Shri Chandanmal Sutar, Nagpur V. Income Tax Officer Ward-8(2),Nagpur,

ITA 164/NAG/2010

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3043 (ITAT-NAGPUR)
• Duration Of Justice: 8 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 24-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI
• Assessee Lawyers: K JOHN VIKRAM
• Keywords: Presumptive income; Opportunity of being heard; Additional evidence
• Section: 44AD; 142(1); 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 164/NAG/2010 ASSESSMENT YEAR : 2005-06 SHRI CHANDANMAL SUTAR VS. INCOME TAX OFFICER, 50, SHUBHARAMBH SOCIETY, AMRAVATI ROAD, WARD-8(2), WADI, NAGPUR. NAGPUR. PAN : ARHPS 7839M (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI K. JOHN VIKRAM RESPONDENT BY :DR. MILIND BHUSARI, CIT, D.R. DATE OF HEARING :17/10/2012 DATE OF PRONOUNCEMENT :30/11/2012 O R D E R PER D. T. GARASIA: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER OF CIT (A) II, NAGPUR, DATED 17/06/2010. IN THIS APPEAL, THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND: 1. THE AO ERRED IS APPLYING A NET PROFIT OF 8% AS A CIVIL CONTRACTOR WHEREAS THE ASSESSEE IS COMMISSION AGENT FOR TRANSPORT. 2. THE SHORT FACTS OF THE CASE ARE THAT I N THIS CASE RETURN OF INCOME WAS FILED ON 31.10.2005 ALONG WITH AUDIT REPORT IN FORM 3CB & 3CD SHOWING AN INCOME OF 2 RS.1,25,219/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT U/S 144 WAS COMPLETED ON 14.12.2007. IT IS SEEN FROM THE ASSESSMENT ORDER THAT A.O. ISSUED NOTICE U/S 140(2) ON FOUR OCCASIONS I.E. ON 23.10.2006, 03.10.2007, 12.04.2007 AND 19.04.2007 BUT THE ASSESSEE HAD NOT COMPLIED WITH THE NOTICES. THE A.O. AGAIN GRANTED FINAL OPPORTUNITY BY ISSUING A LETTER DATED 19.11.2007 ALONG WITH NOTICE U/S 142(1) FIXING THE CASE FOR HEARING ON 23.11.2007. AS PER THE A.O. IT WAS MENTIONED IN THE LETTER DATED 19.11.2007 THAT FAILURE TO ATTEND ON THE GIVEN DATE WOULD COMPEL THE A.O. TO FINALIZE THE ASSESSMENT EX-PARTE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. HOWEVER, IT IS SEEN THAT THE ASSESSEE HAS NOT ATTENDED ON THIS OCCASION ALSO. IT IS STATED BY THE A.O. THAT IN VIEW OF NON-COMPLIANCE BY THE ASSESSEE AND SINCE THE ASSESSMENT WAS GETTING TIME BARRED ON 31.12.2007, THE A.O. HAD NO ALTERNATIVE BUT TO REJECT THE BOOKS OF ACCOUNTS U/S 145(3) OF THE IT. ACT AND ESTIMATE THE INCOME ON THE BASIS OF DOCUMENTS AVAILABLE ON RECORD. THE A.O., IN THE ORDER PASSED U/S 144 OF THE I.T. ACT, HAS ESTIMATED THE INCOME OF APPELLANT @8% OF THE GROSS RECEIPTS OF RS.67,21,435/- WHICH COMES TO RS.5,37,715/-. 3. THE ASSESSEE CARRIED THE MATTER TO CIT (A) AND CIT (A) DISMISSED THE APPEAL BY OBSERVING AS UNDER: - 5.0 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, SUBMISSIONS OF THE APPELLANT AND THE CONTENTIONS RAISED BY THE LEARNED A.R. OF THE APPELLANT. IT IS SEEN THAT THE APPELLANT IS A CIVIL CONTRACTOR AND HAS FAILED TO PRODUCE ALL THE REQUIRED BOOKS OF ACCOUNTS, VOUCHERS AND BILLS BEFORE THE A.O. DURING THE ASSESSMENT PROCEEDINGS AND CONSEQUENTLY A.O. HAS ADOPTED THE NET PROFIT ON GROSS CONTRACT RECEIPTS @8%. SINCE THE BOOKS OF ACCOUNTS HAVE NOT BEEN PRODUCED AND A.O. COULD NOT EXAMINE THEM TO ARRIVE AT THE CORRECTNESS OF THE NET PROFIT DECLARED BY THE APPELLANT, A.O. HAS RIGHTLY ASSESSED THE INCOME OF THE APPELLANT BY INVOKING SECTION 144 OF THE I.T. ACT. THE ONLY QUESTION IS WHETHER THE PRINCIPLES OF BEST JUDGMENT REQUIRED TO BE EXERCISED BY THE A.O. GIVEN THE FACTS OF THE CASE OF THE APPELLANT, HAS BEEN COMPLIED WITH. SECTION 44AD OF THE I.T. ACT MANDATES THAT IN A CASE WHEREIN THE GROSS CONTRACT RECEIPTS IS LESS THAN RS.40 LACS AND IF SUCH AN ASSESSEE EXERCISES THE OPTION OF NOT MAINTAINING THE BOOKS OF A CCOUNTS, THE PRESUMPTIVE INCOME/NET PROFIT IN SUCH A CASE HAS TO BE TAKEN AT 8% OF THE GROSS RECEIPTS. ALTHOUGH SUCH A PROVISION IS APPLICABLE TO ONLY CASES WITH A TURNOVER OF LESS THAN RS.40 LACS, IT CAN BE A YARD STICK AND A GUIDING FORCE IN OTHER CASES WHEREIN THE TAX PAYER HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNTS AND SUPPORT THE ENTRIES IN THE BOOKS OF ACCOUNTS WITH THE ADEQUATE EVIDENCES. THE FACTS OF THIS CASE MAKE IT CLEAR THAT SUCH A BEST JUDGMENT ASSESSMENT WAS CALLED FOR. THE DECISION OF HON'BLE HIGH COURT OF KERALA IN THE CASE OF SAMURAI TECHNO 3 TRADING CO. (P) LTD. VS. CIT [2010] 37 DTR (KER) 386 (HC) IS APPLICABLE TO THE FACTS OF THIS CASE. IN THIS CASE, THE HON'BLE HIGH COURT HAS HELD THAT 'IN THE ABSENCE OF CREDIBLE BOOKS OF ACCOUNTS THE A.O. RIGHTLY INVOKED SECTION 145(3) TO MAKE ASSESSMENT ON ESTIMATION BASIS IN TERMS OF SECTION 144; TRIBUNAL WAS JUSTIFIED IN ESTIMATING THE INCOME AT 8 PER CENT OF THE TURNOVER FROM THE BUSINESS OF CIVIL WORK BY TAKING GUIDELINE FROM SECTION 44AD.' FURTHER THE STAND TAKEN BY THE LEARNED A.R. OF THE APPELLANT TO ADMIT ADDITIONAL EVIDENCE UNDER RULE 46A AND ALLOW THE APPELLANT TO GET THE BOOKS VERIFIED FROM A.O. TO ARRIVE AT THE INCOME IS NOT CONSIDERED NECESSARY AS THE A.O. HAD GRANTED SUFFICIENT OPPORTUNITIES TO PRODUCE THE BOOKS OF ACCOUNTS. THEREFORE, I HEREBY HOLD THAT THE ESTIMATION OF NET INCOME @8% OF THE GROSS CONTRACT PROFITS IS REASONABLE AND THE SAME IS UPHELD. 4. THE LEARNED A.R. SUBMITTED THAT THE ASSESSEE IS A TRANSPORTER. HE RECEIVED THE COMMISSION ON PAYMENT TO THE TRUCK OWNERS. HE ALSO OWNS TWO TRUCKS, WHICH WERE ALSO PUT ON SAME JOB. THE ASSESSEES CASE WAS TAKEN FOR SCRUTINY AND VARIOUS NOTICES WERE SERVED TO THE ASSESSEE. SINCE THERE WAS NO COMPLIANCE OF ANY OF THE NOTICES ISSUED, THE ASSESSING OFFICER HAS MADE AN ORDER U/S 144 OF THE ACT. THE MATTER WAS CARRIED TO CIT(A) AND BEFORE CIT(A) THE ASSESSEE HAS REQUESTED TO ADMIT ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES AND OFFERED TO PRODUCE BOOKS OF ACCOUNT AND REQUIRED DETAILS FOR VERIFICATION. THE LEARNED A.R. SUBMITTED THAT THE ESTIMATION OF INCOME IS HIGHLY UNREASONABLE AND REQUESTED TO VERIFY BOOKS OF ACCOUNT SO AS TO MAKE JUSTICE TO THE ASSESSEE. 5. ON THE OTHER HAND, LEARNED D. R. RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE HAS REQUESTED CIT(A) TO PRODUCE BOOKS OF ACCOUNT AND HE WANTED TO PRODUCE THE BOOKS OF ACCOUNT TO ASSESSING OFFICER AND REQUESTED TO ESTIMATE THE INCOME BUT THE CIT(A) HAS NOT CONSIDERED HIS REQUEST. THEREFORE, IN THE INTEREST AND FAIR PLAY, WE REVERE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE OF CIT(A) WITH A DIRECTION THAT THE ASSESSEE MAY BE GIVEN AN OPPORTUNITY TO PRODUCE THE BOOKS 4 OF ACCOUNT . THE CIT(A) WILL DECIDE THE ISSUE AFRESH AFTER GIVING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2012) SD/. SD/. (P. K. BANSAL) (D. T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:30/11/2012 *CL SINGH COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT, NAGPUR 4. CIT(A), NAGPUR 5. D.R ASSISTANT REGISTRAR