Prem Kumar, New Delhi V. ITO, New Delhi

ITA 168/DEL/2013

• Counselvise Citation: 16820114 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 19-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 09-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S KOCHAR; US KOCHAR
• Keywords: Rejection of books of accounts; Business income

Judgement Text

ITA NO. 168/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER I.T.A. NO. 16 8 /DEL/2013 A.Y. : 2007-08 PREM KUMAR, AB-11, MIANWALI NAGAR, NEAR PASCHIM VIHAR, NEW DELHI 110 087 (PAN: AFXPK49686R) VS. ITO, WARD 25(4), NEW DELHI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. JS KOCHAR, CA AND US KOCHAR, ADV. DEPARTMENT BY : SH. RAMESH KUMAR, SR. D.R. ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU : : : : J JJ JM MM M THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVIII, NEW DELHI DATED 1.11.2012 PERTAINING TO ASSESSMENT YEAR 2007- 08. 2. THE GROUNDS RAISED IN THE APPEAL READ AS UNDER :- 1. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ADOPTION OF NET PROFIT RATE OF 5% OF THE TURNOVER BY THE ASS ESSING OFFICER, WITHOUT ANY EMPIRICAL EVIDENCE OR BASIS AN D WITHOUT CITING OR CONFRONTING THE ASSESSEE WITH THE CASE ITA NO. 168/DEL/2013 2 OF ANY OTHER SIMILARLY PLACED ASSESSEE WHO DECLARED NET PROFIT OF 5%. 2. THAT THE LEARNED CIT(A) ERRED IN NOT CONSIDERIN G THE FACT THAT A NET PROFIT RATE OF 1.21 % IN THE CASE OF THE APPELLANT HIMSELF HAD BEEN ACCEPTED BY THE SAME ASSESSING OFFICER SH. DALIP SINGH IN THE IMMEDIATEL Y SUCCEEDING YEAR (A.Y 2008-09) AFTER A THOROUGH SCRU TINY AND AFTER EXAMINING THE BOOKS OF ACCOUNTS. 3. THAT THE LEARNED CIT(A) ERRED IN SUSTAINING THE REJECTION OF BOOK RESULTS BY THE AO BY OBSERVING THAT THE ASS ESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS IN SPITE OF REPEATED OPPORTUNITIES, DESPITE THE FACT THAT THE B OOKS OF ACCOUNTS WERE NEVER CALLED BY THE A.O. OR THE CIT(A ) DURING THE ASSESSMENT, APPELLATE AND REMAND PROCEEDINGS. 4. THAT THE LEARNED CIT(A) ERRED IN SUSTAINING THE ESTIMATE OF RS.3,00,000 MADE BY THE AO IN RESPECT OF THE HOUSEHOLD EXPENSES OF THE ASSESSEE (AS AGAINST RS.L,60,000 MADE BY THE ASSESSEE) WHEN THE SAME ASSESSING OFFICER SH. DALIP SINGH IN THE IMMEDIATEL Y SUCCEEDING YEAR (A.Y. 2008-09), ESTIMATED THE HOUSE HOLD EXPENDITURE OF RS.2,00,000. ITA NO. 168/DEL/2013 3 5. THAT THE LEARNED CIT(A) ERRED IN SUSTAINING THE NON CONSIDERATION OF THE CONTRIBUTION OF RS.81,000 BY ASSESSEE'S FATHER, WHO WAS A RETIRED GOVERNMENT EMPLOYEE, TOWARDS ASSESSEE'S HOUSEHOLD EXPENSES, EV EN WHILE CONFIRMING THAT THE AO HAD NOT DISCUSSED THIS ASPECT IN THE ASSESSMENT ORDER. 2. BRIEFLY STATED THE FACTS ARE WITH REGARD TO GRO UND NO. 1 IS CONCERNED, THE AO REJECTED THE BOOKS OF ACCOUNTS AND ADOPTED 5% GP RATE ON THE TOTAL SALES AND SIMILARLY, THE LD. C IT(A) IN APPEAL UPHELD THE SAME RATIO AS ADOPTED BY THE AO I.E. 5% ON THE TOTAL SALES. 3. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 4. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BE LOW AND REQUESTED THE SAME MAY BE UPHELD. ON THE OTHER HAND, LD. COU NSEL OF THE ASSESSEE HAS FILED A PAPER BOOK HAVING PAGES 1 TO 1 19 CONTAINING THE DOCUMENTS/EVIDENCE FILED BEFORE THE LOWER AUTHO RITIES VIZ. WRITTEN SUBMISSIONS BEFORE CIT(A); COPY OF TAX AUDI T REPORT, BALANCE SHEET, NOTICES ETC. ETC. IT IS CONTENTION OF THE LD . COUNSEL OF THE ASSESSEE THAT THE LD. CIT(A) ERRED IN NOT CONSIDERI NG THE FACT THAT A NET PROFIT RATE OF 1.21% IN THE CASE OF THE ASSESSE E HIMSELF HAD BEEN ACCEPTED BY THE SAME ASSESSING OFFICER SH. DALIP SI NGH IN THE ITA NO. 168/DEL/2013 4 IMMEDIATELY SUCCEEDING YEAR I.E. A.Y. 2008-09 AFTER A THOROUGH SCRUTINY AND AFTER EXAMINING THE BOOKS OF ACCOUNTS. HE ALSO SUBMITTED THAT LD. CIT(A) ERRED IN SUSTAINING THE R EJECTION OF BOOKS RESULTS BY THE AO BY OBSERVING THAT THE ASSESSEE DI D NOT PRODUCE THE BOOKS OF ACCOUNTS IN SPITE OF THE REPEATED OPP ORTUNITIES, DESPITE THE FACT THAT THE BOOKS OF ACCOUNTS WERE NEVER CALL ED BY THE AO OR THE CIT(A) DURING THE ASSESSMENT, APPELLATE AND REM AND PROCEEDINGS. LD. COUNSEL FURTHER STATED THAT THE AO HAS NOT CITED ANY COMPARABLE CASE WITH REGARD TO THE ISSUE IN QUE STION, WHILE DETERMINING THE NET PROFIT @ 5% AND THE SAME WAS A LSO WRONGFULLY UPHELD BY THE LD. CIT(A) AND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, HE REQUESTED THAT THE NET PROFIT ADOPTED BY THE SAME ASSESSING OFFICER IN THE SUCCEE DING YEAR I.E. 2008-09 @ 1.21% MAY BE ACCEPTED. KEEPING IN VIEW TH E FACTS AND CIRCUMSTANCES OF THE CASE THAT THERE IS CONTRADICTI ON STATEMENT BETWEEN THE ASSESSEE AND THE LOWER AUTHORITIES THAT BOOKS LOWER AUTHORITIES REJECTED THE BOOK RESULTS THAT THE ASS ESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS, IN SPITE OF REPEATED OPPORTUNITIES, DESPITE THE FACT THAT THE BOOKS OF ACCOUNTS WERE NE VER CALLED BY THE LOWER AUTHORITIES. WE ALSO FIND THAT THERE IS CON SIDERABLE COGENCY IN THE SUBMISSIONS OF THE ASSESSEE THAT THE SAME AO HAS ADOPTED THE NET PROFIT @ 1.21% ON THE TOTAL SALES OF THE SA ME ASSESSEE IN THE SUCCEEDING YEAR I.E. A.Y. 2008-09, WHICH THE LD . CIT(A) HAS ALSO ITA NO. 168/DEL/2013 5 NOT CONSIDERED. IN VIEW OF THE ABOVE, WE ARE OF TH E OPINION THAT IN THE INTEREST OF JUSTICE, THE MATTER NEEDS TO BE CON SIDERED IN DETAIL BY THE AO AND ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNI TY TO CANVASS HIS CASE TO SUBSTANTIATE THE CLAIM BEFORE THE AO, A FTER PRODUCING RELEVANT BOOKS OF ACCOUNTS AND OTHER DOCUMENTS, IF ANY, TO ENABLE HIM TO DECIDE THE ISSUE AFRESH. WE HOLD AND ORD ER ACCORDINGLY. 5. THE BRIEF FACTS WITH REGARD TO GROUND NO. 4 AND 5 RELATING TO HOUSE HOLD EXPENSES IS CONCERNED, THE AO HAS COMP UTED RS. 3 LAC AS EXPENDITURE ON HOUSEHOLD WITHDRAWALS AND HAS MAD E AN ADDITION OF RS. 2,47,847/- AFTER ALLOWING THE BENEFIT OF D RAWING MADE BY THE ASSESSEE OF RS. 52,153/-. LD. CIT(A) IN APPEAL CON SIDERED THE ASSESSMENT ORDER, REMAND REPORT AND REJOINDER THER EOF AND UPHELD THE ADDITION MADE BY THE AO. 6. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BE LOW AND REQUESTED THE SAME MAY BE UPHELD. ON THE OTHER HAND, LD. COU NSEL OF THE ASSESSEE HAS FILED A PAPER BOOK HAVING PAGES 1 TO 1 19 CONTAINING THE DOCUMENTS/EVIDENCE FILED BEFORE THE LOWER AUTHO RITIES VIZ. WRITTEN SUBMISSIONS BEFORE CIT(A); COPY OF TAX AUDI T REPORT, BALANCE SHEET, NOTICES ETC. ETC. IT IS THE CONTENTION OF TH E ASSESSEE THAT LD. CIT(A) ERRED IN SUSTAINING THE ESTIMATE OF RS.3,00, 000 MADE BY THE ITA NO. 168/DEL/2013 6 AO IN RESPECT OF THE HOUSEHOLD EXPENSES OF THE ASSE SSEE (AS AGAINST RS.1,60,000 MADE BY THE ASSESSEE) WHEN THE SAME ASS ESSING OFFICER SH. DALIP SINGH IN THE IMMEDIATELY SUCCEEDI NG YEAR (A.Y. 2008-09), ESTIMATED THE HOUSEHOLD EXPENDITURE OF RS .2,00,000. IT WAS THE FURTHER CONTENTION OF THE ASSESSEE THAT CI T(A) ERRED IN SUSTAINING THE NON CONSIDERATION OF THE CONTRIBUTIO N OF RS.81,000 BY ASSESSEE'S FATHER, WHO WAS A RETIRED GOVERNMENT EMP LOYEE, TOWARDS ASSESSEE'S HOUSEHOLD EXPENSES, EVEN WHILE CONFIRMIN G THAT THE AO HAD NOT DISCUSSED THIS ASPECT IN THE ASSESSMENT ORD ER. HENCE, HE REQUESTED THAT THE ESTIMATION OF HOUSEHOLD MAY BE A DOPTED IN TERMS OF ESTIMATION ADOPTED BY THE SAME AO IN THE Y EAR 2008-09. WE ALSO FIND THAT THERE IS CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE ASSESSEE THAT THE SAME AO HAS ESTIMATED THE HOUSEHOLD EXPENSES WITHOUT ANY BASIS AND ALSO NOT FOLLOWING T HE ESTIMATION FOLLOWING IN THE ASSTT. YEAR 2008-09 AND ALSO LD. CIT(A) HAS NOT CONSIDERED THE SAME. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE, THE MATTER NEEDS T O BE CONSIDERED IN DETAIL BY THE AO AND ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY TO CANVASS HIS CASE TO SUBSTANTIATE THE CLAIM BEFOR E THE AO, AFTER PRODUCING RELEVANT BOOKS OF ACCOUNTS AND OTHER DOCU MENTS, IF ANY, TO ENABLE HIM TO DECIDE THE ISSUE AFRESH. WE HOLD AND ORDER ACCORDINGLY. ITA NO. 168/DEL/2013 7 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20/8/2014. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [J.S. REDDY J.S. REDDY J.S. REDDY J.S. REDDY] ]] ] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 20/8/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 168/DEL/2013 8