Subhash Chandra Tripathy, Delhi V. DCIT, Gurgaon

ITA 1330/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2117 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K TEWARI
• Keywords: Business income; Principle of natural justice; Corroborative evidences
• Section: 44AD; 145

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH G, NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1330/DEL/2015 ASSESSMENT YEAR: 2010-11 SUBHASH CHANDRA TRIPATHY, C/O KAPIL GOEL ADV., F-26/124, SECTOR-7, ROHINI, DELHI. PAN- AAOPT 2180Q (APPELLANT) VS. DCIT, CIRCLE II, GURGAON. (RESPONDENT) ASSESSEE BY SH. KAPIL GOEL, ADVOCATE REVENUE BY SH. K. TEWARI, SR. DR ORDER PER L.P. SAHU, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-1, GURGAON DATED 15.01.2015 FOR THE ASSESSME NT YEAR 2010-11 ON THE FOLLOWING GROUNDS : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING IN SUMMARY MANNER THE APP LICATION OF ARBITRARY 8% PROFIT RATE TO DECLARED RECEIPTS OF RS 11,97,88, 637/- POST REJECTION OF BOOKS U/S 145 WITHOUT ANY ADEQUATE AND LEGAL FOUNDA TION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT-A ERRED IN NOT RESTORING THE RETURNED BUSINESS PROFITS WHICH ARE QUITE REASONABLE AND CONTEMPORANEOUS (BEING 4.26% OF DECL ARED RECEIPTS) BEING RS 51,09,000/-. DATE OF HEARING 21.08.2018 DATE OF PRONOUNCEMENT 04 .0 9 .2018 ITA NO. 1330/DEL/2015 2 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT -A ERRED IN NOT VACATING THE AD HOC AND ARBITRAR Y ASSESSMENT MADE BY LD AO AT HYPOTHETICAL BUSINESS INCOME OF RS. 95,83, 090 WITHOUT ANY REQUISITE ANALYSIS. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, BOTH LD AO AND LEARNED CIT-A ERRED IN PASSING THE O RDERS EX-PARTE AT THE BACK OF THE APPELLANT WITHOUT CONFIRMING TO PRINCIP LES OF NATURAL JUSTICE. ADDITION OF RS 538,020 AS INTEREST INCOME FROM OTHE R SOURCES HEAD 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, BOTH LD AO AND LEARNED CIT-A ERRED IN SEPARATELY AS SESSING THE BUSINESS (INTEREST) INCOME ALREADY OFFERED TO TAXATION AS IN COME FROM OTHER SOURCES WHICH IS NOT SUPPORTED BY APPLICABLE LEGAL PROVISIONS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CONTRACTOR AND FILED ITS RETURN OF INCOME ON 28.09.2010 DECLARING INCOME OF RS.51,09,000/- OUT OF TOTAL RECEIPTS OF RS.11,97,88,637/- AT THE PROFIT R ATE OF 4.26%. IN THE ASSESSMENT PROCEEDINGS, THE AO GAVE MORE THAN SUFFI CIENT OPPORTUNITIES TO THE ASSESSEE TO FURNISH THE REQUISITE DETAILS, BUT THE ASSESSEE FAILED EITHER TO FURNISH THE REQUISITE DETAILS OR TO PRODUCE ANY BOO KS OF ACCOUNT BEFORE THE AO. THE DETAILS OF OPPORTUNITIES GIVEN BY DIFFERENT MOD ES AND THE EVIDENCES/DETAILS CALLED FOR ARE WELL ENUMERATED IN THE ASSESSMENT ORDER ITSELF. THE AO, THEREFORE, FOR WANT OF ANY BOOKS OF ACCOUNTS/BILLS OR VOUCHERS REJECTED THE VERSION OF THE ASSESSEE AND MADE THE B EST JUDGMENT ASSESSMENT BY ASSESSING THE PROFIT OF ASSESSEE AT RS.95,83,090 /- ON DECLARED GROSS RECEIPTS OF RS.11,97,88,637/- REPRESENTING TO 8% ON PRESUMPTIVE BASIS AS CONTEMPLATED U/S. 44AD OF THE ACT. APART FROM THE A BOVE, THE AO ALSO NOTICED ITA NO. 1330/DEL/2015 3 FROM THE PROFIT AND LOSS ACCOUNT OF ASSESSEE THAT H E HAS RECEIVED A SUM OF RS.5,38,020/-, WHICH BEING NOT THE PART OF CONTRACT RECEIPTS, WAS ALSO SEPARATELY ADDED TO THE INCOME OF THE ASSESSEE AS I NCOME FROM OTHER SOURCES. 3. THE APPELLANT ASSAILED THE AFORESAID ORDER IN AP PEAL BEFORE THE LD. CIT(A), WHERE ALSO SEVERAL NOTICES WERE ISSUED TO T HE ASSESSEE ON 12.03.14, 18.07.14, 28.08.14, 10.10.14 AND 22.12.2014 FIXING THE DATES OF HEARING ON 29.04.14, 31.07.14, 12.09.14, 21.10.14 AND 13.01.20 15 RESPECTIVELY. BUT THE ASSESSEE DID NOT ATTEND AT ANY OF THE AFORESAID DAT E. THEREFORE, KEEPING IN VIEW THE NON-COOPERATION ON THE PART OF THE ASSESSE E BEFORE BOTH THE AUTHORITIES BELOW AND FOR WANT OF ANY DETAILS OR BO OKS OF ACCOUNT, THE LD. CIT(A) AFFIRMED THE ORDER OF THE AO VIDE IMPUGNED O RDER. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ACCOUNTS OF THE ASSESSEE ARE AUDITED AND AUDIT REPORTS WERE FURNISHED BEFORE THE AO AND THEREFORE, THE AUTHORITIES BELOW WERE NOT JUSTIFIED TO APPLY THE PROVISIONS OF SECTION 44AD OF THE ACT. IT WAS S UBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN JUSTIFYING THE PROFIT RATE OF 8 % IGNORING THE FACT THAT IN ASSESSMENT YEAR 2013-14, THE ASSESSING OFFICER ITSE LF HAS ASSESSED THE PROFIT OF THE ASSESSEE BY APPLYING THE PROFIT RATE OF 4.25 % OF THE GROSS RECEIPTS OF ASSESSEE. IT WAS SUBMITTED THAT NO COMPARABLE CASE HAS BEEN CITED BY ANY OF THE AUTHORITIES BELOW. IT WAS ALSO SUBMITTED THAT T HE INTEREST INCOME SHOWN IN ITA NO. 1330/DEL/2015 4 THE CREDIT SIDE OF PROFIT AND LOSS ACCOUNT WAS THE BUSINESS INCOME OF THE ASSESSEE WHICH HAS WRONGLY BEEN TREATED AS INCOME F ROM OTHER SOURCES. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW AND SUBMITTED THAT MORE THAN ENOUGH OPPORTUNI TIES WERE GIVEN TO THE ASSESSEE BY BOTH THE AUTHORITIES BELOW, BUT THE ASS ESSEE ALWAYS CHOSE NOT TO COOPERATE WITH THE DEPARTMENT SO AS TO VERIFY THE P ROFIT RETURNED BY THE ASSESSEE. THEREFORE, FOR WANT OF ANY BOOKS OF ACCOU NT, THE AUTHORITIES BELOW WERE JUSTIFIED TO APPLY THE PROFIT RATE OF 8% ON TH E GROSS RECEIPTS OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN D ISPUTE THAT THE ASSESSEE WAS GIVEN MORE THAN SUFFICIENT OPPORTUNITIES BY BOTH TH E AUTHORITIES BELOW, BUT THE ASSESSEE ALWAYS PAID DEAF EAR TO THEM. ON A QUE RY BY THE BENCH TO ASSIGN THE REASON FOR SUCH A NON-COOPERATION ON THE PART O F THE ASSESSEE BEFORE THE AUTHORITIES BELOW, THE LD. AR FIRSTLY APOLOGIZED TH E DEFAULTS OF ASSESSEE AND AGREED TO PAY THE COST OF RS.20,000/- FOR SUCH DEFA ULTS. IT WAS, HOWEVER, STATED THAT ALL THE BOOKS OF ACCOUNT ARE MAINTAINED IN ORD INARY COURSE OF BUSINESS, BUT THE SAME COULD NOT BE PRODUCED BEFORE THE AO FO R THE REASON THAT THE ACCOUNTS BOOKS WERE WITH THE LADY ACCOUNTANT, WHO H AD GONE ON LONG LEAVE OWING TO HER PREGNANCY. THIS REASON, HOWEVER, IS NO T APPEALING TO US, AS THE ASSESSEE HAS ALSO FAILED TO ATTEND VARIOUS DATES GI VEN BY FIRST APPELLATE AUTHORITY AND TO PRODUCE THE BOOKS OF ACCOUNTS BEFO RE HIM. WE, HOWEVER, FIND ITA NO. 1330/DEL/2015 5 THAT THE APPLICATION OF SECTION 44AD BY THE AUTHORI TIES BELOW DOES NOT APPEAR PROPER KEEPING IN VIEW THE VOLUME OF GROSS RECEIPTS AND THE AUDIT REPORTS FILED BY THE ASSESSEE BEFORE THE AO. THE AUTHORITIE S BELOW, THEREFORE, WERE ALSO NOT JUSTIFIED TO APPLY THE PROFIT RATE OF 8% I N VIEW OF SECTION 44AD WITHOUT EXAMINING THE PREVIOUS AND SUBSEQUENT HISTO RY OF THE APPELLANT AND WITHOUT REFERRING TO ANY COMPARABLE CASE IN THE LIN E OF ASSESSEES BUSINESS. AS A MATTER OF FACT, THE BEST JUDGMENT ASSESSMENT SHOU LD NOT BE BASED ON SIMPLE PRESUMPTION, BUT SHOULD HAVE A REASONABLE BASIS, AS HELD IN SEVERAL DECISIONS. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES NARRATED ABOVE, WE THINK IT APPROPRIATE IN THE INTEREST OF JUSTICE TO RESTORE T HE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR PASSING THE ASSESSMENT ORDER DE NOVO AFTER GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. TH E ASSESSEE IS DIRECTED TO RENDER FULL COOPERATION TO THE AO AND SHALL PUT UP ITS CASE ON MERITS WITH SUPPORTING EVIDENCES WHICH HE THINKS APPROPRIATE TO FURNISH ALONGWITH BOOKS OF ACCOUNT MAINTAINED BY IT. THE ASSESSEE IS ALSO D IRECTED TO PAY COST OF RS.20,000/- TO THE DEPARTMENT AS AGREED. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES, AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER, 2018. SD/- SD/- (BHAVNESH SAINI) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 4 TH SEPTEMBER, 2018