ACIT, UDAIPUR V. Shri Mahendra Singh Choudhary, UDAIPUR

ITA 285/JODH/2013

• Counselvise Citation: 28523314 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: C R CHOUDHARY
• Section: 133(6); 145

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.285/JODH/2013 (A.Y. 2009-10) ACIT, CIRCLE-1, VS. SHRI MAH ENDRA SINGH CHOUDHARY, UDAIPUR. 1090, GYAN NAGAR, SEC - 4, HIRAN MAGRI, UDAIPUR. PAN NO. AFLPC 6138 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C.R. CHOUDHARY. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 07/05/2014. DATE OF PRONOUNCEMENT : 09/06/2014. O R D E R PER HARI OM MARATHA, J.M THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 28/02/2013 OF THE LD. CIT(A), UDAIPUR FOR A.Y. 2009 -10. 2 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS A PPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN: 1. DELETING THE ADDITION OF RS. 1,13,30,726/- MADE ON ACCOUNT OF BOGUS SUNDRY CREDITORS, THE GENUINENESS OF WHICH, T HE ASSESSEE UTTERLY FAILED TO PROVE & FURTHER ERRED IN IGNORING THE UNCONTROVERTED FINDING THAT IN THE MOST OF THE CASES THE SITE SUPERVISORS WERE SHOWN AS CREDITORS INSTEAD OF THE ACTUAL PERSONS FROM WHOM MATERIAL/LABOUR HAS BEEN PRODUCED OR EXPENSES INCURRED. 2. CHANGING IN SPECIFIC ADDITION MADE ON ACCOUNT OF BO GUS SUNDRY CREDITORS DESPITE ASSESSEE FAILING TO PROVE THE GENUINENESS OF THE CREDITORS, TO LUMP SUM TRADING A DDITION. 3. THE FACTS OF THE SOLE ISSUE INVOLVED IN THIS APP EAL ARE THAT THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN THE CIVIL SUB -CONTRACT WORK IN THE YEAR UNDER CONSIDERATION. FOR A.Y. 2009-10, HE FIL ED HIS RETURN OF INCOME [ROI] ON 30.9.2009 DECLARING TOTAL INCOME OF RS. 9, 79,430/-. DURING ASSESSMENT PROCEEDINGS, WHILE EXAMINING THE BALANCE SHEET FILED BY THE ASSESSEE, AS ON 31.3.2009, IT WAS NOTICED THAT SUND RY CREDITORS TO THE TUNE OF RS. 1,61,16,095/- HAVE BEEN SHOWN AS UNDER: 3 SUNDRY CREDITORS AMOUNT AGARWAL B.T. SONS 250000 HEERA LAL 78790 HI - TECH EARTH MOVERS 4163799 J.J. ENGINEERS 75529 JRC CONSTRUCTION 30350 0 MADAN RAM 51760 MAHIPAL RAM 2344409 MAN SINGH 1080650 MOHD. BHAI CONTRACTOR 790775 NASIR BHAI CONTRACTOR 758763 NATHU LAL 432670 PIONEER TRADER 296040 PRADEEP KUMAR 1015000 RIPRA ENTERPRISES 1015000 SMT. BHAWARI DEVI CHOUDHARY 291544 SMT. NIRMALA CHOUDHARY 2356535 TOTAL 16116094 THE ASSESSEE WAS ASKED TO SUBMIT THE NAMES WITH COM PLETE ADDRESSED OF THESE SUNDRY CREDITORS. THE ASSESSEE SUBMITTED ADDR ESSES OF FIVE SUNDRY CREDITORS ON 26.6.2011 BUT DID NOT SUBMIT COMPLETE ADDRESSED OF OTHER CREDITORS. SUBSEQUENTLY, CONFIRMATION FROM SOME OT HERS WERE ALSO PRODUCED ON 16.11.2011. THE A.O. CALLED FOR INFORM ATION U/S 133(6) OF THE ACT FROM M/S PIONEER TRADERS, J.J. ENGINEERS AN D JRC CONSTRUCTION. NOTICE ISSUED TO JRC CONSTRUCTION WAS RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES WHEREAS NOTICE TO OTHERS WAS SER VED AND THEY FILED THEIR CONFIRMATIONS. CONSEQUENTLY, THE A.O. HAS TR EATED THE FOLLOWING SUNDRY CREDITORS AS NOT EXPLAINED: 4 HEERA LAL 78790 JRC CONSTRUCTION 303500 MADAN RAM 51760 MAHIPAL RAM 2344409 MAN SINGH 1080650 MOHD. BHAI CONTRACTOR 790775 NASIR BHAI CONTRACTOR 758763 NATHU LAL 432670 PRADEEP KUMAR 1015000 RIPRA ENTERPRISES 1015000 SMT. BHAWARI DEVI CHOUDHARY 291544 SMT. NIRMALA CHOUDHARY 2356535 TOTAL 11330726 FINALLY, AFTER MAKING DISCUSSION REGARDING THE GENU INITY OF THE OTHER CREDITORS, THE A.O. HAS MADE ADDITION OF RS. 1,13,3 0,726/- BY HOLDING THEM AS BOGUS CREDITORS, AGAINST WHICH THE ASSESSEE PREFERRED APPEAL AND THE LD. CIT(A) HAS DELETED THE ENTIRE ADDITION BY G IVING A FINDING THAT WHEN BOOKS OF ACCOUNT ARE REJECTED AND PROVISIONS O F SECTION 145 OF THE ACT ARE INVOKED, NO SUCH SEPARATE ADDITION CAN BE M ADE IN RESPECT OF TRADE CREDITORS AND HE FOUND IT JUST AND FAIR TO ES TIMATE THE INCOME OF THE ASSESSEE BY ADOPTING NET PROFIT RATE OF 5.5% AS AGAINST 3.42% DECLARED BY THE ASSESSEE. THUS, HE HAS SUSTAINED A LUMPSUM ADDITION ON THE TOTAL TURNOVER OF R S3,15,09,837/- WHICH ALSO INCLUDED TH IS AMOUNT OF TRADE CREDITORS OF RS. 1,13,30,726/-. THE REVENUE IS NOW AGGRIEVED AND HAS COME IN APPEAL. 5 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. BOTH THE PARTIES HAVE R EITERATED THEIR STAND WHICH WAS TAKEN BEFORE THE LD. CIT(A). WE ARE IN A GREEMENT WITH THE LD. CIT(A) WHO HAS FOUND THAT IN FACT, THE A.O. HAS REJ ECTED THE BOOKS OF ACCOUNT BY MENTIONING NUMEROUS DEFECTS THEREIN WHIC H HAS BEEN DISCUSSED FROM PAGE 2 TO 9 OF THE ASSESSMENT ORDER. THUS THERE IS IMPLIED REJECTION OF BOOKS OF ACCOUNT. TO MEET OUT ANY PIL FERAGE, ETC., BY ENHANCING AND INCREASING THE NET PROFIT RATE, IN OU R CONSIDERED OPINION, THE LD. CIT(A) HAS JUSTIFIED HIS ACTION. THE TRADE CREDITORS, OBVIOUSLY HAVE TO BE INCLUDED IN THE TURNOVER OF THE YEAR AND IN C ASE OF A CIVIL CONTRACTOR, THE NET TAXABLE INCOME CAN BE ARRIVED B Y APPLYING THE NET PROFIT RATE OF THE TOTAL RECEIPTS. ALTHOUGH A LUMP SUM ADDITION HAS BEEN SUSTAINED BY INVOKING DIFFERENT NET PROFIT RATE, BU T A SEPARATE ADDITION OF SUNDRY CREDITORS BY TREATING THEM AS BOGUS, PARTICU LARLY, WHEN THESE ARE TRADE CREDITORS, THE ENTIRE AMOUNT QUA THEM IS NOT JUSTIFIED. WHEN THE ASSESSEE IS SHOWING RECEIPT OF ALL THESE CREDITORS AND IN THAT CASE EVEN IF THE NAMES AND COMPLETE ADDRESSES THEREOF COULD NOT BE GIVEN BUT THE TRADE CREDITORS CANNOT BE TREATED AT PAR WITH THE C ASH CREDITORS. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE IM PUGNED FINDING OF THE LD. CIT(A) AND THEREFORE, CONFIRM THE SAME. 6 5. IN THE RESULT, APPEAL OF THE DEPARTMENT STANDS DISM ISSED. (ORDER PRONOUNCED IN THE COURT ON 09 TH JUNE, 2014). SD/- SD/- (N.K.SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 09 TH JUNE, 2014. VL/ COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.