The Income-tax Officer, Jammu V. Sh. Anan Sharma, Jammu

ITA 106/ASR/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1416 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 15-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 142(1); 147; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.R. MEENA HONBLE ACCOUNTANT MEMBER I.T.A. NO.106 (ASR)/2013 ASSESSMENT YEAR: 2004-05 PAN: ........... THE INCOME TAX OFFICER, WARD -1, JAMMU. VS. SH. ANAN SHARMA, PROP. M/S GANPATI STEEL INDUSTRIES, 117/6, TRANSPORT NAGAR, JAMMU. (APPELLANT) (RESPONDENT) CROSS OBJECTION NO. 6(ASR)/2015 ASSESSMENT YEAR: 2004-05 PAN: ............ SH. ANAN SHARMA, PROP. M/S GANPATI STEEL INDUSTRIES, 117/6, TRANSPORT NAGAR, JAMMU. THE INCOME TAX OFFICER, WARD -1, JAMMU. VS. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY: SH. TARSEM LAL (DR) RESPONDENT BY: NONE. DATE OF HEARING: 2 7.08.2015 DATE OF PRONOUNCEM ENT: 16.09.2015 ORDER PER A.D. JAIN (JM): THIS IS DEPARTMENTS APPEAL AND ASSESSEES CROSS OBJECTION FOR ASSESSMENT YEAR 2004-05. THE DEPARTMENT HAS TAKEN T HE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DIRECTING THE ASSESSING OFFICER TO ADOPT NET PRO FIT RATE OF 3% INSTEAD OF 12% APLIED ON THE SALES WHEN NO RETURN O F INCOME OF INCOME WAS FILED BY THE ASSESSEE IN RESPONSE TO NOT ICE ISSUED U/S 2 I.T. NO.106 (ASR )/2013 C.O. NO. 06 (ASR)/2015 ASST. YEAR 2004-05 148 OF THE INCOME TAX ACT, 1961 AND ALSO FAILED TO COMPLY WITH THE NOTICE ISSUED U/S 142(1) FROM TIME TO TIME. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DIRECTING THE ASSESSING OFICER TO DOPT NET PROFI T RATE OF 3% INSTEAD OF 12% APPLIED ON THE SALES WITHOUT ASSIGNING ANY R EASONS FOR APPLYING NET PROFIT RATE OF 3%. 2. THE ASSESSEES CROSS OBJECTIONS ARE AS FOLLOWS: 1. THE LD. CIT(A) IS NOT JUSTIFIED IN APPLYING THE NET PROFIT RATE OF 3% ON TOTAL RECEIPTS, WHERE AS NO SALES HAVE BEEN E FFECTED IN THE YEAR UNDER CONSIDERATION. 2. THE LD. CIT(A) HAS APPLIED 3% NET PROFIT RATE ON TOTAL RECEIPTS ON ASSUMPTION, PRESUMPTIONS & SURMISES WITHOUT APPRECI ATING THE DOCUMENTARY EVIDENCE FURNISHED BY THE ASSESSEE. 3. THE NOTICE SENT TO THE ASSESSEE THROUGH RPAD HAS RETUNED UNSERVED WITH THE POSTAL REMARK ANAN SHARMA LEFT WITHOUT AD DRESS. SHOP CLOSED. RETURN. HOWEVER, FINDING THAT THE MATTER CAN BE PR OCEEDED WITH IN THE ABSENCE OF THE ASSESSEE, WE ARE DOING SO. 4. AS PER THE RECORD, THE A.O RECEIVED INFORMATION FROM NATIONAL CO- OPERATIVE CONSUMERS FEDERATION OF INDIA LTD (NCCF), THAT IN THE YEAR UNDER CONSIDERATION, THE ASSESSE HAD MADE SUPPLY OF BARBED WIRES/CONCERTINA COIL TO ARMY AMOUNTING TO RS.1,61, 98,214/-. THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME FOR THE YEAR. ON THE BASIS OF THESE REASONS, PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE INITIATED AGAINST THE ASSESSEE. THE A.O MADE ADDITION, WHICH WAS CHALLANGED BY THE ASSESSEE BEFORE THE LEARNED CIT(A). 5. BEFORE THE LEARNED CIT(A), THE ASSESSEE SUBMITTE D THAT DURING THE YEAR, HE HAD RECEIVED A SUPPLY ORDER DATED 22.02.20 14 FROM NCCF FOR SUPPLY OF 14,700 COILS OF PUNCHED TAPE CONCERTINA C OIL TO PATTAN (ON 3 I.T. NO.106 (ASR )/2013 C.O. NO. 06 (ASR)/2015 ASST. YEAR 2004-05 SRINAGAR BARAMULLA ROAD) @ RS.1,059/- PER COIL F.O. R PATTAN, INCLUSIVE OF NCCF MARGIN. THE ASSESSEE FILED A COPY OF THE SAID SUPPLY ORDER. IT WAS SUBMITTED THAT AGAINST THE SAID SUPPLY ORDER, THE A SSESSEE HAD ARRANGED THE SUPPLY DIRECTLY FROM THE DELHI BASED SUPPLIER; THAT THE SUPPLY OF BARBED WIRES WAS NOT MADE DURING THE YEAR, BUT WAS MADE IN THE FIRST QUARTER OF THE FINANCIAL YEAR 2004-05, RELEVANT TO ASST. YEAR 2005-06; THAT PAYMENT OF RS.1,51,00,281/- AGAINST THE SAID S UPPLY ORDER WAS ALSO RECEIVED VIDE CHEUQE NO. 7868428 DRAWN ON J&K BANK LTD. SSI BRANCH, LAL CHOWK, SRINAGAR, ON 30.06.2004. THE ASSESSE FIL ED THE COPIES OF INVOICES OF THE SUPPLIER AND RECEIPT ISSUED BY THE ASSESSEE FOR THE PAYMENT. REGARDING RECIEPT OF THE PAYMENT, THE ASSE SSEE SUBMITTED THAT DURING THE YEAR, NEITHER ANY SUPPLY OF BARBED WIRES WAS EVER MADE, NOR WAS ANY PAYMENT RECEIVED BY THE ASSESSEE AND AS SUC H, INCOME EARNED ON SUPPLY OF BARBED WIRE FOR ASST. YEAR 2005-06 COULD NOT BE TAXED IN ASST. YEAR 2004-05. THE ASSESSEE SUBMITTED THAT THE ONLY INFORMATION WITH THE A.O WAS THAT THE ASSESSEE HAD MADE SUPPLY OF BARBED WIRES TO THE ARMY; THAT THIS INFORMATION DID NOT INDICATE THE YEAR IN WHICH THE SUPPLY OF BARBED WIRES WAS MADE TO THE ARMY AND THE TIME WHEN THE PAYMENT AGAINST THE SAID SUPPLY WAS MADE TO THE ASSESSEE; T HAT THERE WAS NO BASIS FOR INITIATING THE REOPENING PROCEEDINGS, IN AS MUC H AS EVEN THE CORRECTNESS OF THE INFORMATION RECEIVED BY THE A.O HAD NOT BEERN VERIFIED BY HIM AND THE SAME HAD BEEN ACCEPED IN A MECHANICA L MANNER, WITHOUT APPLICATION OF MIND AND PURELY ON THE BASIS OF SURM ISES AND 4 I.T. NO.106 (ASR )/2013 C.O. NO. 06 (ASR)/2015 ASST. YEAR 2004-05 PRESUMPTIONS; THAT THE A.O HAD ARBITRARILY ASSUMED THAT THE PETROL PUMP IN THE NAME AND STYLE OF M/S SHIVA SERVICE STATION, DOMANA, JAMMU WAS BEING RUN BY THE ASSESSEE UNDER THE BENAMI NAME OF SMT. DARSHANA KUMARI AND HER INCOME, WHICH WAS ALREADY DISCLOSED TO THE DEPARTMENT, WAS WRONGLY ADDED ON A PROTECTIVE BASIS IN THE HAND S OF THE ASSESSEE; THAT SMT. DARSHANA KUMARI WAS THE OWNER OF THE PETROL PU MP UNDER THE NAME AND STYLE OF M/S SHIVA SERVICE STATION, DOMANA, JAM MU; THAT THE SAID PETROL PUMP HAD BEEN ALLOTTED BY THE INDIAN OIL COR PORATION IN FAVOUR OF THE SMT. DARSHANA KUMARI, WAY BACK IN 1987. THE ASS ESSEE FILED A COPY OF THE LETTER OF APPOINTMENT DATED 11.03.19987, ISSUED BY THE INDIAN OIL CORPORATION. IT WAS SUBMITTED THAT SMT. DARSHANA KU MARI WAS RUNNING THE PETROL PUMP AND WHATEVER INCOME WAS EARRNED BY HER FROM THE SAID BUSINESS OF RUNNING PETROL PUMP, WAS REFLECTED IN H ER RETURNS OF INCOME; THAT SHE HAD BEEN FILING HER RETURNS OF INCOME UNDE R SECTION 139 OF THE I.T. ACT FROM THE VERY BEGNNING AND THESE RETURNS STOOD DULY ACCEPTED BY THE DEPARTMENT. THE ASSESSEE FILED THE COPIES OF THE RE TURNS OF INCOME OF SMT. DARSHANA KUMARI FOR ASST. YEARS 2001-02 TO 2005-06. THE ASSESSEE, ON THIS BASIS, REQUESTED FOR DELETION OF THE ADDITION MADE ON A PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE, ON MERIT ALSO. 6. THE A.O FURNISHED AS MANY AS THREE REMAND REPOR TS BEFORE THE LEARNED CIT(A), I.E., THAT DATED 13.07.2012, THAT D ATED 16.08.2012 AND THAT DATED 01.10.2012. FOR READY REFERENCE, THESE REPORT S, AS REPRODUCED AT 5 I.T. NO.106 (ASR )/2013 C.O. NO. 06 (ASR)/2015 ASST. YEAR 2004-05 PAGES 4 AND 5 OF THE IMPUGNED ORDER, ARE BEING REPO RDUCED HEREUNDER ALSO: REPORT DATED 13.07.2012 4.1 AS DESIRED, I AM ENCLOSING HEREWITH COPY OF LET TER F.NO.NCCF/JMU/BUSS/207-08/661 DATED 20.02.2008 ALON G WITH ITS ENCLOSURE ISSUED BY THE BRANCH MANAGER, NATIONAL CO-OPERATIVE CONSUMERS FEDERATION OF INDIA LTD., 37-A EXT. GANDHI NAGAR, JAMMU IN WHICH HE HAS WRITTEN THAT DURING THE YEAR 2003-04 AND 2004-05 CONCERTINA COIL, ANGLE IRONS, COILS AND RELATED ITEMS WERE SUPPLIED BY THEIR DIFFERENT SUPPLIERS TO THE DEPARTMENT CONCERNED. IN THE ENCLOSURE ATTACHED IT IS CLEAR THAT DURING THE FINANCIAL YEAR 203-04 M/S GANPATI STEEL INDUSTRIES, TRANSPORT NAGAR, NARW AL, JAMMU SUPLIED CONCERTINA COIL, LONG ANGLE IRON AND BARBAD WIRE WE RE SUPPLIED TO C.O.107 ENGR. REGT. C.O 6 REGT. C.O 56 A.P.O AMOUNTING TO RS.1,61 ,98,214/-. SO PLEA TAKEN BY THE COUNSEL OF THE ASSESSEE DOES NOT APPEAR TO BE C ORRECT THAT THE PARTY DID NOT SUPPLY ANY MATERIAL DURING THE FINANCIAL YEAR 2003- 04. REPORT DATED 16.08.2012 4.2 IN CONTINUATION TO THIS OFICE LETTER NO.ITO/W- 1(1)/JMU/2012-13/34 DATED 17.04.2012 IT IS STATED THAT THE BRANCH MANAGER, NA TIONAL CO-OPERATIVE CONSUMERS FEDERATION OF INDIA NCCF/JMU/A CS/2012-1 3/92 DATED 14.06.2012 RECEIVED IN THIS OFICE ON 22.06.2012 ENCLOSING THER EWITH COMPLETE DETAIL OF SUPPLY MADE BY THE ABOVE MENTIONED ASSESSEE DURING THE FIN ANCIAL YEAR 2003-04 RELEVANT TO THE ASSESSMENT YEAR 2004-05. AS PER SAID INFORMA TION (COPY OF LETTER AS WELL AS COPY OF STATEMENT ENCLOSED) THE ABOVE ASSESSEE MADE SUPPLIES OF RS.1,99,02,204/- TO NATIONAL CO-OPERATIVE FEDERATION OF INDIA LTD., JAMMU FROM 15.03.2004 TO 23.03.2004 WHICH WAS FURTHER SUPLIED BY NATIONAL CO -OPERATIVES CONSUMERS FEDERATION OF INDIA LTD., JAMMU COMMANDING 107 ENGT AND 6 ENGR. REFT. FOR A CONSIDERATION OF RS.20,51,6816/-. IN VIEW OF THE INFORMATION PROVIDED BY NATIONAL CO- OPERATIVE CONSUMERS FEDERATION OF INDIA LTD., JAMMU IT IS CLEAR THAT TH E ASSESSEE HAS MADE SUPPLIED TO THE TUNE OF RS.1,99,02,204/- DURING THE FINANCIAL Y EAR 2003-04 RELEVANT TO THE ASSESSMENT YEAR 2004-05 AND THE PLEA OF THE ASSESSE E THAT NO SUPPLY WAS MADE THE ABOVE FINANCIAL YEAR IS NOT CORRECT. REPORT DATED 01.10.2012 4.3 IN THIS CONNECTION IT IS SUBMITTED THAT MY PRE DECESSOR VIDE HIS LETTER NO.34 DATED 17.04.2012 HAD FORWARDED THE DOCUMENTS REQUIR ED BY THE THEN LEARNED CIT(A). A COPY OF SAID LETTER IS ENCLOSED HEREWITH. IN RESPONSE TO YOUR OFFICE LETTER NO. 141 DATED 07.05.2012, A FURTHER REPORT ON THE B ASIS OF INFORMATION CALLED FROM NCCF WAS SUBMITTED VIDE THIS OFFICE LETTER NO.578 D ATED 13.07.2012 (COPY ENCLOSED). DURING THE COURSE OF HEARING THE LEARNED CIT(A) DIRECTED TO CALL THE ABOVE PARTY FOR CROSS EXAMINATION BY THE REPRESENTA TIVE OF THE ASSESSEE. 6 I.T. NO.106 (ASR )/2013 C.O. NO. 06 (ASR)/2015 ASST. YEAR 2004-05 ACCORDINGLY, A LETTER WAS ISUED TO THE REGIONAL MAN AGER, NCCF TO PRODUCE THE RELEVANT RECORDS FOR CROSS EXAMINATION. IN RESPONSE TO THIS LETTER THE REGIONAL MANAGER FORWARDED THE DOCUMENTS CALED FOR BUT NO BO DY APPEARED FROM HIS SIDE FOR CROSS EXAMINATION OF THESE RECORDS BY THE ASSES SE. AL THESE DOCUMENTS WERE FORWARDED TO YOUR OFFICE UNDER THIS OFFICE LETTER N O.786 DATED 16.08.2012. IN COMPLIANCE TO THE DIRECTINS GIVEN DURING THE CO URSE OF THE LAST HEARING HELD IN THE ABOVE NOTED CASE, A LETTER WAS ISSUED T O THE REGIONAL MANAGER, NATIONAL CO-OPERATIVE CONSUMERS FEDERATIN OF INDIA LTD. ON 30.07.2012 REQUESTING HIM TO ATTEND THIS ON 13 TH AUGUST, 2012 ALONWITH RELEVANT RECORD FOR CROSS EXAMINATION OF THE ASSESSEE. IN COMPLIANCE TO THE SAID LETTER NOBODY ATTENDED ON THE DATE OF HEARING. THIS OFFICE RECEIV ED A REPLY FROM THE ABOVE PARTY VIDE ITS LETTER NO. NCCF/JMU/A/CC/2012-13/190 DATED 08.08.2012 ENCLOSING THEREWITH COPIES OF BILLS ISSUED BY THE ABOVE ASSES SEE, COPIES OF BILLS RAISED AGAINST PARTIES TO WHOM GOODS SUPPLIED, SUPPLY ORDERS, DELI VERY CHALLANS ETC. A COPY OF ALL THESE DOCUMENTS IS ENCLOSED HEREWITH FOR YOUR KIND CONSIDERATION. 7. VIDE HIS REJOINDER, THE ASSESSEE SUBMITTED AS FO LLOWS: PLEASE REFER THE LETTER DATED 16/08/2012 SUBMITT ED BY THE A.O TO YOUR GOOD SELF REGARDING THE INFORMATION PROVIDED BY THE NCCF, JAM MU IN THE ABOVE MENTION CASE. FROM THE PERUSAL OF THE DELIVERY CHALLANS IT IS PROVED BEYOND THAT THE GOODS WERE DELIVRED IN THE ASSESSMENT YEAR 205-06 AND NOT IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE SAME WERE ALREADY FURNISHE D WITH EARLIER PAPER BOOK. THE ASSESSE SUBMITTED THAT THE UNDATED BILLS TO TH E NCCF AS DESIRED BY THEM, WHICH IS EVIDENT FROM THE RECORD PRODUCED BY THEM IN WHICH SOME OF THE BILLS ARE STILL UNDATED AND ON SOME BILLS THEY HAVE WRITTEN DATES AS PER THEIR REQUIREMENT. THE DEFINITION OF SALE AS PER SECTION 4(3) OF SALES OF GODS ACT 1930 IS REPRODUCED BELOW: SECTION 4(3) WHERE UNDER A CONTRACT OF SALE THE PR OPERTY IN THE GOODS IN TRANSFERRED FROM THE SELLER TO THE BUYER, THE CONTR ACT IS CALLED A SALE. FROM THE PERUSAL OF THE ABOVE DEFINITION, THE SALE OF GOODS IS COMPLETED ONLY WHEN ACTUALLY THE GOODS HAVE BEEN DELIVERED. T HIS WAS ALSO SUBMITTED EARLIER THAT IN THE YEAR UNDER CONSIDERATION THE APPELLANT ONLY RECEIVED SUPPLY ORDER FOR SUPPLYING OF GOODS AS PER SUPPLY ORDER NO 1326/SO/1 83/2003-04 BUT THE GOODS WERE DELIVERED IN THE SUBSEQUENT ASSESSMENT YEAR I. E., ASSESSMENY YEAR 2005-06. WITH REGARD TO THE CHEQUE NO.903957 UCO BANK FOR R S.46,16,376/- DATED 25/05/204, IT IS TO SUBMIT THAT THE SAID INFORMATIO N DOES NOT PERTAIN TO THE ASSESSEE AND SUCH CHEQUE WAS NEVER RECEIVED BY THE ASSESSEE AS EVIDENT FROM THE BANK ACCOUNT OF THE ASSESSEE. FURTHER, IT IS TO SUBMIT THAT WE HAVE REQUESTED YO UR PREDECESSOR TO ALLOW THE CROSS EXAMINATION OF THE PERSON PROVIDING THE I NFORMATION ON BEHALF OF NCCF, BUT TILL DATE NO SUCH OPPORTUNITY WAS GIVEN TO US F OR THE SAME. THUS IT IS AGAIN REQUESTED TO YOUR GOOD SELF TO ALLOW US THE CROSS E XAMINATION OF PERSON SUPPLYING THE INFORMATION ON BEHALF OF NCCF. WITHOUT PREJUDICE TO THE ABOVE, IT IS FURTHER SUBM ITTED THAT THE ASSESSE HAS PURCHASED THE PUNCH TAPE COIL (RS 985/- PLUS CST RS .39.40 PER COIL) AND THE SALE 7 I.T. NO.106 (ASR )/2013 C.O. NO. 06 (ASR)/2015 ASST. YEAR 2004-05 PRICE OF THE SAID MATERIAL IS RS 1059/- PER COIL, T HUS RESULTING GROSS PROFIT IS RS. 24/- I.E., 2.26% SUBJECT TO TRANSPORTATION COST. TH IS PROFIT IS FURTHER SUBJECT TO INDIRECT COST BEING INCURRED BY THE ASSESSE. THE RA TE APPLIED BY THE LD. AO AT 12% IS TOTALLY BASED ON SURMISES AND CONJECTURES AND WI THOUT CITING ANY COMPARABLE CASE TO THIS NATURE. 8. AS AGAINST A NET PROFIT RATE OF 12% AS APPLIED B Y THE A.O, THE LEARNED CIT(A) CONFIRMED THAT OF 3%, OBSERVING AS FOLLOWS: IT IS SEEN FROM THE ASSESSMENT ORDER THAT AS PER INFORMATION RECEIVED FROM NATIONAL CO-OPERATIVE CONSUMER FEDERATION OF INDIA LTD, JAMMU THE AFORESAID APPELLANT DURING THE FINANCIAL YEAR 203-04 RELEVANT TO THE ASST. YEAR 2004-05 HAS MADE SUPPLY OF BARBED WIRE/CONCERTINA WIRES TO ARMY AMOUNTING TO RS. 1,61,98,214/-. SINCE THE APPELLANT HAS FAILED TO FU RNISH ANY RETURN OF INCOME OR ANY DOCUMENTARY EVIDENCE, THE PROFIT OF THE APPELLA NT WAS ESTIMATED AT 12% OF THE TOTAL SALES. DURING THE YEAR UNDER CONSIDERATION TH E APPELLANT HAS MADE SALES OF RS., 1,61,98,214/- AND 12% OF THIS WORKS OUT TO BE RS.19,43,785/-. 6.1. I HAVE CAREFULLY CONSIDERED THE REPLY OF THE A PPELLNAT, ASSESSMENT ORDER, REMAND REPORTS OF ASSESSING OFFICE AND APPELLANTS CAREFULLY CONSIDERED THE REPLY OF THE APPELLANT, ASSESSMENT ORDER, REMAND REPORTS OF ASSESSING OFFICER AND APPELLANTS SUBMISSION IN RELATION TO THE REMAND RE PORTS. IT IS AN ADMITTED FACT THAT THE SUPPLY ORDER WAS RECEIVED BY THE APPELLANT ON 25/02/2004 FOR SUPLY OF 14700 COILS OF THE PUNCHED TAPE, CONCERTINA COILS T O PATTAN (ON SRINAGAR- BARAMULLA ROAD) @ 1059.00 PER COIL F.O.R. PATTAN IN CLUSIVE OF NCCF MARGIN. ALTHOUGH SUPPLY ORDER WAS MAE IN THE ASSESSMENT YEA R 2004-05, IT IS APPARENT FROM THE DELIVERY CHALLANS SUBMITTED BY THE NCCF AN D THE INVOICES OF SUPPLIERS THROUGH WHOM THE SUPPLIES WERE MADE MENTIONING THE SUPPLY ORDER NO AND NAME OF THE CONSIGNEE, THAT THE SUPPLY OF GOODS WERE EXE CUTED IN THE ASSESSMENT YEAR 2005-06 AND NOT IN THE YEAR UNDER CONSIDERATION. IN THE REMAND REPORT DATED 13.07.2012 AND 16.08.2012 (MENTIONED AT PARA 4.1 AN D 4.2 OF THE ORDER) IT IS STATED THAT SUPPLY HAS TAKEN PLACE IN THE FINANCIAL YEAR 2003-04 RELEVANT TO THIS A.Y. THE FACT IS THAT THE SUPPLY HAS BEEN MADE THE APPELLANT HAS NEITHER FILED ANY RETURN OF INCOME NOR PAID ANY TAX ON THE PROFITS EA RNED THROUGH SUCH SUPPLY OF GOODS IN THIS YEAR OR SUBSEQUENT YEAR, THEREFORE, T HE CONTENTION ABOUT THE ASSESSABILITY OF INCOME IN SUBSEQUENT YEAR HAS NO F ORCE. 6.2 AS FAR AS THE APPLICATION OF NET PROFIT RATE O F 12% IS CONCERNED, NO REASONS OF COMPARABLE CASES ARE CITED BY THE A.O. TO ARRIVE AT A REASONABLE AND FAIR NET RATE OF PROFIT, I HAVE TO TAKE INTO ACCOUNT THE FAC T THAT NCCF ON SUUPLIES MADE TO ARMY BY THE APPELLANT CHARGED ITS FEE/COMMISSION AT 3%. THE APPLICATION OF NET PROFIT RATE OF 12% IS HELD TO BE UNREALISTIC AS IT WOULD SET THE TOTAL MARGIN @ 15%. THE SUPPLY ORDER, SUPPLY INVOICES AND PURCHASE INVO ICES CLEARLY SHOWS THAT THE SUPPLY HAS BEEN MADE @ RES.1059.00 PER COIL AND THE APPELLANT HAS PURCHASED THESE COILS @ RS 1024.40 PER COIL (I.E. RS.985.00 P ER COIL + 4% CST) AND THE RESULTANT GROSS PROFIT IS RS 34.60 PER COIL WHICH I S 3.27%. FURTHER ALLOWANCE FRO ADMINISTRATIVE EXPENSES IS ALSO TO BE ALLOWED TO TH E APPELLANT. IN VIEW OF THE FACTUAL POSITION, I AM OF THE CONSIDERED OPINION TH AT IT WOULD BE FAIR AND 8 I.T. NO.106 (ASR )/2013 C.O. NO. 06 (ASR)/2015 ASST. YEAR 2004-05 REASONABLE IN THE CIRCUMSTANCES OF THIS CASE, IF TH E NET PROFIT RATE OF 3% IS APPLIED TO THE GROSS RECEIPT INSTEAD OF 12% APPLIED BY THE A.O ON ESTIMATED BASIS. THE A.O IS ACCORDINGLY DIRECTED TO MODIFY HIS ORDER IN THE INTEREST OF JUSTICE, BY APPLYING 3% NET PROFIT RATE ON THE GROSS RECEIPT OF RS.1,55, 67,300/-. HENCE, THIS GROUND IS PARTIALLY ALLOWED. 6.3. ANOTHER DISPUTE INVOLVED IS REGARDING TOTAL SA LES MADE TO ARMY THROUGH NCCF. THE AO IN HIS ASSESSMENT ORDER HAS TAKEN THE FIGURE OF SALES AT RS.1,61,98,214/-. WHERE AS PER THE SUPPLY ORDER THE SUPLY WAS TO BE MADE FOR RS.1,5,67,300/- AND BANK RECORDS PRODUCED BY THE AS SESSEE ALSO SHOWS THAT THE APPELLANT RECEIVED AN AMOUNT OF RS.1,51,00,281/- AF TER DEDUCTING 3% COMMISSION OF NCCF ON SUPPLY AMOUNTING TO RS.1,5,67,300. THE N CCF HAS SUPPLIED TWO DIFFERENT LETTERS IN WHICH TWO DIFFERENT SALES FIGU RES WERE GIVEN I.E.RS.1,61,98,214/- AND RS.2,05,16,816/-. THE APPE LLANT REQUESTED TO CROSS EXAMINE THE EVIDENCE PRODUCED BY NCCF BUT THE OFFIC ERS OF NCCF DID NOT TURN UP FOR CROSS EXAMINATION. THE A.O MENTIONED IN THE REM AND REPORT THAT THE OFFICIAL OF NCCF WHO SUPPLIED THE VARIED INFORMATION DID NOT MA KE THEMSELVES AVAILABLE FOR CROSS VERIFICATION AND CROSS EXAMINATION. THEREFORE , THE DOCUMENTS PRODUCED BY THE NCCF CANNOT BE USED AGAINST THE APPELLANT. AS T HE SUPPLY ORDER AND BANK RECORDS OF THE APPELLANT ARE THE ONLY CREDIBLE DOCU MENTS, THE SALES ARE TAKEN AT RS.1,5,67,300/-. 6.4. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND ASSESSMENT ORDER WITH REGARD TO THE INCOME OF PETRO L PUMP M/S SHIVA SERVICE STATION. IT IS OBSERVED THAT THE LICENCE OF PETROL PUMP IS IN THE NAME OF SMT. DARSHANA DEVI AND RETURN OF INCOME HAS BEEN FILED I N THE NAME OF SMT. DARSHANA DEVI PROP. M/S SHIVA SERVICE STATION. THE LICENCE OF PETROL PUMP IS NOT TRANSFERABLE. IT IS A BASIC LAW OF TAXATION THAT TH E SAME INCOME CANNOT BE TAXED TWICE. THE INCOME OF SMT. DARSHANA DEVI HAS BEEN AC CEPTED AND NO PROCEDINGS HAS BEEN INITIATED IN THE HANDS OF SMT DARSHANA DEV I. THE ADDITIONS ARE MADE ON PROTECTIVE BASIS IN THE HANDS OF APPELLANT IN THE A BSENCE OF ADEQUATE MATERIAL AS TO THE NATURE AND OWNERSHIP OF THE PETROL PUMP. THE REFORE, I DELETE THE ADDITION INCOME OF THE PETROL PUMP NAMELY M/S SHIVA SERVICE STATIONH IN THE HANDS OF APPELLANT ON PROTECTIVE BASIS. 9. BEFORE US, THE DEPARTMNET HAS FILED APPEAL, BEI NG AGGRIEVED AGAINST THE ACTION OF THE LEARNED CIT(A) IN NOT CONFIRMING THE NET PROFIT AT THE RATE OF 12% AS APPLIED BY THE A.O AND DIRECTING THE A.O TO ADOPT A NET PROFIT RATE OF 3% . ON THE OTHER HAND, AS PER THE CROSS OB JECTIONS OF THE ASSESSEE, THE LEARNED CIT(A) ERRED IN APPLYING THE NET PROFIT OF 3%, WITHOUT APPRECIATING THE DOCUMENTARY EVIDENCE FURNISHED, EV EN THOUGH NO SALES 9 I.T. NO.106 (ASR )/2013 C.O. NO. 06 (ASR)/2015 ASST. YEAR 2004-05 WERE AFFECTED DURING THE YEAR UNDER CONSIDERATION. THE LEARNED DR HAS SOUGHT TO PLACE STRONG RELIANCE ON THE IMPUGNED ORD ER. 10. HAVING CONSIDERED THE MATERIAL ON RECORD, AS WE LL AS THE ARGUMENTS OF THE LEARNED DR, WE FIND THAT THOUGH IN PARA 6.1 OF THE IMPUGNED ORDER, THE LEARNED CIT(A) HAS HIMSELF OBSERVED THAT ...........IT IS APPARENT FROM THE DELIVERY CHALLANS SUBMITTED BY THE NCCF AND THE INVOICES OF SUPPLIERS THROUGH WHOM THE SUPPLIES WERE MADE MENTI ONING THE SUPPLY ORDER NO. AND NAME OF THE CONSIGNEE, THAT TH E SUPPLY OF GOODS WAS EXECUTED IN THE ASSESSMENT YEAR 2005-06 AND NOT IN THE YEAR UNDER CONSIDERATION. ............ (EMPHASIS SUPPLIED BY US). THEREBY, THE LEARNED CIT(A) TOOK SPECIFIC NOTE OF THE FACT T HAT AS PER THE DELIVERY CHALLANS OF NCCF AND INVOICES OF THE SUPPLIERS, NO SUPPLY OF GOODS WAS MADE DURING THE YEAR UNDER CONSIDERATION, AS MAINTA INED ALL THROUGH BY THE ASSESSEE. HOWEVER, THE LEARNED CIT(A) APPLIED A NET PROFIT RATE OF 3% AS AGAINST THAT OF 12% APPLIED BY THE A.O. THE CIT(A) OBSERVED THAT AS PER THE REMAND REPORTS DATED 13.07.2012 AND 16.08.2012, SUPPLIES HAD TAKEN PLACE IN FINANCIAL YEAR 2003-04, RELEVANT TO THE AS SESSMENT YEAR UNDER CONSIDERATION, I.E., ASSESSMENT YEAR 2004-05. HE OB SERVED THAT THE FACT WAS THAT THE SUPPLY HAD BEEN MADE AND THE ASSESSEE HAD NEITHER FILED ANY RETURN OF INCOME, NOR PAID ANY TAX ON THE PROFITS E ARNED THROUGH SUCH SUPPLY OF GOODS, EITHER IN THE YEAR UNDER CONSIDERA TION, OR IN THE SUBSEQUENT YEAR AND THAT THEREFORE, THE CONTENTION ABOUT THE ASSESSABILITY OF THE INCOME IN THE SUBSEQUENT YEAR HAD NO FORCE. 10 I.T. NO.106 (AS R)/2013 C.O. NO. 06 (ASR)/2015 ASST. YEAR 2004-05 11. NOW, ONCE THE LEARNED CIT(A) HAD HIMSELF, ON AP PRECIATION THE EVIDENCE IN THE FORM OF THE DELIVERY CHALLANS SUBMI TTED BY THE NCCF AND THE INVOICES OF THE SUPPLIERS, THROUGH WHOM THE SUP PLIES WERE MADE, CAME TO THE CONCLUSION THAT THE SUPPLY OF GOODS WAS EXEC UTED IN ASSESSMENT YEAR 2005-06 AND NOT DURING THE YEAR UNDER CONSIDER ATION, APPLICABILIY OF NET PROFIT RATE DURING THE YEAR UNDER CONSIDERATION , DESPITE SUCH CONCLUSION, WAS ENTIRELY UNCALLED FOR IN OUR CONSID ERED OPINION. THEREFORE, THE ISSUE OF ASSESSABILITY OF INCOME IN THE SUBSEQU ENT YEAR, AS CONTENDED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW, REMAI NED AND WAS NEEDED TO BE ADDRESSED IN THE PROPER PROSPECTIVE, WHICH WAS N OT DONE BY THE LEARNED CIT(A). 12. FOR THE ABOVE REASONS, WE REVERSE THE ORDER OF THE LEARNED CIT(A) SO FAR AS REGARDS THE APPLICATION OF NET PROFIT RATE F OR THE YEAR UNDER CONSIDERATION, WHEN ADMITTEDLY , NO SUPPLY OF GOODS WAS EXECUTED IN THE YEAR UNDER CONSIDERATION. HOWEVER, SINCE THE ISSUE OF ASSESSABILITY OF INCOME IN THE SUBSEQUENT YEAR HAS NOT BEEN CORRECTL Y DECIDED BY THE LEARNED CIT(A), REJECTING THE ASSESSEES CONTENTION THAT THE INCOME WAS ASSESSEABLE IN THE SUBSEQUENT YEAR, WHEN THE SUPPL Y HAD BEEN MADE, WE DEEM IT PREFER TO REMIT THIS ISSUE TO THE FILE OF T HE A.O, TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, KEEPING IN CONSIDERATION OU R ABOVE OBSERVATIONS. WE HOLD ACCORDINGLY. 11 I.T. NO.106 (AS R)/2013 C.O. NO. 06 (ASR)/2015 ASST. YEAR 2004-05 13. IN THE RESULT, THE APPEAL AS WELL AS CROSS OBJE CTIONS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES, AS INDICATED ABOV E. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2015. SD/- SD/- (T. R. MEENA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 .09. 2015 /PK/ PS. COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SH. ANAN SHARMA, 2. THE INCOME TAX OFFICER 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.