Smt. Bharati Mahadev Ugare, Pune V. Assistant Commissioner of Income-tax,

ITA 1062/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1083 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 20-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Assessee Lawyers: A R SATHYANARAYANAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.1062/PN/2016 / ASSESSMENT YEAR : 2007-08 SMT. BHARATI MAHADEV UGARE, S.NO.15-8, 2 ND FLOOR, KRUTI INDUSTRIAL ESTATE, OPP. SANGAM PRESS, KOTHRUD, PUNE 411029 PAN : AGEPB0614M . / APPELLANT V/S ACIT, CIRCLE - 3, PUNE . / RESPONDENT / APPELLANT BY : SHRI A.R. SATHYANARAYANAN / RESPONDENT BY : SHRI ANIL KUMAR CHAWARE / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 02-03-2016 OF THE CIT(A)-III, PUNE RELATING TO TH E ASSESSMENT YEAR 2007-08. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY TH E ASSESSEE THEY ALL RELATE TO THE ORDER OF THE CIT(A) IN DISM ISSING THE APPEAL FILED BY THE ASSESSEE AND THEREBY CONFIRMING THE AD DITION OF RS.16,59,598/- MADE BY THE AO ON ACCOUNT OF NET PROFIT. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND ENGAGED IN THE BUSINESS ACTIVITY OF TAKING ELEC TRICAL CONTRACTS, FIXING HT AND LT CONNECTIONS, METERING EQUIPMENT S ETC. SHE FILED HER RETURN OF INCOME ON 31-10-2007 DECLARING TOT AL INCOME / DATE OF HEARING :24.08.2016 / DATE OF PRONOUNCEMENT: 24.08.2016 2 ITA NO.1062/PN/2016 OF RS.14,71,656/-. THE CASE WAS SELECTED FOR SCRUTINY. DES PITE SERVICE OF STATUTORY NOTICES THERE WAS NO RESPONSE FROM THE ASSESSEE FOR WHICH THE AO COMPLETED THE ASSESSMENT EXPARTE U/S.1 44 OF THE I.T. ACT. THE AO OBSERVED FROM THE TAX AUDIT REPORT TH AT THE NET PROFIT DECLARED BY THE ASSESSEE IS RS.15,71,656/- WHICH IS 7 .29% OF THE GROSS TURNOVER OF RS.2,15,41,695/-. SINCE THE ASSESS EE FAILED TO PRODUCE THE BOOKS OF ACCOUNT, THE AO, CONSIDERING THE NE T PROFIT DECLARED AT 7.29% AS DRASTICALLY LOW, ESTIMATED THE NET PR OFIT AT 15% OF THE TURNOVER WHICH COMES TO RS.31,31,254/-. AFTER DEDU CTING THE NET PROFIT OF RS.15,71,656/- DECLARED BY THE ASSESSEE THE AO MADE ADDITION OF RS.16,59,598/- TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEFORE CIT(A) THE ASSESSEE DID NOT APPEAR DESPITE SER VICE OF NOTICE FOR WHICH THE LD.CIT(A) DISMISSED THE APPEAL FILED BY TH E ASSESSEE UPHOLDING THE ADDITION MADE BY THE AO. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED THE ORDER OF THE AO AND THE CIT(A). HE SUBMITTED THAT THE HOUSE OF T HE ASSESSEE WAS LOCKED FOR WHICH THE VARIOUS NOTICES ISSUED BY THE CI T(A) WERE NOT RECEIVED BY THE ASSESSEE. ONLY WHEN THE HOUSE WA S LET OUT THE TENANT HANDED OVER THE LETTERS AND AFTER THAT THE ASS ESSEE CAME TO KNOW OF SUCH NOTICES AND ORDERS. HE SUBMITTED THAT THE ESTIMATION OF INCOME BY THE AO IS ARBITRARY AND WITHOUT ANY BASIS. T HE AO HAS NOT CONSIDERED ANY COMPARABLE CASE BEFORE ADOPTING THE NET PROFIT RATE OF 15%. ALTHOUGH THE ASSESSEE HAS NOT ATTENDED B EFORE THE AO, HOWEVER, THE AO HAS NOT ADOPTED ANY OTHER METHOD FOR ENFORCEMENT OF THE PRESENCE OF THE ASSESSEE SUCH AS ISSUE OF SUMMON S U/S.131 3 ITA NO.1062/PN/2016 OR LEVY OF PENALTY U/S.271(1)(B) ETC. IN ANY CASE WHEN THE ASSESSEE HAS FILED RETURN OF INCOME ALONG WITH TAX AUDIT REPORT THE AO COULD NOT HAVE ESTIMATED THE INCOME AT 15% WHICH IS MORE THA N DOUBLE THE NET PROFIT RATE DECLARED BY THE ASSESSEE. THE LD.CI T(A) ALSO WAS EQUALLY UNJUSTIFIED IN UPHOLDING THE HIGH PITCH ASSESSMENT ORDER PASSED BY THE AO. HE ACCORDINGLY SUBMITTED THAT THE BOOK RESULTS DECLARED BY THE ASSESSEE SHOULD BE ACCEPTED. IN HIS AL TERNATE CONTENTION, HE SUBMITTED THAT THE MATTER MAY BE RESTOR ED TO THE FILE OF THE AO WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY T O THE ASSESSEE TO EXPLAIN HIS CASE. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A) AND OPPOSED THE ABOVE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. HE SUBMIT TED THAT DESPITE REPEATED OPPORTUNITIES GIVEN BY THE AO AND THE CIT(A) THE ASSESSEE DID NOT BOTHER TO APPEAR BEFORE EITHER OF THE AUTHORITIES. THEREFORE, THE ORDER OF THE CIT(A) UPHOLDING THE ADDITION M ADE BY THE AO SHOULD BE UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 8. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PA PER BOOK FILED ON BEHALF OF THE ASSESSEE. I FIND THE ASSESSEE IN THE INST ANT CASE IS ENGAGED IN THE BUSINESS ACTIVITY OF TAKING CONTRACTS FOR FIXING ELECTRIC HT AND LT CONNECTIONS, METERING EQUIPMENTS ETC. SHE FILED HER RETURN OF INCOME DECLARING TOTAL INCOME OF RS.14,71,656/-. TH E RETURN WAS ACCOMPANIED BY TAX AUDIT REPORT AND THE NE T PROFIT DECLARED IN THE PROFIT AND LOSS ACCOUNT AT RS.15,71,656/- COMES TO 7.29% OF THE GROSS TURNOVER OF RS.2,15,41,695/-. SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE THE AO PASSED THE O RDER U/S.144 4 ITA NO.1062/PN/2016 ESTIMATING THE PROFIT AT 15% OF THE TURNOVER AND THEREB Y MAKING ADDITION OF RS.16,59,598/- WHICH HAS BEEN UPHELD BY THE CIT(A). 9. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSE E THAT SUCH ESTIMATION OF PROFIT AT 15% IS HIGHLY EXCESSIVE AND AR BITRARY ESPECIALLY IN ABSENCE OF ANY COMPARABLE CASE OF ANY OTHER ASSESSEE ENGAGED IN SIMILAR LINE OF BUSINESS BEING CONSIDERED BY THE AO. IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE TH AT DUE TO NON RECEIPT OF NOTICES FROM THE OFFICE OF THE CIT(A) THE ASSE SSEE COULD NOT APPEAR BEFORE THE CIT(A). IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT GIVEN AN OPPORTUNITY HE W ILL PRODUCE THE BOOKS OF ACCOUNT TO SUBSTANTIATE THE RETURN FILED BE FORE THE AO. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN T HE INTEREST OF JUSTICE, I DEEM IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASS ESSEE TO SUBSTANTIATE THE INCOME DECLARED BY THE ASSESSEE. THE ASSESSEE IS DIRECTED TO APPEAR BEFORE THE AO AND PRODUCE BOOKS OF ACCOUNT FAILING WHICH THE AO SHALL DECIDE THE ISSUE AS PER LAW. I H OLD AND DIRECT ACCORDINGLY. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITS ELF, I.E. ON 24-08-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 24 TH AUGUST, 2016. 5 ITA NO.1062/PN/2016 '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // // $ % //TRUE COPY // // &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - III , PUNE 4. THE CIT-III, PUNE 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.