Shri Sakil Babulal Belim, Vapi V. The Income tax Officer,Vapi Ward-3, Vapi

ITA 2434/AHD/2011

• Counselvise Citation: 243420514 RSA 2011
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 26-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Reasonable cause; Condonation of delay
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .. , , BEFORE SHRI BEFORE SHRI G.D. AGARWAL,VICE PRESIDEN T (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2434/AHD/2011 ( / ASSESSMENT YEAR : 2006-07 ) SAKIL BABULAL BELIM PLOT NO.2, IMRANNAGAR SILVASSA ROAD VAPI / VS. THE INCOME TAX OFFICER VAPI WARD-3, VAPI ! '# ./ ./ PAN/GIR NO. : AFMPB 1267 K ( !% / APPELLANT ) .. ( &'!% / RESPONDENT ) !%(' / APPELLANT BY : SHRI RAJESH UPADHYAY, AR &'!%)( ' / RESPONDENT BY : SHRI NIMESH YADAV, SR.DR * +) ,# / DATE OF HEARING 18/03/2015 -./0 ) ,# / DATE OF PRONOUNCEMENT 27/03/2015 '/ O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VALSAD (CIT(A) IN SHORT) DATED 28/02/2011 PERTAINING TO ASSESSMENT YEAR (AY) 2006-07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- (1) INCOME TAX OFFICER HAS ERRED IN LAW AND ON FACTS T O ESTIMATE NET PROFIT OF RS.8,34,181/- AT THE RATE OF 8% ON RECEIP TS FROM CIVIL CONSTRUCTION BUSINESS SHOWN OF RS.1,04,27,274/- AS AGAINST ITA NO.2434/AHD /2011 SAKIL BABULAL BELIM VS. ITO ASST.YEAR 2006-07 - 2 - N.P.SHOWN OF RS.4,62,708/-. ADDITION OF RS.3,71,4 73/- DIFFERENCE OF ESTIMATED N.P. AND N.P.SHOWN IS NOT JUSTIFIED WHEN ACCOUNTS ARE AUDITED. (2) LEARNED INCOME TAX OFFICER HAS ERRED IN LAW AND ON FACTS TO ADD ON AMOUNT OF RS.2,20,872/- TOWARDS CLOSING BALANCES AP PEARING IN THE NAMES OF THE CREDITORS OUTSTANDING TO BE PAID AND A MOUNTS RS.84,134/- EXPENSES PAYABLE. CIT(APPEALS) HAS ALS O ERRED IN SUSTAINING ADDITION OF RS.2,20,892/- THOUGH THIS AD DITION IS MADE SUBJECT ON VERIFICATION BY INCOME TAX OFFICER WHETH ER SUCH CREDIT BALANCES ARE OF EARLIER YEAR OR OF CURRENT YEAR. (3) INCOME TAX OFFICER WHEN ACCEPTED PURCHASES AND EXPE NSES ADDITION OF CREDIT BALANCES OF SUNDRY CREDITORS FOR PURCHASE S DURING THE YEAR AND EXPENSES UNPAID TO THE CREDITORS IS WRONGLY ADD ED AS INCOME OF THE YEAR UNDER APPEAL. (4) LEARNED INCOME TAX OFFICER HAS ERRED IN LAW AND ON FACTS TO CHARGE INTEREST U/S.234B, WHEN ALL THE RECEIPTS ARE EXIGIB LE TO TDS. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.144( 1) R.W.SECTION 143(3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 25/11/2008. WHILE FRAMING THE ASSESSMENT, THE AO MADE ADDITION BY ESTIMATING THE PROFIT AMOUNTING TO RS.3,71,473/- AND ALSO MADE ADDITION ON ACCOUNT OF UNEXPLAINED SU NDRY AND OUTSTANDING EXPENSES OF RS.13,01,026/-. AGAINST TH IS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL. WHILE PART LY ALLOWING THE APPEAL, THE LD.CIT(A) SUSTAINED THE ADDITION OF RS.3,71,473 /- AND ALSO SUSTAINED THE ADDITION MADE ON ACCOUNT OF SUNDRY CREDITORS OF RS.12,20,892/-. ITA NO.2434/AHD /2011 SAKIL BABULAL BELIM VS. ITO ASST.YEAR 2006-07 - 3 - 3. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE PRESENT APPEAL IS BARRED BY 146 DAYS. HE SUBMITTED THAT A PETITION FOR CONDONATION OF DELAY HAS BEEN FILED. IN SUPPORT OF THE CONDONATION, AN AFFIDAVIT HAS BEEN FILED BY THE ASSESSEE. HE SUBMI TTED THAT THERE WAS A REASONABLE CAUSE FOR NOT FILING THE APPEAL IN TIME AS THE ASSESSEE WAS SICK AND WAS ADVISED BED-REST BY THE DOCTOR ATTENDING TH E ASSESSEE. 3.1. ON THE CONTRARY, LD.SR.DR OPPOSED THE CONDONAT ION OF DELAY. HE SUBMITTED THAT EVEN BEFORE THE AO, THE ASSESSEE DID NOT REMAIN PRESENT ON THE DATE OF HEARING FIXED FOR THE CASE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE REASON GIVEN BY THE ASSESSEE FOR NOT FILING THE PRESENT APPEAL IN TIME IS THAT THE ASSESSEE WAS SERIOUSLY SICK. THE ASSES SEE HAS FILED AN AFFIDAVIT TO THIS EFFECT. THE OBJECTION OF THE LD. SR.DR IS THAT THE ASSESSEE IS NEGLIGENT WHICH IS EVIDENT FROM THE FACT THAT EV EN BEFORE THE AO HE CHOSE NOT TO APPEAR. WE HAVE GIVEN OUR THOUGHTFU L CONSIDERATION TO THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOTICE THAT THE FIRST NOTICE WAS ISSUED BY THE AO ON 10/04/2007 AND, SUBSEQUENTLY, N OTICES DATED 09/05/2008, 22/08/2008 AND 14/10/2008. THE LD.COU NSEL FOR THE ASSESSEE SUBMITTED THAT BEFORE THE AO, THE ASSESSEE COULD NO T REMAIN PRESENT AS THE NOTICES SO ISSUED WERE SERVED AT VAPI ADDRESS, HOWEVER, THE ASSESSEE ITA NO.2434/AHD /2011 SAKIL BABULAL BELIM VS. ITO ASST.YEAR 2006-07 - 4 - WAS BUSY IN THE CONTRACT WORK AT OTHER SITES. HE F URTHER SUBMITTED THAT KEEPING IN VIEW OF THE FACT THAT THE ASSESSEE BEING UNAWARE OF THE PROVISIONS OF THE INCOME TAX ACT, COULD NOT APPEAR BEFORE THE AO. HE RELIED ON THE JUDGEMENT OF HONBLE APEX COURT REND ERED IN THE CASE OF N.BALAKRISHNAN VS. M.KRISHNAMURTHY REPORTED AT (199 8) 7 SCC 123. WE FIND THAT THE HONBLE SUPREME COURT IN THE CASE OF N.BALAKRISHNAN VS. M.KRISHNAMURTHY (SUPRA) HAS HELD AS UNDER:- IT MUST BE REMEMBERED THAT IN EVERY CASE OF DELAY, THERE CAN BE SOME LAPSE ON THE PART OF THE LITIGANT CONCERNED. THAT ALONE IS NOT ENOUGH TO TURN DOWN HIS PLEA AND TO SHUT THE DOOR AGAINST HIM . IF THE EXPLANATION DOES NOT SMACK OF MALA FIDES OR IT IS NOT PUT FORTH AS PART OF A DILATORY STRATEGY, THE COURT MUST SHOW UTMOST CONSIDERATION TO THE SUITOR. BUT WHEN THERE IS REASONABLE GROUND TO THINK THAT THE D ELAY WAS OCCASIONED BY THE PARTY DELIBERATELY TO GAIN TIME, THEN THE CO URT SHOULD LEAN AGAINST ACCEPTANCE OF THE EXPLANATION. WHILE CONDONING THE DELAY, THE COURT SHOULD NOT FORGET THE OPPOSITE PARTY ALTOGETHER. I T MUST BE BORNE IN MIND THAT HE IS A LOSER AND HE TOO WOULD HAVE INCUR RED QUITE LARGE LITIGATION EXPENSES. IT WOULD BE A SALUTARY GUIDEL INE THAT WHEN COURTS CONDONE THE DELAY DUE TO LACHES ON THE PART OF THE APPLICANT, THE COURT SHALL COMPENSATE THE OPPOSITE PARTY FOR HIS LOSS. 4.1. AFTER CONSIDERING THE TOTALITY OF THE FAC TS OF THE CASE AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE H ONBLE APEX COURT IN THE CASE OF N.BALAKRISHNAN VS. M.KRISHNAMURTHY(SUPR A), WE HEREBY CONDONE THE DELAY AND THE APPEAL IS ADMITTED FOR AD JUDICATION. 5. FIRST GROUND OF APPEAL IS AGAINST THE ADDITION O F RS.3,71,473/-. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACCOUNTS OF THE ITA NO.2434/AHD /2011 SAKIL BABULAL BELIM VS. ITO ASST.YEAR 2006-07 - 5 - ASSESSEE ARE DULY AUDITED AND THE NP DECLARED BY TH E ASSESSEE IS ACCEPTED IN THE SUBSEQUENT YEAR AT LOWER RATE. THE AUTHORIT IES BELOW FAILED TO APPRECIATE THE FACT THAT IN THE SUBSEQUENT YEAR EVE N LOWER NP WAS ACCEPTED BY THE DEPARTMENT. HE FURTHER SUBMITTTD T HAT THE ASSESSEE BEING CONTRACTOR AND ON THE BASIS OF PRESUMPTIVE RATE OF TAX IT SHOULD NOT HAVE BEEN ADOPTED MORE THAN 5%. 6. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. WE FIND THAT THIS ISSUE IS DECIDED BY THE L D.CIT(A) IN PARA-6.3 OF HIS ORDER WHICH READS AS UNDER:- 6.3. DECISION :- I HAVE CONSIDERED THE OBSERVATIONS OF AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAI SED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION CAREFULLY. THE AO OBSERVED THAT THE APPELLANT HAS SHOWN PROFIT OF ONL Y 4.45%. THE AO OFFERED MANY CHANCES TO THE APPELLANT TO EXPLAIN WHY THE MARGIN IS SO LOW AS COMPARED TO OTHER CIVIL CONTRAC TORS. NO EXPLANATION WAS OFFERED BY THE APPELLANT WHY SUCH L OW PROFIT EARNED BY IT. THEREFORE, THE AO ESTIMATED THE PROF IT AT 8% AND THE BALANCE AMOUNT OF WHAT ALREADY SHOWN WAS ADDED TO T HE INCOME OF THE APPELLANT. BEFORE ME THE LD.AR DID NOT PUT UP A CONVINCING ARGUMENT AGAINST THE FINDING OF THE AO. THE ONLY P LEA TAKEN BY HIM WAS THE A/C. WAS DULY AUDITED AND PROFITS AS PE R THE A/C. BE TAKEN. I HAVE CONSIDERED THE FACTS OF THE CASE. T HE APPELLANT FORFEITED THE CHANCES GIVEN DURING THE ASSESSMENT P ROCEEDING AS WELL AS IN THE APPELLATE PROCEEDING TO COME OUT WIT H A STRONG ARGUMENT AGAINST THE FINDING OF THE AO. I AM CONST RAINED TO UPHELD THE ACTION OF THE AO IN THIS CIRCUMSTANCES. THUS, THIS GROUND IS DISMISSED. ITA NO.2434/AHD /2011 SAKIL BABULAL BELIM VS. ITO ASST.YEAR 2006-07 - 6 - 6.1. WE FIND THAT THE LD.CIT(A) HAS NOT POINTED OUT ANY DEFECT INTO THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE. THE LD .CIT(A) HAS NOT CONSIDERED THE MATERIAL PLACED BEFORE HIM BY THE AS SESSEE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE LD.CIT(A) WA S NOT JUSTIFIED IN DISMISSING THE APPEAL ON THE BASIS THAT THE ASSESSE E FORFEITED THE CHANCES GIVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS A S WELL AS IN THE APPELLATE PROCEEDINGS. SINCE THE REVENUE HAS ACCEP TED THE LOWER PROFIT IN THE SUBSEQUENT YEAR, THEREFORE WE FEEL THAT THE ASSESSEE SHOULD BE GIVEN ANOTHER CHANCE TO EXPLAIN BEFORE THE AO IN RE SPECT OF THE PROFIT EARNED. THUS, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND NO.2 IS AGAINST THE CONFIRMATION OF ADDIT ION OF RS.12,20,892/-. THE LD.COUNSEL FOR THE ASSESSEE SU BMITTED THAT ALL MATERIAL EVIDENCES WERE PLACED FROM THE LD.CIT(A) A ND LD.CIT(A) DID NOT CONSIDER THE SAME. 7.1. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT THE O NUS IS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE SUNDRY AND OUTSTANDING EXPENSES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND IN VIEW OF THE FACT THAT THE ASSESSEE WAS NOT GIVEN SUFFICIENT OPPORTUNITIES OF HEARING, THEREFORE THE ITA NO.2434/AHD /2011 SAKIL BABULAL BELIM VS. ITO ASST.YEAR 2006-07 - 7 - ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE ARE S ET ASIDE AND THE SAME IS RESTORED BACK TO THE FILE OF AO FOR DECISION AFRESH , AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THUS THIS GROUND OF ASSESSEES APPEAL IS ALSO ALLOWED FOR STATISTICA L PURPOSES. 9. GROUND NOS.3 & 4 ARE GENERAL IN NATURE WHICH REQ UIRE NO INDEPENDENT ADJUDICATION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 27 TH DAY OF MARCH, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 27/ 03 /2015 4,..* , .*../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. !% / THE APPELLANT 2. &'!% / THE RESPONDENT. 3. 567 8 / CONCERNED CIT 4. 8 ( ) / THE CIT(A)-VALSAD 5. 9 :&*67 , ,670 , 5 / DR, ITAT, AHMEDABAD 6. : <= + / GUARD FILE. ! / BY ORDER, ' 9& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD