ITO, Rohtak V. Shri Shyam Lal Gupta, Rohtak

ITA 1921/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58542 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 30-01-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Keywords: Unexplained cash credit
• Section: 145

Judgement Text

ITA NO. 1921/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1921/DEL/2011 A.Y. : 2007-08 INCOME TAX OFFICER, WARD-2, ROHTAK VS. SH. SHYAM LAL GUPTA, SCF-15A, HUDA COMPLEX, ROHTAK (PAN : ACYPG5952F) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. GAUTAM JAIN, CA DEPARTMENT BY : S. MOHANTY, D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 11.2.2 011 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW IN DELETING THE ESTIMATION OF PROFIT @12% APPLIED BY ASSESSING OFFICER IN VIEW OF THE JUDGEMENT OF THE HO NBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF M/S PRABHA T KUMAR CONTRACTOR, SIRSA IN ITA NO. 293 OF 2008 DATE D 14.11.2008. ITA NO. 1921/DEL/2011 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LA W IN DELETING THE ESTIMATION OF PROFIT @ 12% APPLIED BY ASSESSING OFFICER AS THE ASSESSEE COULD NOT PRODUC E BOOKS OF ACCOUNTS WITH SUPPORTING VOUCHERS. THEREFORE, T HE BOOKS OF ACCOUNTS CANNOT BE RELIED UPON AND THE PROFIT O F THE ASSESSEE HAS TO BE ESTIMATED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DE LETING THE ADDITION OF ` 450000/- MADE BY ASSESSING OFFICER ON ACCOUNT OF WORK IN PROGRESS AS THE ASSESSEE COULD N OT FILE ANY REPLY / EVIDENCE DURING ASSESSMENT PROCEEDINGS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LA W IN DELETING THE ADDITION OF ` 263421/- MADE BY ASSESSI NG OFFICER ON ACCOUNT OF UNSECURED LOANS AS THE ASSES SEE COULD NOT FILE ANY REPLY / EVIDENCE DURING ASSESSM ENT PROCEEDINGS. 5. THE APPELLANT CRAVES LEAVE TO ADD, DELETE OR AME ND ANY GROUND OR GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. IN THIS CASE THE ASSESSING OFFICER HAD FOUND TH AT THE ACCOUNTS ARE NOT CORRECT AND COMPLETE AS PROVIDED IN SUB-SECT ION 145 OF THE INCOME TAX ACT. THEREFORE, HE REJECTED THE BOOKS O F ACCOUNTS AND ESTIMATE THE INCOME FROM CONTRACT WORK @12% OF THE G ROSS RECEIPT AFTER EXCLUDING THE COST OF MATERIAL SUPPLIED BY THE DEPARTMENT. ASSESSING OFFICER HAS FURTHER MADE ADDITION OF ` 45 0,000/- ON ACCOUNT ITA NO. 1921/DEL/2011 3 O F WORK IN PROGRESS. ASSESSING OFFICER HAS FURTH ER MADE ADDITION OF ` 2,63,421/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE ISSUE AND HELD AS UNDER:- I HAVE CAREFULLY CONSIDERED THE ISSUES AND THE SUB MISSION MADE BY THE LD. AUTHORISED REPRESENTATIVE. ON ONE H AND THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT TO HIS BEST JUDGEMENT U/S. 144 OF THE ACT BUT ON THE OTHER HAND HE HAS APPLIED THE PROVISIONS OF SECTION 145 BY REJECT ING THE BOOKS OF A/CS ON THE GROUND THAT THEY ARE NOT CORRE CT AND COMPLETE. IT IS NOT KNOW AS TO HOW THE ASSESSIN G OFFICER INVOKED BOTH THE PROVISIONS. COMING TO THE ISSUE O F ESTIMATION OF PROFIT, IT IS CLEAR THAT THE ASSESSIN G OFFICER HAS BLINDLY APPLIED THE RATIO OF M/S PRABHAT KUMAR CONT RACTOR, SIRSA WITHOUT BOTHERING TO VERIFY THE FACTS OF THE CASE. IT WOULD BE APPRECIATED THAT THE FACTS OF THE CASE ARE TOTALLY DIFFERENT FORM THAT OF M/S PRABHAT KUMAR CONTRACTOR , SIRSA. THE ASSESSING OFFICER SHOULD HAVE CONSIDERED THE P AST HISTORY OF THE CASE AND COMPARABLE CASES TO ESTIMATE THE PROFIT AS POINTED OUT BY THE LD. AUTHORISED REPRESE NTATIVE. THE JUDGEMENTS OF THE HONBLE ITAT, NEW DELHI BENCH QUOTED BY THE LD. AUTHORISED REPRESENTATIVE ALSO R EINFORCE THE VIEW THAT THE RATIO OF M/S PRABHAT KUMAR CONTRACT OR, SIRSA CAN NOT BE APPLIED INDISCRIMINATORY TO ALL THE CONTRACTORS IRRESPECTIVE OF THE NATURE OF THE CON TRACTS. IN VIEW OF THE ABOVE, THE ESTIMATION OF PROFIT AT 12% B Y THE ITA NO. 1921/DEL/2011 4 ASSESSING OFFICER IS DELETED AND THE GROUNDS OF AP PEAL ARE ALLOWED. I HAVE CONSIDERED THE ISSUE AND THE SUBMISSIONS MADE BY THE LD. AUTHORISED REPRESENTATIVE. FROM THE BALANCE SHEETS, IT IS EVIDENT THAT THE CLOSING WORK IN PROG RESS OF ` 4.40 LACS AS ON 31.3.2006 WAS DULY TAKEN AS OPENING WORK IN PROGRESS AS ON 1.4.2006. IT IS NOT KNOWN AS T O FROM WHERE THE ASSESSING OFFICER BROUGHT THE FIGURE OF ` 4.50 LACS AND HOW THIS ADDITION WAS MADE. REGARDING TH E ADDITION ON ACCOUNT OF UNSECURED LOANS, IT IS EVIDE NT FROM THE BALANCE SHEETS AS ON 31.3.2006 AND 31.3.2007 TH AT ALL OF THEM ARE OLD AND THEREFORE THE ASSESSING OFFICER COULD NOT HAVE MADE ADDITION IN THE YEAR UNDER CONSIDERATI ON. IN ANY CASE, THE ASSESSING OFFICER COULD NOT HAVE EST IMATED THE PROFIT ON ONE HAND AND FURTHER MAKE ADDITIONS O N ACCOUNT OF CASH CREDITS AND WORK IN PROGRESS ON THE OTHER HAND. IN VIEW OF THE ABOVE, THE ADDITIONS MADE BY THE ASSESSING OFFICER ARE DELETED AND THE GROUNDS OF A PPEAL ARE ALLOWED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S GIVEN A REASONABLE ORDER. LD. COMMISSIONER OF INCOME TAX (AP PEALS) HAS FOUND THAT ASSESSING OFFICER IS WRONG IN INVOKING BOTH THE PROVISIONS OF SECTION 144 AND 145 AT THE SAME TIME. MOREOVER, THE RATE OF PROFIT FOLLOWED BY THE ASSESSING OFFICER HAVE BEEN FOUND B Y THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOT COMPARABLE. IN THESE ITA NO. 1921/DEL/2011 5 CIRCUMSTANCES, THE DELETION OF THE ESTIMATION OF PROF IT BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DOES NOT NEED A NY INTERFERENCE ON OUR PART. AS REGARDS THE ADDITION ON ACCOUNT OF WORK IN PROG RESS ALSO, LD. COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT FROM WHERE THE ASSESSING OFFICER HAS BROUGHT THIS FIGURE IS NOT K NOWN. REGARDING THE ADDITION ON UNSECURED LOAN, LD. COMMI SSIONER OF INCOME TAX (APPEALS) HAS FOUND THAT BECAUSE THEY ARE OLD, ASSESSING OFFICER COULD NOT HAVE MADE ADDITION IN THE CURRE NT YEAR. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER HEL D THAT IN ANY CASE, THE ASSESSING OFFICER COULD NOT HAVE ESTIMAT ED THE PROFIT ON ONE HAND AND FURTHER MAKE ADDITIONS ON ACCOUNT OF CA SH CREDITS AND WORK IN PROGRESS ON THE OTHER HAND. IN OUR CONSIDER ED OPINION, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS PASSED A RE ASONABLE ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. HENCE, WE UPHOLD THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/1/2012, UP ON CONCLUSION OF HEARING. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 30/1/2012 SRB 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