO SHO, PRASHANT VIHAR, NEW DELHI REQUIRING HIM TO FURNISH COPY OF FIR ITA 1018/DEL/2013 A.Y. 2009 - 10 SH. OM PRAKASH THAKKAR, SAHARANPUR, UP 2 LODGED WITH THE POLICE STATION ALONG WITH CURRENT STATUS OF THE CASE. HOWEVER, THROUGH TELEPHONIC MESSAGE IT WAS CONVEYED BY POLICE STATION, PRASHANT VIHAR, NEW DELHI THAT NO SUCH FIR WAS EVER LODGED BY THE ASSESSEE. THUS ABSENCE OF ANY COMPLIANCE MADE BY T HE ASSESSEE, THE AO PROCEEDED TO PASS EX - PARTE ORDER ON THE BASIS OF MATERIAL EVIDENCE AVAILABLE ON RECORD. 2.1 THE AO HAS GIVEN TRADING RESULTS FOR A . YS.2008 - 09 AND 2009 - 10 WHICH ARE REPRODUCED AS UNDER. ASSTT. YEAR TURNOVER GROSS PROFIT G.P. RATE N.P. RATE 2009 - 10 16,25,28,307 21,54,333 1.33% 0.13% 2008 - 09 I 17,47,52, L39 29,64,689 1.70% 0.14% FURTHER, SEPARATE TRADING RESULTS AT SA HARANPUR HEAD OFFICE AND DELHI BRANCH OFFICE HAVE BEEN REPRODUCED B) THE AO AS UNDER: - SAHARANPUR HEAD OFFICE: ASSTT. YEAR TURNOVER GROSS PROFIT G.P. RATE N.P. RATE 2009 - 10 3,46,37,569 13,28,363 3.8 3% 0. 24 % 2008 - 09 10,10,80,211 1 9 , 52 ,9 30 1. 93% 0.13 % DELHI BRANCH OFFICE ASSTT. YEAR TURNOVER GROSS PROFIT G.P. RATE N.P. RATE 2009 - 10 12,76,50,312 8,25,970 0.64 % 0.01 % 2008 - 09 7,36,71,928 10,11,760 1. 37 % 0.14% THE AO AFTER CONSIDERING THE TRADING RESULTS OF HEAD OFFICE, SAHARANPUR I NFERRED THAT THE GP RATE HAS BEEN DECLARED AT 3. 83 % ON AN INCREASING MANNER AS COMPARED TO THE LAST YEAR'S GP RATE OF 1.933% WHEREAS IN THE BRANCH OFFICE DELHI THE G.P. RATE WAS 1 3.7% IN AY 2008 - 09 BUT THE ASSESSEE UNEXPECTEDLY DECREASED THE GP RATE IN THE CURRENT YEAR AT 0.64% AS WELL AS NET PROFIT AT 0.01 %. THE AO KEEPING IN VIEW THE FACTS OF THE CASE IN TOTALITY, HELD THAT THE AVERAGE RATE FOR AY 2008 - 09 WAS 1.70% AND FOR THE Y EAR UNDER CONSIDERATION A T 2.23% WHICH WAS APPLIED ON THE TOTAL TURNOVER DECLARED BY THE ASSESSEE. THIS RESULTED IN GP AT RS.36,24,381 / - AND AFTER DEDUCTING GP ALREADY DECLARED AT RS.21,54,333/ - , THE BALANCE AMOUNT OF RS.14,70,048/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. ITA 1018/DEL/2013 A.Y. 2009 - 10 SH. OM PRAKASH THAKKAR, SAHARANPUR, UP 3 2.2 THE ASSESSEE HAD DEBITED VARIOUS EXPENSES IN TRADING AND PROFIT AND LOSS ACCOUNT OF HEAD OFFICE, SAHARANPUR UNDER THE FOLLOWING HEADS: - (I) FREIGHT & CARTAGE EXPENSES RS.2,05,112/ - (II) PURCHASE EXPENSES RS. 24,231 / - (III) GENERATOR EXPENSES RS. 7,125/ - (IV) SALARY EXPENSES RS.1,50,000/ - (V) SALES PROMOTION EXPENSES RS . 16,956/ - (VI) TELEPHONE EXPENSES RS. 15,385/ - (VII) TRAVELLING EXPENSES RS. 5,625/ - SINCE THE ASSESSEEE HAD NOT PRODUCED VOUCHERS OF SUCH EXPENSES THUS IN ABSENCE OF THE SAME THE AO DISALLOWED THE AMOUNT OF RS. 1, 50,000/ - OUT OF SUCH EXPENSES WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE . 2.3 THE ASSESSEE HAD DEBITED VARIOUS EXPENSES IN TRADING AND PROFIT AND LOSS ACCOUNT OF B RANCH OFFICE, DELHI UNDER THE FOLLOWING HEADS . I ) CAR EXPENSES RS.53,237/ - II ) DA LALI EXPENSES RS. 37,163/ - III ) WAGES EXPENSES RS.99,946/ - IV ) SALARY EXPENSES RS.1,63,833/ - V ) MOTOR EXPENSES RS.10,636/ - VI ) TELEPHONE EXPENSES RS.9,840/ - 3. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE LD.CIT(A) WHO GRANTED PART RELIEF. FURTHER AGGRIEVED, THE ASSESSEE IS BEFORE US ON THE FOLLOWING GROUNDS. 1 . THE ORDER PASSED BY THE ID . CIT (APPEALS) CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER IS BAD IN LAW, AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT (APPEAL), HAS ERRED IN LAW IN IGNORING THE FACTS THAT P ROVIDED BY THE L D . ASSESSING OFFICER SERVING A NOTICE CALLING UPON THE APPELLANT TO SHOW CAUSE , WHY THE ASSESSMENT SHOULD NOT BE COMPLETED TO THE BEST OF HIS JUDGMENT' AND NOT PASSING THE ORDER OF SET ASIDE THE ORDER OF L D ASSESSING OFFICER WITH THE DIRECTION TO GIVE FRESH OPPORTUNITY TO THE ASESSEE . 3. THERE WAS NO JUSTIFICATION EITHER ON FACTS AND IN CIRCUMSTANCE OF THE CASE, NOT TO HAVE DELETED THE ADDITION BY THE LEARNED CIT (APPEAL), INSTEAD ERRED IN CONFORMING THE PARTIAL ADDITION OF RS. 6,08,648/ - OUT OF TOTAL ADDITION ITA 1018/DEL/2013 A.Y. 2009 - 10 SH. OM PRAKASH THAKKAR, SAHARANPUR, UP 4 OF RS 14,70,048 / - MADE BY THE ASSESSING OFFICER WITHOUT A NY BASIS, JUSTIFICATION AND MERIT 4. THE PARTIAL ADDITION OF RS. 1,25,000 / - OUT OF TOTAL ADDITION OF 2,50,000 / - BEING DIS - ALLOWANCE OF EXPENSE S HIGHLY INCORRECT ARBITRARY AND CONTRARY TO THE FACTS BROUGHT ON RECORD. 5. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL. THAT THE ENTIRE CASE IS FULLY SUPPORTED AND VERIFIABLE AND THERE IS NO CASE OF ANY DISALLOWANCE WHATSOEVER. IT IS THEREFORE, PRAYED THAT UNJUSTIFIED ADDITION BE DELETED AND THE APPELLANT BE GIVEN AN OPPORTUNITY OF BEING HEARD AND THE MATTER BE RESTORED FOR FRESH HEARING . 4. WE HAVE HEARD SHRI AKARSH GARG, THE LD.COUNSEL FOR THE ASSESSEE AND SH.P.DAMKANUNJNA, THE LD.SR.D.R. ON BEHALF OF THE REVENUE . 5. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDERS OF LOWER AUTHORITIES, MATERIAL FILED ON RECORD AND CASE LAWS CITED, WE HOLD AS FOLLOWS. 6. THE LD.COUNSEL FOR THE ASSESSEE ARGUED THAT PROFITS HAVE BEEN ESTIMATED WITHOUT REJECTING THE BOOKS OF ACCOUNTS AND THAT NO OPPORTUNITY WAS GRANTED TO THE ASSESSEE. WE DO NOT FIND ANY MERIT IN THIS SUBMISSION AS THE ASSESSEE HA S NOT APPEARED BEFORE THE ASSESSING OFFICER (A.O. ) ON VARIOUS OCCASIONS DESPITE NOTICE. IN OUR VIEW THERE IS NO VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 7. COMING TO THE REJECTION OF BOOKS, WE FIND ONLY BOOKS OF DELHI BRANCH OFFICE HAVE NOT BEEN PRODUCED BEFORE THE ASSESSING OFFICER (A.O.). BE IT AS IT MAY, THE A.O. NOWHERE IN HIS ORDER CITED REASONS AS TO WHY THE BOOKS OF ACCOUNTS HAVE TO BE REJECTED. MERE FALL IN THE GROSS PROFIT RATIO DOES NOT AUTHORISE THE A.O. TO REJECT THE BOOKS OF ACCOUNTS. THE ASSESSEE IN THIS CASE HAS DECLARED GROSS PROFIT OF 1.33% AND THE A.O. HAS ESTIMATED GROSS PROFIT @ 2.33% AND WHEREAS ON APPEAL THE LD.CIT(A) APPLIED THE LAST YEAR S GROSS ITA 1018/DEL/2013 A.Y. 2009 - 10 SH. OM PRAKASH THAKKAR, SAHARANPUR, UP 5 PROFIT RATE OF 1.71%. AS THE BOOKS ARE NOT REJECTED THIS ADDITION ON THE GROUND THAT GROSS PROFIT RATE IS LOW DOES NOT SURVIV E. HENCE THIS AD - HOC ADDITION IS HEREBY DELETED. 8. THE NEXT GROUND OF APPEAL IS AN ADDITION OF RS.1,25,000/ - . THE A.O. DISALLOWED AN AMOUNT OF RS. 1,25, 000/ - OUT OF AN AMOUNT OF RS.2,50,000/ - ON ADHOC BASIS ON THE GROUND THAT THE EXPENSES CLAIMED ARE HIG HLY EXCESSIVE. THE LD.CIT(A) GRANTED PART RELIEF. SUCH ADHOC DISALLOWANCE CANNOT BE SUSTAINED AS IT IS ARBITRARY. THE A.O. HAS NOT GIVEN ANY COGENT REASONS WITH EVIDENCE TO SUPPORT HIS FINDING. HENCE THIS DISALLOWANCE IS HEREBY DELETED. 9. IN THE RESUL T THE ASSESSEE S APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2016. SD/ - SD/ - (SUDHANSHU SRIVASTAVA ) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 15 TH MARCH, 2016 MANGA COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR