Nigmendra Singh, Bulandshahr V. ACIT, Bulandshahr

ITA 1671/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6557 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 02-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Keywords: Rejection of books of accounts
• Section: 44AD; 145

Judgement Text

1 ITA NO. 1671/DEL/2 013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEM BER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.- 1671/DEL/2013 (ASSESSMENT YEA R-2008-09) NIGMENDRA SINGH S/O KIRAN PAL SINGH CHAMAN VIHAR, COLONY, KHURJA (BSR) BULANDSHAHAR AMWPS9250L (APPELLANT) VS ACIT CIRCLE BULANDSHAHR (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SHRI AMRIT LAL, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER DATED 14/12/2012 PASSED BY CIT (A) NOIDA. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS:- 1. ADDITION OF RS.2,23,057/- TO THE NET PROFIT BY APPLYING NET PROFIT RATE 8% BY THE LD. ACIT AND CONFIRMED BY THE LD. CIT(APPEALS), IS HIGHLY OBJECTIONABLE. THE GRO UNDS FOR THE ADDITION ARE OBJECTIONABLE. 2. ADDITION OF RS.3,8,864/- ON ACCOUNT OF ACCRUED I NTEREST ON SECURITIES TO TOTAL INCOME BY THE LD. ACIT AND C ONFIRMED DATE OF HEARING 02.02.2016 DATE OF PRONOUNCEMENT 01.03.2016 2 ITA NO. 1671/DEL/2 013 BY THE LD. CIT(APPEALS) IS OBJECTIONABLE. THE GROU NDS TO MAKE THE ADDITION IS OBJECTIONABLE. 3. ADDITION OF RS.18,000/- ON ACCOUNT OF LOW HOUSE HOLD EXPENSES BY THE LD. ACIT AND CONFIRMED BY THE LD. CIT(APPEALS) IS OBJECTIONABLE. THE GROUNDS TO MAKE THE ADDITION IS OBJECTIONABLE. 4. CHARGING OF INTEREST U/S 234-B AND 234-D ARE OBJECTIONABLE. 3. DURING THE HEARING NONE APPEARED FOR THE ASSESSE E AND THE ASSESSEE WAS ALSO NOT PRESENT. AFTER GOING THROUGH THE RECORDS IT WAS FOUND THAT THE ASSESSEES REPRESENTATIVE WAS ME DICALLY UNFIT HENCE HAD NOT APPEARED ON MANY OCCASSIONS. THE ASSE SSEE THROUGH HIS LETTER PRODUCED THE MEDICAL CERTIFICATE DATED 2 7.07.2015 ON THE EARLIER OCCASION WHICH IS ON RECORD. IN THE INTERES T OF JUSTICE AND AFTER GOING THROUGH THE FILE, WE ARE OF THE OPINION THAT THE MATTER HAS TO BE DECIDED ON MERIT. 4. THE ASSESSEE IS A CIVIL CONTRACTOR AND DERIVED I NCOME FROM CONSTRUCTION OF ROAD ON CONTACT. ASSESSEE FILED RE TURN OF INCOME ON 30/9/2008 DECLARING INCOME OF RS.2,41,780/-. DURIN G THE YEAR THE GROSS RECEIPT AND NET PROFIT WAS DECLARED AT RS.68, 52,326/- AND RS.3,25,129/- RESPECTIVELY AND NET PROFIT RATE WAS SHOWN AT 4.74% OF THE GROSS RECEIPT. THE CASE WAS SELECTED FOR SC RUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O FOUND THAT THE BOOKS OF ACCOUNTS WERE AUDITED AND COPY OF AUDIT REPORT A LONG WITH BALANCE SHEET AND PROFIT AND LOSS ACCOUNTS ALSO FUR NISHED BY THE 3 ITA NO. 1671/DEL/2 013 ASSESSEE. IT ALSO CAME TO THE NOTICE OF THE A.O TH AT IN THE PRECEDING YEAR, THE ASSESSEE HAD DECLARED NET PROFIT @ 8% U/S 44AD OF THE I.T ACT, 1961 ON THE GROSS RECEIPT OF RS.15,96,854/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE DECLINE IN THE NET PROFIT RATE SHOWN IN THE CURRENT ASSESSMENT YEAR VIZ-A-VIZ PRECEDING YEAR. IN RESPONSE, THE ASSESSEE SUBMITTED THAT NET PROFIT IN THE CURRENT A SSESSMENT YEAR DECREASED DUE TO COMPETITION AS CONTRACTS WERE TAKE N ON LOW RATE TENDER AND INCREASE IN WAGES WAS ALSO ONE OF THE RE ASONS FOR DECREASE IN PROFIT. HOWEVER, A.O WAS NOT SATISFIED WITH THE CLARIFICATIONS AND ASKED THE ASSESSEE TO PRODUCE BO OKS OF ACCOUNTS FOR EXAMINATION. IN RESPONSE, THE ASSESSEE PRODUCE D COMPUTER GENERATED CASH BOOK AND LEDGER BEFORE THE A.O AND I N THE COURSE OF ITS EXAMINATION A.O FOUND THAT COMPLETE VOUCHERS WE RE NOT AVAILABLE. THE A.O FURTHER, NOTICED FROM THE TDS C ERTIFICATE ATTACHED WITH THE REPORT THAT GROSS RECEIPT WAS AT RS. 70,76,334/- WHEREAS, IN THE AUDITED REPORT IT WAS DECLARED AT R S. 68,52,326/- ONLY. THUS THE DIFFERENCE OF RS. 2,24,008/- WAS FO UND TO BE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. FURTHER, O N SCRUTINY OF ACCOUNTS A.O ALSO FOUND THAT THE ASSESSEE HAD FAILE D TO DECLARE ACCRUED INTEREST ON SECURITY OF RS.5,66,500/- SHOWN IN THE BALANCE SHEET. BESIDES, ABOVE ASSESSEE WAS ALSO UNABLE TO SHOW THE COMPLETE VOUCHERS BEFORE THE A.O. THE A.O ALSO OBS ERVED THAT THE BOOKS OF ACCOUNTS WERE NOT SATISFACTORY MAINTAINED AND ARE COMPLETELY UNRELILABLE. IN VIEW OF ABOVE CATEGORIC AL FINDINGS, THE A.O REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) AND W ENT AHEAD WITH ASSESSMENT ON NET PROFIT @ 8% OF GROSS RECEIPT OF R S.68,52,326/- AS 4 ITA NO. 1671/DEL/2 013 DECLARED IN THE AUDIT REPORT. AS A RESULT ADDITION OF RS.2,23,057/- WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. THE A SSESSEE FILED APPEAL BEFORE THE CIT(A). 5. THE CIT(A) HELD THAT THE A.O. HAS GIVEN CATEGORI CAL FINDINGS SHOWING SPECIFIC DISCREPANCIES IN THE BOOKS OF ACCO UNTS BEFORE REJECTING THE BOOKS WHEREAS ASSESSEE HAS FURNISHED NO MEANINGFUL OR TENABLE EXPLANATION TO REVERT A.OS FINDINGS. T HEREFORE, THE CIT(A) HELD THAT A.O WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTI ON 145(3) AND COMPLETED THE ASSESSMENT @8% OF NET PROFIT AND THE SAME IS REASONABLE. THUS CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 6. WE HAVE PERUSED ALL THE RECORDS, THE ASSESSING O FFICER HAS OVER LOOKED THE DETAILS FURNISHED BY THE ASSESSEE D URING THE ASSESSMENT PROCEEDINGS AS WELL AS BEFORE THE CIT(A) . REJECTION OF BOOKS OF ACCOUNT BY ASSESSING OFFICER WITHOUT HAVIN G AUTHORITY IS NOT JUSTIFIED. SECTION 145 (3) OF THE INCOME TAX AC T, 1961 CLEARLY STATES THAT THE SATISFACTION WHILE DETERMINING THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNT IS NECESSARY. IN THE PR ESENT CASE A.O. HAS SIMPLY STATED IN ONE SENTENCE THAT THE BOOKS OF ACCOUNT ARE NOT SATISFACTORILY MAINTAINED AND INCOMPLETE AND UNRELI ABLE, BUT HOW HE ARRIVES ON THAT FINDING IS NOT GIVEN IN THE ASSE SSMENT ORDER. THIS ASPECT WAS NOT EVEN LOOKED UPON BY THE CIT(A) AS WELL. THUS 5 ITA NO. 1671/DEL/2 013 GROUND NO. 1 IS ALLOWED. IN RESPECT OF ADDITION OF RS. 38,864/- ON ACCOUNT OF ACCRUED INTEREST INCOME ON ACCOUNT OF SE CURITIES AND REGARDING ADDITION OF RS.18,000/- ON ACCOUNT OF HOU SEHOLD EXPENSES, THE ASSESSING OFFICER HAS NOT GIVEN PROPE R REASONING WHILE MAKING THESE ADDITIONS. THE ACCRUED INCOME DE RIVED BY THE ASSESSEE IS REASONABLE. IN FACT, HOUSEHOLD EXPENSES INCURRED BY THE ASSESSEE ARE JUST AND PROPER. AS RELATES TO GROUND NO. 4 THE SAME IS CONSEQUENTIAL. 7. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 ST OF MARCH, 2016. SD/- SD/- (J. SUDHAKAR REDDY) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 01/03/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI 6 ITA NO. 1671/DEL/2 013 DATE 1. DRAFT DICTATED ON .02.02.2016 PS 2. DRAFT PLACED BEFORE AUTHOR .03.02.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 01.03.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 01.03.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.