ITO, New Delhi V. Shri Tuntun Prasad Gupta, New Delhi

ITA 2680/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82071 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 24-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SHRI C. M. GARG, JUDICIAL MEMBER I.T.A .NO. - 2680 /DEL/201 2 (ASSESSMENT YEAR - 2009 - 10) ITO VS. SHRI TUNTUN PRASAD GUPTA WARD 38(3), ROOM NO. 176, D - 491, BLOCK D, CR BUILDING, IP ESTATE, BAPROLA VIHAR, NEW DELHI. DASS GARDEN, GALI NO. 17, NAJAFGARH, NEW DELHI - 43. PAN: A GVPG7925P (APPELLANT) (RESPONDENT) C.O. NO. - 154/DEL/2014 (IN ITA NO. 2680 /DEL/2012) (ASSESSMENT YEAR - 2009 - 10) SHRI TUNTUN PRASAD GUPTA VS. ITO D - 491, BLOCK D, WARD 38(3), ROOM NO. 176, BAPROLA VIHAR, CR BUILDING, IP ESTATE, DASS GARDEN, GALI NO. 17, NEW DELHI. NAJAFGARH, NEW DELHI - 43. PAN: AGVPG7925P (APPELLANT) (RESPONDENT) ASSESSEE BY: - SH. AKARSH GARG, ADV. REVENUE BY: - SH. J.P. CHANDRAKAR, SR.DR. ORDER PER N. K. SAINI, AM TH E APPEAL BY THE DEPARTMENT AND CROSS - OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 23.04 .2012 OF LD. CIT (APPEALS) - X X V III, NEW DELHI. 2 2. IN T HE DEPARTMENTAL APPEAL I.E. ITA NO.2680/DEL/2012 THE ONLY EFFECTIVE GROUND RAISED READ S AS UNDER: 1. THE LD. CIT(A) ERRED IN ESTIMATING THE INCOME OF THE ASSESSEE @ 2% OF GROSS RECEIPTS AS AGAINST 5% ESTIMATED BY THE AO, COMPLETELY DISREGARDING THE FACT THAT THE ABOVE AMOUNT WAS SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SCRUTINY PROCEEDINGS, AS THE ASSESSEE FAILED TO PRODUCE BILLS AND VOUCHERS AS THEY WERE LOST / MIS PLACED BY THE ASSESSEE. 3. THE BRIEF FACTS RELATED TO THIS ISSUE ARE THAT THE ASSESSEE BEING AN INDIVIDUAL WAS A CIVIL CONTRACTOR AND DECLARED NET PROFIT RATE OF 0.97% ON THE TURNOVER OF RS.4,74,86,140/ - AS AGAINST THE NET PROFIT RATE OF 1.69% IN THE IM MEDIATELY PRECEDING YEAR ON THE TURNOVER OF RS. 2,60,12,373/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSEE PRODUCED HIS BOOKS OF ACCOUNTS , HOWEVER, THE SUPPORTING BILLS AND VOUCHERS ETC. WERE NOT PRODUCED. IT WAS EXPLAINED TO THE AO THAT THE SAID BILLS AND VOUCHERS ETC. WERE LOST. THE AO APPLIED THE NET PROFIT RATE OF 5% AND MADE THE ADDITION OF RS.23,74,307/ - . B EING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE FURNISHED SUPPORTING DOCUMENTS ( WAGE S & SALARY SHEETS) OF MAJOR HEADS OF EXPENSES WHICH WERE AT RS.4,13,56,374/ - OUT OF TOTAL EXPENSE S OF RS.4,70,24,567/ - I.E. ABOUT 88% AND THE VOUCHERS LOST WERE ONLY FOR 12% OF THE EXPENSES . S O, I T WAS NOT FAIR TO SAY THAT THE SUPPORTING BILLS AND VOUCHERS WERE NOT PRODUCED. IT WAS STATED THAT THE ASSESSEE FURNISHED A CHART OF NET PROFIT RATIO 3 FOR THE LAST 3 YEARS BEFORE THE AO VIDE LETTER DATED 7.12.2011 AS PER FOLLOWING DETAILS: FINANCIAL YEAR 2006 - 07 2007 - 08 2008 - 09 TURNOVER 24546609 26018650 47486140 NET PROFIT 502140 442149 461573 N.P. RATIO % 2.045 1.699 0.972 IT WAS CONTENDED THAT THE NET PROFIT RATIO HAD BEEN FALLING DOWN COMPARATIVELY DURING THE LAST 2 PREVIOUS YEARS AND THE REASON FOR FALLING DOWN THE NET PROFIT RATIO WAS STEEP INCREASE IN LABOUR CHARGES, WHEREAS THE RATIO OF CONTRACT DID NOT INCREASE IN THE SAME RATIO. 4. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE MAXIMUM NET PROFIT RATIO WAS 2.045% DURING THE L AST 3 YEARS, HOWEVER, THE AO ESTIMATED THE INCOME @ 5% ON THE GROSS RECEIPTS WITHOUT CONSIDERING THE FULL FACTS AND REASON FOR FALLING IN THE NET PROFIT RATIO. SHE FURTHER OBSERVED THAT THE ASSESSEE MAINTAINED BOOKS OF ACCOUNTS WHICH WERE AUDITED AND THE S AME WERE PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS . T HE LD. CIT ( A) SUSTAINED PART OF ADDITION BY ESTIMATING THE NET PROFIT RATIO @ 2%. NOW, THE DEPARTMENT IS IN APPEAL. 5. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE AO AND FURTHER SUBMITTED THAT THE ASSESSEE HIMSELF OFFERED NET PROFIT RATE OF 5 % THEREFORE, THE ADDITION MADE BY THE AO WAS FULLY JUSTIFIED AND THE LD. CIT ( A) WRONGLY DELETED THE 4 SAME. IN HIS RIVAL SUBMISSION S THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE NET PROFIT RATIO OF THE ASSESSEE WAS DECREASING DUE TO STEEP INCREASE IN THE LABOUR CHARGES AND INCREASE IN THE TURNOVER , AND THE AO APPLIED THE NET PROFIT RATE OF 5 % WITHOUT ANY BASIS AND THE LD. CIT ( A) RIGHTLY ALLOWED THE RELIEF TO THE ASSESSEE. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE IT IS NOTICED THAT THE TURNOVER OF THE ASSESSEE WAS INCREASING YEAR AFTER YEAR BUT THERE WAS DECREASE IN THE NET PROFIT RATE CONSISTENTLY. IN THE INSTANT CASE , IT IS AN ADMITTED FACT THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE AUDITED U/S 44AB OF THE IT ACT 1961, AND THOSE W ERE ACCEPTED BY THE AO WHO APPLIED THE NET PROFIT RATE OF 5% ONLY ON THIS BASIS THAT THE BILLS AND VOUCHERS WERE NOT PRODUCED BY THE ASSESSEE. ON THE OTHER HAND, THE EXPLANATION OF ASSESSEE WAS THAT 88% OF THE EXPENSES WERE RELATED TO THE SALARY AND WAGES FOR WHICH SUPPORTING DOCUMENTS WERE PRODUCED BEFORE THE AO WHO DID NOT POINT OUT ANY DEFECT IN THOSE DOCUMENTS. CONSIDERING THE TOTALITY OF THE FACTS, WE ARE OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN ESTIMATING THE NET PROFIT AT 5% , PAR TICULARLY WHEN NET PROFIT OF 2.045% WAS ACCEPTED IN THE ASSESSMENT YEAR 2006 - 07 ON A LOWER TURNOVER . I N THAT VIEW OF THE MATER W E DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO APPLIED THE NET PROFIT RATE OF 2% INSTEAD OF 5% APPLIED BY THE AO . 5 7. A S REGARDS TO THE CROSS - OBJECTION OF THE ASSESSEE, T HE LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING STATED THAT HE HAS THE INSTRUCTION NOT TO PRESS THE CROSS - OBJECTION . A CCORDINGLY THE C ROSS - OBJECTION IS DISMISSED AS NOT PRESSED. 8 . IN T HE RESULT, APPEAL OF THE DEPARTMENT AND THE C ROSS - OBJECTION OF THE ASSESSEE ARE DISMISSED. ( ORDER PRONOUNCED IN THE OPEN COURT ON 28 /11/2014 ). SD/ - SD/ - ( C. M. GARG ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 /11/2014 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR