AMOLAK I. SUTHAR, MUMBAI V. I.T.O.19(3)(1), MUMBAI

ITA 2598/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78782 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH KUMAR SINGH
• Assessee Lawyers: PRADIP KEDIA
• Keywords: Non compliance
• Section: 145

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . , !'# $% &'() , $* +, $ # BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI N.K . BILLAIYA, AM ./I.T.A. NO. 2598/MUM/2012 ( - - - - / ASSESSMENT YEAR : 2008-09 MR. AMOLAK I SUTHAR, M/S. CHHAJED KEDIA & ASSOCIATES, 208, BLUE MOON CHAMBERS, NAGINDAS MASTER ROAD, NEAR WELCOME RESTAURANT, FORT, MUMBAI-400 023 THE ITO 19(3)(1), PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400 012 ,. $* ./ /0 ./PAN/GIR NO. :AATPA 1937F ( .1 /APPELLANT ) .. ( 23.1 / RESPONDENT ) .1 4 $ / APPELLANT BY : ` SHRI PRADIP KEDIA 23 .1 5 4 $ /RESPONDENT BY : SHRI MANISH KUMAR SINGH 5 6* / DATE OF HEARING :21.4.2014 7- 5 6* / DATE OF PRONOUNCEMENT :30.4.2014 +$8 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-30, MUMBAI DT.30.1.2012 PERTAINING TO ASSES SMENT YEAR 2008-09. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE AS SESSEE IS THAT THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN MAKING ADDITION OF RS. 35,68,565/- BY ESTIMATING THE GROSS PROFIT @ 2 5% AS AGAINST 10.85% SHOWN BY THE ASSESSEE. ITA NO.2598/M/2012 2 3. THE ASSESSEE IS A FURNITURE CONTRACTOR AND INTER IOR DECORATOR. RETURN DECLARING TOTAL INCOME AT RS. 8,64,851/- WAS FILED ON 20.9.2008. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. SEVERAL NOTICES WERE ISSUED WHICH WERE NOT COMPLIED BY THE ASSESSEE AND FOR SUCH NON COMPLIANCE, THE ASSESSING OFFICER ALSO IMPOSED PENA LTY U/S. 271(1)(B) OF THE I.T. ACT AT RS. 10,000/-. FINALLY THE PROCEEDI NGS WERE ATTENDED AND BOOKS OF ACCOUNTS WERE PRODUCED. ON VERIFICATION OF THE BOOKS OF ACCOUNT, THE AO NOTICED THAT IN THE WAGES/SALARY RE GISTER SIGNATURES MADE AGAINST RECEIPT OF WAGES WERE APPARENTLY SIGNED BY A SINGLE PERSON. FURTHER, THE WAGES REGISTER APPEARED TO BE A NEW RE GISTER AND THE REVENUE STAMPS AFFIXED WERE ALSO VERY NEW. SALARY/WAGES RE GISTER WAS IMPOUNDED AND WAS HANDED OVER TO THE OFFICE OF THE GENERAL MANAGER, INDIAN SECURITY PRESS, NASHIK ROAD, NASHIK. REPORT FROM THE OFFICER OF THE GENERAL MANAGER, INDIAN SECURITY PRESS WAS RECE IVED. THE SAID REPORT WAS INCORPORATED BY THE AO AT PARA-3 OF THE ASSESSMENT ORDER. 3.1. AFTER CONSIDERING THE REPORT, THE AO CONCLUDED THAT THE STAMPS WHICH WERE AFFIXED ON THE WAGES REGISTER ARE NOT AT ALL IN EXISTENCE DURING THE FINANCIAL YEAR 2007-08 DURING WHICH THE WAGES W ERE PAID TO THE LABOURERS. THE AO PROCEEDED TO EXAMINE THE BOOKS O F ACCOUNT IN THE LIGHT OF THE PROVISIONS OF SEC. 145 OF THE ACT. TH E AO FINALLY CONCLUDED THAT HE WAS NOT SATISFIED WITH THE CORRECTNESS OR C OMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE AS THE ASSESSEES BOOKS OF ACCOUNT DO NOT GIVE A FULL AND FAIR PICTURE OF TRUE INCOME. THE AO REJEC TED THE BOOKS OF ACCOUNT OF THE ASSESSEE INVOKING THE PROVISIONS OF SEC 145(3) OF THE ACT. THE AO NOTICED THAT THE ASSESSEE HAS SHOWN GROSS PR OFIT AT THE RATE OF 10,85%. THE AO WENT ON TO ESTIMATE THE GROSS PROFI T AT THE RATE OF 25% AND ADDED THE DIFFERENCE OF RS. 35,68,565/- TO THE INCOME OF THE ASSESSEE. ITA NO.2598/M/2012 3 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. T HE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE ASSESSMENT O RDER FOR A.Y. 2007-08 AND POINTED OUT THAT IN THE IMMEDIATELY PRECEDING A SSESSMENT YEAR, THE AO WAS NOT SATISFIED WITH THE CLAIM OF WAGES AND HA S MADE AN ADHOC ADDITION OF RS. 1,00,000/- ONLY. IT IS THE SAY OF THE LD. COUNSEL THAT SIMILAR VIEW DESERVES TO BE TAKEN DURING THE YEAR U NDER CONSIDERATION. THE LD. COUNSEL FURTHER STATED THAT THE GROSS PROFI T RATE ADOPTED BY THE AO IS ON HIGHER SIDE AS COMPARED TO THE PROFIT RATE SHOWN BY THE ASSESSEE AND THEREFORE THE SAME SHOULD BE REDUCED TO A REASO NABLE RATE. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. IT IS NOT IN DISPUTE THAT THE WAGES REGISTER WAS FOUND TA MPERED, THE REVENUE STAMPS FOUND AFFIXED WERE NOT EVEN IN EXISTENCE DUR ING THE PERIOD OF PAYMENT AS IS EVIDENCED BY THE REPORT OF THE GENERA L MANAGER, INDIAN SECURITY PRESS, NASHIK. THE WAGES PAID DURING THE YEAR AT RS. 1,05,60,600/- COMES TO 40.11% OF THE TOTAL RECEIPTS FROM THE BUSINESS. THE ASSESSEE IS NOT ONLY A CONTRACTOR IN MAKING FUR NITURE BUT IS ALSO AN INTERIOR DECORATOR. THE GROSS PROFIT MARGIN OF 10. 85% SHOWN BY THE ASSESSEE APPEARS TO BE MUCH LOWER IN THIS LINE OF T HE BUSINESS ADDED TO THIS, THE WAGES ARE NOT VERIFIABLE. AT THE SAME TI ME, THE AO HAS ALSO NOT BROUGHT ON RECORD ANY COMPARABLE JUSTIFYING HIS ADO PTION OF GP MARGIN AT 25%. THUS, THIS IS A CASE WHERE NEITHER THE ASS ESSEE HAS JUSTIFIED HIS CLAIM OF PROFIT AND AT THE SAME TIME FOUND TO HAVE MANIPULATED THE WAGES REGISTER WHICH AMOUNTS TO FILING OF INACCURATE PART ICULARS AND TAMPERING ITA NO.2598/M/2012 4 WITH THE PROFIT NOR THE REVENUE HAS BROUGHT ANY COG ENT MATERIAL EVIDENCE ON RECORD TO JUSTIFY THE ADOPTION OF GP RATE OF 25 %. WE ARE LEFT WITH NO CHOICE BUT TO MAKE A FAIR ESTIMATE OF THE PROFIT. 8. CONSIDERING THE FACTS IN ENTIRETY, IN OUR CONSID ERED VIEW, AN ADHOC ADDITION OF RS. 20,00,000/- SHOULD MEET THE ENDS OF JUSTICE. WE, ACCORDINGLY DIRECT THE AO TO RESTRICT THE DISALLOWA NCE TO RS. 20,00,000/- ONLY. THE ASSESSEE WILL GET A PART RELIEF OF RS. 1 5,68,565/-. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2014 SD/- SD/- (D. MANMOHAN ) (N. K. BILLAIYA ) !'# /VICE PRESIDENT $* +, / ACCOUNTANT MEMBER MUMBAI; 9+ DATED 30.4.2014 . . ./ RJ , SR. PS +$8 +$8 +$8 +$8 5 55 5 26& 26& 26& 26& :$&-6 :$&-6 :$&-6 :$&-6 / COPY OF THE ORDER FORWARDED TO : 1. .1 / THE APPELLANT 2. 23.1 / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- 4. ; / CIT 5. &<= 26 , , / DR, ITAT, MUMBAI 6. = > / GUARD FILE. +$8 +$8 +$8 +$8 / BY ORDER, 3&6 26 //TRUE COPY// ! !! ! / / / / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI