ITO 31(2)(3), MUMBAI V. MADHUKANT V SHAH, MUMBAI

ITA 2615/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0273 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURUSHOTAM KUMAR
• Assessee Lawyers: N O N E
• Keywords: Rule of consistency; Non compliance
• Section: 133(6); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE S/SHRI SANJAY GARG, JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO. 2615 /MUM/201 5 ( / ASSESSMENT YEAR S : 20 09 - 10 ) INCOME TAX OFFICER - 31 ( 2 )( 3 ), R NO.704, C - 11, PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 / VS. SHRI MADHUKANT V SHAH, 25/207, RID HI SIDHI BUNGLOW, OPP, PETROL PUMP, GOREAON (W), MUMBAI - 400062 ./ PAN : AAFPS0843L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PURUSHOTAM KUMAR / RESPONDENT BY : N ONE / DATE OF HEARING : 6 .6.2017 / DATE OF PRONOUNCEMENT : 14. 6.2017 / O R D E R PER RAJESH KUMAR , AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 23.2.20 15 PASSED BY THE LD.CIT(A) - 4 1 , MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 20 09 - 10 . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE THROUGH RPAD, THEREFORE, WE ARE DECIDING THE APPEAL EX - PARTE AFTER HEARING THE LD.DR. ITA NO. 2615 / MUM/20 1 5 2 3. THE GROUND S OF APPEAL TAKEN BY THE REVENUE ARE AS UNDER : 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED I N DIRECTING THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT @ 0.50% OF THE TOTA L TURNOVER INSTEAD OF @ 2% ESTIMATED BY THE ASSESSING OFFICER IGNORING THE FACT THA T ASSESSEE HAS FAILED TO PRODUCE VARIOUS DETAILS CALLED FOR BY THE ASSESSING OFFICE R IGNORING THE FACT THAT ASSESSEE HAS FAILED TO PRODUCE VARIOUS DETAILS CALLED FO R BY THE A .O DESPITE SEVERAL OPPORTUNITIES DUE TO WHICH THE GENUINE NE SS OF TRANSACTION S COULD NOT BE ASCERTAINED. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ESTIMATE NET PROFIT @ 0.50% OF THE TOTAL TURNOVE R INSTEAD OF @ 2 % ESTIMATED BY THE ASSESSING OFFICER IGNORING THE FACT THAT NOTICE S ISSUED TO VARIOUS PURCHASE PARTIES WERE EITHER RETURNED BACK UNSERVED OR THE RE WAS NO RESPONSE FROM THE PARTIES . 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD C IT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT @ 0.50% OF THE TOTA L TURNOVER INSTEAD OF @ 2% ESTIMATED BY THE ASSESSING OFFICER IGNORING THE FACT THA T THE ONUS LIES ON ASSESSEE TO PRODUCE THE CONCERNED PARTIES WHICH ASSESSEE FAI LE D TO DO SO 4. SEVERAL GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AGAINST THE DIRECTION OF LD.CIT(A) TO AO TO ESTIMATE THE NET PROFIT OF THE ASSESSEE BY APPLYING THE NET PROFIT @ 0.50% OF THE TOTAL TURNOVER INSTEAD OF @ 2% ESTIMATED BY THE ASSESSING OFFICER . THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 30.9.2009 DECLARING TOTAL INCOME OF RS.12,11,758/ - , WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . T HEREAFTER , THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES UNDER S ECTION 143(2) AND U/S 142(1), WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE AO CALLED FOR THE DETAILS O F SUNDRY CREDITORS AND DEBTORS ALONG WITH THEIR NAMES AND ADDRESSE S WHICH ITA NO. 2615 / MUM/20 1 5 3 WERE NOT SUBMITTED BY THE ASSES SEE EVEN AFTER PROVIDING SEVERAL OPPOR TUNITIES ALLOWED BY THE AO . WHEN THE AO ISSUED SHOW CAUSE NOTICE AS TO WHY THE ASSESSMENT SHOULD NOT BE MADE EX - PARTE, THE ASSESSEE SOME DETAI L S BUT BY AND LARGE THE ASSESSEE REMAINED NON COMPLIANT. IN SOME CASES T HE NOTICES SENT TO THE DEBTORS AND CREDITORS WERE RETURN ED UN SERVED AND THE ASSESSEE WAS INFORMED ACCORDINGLY ABOUT NOT AVAILABILITY OF THE PARTIES ON THE ADDRESSES GIVEN BY THE ASSESSEE. THEREAFTER THE ASSESSEE WAS GIVEN ONE MORE OPPORTUNITY TO PRODUCE BOO KS OF ACCOUNTS AND OTHER RECORDS FOR NECESSARY VERIFICATION, HOWEVER, THE ASSESSEE FAILED TO DO SO. FINALLY, THE AO MADE ASSESSMENT AT THE RATE OF 2% ON THE TOTAL TURNOVER OF RS.75,75,20,332/ - AGAINST THE PROFIT SHOWN AT THE RATE OF 0.17% ON THE TURN OVER FOR THE REASONS THAT THE BOOKS OF ASSESSEE COULD NOT BE VERIFIED AND THEREFORE THE RESULT SHOWN BY THE ASSESSEE IN THE INCOME TAX RETURN COULD NOT BE VERIFIED. ULTIMATELY, THE ASSESSMENT COMPLETED VIDE ORDER DATED 30.12.2011 PASSED UNDER SECTION 143 (3) OF THE ACT AT AN AMOUNT OF RS.1,88,19,585/ - BY MAKING SEVERAL ADDITION S INTERALIA ADDITION ON ACCOUNT OF NET PROFIT OF RS.1,38,80,599/ - BY APPLYING @2% ON THE TOTAL TURNOVER . 5. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING THE SUBMISSIONS AND CONTENTIONS RAISED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS. DURING THE APPELLATE PROCEEDINGS, THE ITA NO. 2615 / MUM/20 1 5 4 ASSESSEE SUBMITTED BEFORE THE LD.CIT(A) THAT THO UGH THE ASSESSEE PROVIDED ADDRESSE S OF THE SUNDRY DEBTORS AND CREDITORS TO AO AND NOTICE S U/S 133(6) OF THE ACT WHICH COULD NOT BE SERVED AND THE AO REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT , BUT ESTIMATION OF INCOME HE INCOME BY THE AO WA S WITHOUT ANY MATERIALS ON RECORDS OR ANY PLAUSIBLE BASIS AND NOT ON SURMISES AND PRESUMPTION S . THE LD. AR FILED BEFORE THE FAA THE COMPARATIVE CHART SHOWING SALES AND NET PROFIT PERCENTAGE OF PROFIT FROM FINANCIAL YEAR 2001 - 02 TO 2007 - 08 AND THE PERCE NTAGE OF GP RANTING BETWEEN 0.14 TO 0.26%. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALLOWED THE APPEAL IN PART BY OBSERVING AND HOLDING AS UNDER : 2.3 I HAVE CAREFULLY CONSIDERED THE FACTS AND, CIRCUMSTANCES OF THE CASE. THE APPELLANT HAS NOT SUBMITTED THE DETAILS CALLED FOR BY THE A O IN RESPECT OF PURCHASE, & SALES OR DEBTORS & CREDITORS. THE APPELLANT KEPT ON TAKING ADJOURNMENTS AND SINCE THE ASSESSMENT WAS GETTING TIME BARRED, IT WAS PRINCIPALLY NOT UNLAWFUL ON THE PART O F THE AO TO REJECT THE BOOKS OF ACCOUNTS. 2.3.1 HENCE, I AM IN AGREEMENT WITH THE ID A. O . THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT OUGHT TO BE REJECTED UNDER SECTION 145(3) OF THE ACT AS THE APPELLANT HAS NOT SUBMITTED THE DETAILS OF SALES / PURCHASES IN APPELLATE PROCEEDINGS AS WELL. HOWEVER, EVEN IF THE BOOKS ARE REJECTED, THE BEST JUDGMENT ASSESSMENT HAS TO BE MADE ON SOME COMPARABLE BASIS. THE APPELLANT HAS FURNISHED NET PROFIT PERCENTAGES FOR PRECEDING FINANCIAL YEARS. A REFERENCE TO THE SAME WOUL D SHOW THAT TILE APPELLANT HAS BEEN SHOWING NET PROFIT RATIO RANGING FROM 0.14% TO 0.26%. HOWEVER, SINCE THE APPELLANT HAS NOT BEEN ABLE TO SUBMIT THE REQUISITE DETAILS DUE TO WHICH THE BOOKS HAVE BEEN REJECTED, IT WOULD BE FAIR TO CONFIRM ADDITION BASED O N ESTIMATED NET PROFIT @ 0.5% OF TURNOVER OF RS 75,75,20,332/ - AMOUNTING TO RS 37,87,602/ - ._ THE APPELLANT HAS DECLARED NET PROFIT OF RS 12,69,807/ - . IN VIEW OF THE TOTALITY OF FACTS, I FIND THAT ADDITION TO THE EXTENT OF RS 25,17,794/ - IE RS 37,87,602/ - LESS RS 12,69,807/ - MEETS THE ENDS OF JUSTICE. ACCORDINGLY, OUT OF THE ITA NO. 2615 / MUM/20 1 5 5 ADDITION MADE BY THE ID A.O. OF RS . 1,38,80,599/ - , THE APPELLANT IS ENTITLED TO RELIEF OF RS 1,13,62,804/ - . IN VIEW OF ABOVE, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 6 . WE HAVE HEAR D THE SUBMISSIONS OF LD.DR AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE IMPUGNED ORDERS AND THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL FILED BY THE LD.DR IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010 - 11. WE FIND FROM THE PERUSA L OF THE SAID DECISION IN ITA NO.2605/MUM/2015(AY - 2 010 - 11) DATED 22.2.2017 THAT THE GROUND OF APPEAL RAISED BY THE REVENUE IN THAT YEAR ARE IDENTICAL AS HA VE BEEN TAKEN BY THE REVENUE IN THE INSTANT YEAR WITH FACTS TOO MATERIAL LY SAME. THE CO - ORDINATE B ENCH OF THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY UPHOLDING THE ORDER OF LD.CIT(A). THE OPERATIVE PART OF THE SAID DECISION IS REPRODUCED BELOW: 7. WE HAVE THROUGH THE ORDER PASSED BY THE LOWER AUTHORITIES. IT IS NOTED ON THE BASIS OF A NOTE PROVIDES BEFORE US THAT PAST HISTORY OF NET PROFIT RATES DISCLOSED BY THE ASSESSEE IN VARIOUS YEARS INDICATE THAT ASSESSEE HAD DISCLOSED NET PROFIT RATE AT AROUND 0.25% OF TURNOVER. THE AD DID NOT BRING ANY OTHER MATERIAL ON RECORD TO JUSTIFY THE ESTIMATION OF NET PROFIT AT THE RATE OF 5% I.E. MORE THAN 20 TIMES OF THE NET PROFIT AS WAS DISCLOSED BY THE ASSESSEE IN PAST YEARS. UNDER THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT ACTION OF LD. (IT (A) IN ESTIMATING THE NET PROFIT AT THE RATE OF 0. 50% DOES NOT CALL FOR ANY INTERFERENCE; THEREFORE , ORDER OF LD.CIT(A) IS UPHELD 7 . SINCE THE FACTS OF THE CASE IN HAND AND THAT OF RELIED UPON BY THE ASSESSEE IN ASSESSEES OWN CASE ARE MATERIALLY SAME, THEREFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY, WE ARE INCLINED TO UPHOLD THE O R DER OF T HE LD.CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE. ITA NO. 2615 / MUM/20 1 5 6 8 . IN THE RESULT, THE APPEAL OF TH E REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH JUNE, 2017 . J UNE, 2017 SD SD ( / SANJAY GARG) ( / RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 14 /06/ 201 7 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI