KALYANI ENGINEERING WORKS, GHAZIABAD V. DCIT, CIRCLE- 1, GHAZIABAD

ITA 2625/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3634 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 16-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Rejection of books of accounts; Agreed addition; Audi alteram partem
• Section: 201; 139(4); 145(3); 131

Judgement Text

1 ITA NO. 2625/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 2625/DEL/20 18 (A.Y 2013-14) (THROUGH VIDEO CON FERENCING) KALYANI ENGINEERING WORKS 109-110, ANAND INDUSTRIAL ESTATE, MOHAN NAGAR, GHAZIABAD, UTTAR PRADESH ABFK7616K (APPELLANT) VS DCIT CIRCLE-1, CTO COMPLEX, HAPUR CHUNGI, GHAZIABAD (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 02/01/2018 PASSED BY CIT(A), GHAZIABAD FOR ASSESSMENT YEAR 201 3-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE LD. CIT(A), ERRED IN LAW, ON FACTS AND IN SURROUNDING CIRCUMSTANCES IN DISMISSING THE STRONG LEGALLY BASE D APPEAL IN A CASUAL, ABRUPT, ARBITRARY WHIMSICAL AND SUMMARILY MANNER AN D THAT TOO IN THE ABSENCE OF APPELLANT AND HIS LD. COUNSEL RESULTING IN BREACH OF PRINCIPLE OF AUDI ALTERAM PARTEM. 2. THAT THE LD. CIT(A) ALSO ERRED IN LAW, ON FACTS AN D IN SURROUNDING CIRCUMSTANCES, IN FAILING TO APPRECIATE THAT THE SO CALLED AGREED ADDITION BEING BASED ON MISCONCEPTION AND MISUNDERSTANDING O F LAW AND FACTS ON THE APPELLANT BY NONE RESPONDENT BY SH. VIVEK VARDHAN, SR. DR DATE OF HEARING 07.10.2021 DATE OF PRONOUNCEMENT 13.10.2021 2 ITA NO. 2625/DEL/2018 PART OF PANIC STRICKEN, MENTALLY ANGUISHED OLD AGED APPELLANT, UNDER PRESSURE DOES NOT TANTAMOUNT TO BE VOLUNTARY IN THE EYES OF SETTLED LAW OF HONBLE SUPREME COURT,. 3. THAT THE LD. CIT(A) FURTHER ERRED IN LAW, ON FACTS AND IN SURROUNDING CIRCUMSTANCES IN FAILING TO APPRECIATE THAT REJECTI ON OF BOOK RESULT MERELY ON THE INABILITY OF THE ASSESSEE TO PRODUCE CONFIRMATI ON OF SUNDRY CREDITORS, DOES NOT ATTRACT THE PROVISIONS OF SECTION 145(3) OF I.T . ACT. 4. THAT IN DOING SO, THE LD. CIT(A) ERRED IN LAW, ON FACTS AND IN SURROUNDING CIRCUMSTANCES IN FAILING TO APPRECIATE THAT PROVISI ONS OF SECTION 145(3) I.T ACT ARE ATTRACTED ONLY WHEN THE A.O. IS NOT SATISFIED A BOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. WHERE AS IN THE ASSESSMENT ORDER, THERE IS NO IOTA OF ADVERSE FINDINGS/COMMENT S OF NON SATISFACTION ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, WHICH IN TURN CLEARLY IMPLIES THAT IMPUGNED ADDITION HAD BEEN MAD E ON MISAPPLICATION OF SECTION 145(3) OF I.T. ACT, THEREBY RENDERING THE S AME UNSUSTAINABLE AS PER LAW. 5. THAT THE LD. CIT(A) TOO ERRED ON FACTS AND IN SURR OUNDINGS CIRCUMSTANCES IN HOLDING WRONG VIEW A.O. REJECTED THE BOOKS OF A CCOUNT AND CONSEQUENTLY THE APPELLATE ORDER SOLELY BASED ON WRONG IMPRESSIO N, MISINTERPRETATION AND MISUNDERSTANDING OF THE FACTUAL CONTENT OF ASSESSME NT ORDER, IS BAD IN LAW. 6. THAT SO FAR AS ESTIMATION OF NET PROFIT @ 7.00% IS CONCERNED, THE LD. CIT(A) ERRED IN LAW, ON FACTS AND IN SURROUNDING CIRCUMSTA NCES IN FAILING TO APPRECIATE THAT IN THE ABSENCE OF ANY SUPPORTING CR EDIBLE OR ESTIMATION SO MADE, IS COMPLETELY BASED ON ASSUMPTION, PRESUMPTIO N, HAVING NO SANCTITY IN LAW. 7. THAT WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) ER RED IN LAW, ON FACTS AND IN SURROUNDING CIRCUMSTANCES IN FAILING TO APPRECIA TE THAT DESPITE WRITTEN REQUEST OF THE ASSESSEE FOR GETTING CONFIRMATION OF BALANCES DIRECTLY FROM THE PARTIES CONCERNED, THE LD. A.O. HAD IGNORED THE SAM E IN DISREGARD OF SETTLED LAW OF HONBLE SUPREME COURT LEADING TO MISCARRIAGE OF JUSTICE. 3 ITA NO. 2625/DEL/2018 3. THE ASSESSEE IS ENGAGED IN MANUFACTURING AND JOB WORK O F MECHANICAL SPARE PARTS ON ORDER BASIS , BEING A SPECIFIC ORDER ORIENTED ENGINEERING INDUST RY, PRODUCES SINGLE AND MULTIPLE PRODUCT LINE, THERE IS NO SPECIFIC PRODUCT TO SPECIFY. THE INCOME TAX RETURN FILED ELECTRONICALLY ON 02/04/2014 DECLARING TOTAL TAXABLE INCOME RS. 43167880/-. THE ASSESSING OFFICE R MADE ADDITION OF RS. 85,67,317/- BY INCREASING NET PROFIT RATE 7% AS AGAINST DECLARED @ 5.84% IN THE ORIGINAL RETURN FILED U/S 139(4) OF I.T. ACT . 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE GIVING NOTICE FOR HEARING. THE NOTICE HAS RETURNED BACK WITH THE REMARK BY THE POSTAL AUTHORITIES THAT THIS FIRM IS TOTALLY CLOSED DOWN. NO NEW ADDRESS WAS GIVEN BY THE ASSESSEE IN FORM NO. 36. HENCE, WE ARE PROCEEDING ON THE BASIS OF SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A). THE ASSESSEE IN FORM NO. 35 MENTIONED THE FACTS THAT DURING COURSE OF SC RUTINY PROCEEDINGS, THE ASSESSING OFFICER RAISED SEVERAL QUERIES, BUT SPECI ALLY REQUIRED ASSESSEE TO VERIFY THE AMOUNT OF SUNDRY CREDITORS. THE ASSESSEE WAS ABLE TO FILE CONFIRMATIONS OF SOME SUNDRY CREDITORS AND IT HAS B EEN REQUESTED TO THE ASSESSING OFFICER TO VERIFY REST OF THE SUNDRY CRED ITORS USING HIS POWERS AS VESTED U/S 131 OF INCOME TAX ACT. AS PER ORDER, FIN DING IN PARA 7 IS TOTALLY WRONG THAT THE APPELLANT WAS NOT ABLE TO FILE CONFI RMATION LETTERS OF SUNDRY CREDITORS. DUE TO NON VERIFICATION OF ALL SUNDRY CR EDITORS THE BOOK RESULT OF PROFIT AS DECLARED BY THE ASSESSEE HAS BEEN TREATED AS INCOMPLETE AND NOT RELIABLE. AS THE POWER VESTED UNDER SECTION 145(3) OF INCOME TAX ACT THE DECLARED BOOK RESULT HAS BEEN TREATED AS NOT RELIABLE WITHOUT TREATING T HE BOOKS OF ACCOUNT OF THE ASSESSEE, AS DEFECTIVE. NO DEFECT HAS BEEN FOUND BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNT DURING CO URSE OF SCRUTINY PROCEEDINGS. AT LAST, THE ASSESSING OFFICER MADE AD DITION OF RS. 8567317/- BY INCREASING NET PROFIT RATE 7% AS AGAINST DECLARED @ 5.84% IN THE ORIGINAL RETURN 4 ITA NO. 2625/DEL/2018 FILED U/S 139(4) OF I.T. ACT. 6. THE LD. DR RELIED UPON THE ORDER OF THE CIT(A) A ND ASSESSMENT ORDER. 7. WE HAVE HEARD LD. DR AND PERUSED ALL THE RELEVAN T MATERIALS AVAILABLE ON RECORD. THE ASSESSEE CHALLENGED THE ADDITIONS OF R S. 85,67,317/- WHEREIN THE ASSESSEES BOOKS OF ACCOUNTS WERE REJECTED AND ALS O CHALLENGED THE ASSUMPTION OF THE NET PROFIT AT 7%. THE CIT(A) HA S GIVEN A CATEGORICAL FINDING THAT THE ASSESSING OFFICER ASKED THE ASSESSEE TO P RODUCED CONFIRMATION OF SUNDRY CREDITORS FOR WHICH THE ASSESSEE FAILED TO S UBMIT AND EXPRESSED INABILITY TO PRODUCE THE SAME AT THE TIME OF ASSESS MENT PROCEEDINGS. THUS, THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNTS. THERE IS OBSERVATION THAT THE ASSESSEE HAS HABITUALLY NOT MA INTAINING BOOKS OF ACCOUNT AS IN THE PREVIOUS ASSESSMENT YEAR I.E. 2012-13, TH E PROFIT OF THE ASSESSEE WAS ASSESSED AT 7% OF GROSS TURNOVER. IN-FACT, AFTER C ONFRONTING THE ASSESSEE AND ON BASIS OF AGREEMENT OF THE ASSESSEE, THE PROFIT O F ASSESSEE COMPANY WAS ESTIMATED AT 7% OF THE TOTAL TURNOVER OF RS. 73,62, 82,543/- LEADING TO ADDITION OF RS. 85,67,317/-. THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). AS REGARDS THE SUBMISSIONS OF THE ASSE SSEE, THE ASSESSEE HAS SIMPLY STATED THAT NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE BEFORE THE ASSESSING OFFICER. BUT FROM THE PERUSAL OF RECORDS , IT CAN BE SEEN THAT THE ASSESSEE WAS CALLED UPON ON 23/3/2016 AND THE ASSES SEE HAS NOT RESPONDED PROPERLY TO THE ASSESSING OFFICER. THEREFORE, THE A PPEAL OF THE ASSESSEE IS DISMISSED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13TH DAY OF OCTOBER, 2021 SD/- SD/- (PRASHANT MAHARISHI) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 13/10/2021 R. NAHEED * 5 ITA NO. 2625/DEL/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI