The ITO, Ward-1, Bharuch V. Shri Vinayak Ratilal Mehta, Bharuch

ITA 1975/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0496 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-02-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 08-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 142(1); 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , .'.#$%, '& ' ' BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ./ I.T.A. NO.1975/AHD/2010 ( ( ) *) / ASSESSMENT YEAR : 2006-07) THE INCOME TAX OFFICER WARD-1 BHARUCH ( / VS. SHRI VINAYAK RATILAL MEHTA PROP.R.R. CONSTRUCTION SHOP NO.3-4, V.D.TOWNSHIP DAHEJ BY-PASS ROAD BHARUCH ./ ./ PAN/GIR NO. : AFQPM 6438 M ( / APPELLANT ) .. ( / RESPONDENT ) AND CO NO.203/AHD/2010 A.Y. 2006-07 (ARISING OUT OF ITA NO.1975/AHD/2010) SHRI VINAYAK RATILAL MEHTA VS. THE INCOME TAX O FFICER BHARUCH WARD-1, BHARUCH ( CROSS OBJECTOR ) .. ( RESPONDENT ) REVENUE BY : SHRI T. SANKAR, SR.D.R. ASSESSEE BY : -NONE-(WRITTEN SUBMISSION FILED) / DATE OF HEARING : 04/02/2013 !' / DATE OF PRONOUNCEMENT : 22/2/13 #$ / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M THE ORDER OF THE LEARNED CIT(APPEALS)-VI, BARODA DATED 23/03/201 0 PASSED FOR ASSESSMENT YEAR 2006-07. THE RESPONDENT ASSESSEE I S IN CROSS OBJECTION. ITA NO.1975/AHD/2010(BY REVENUE) AND CO NO.203/AHD/2010 (BY ASSESSEE) ITO VS. SHRI VINAYAK RATILAL MEHTA ASST.YEAR - 2006-07 - 2 - 2. REVENUES APPEAL, ITA NO.1975/AHD/2010 FOR A.Y. 20 06-07 IN THIS APPEAL, THE REVENUE HAS RAISED FOLLOWING GR OUNDS:- 1(1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION T O THE EXTENT OF RS.18,35,464/- OUT OF TOTAL ADDITION OF RS.24,09,84 8/- ON ACCOUNT OF LOW NET PROFIT DECLARED BY THE ASSESSEE. 1(II). THE LD. CIT(A) FAILED TO APPRECIATE THAT DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO PROD UCE THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS IN SPITE OF SEVERAL OPPORTUNITIES GRANTED BY THE A.O. HENCE, THE EXPENDITURE AMOUNTI NG TO RS.3,47,52,535/- BEING COST OF MATERIAL CONSUMED AN D RS.51,60,911/- BEING ADMINISTRATIVE AND OTHER EXPEN SES WERE NOT VERIFIABLE ESPECIALLY WHEN THE NET PROFIT RATIO SHO WN BY THE ASSESSEE WAS ONLY 2.09%. THE ASSESSEE BEING A CIVI L CONTRACTOR, THE ESTIMATION OF NET PROFIT @ 8% IN ABSENCE OF PRO DUCTION OF ANY BOOKS OF ACCOUNT IS JUSTIFIABLE, AS DONE AND ACCEPT ED BY THE ASSESSEE FOR A.Y. 2005-06 IN THE ASSESSEES OWN CAS E. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F RS.3,81,283/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN RESPECT OF UNSECURED LOAN ACCEPTED BY THE ASSESSEE. RELIEF CLAIMED IN APPEAL THE ORDER OF THE CIT(A) ON THE ABOVE ISSUE BE SET A SIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2.1. ASSESSEES CROSS OBJECTION NO.203/AHD/2010 FOR A.Y. 2006-07 IN THIS CROSS-OBJECTION, THE ASSESSEE HAS RAISED FO LLOWING GROUND:- THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRM ING ADDITION, TO THE EXTENT OF RS.5,74,384/- MADE BY TH E ASSESSING OFFICER BY ESTIMATING NET PROFIT AND IGNORING THE B OOK RESULT. ITA NO.1975/AHD/2010(BY REVENUE) AND CO NO.203/AHD/2010 (BY ASSESSEE) ITO VS. SHRI VINAYAK RATILAL MEHTA ASST.YEAR - 2006-07 - 3 - 3. AS IS EVIDENT FROM THE ORDER OF THE AO THAT THE NOTICES U/S.143(3)(2) AND 142(1) WERE ISSUED WHILE GRANTING OPPORTUNITY OF HEARING BUT NO ONE HAS ATTENDED. AS PER AO, THE A SSESSEE HAD DELIBERATELY EVADED THE PRODUCTION OF BOOKS OF ACCO UNTS. IN SPITE OF SEVERAL OPPORTUNITIES, AS PER AO, THE ASSESSEE H AD NOT PRODUCED THE BOOKS OF ACCOUNTS, THEREFORE, THE AO HAS DECIDED TO PROCEED EX-PARTE AS PER SECTION 144 OF THE ACT. THE AO HAS THEREFORE, ESTIMATED THE NET PROFIT AND TAXED THE DIFFERENCE IN THE NET PROFIT A T RS.24,09,848/-. THE AO HAS ALSO MADE AN ADDITION OF RS.49,16,491/- AS UNEXPLAINED CASH CREDIT. 4. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, THE LD.CIT(A) HAS ACKNOWLEDGED THE FACT IN PARAGRAP H NO.4.3.1 THAT NO BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE AO FOR V ERIFICATION. HOWEVER, HE HAD PROCEEDED TO DECIDE THE ISSUE OF ES TIMATION OF NET PROFIT ON A FAIR BASIS. IN HIS OPINION, A FAIR ESTIMATION COULD BE BETWEEN 2.09 TO 8%. HE HAS HELD THAT AN ESTIMATE OF 3.5% WOULD MEE T THE ENDS OF JUSTICE. ACCORDINGLY, A PART RELIEF WAS GRANTED, THUS, ADDIT ION TO THE EXTENT OF RS.5,74,384/- WAS SUSTAINED AND THE BALANCE OF RS. 18,35,464/- WAS DELETED. 5. ON THE DATE OF HEARING, NO ONE HAS APPEARED ON B EHALF OF THE RESPONDENT-ASSESSEE. ONLY WRITTEN SUBMISSIONS HAVE BEEN FURNISHED. WE HAVE EXAMINED OF THOSE WRITTEN SUBMISSIONS. ITA NO.1975/AHD/2010(BY REVENUE) AND CO NO.203/AHD/2010 (BY ASSESSEE) ITO VS. SHRI VINAYAK RATILAL MEHTA ASST.YEAR - 2006-07 - 4 - 6. ON THE OTHER HAND, FROM THE SIDE OF THE REVENUE, LD.SR.DR MR.T.SANKAR, APPEARED AND VEHEMENTLY OPPOSED THE MA NNER IN WHICH THE LD.CIT(A) HAS ENTERTAINED CERTAIN NEW EVIDENCES AND WITHOUT PROVIDING AN OPPORTUNITY OF HEARING TO THE REVENUE DEPARTMENT GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. ACCORDING TO HIS ARGUMENT, THE PROVISIONS OF IT RULE 46A HAVE ALSO BEEN INFRINGED BY LD.CIT(A). IT IS VEHEMENTLY PLEADED THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE AO, SO THAT ON EXAMINATION OF BOOKS OF ACCOUNTS THE TRUE AND CORRE CT PROFIT OF THE ASSESSEE MUST BE DETERMINED. IN SUPPORT OF HIS ARG UMENT, LD.DR HAS PLACED RELIANCE ON THE DECISION OF HONBLE APEX COU RT IN THE CASE OF COMMISSIONER OF SALES-TAX VS. H.M.ESUFALI H.M. ABDU LALI (90 ITR 271)[SC] AND DECISION OF TRIBUNAL LUCKNOW BENCH IN THE CASE OF PRAGATI ENGINEERING CORPORATION VS. ITO (137 ITD 35 5 (LUCKNOW ITAT )[TM]. 7. ON CAREFUL PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES, WE ARE ALSO CONVINCED THAT THE CORRECT INCOME CAN ONLY BE DETERMINED AFTER EXAMINING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. O THERWISE ALSO, AN INCOME CAN BE EXACTLY ASSESSED ONLY ON THE BASIS OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE IN THE REGULAR COURSE OF BUSINESS. FURTHER, NO COURT OF LAW SHALL ENCOURAGE THE DISOBE DIENCE OF NON- APPEARANCE. IN THE PRESENT CASE, IT IS VERY MUCH E VIDENT THAT SEVERAL NOTICES WERE ISSUED BY THE AO BUT THE ASSESSEE HAD CHOSEN NOT TO APPEAR BEFORE HIM. ONCE THE ADMITTED FACTUAL POSITION IS THAT FOR THE YEAR UNDER CONSIDERATION, A RETURN HAS BEEN FILED DECLARING AN INCOME OF RS.8,46,511/- AND THAT RETURN OF INCOME WAS DULY AC COMPANIED WITH AN ITA NO.1975/AHD/2010(BY REVENUE) AND CO NO.203/AHD/2010 (BY ASSESSEE) ITO VS. SHRI VINAYAK RATILAL MEHTA ASST.YEAR - 2006-07 - 5 - AUDIT REPORT ON FORM NO.3CB AND 3CD AS PRESCRIBED U /S.44AB OF THE ACT, THEN NATURALLY THE ASSESSEE MUST BE MAINTAININ G THE BOOKS OF ACCOUNTS WHICH WERE GOT AUDITED AS PER THE PROVISIO NS OF THE ACT. THEREFORE, WE DIRECT THE ASSESSEE TO PRODUCE THE BO OKS OF ACCOUNTS ALONG WITH ALL THE VOUCHERS AND EVIDENCES BEFORE THE AO W ITHIN 30 DAYS ON RECEIPT OF THIS ORDER OF THE TRIBUNAL, SO THAT AO C AN ASSESS THE CORRECT INCOME. WE HAVE TAKEN THIS DECISION BECAUSE WE ARE NOT CONVINCED WITH THE MANNER THE LD.CIT(A) HAS ARBITRARILY ESTIMATED THE INCOME OF THE ASSESSEE. AN ESTIMATION HAS TO BE ON SOME RATIONAL BASIS AND THAT TOO SHOULD BE EXERCISED SPARINGLY IN CERTAIN EXTRAORDIN ARY SITUATIONS WHEN THERE IS NO OTHER RECOURSE IS AVAILABLE. AS THE ASS ESSEE IS HAVING BOOKS OF ACCOUNTS, THEREFORE THE RECOURSE OF ESTIMATION OF I NCOME COULD HAVE BEEN AVOIDED. RESULTANTLY, WE HEREBY RESTORE BOTH THE G ROUNDS OF THE REVENUE AS WELL AS THE GROUND OF THE ASSESSEE AS RAISED IN THE CROSS OBJECTION BACK TO THE FILE OF AO TO BE DECIDED DE NOVO AS PER LAW. 8. IN THE RESULT, REVENUES APPEAL AS WELL AS CROSS O BJECTION FILED BY THE ASSESSEE BOTH MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES. SD/- SD/- ( %..& '( ) ( ) ) * ) # +, # ( A. K. GARODIA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/ 02 /2013 -.., .,../ T.C. NAIR, SR. PS ITA NO.1975/AHD/2010(BY REVENUE) AND CO NO.203/AHD/2010 (BY ASSESSEE) ITO VS. SHRI VINAYAK RATILAL MEHTA ASST.YEAR - 2006-07 - 6 - ', - ./0 1'0* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / 01 2 / CONCERNED CIT 4. 2 () / THE CIT(A)-VI, BARODA 5. 56& ,,01, 01', 7)#/# / DR, ITAT, AHMEDABAD 6. &(8 9 / GUARD FILE. ',( / BY ORDER, 5 , //TRUE COPY// 2/ 3 ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION DATED 05/02/13 (DICTATION PAD 9 PAGES ATTACHED) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 8/02/13 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S22.2.13 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 22.2.13 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER