Puneet Pandey, New Delhi V. ITO, Noida

ITA 2891/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3351 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH SENIOR
• Section: 145; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.2891/DEL./2016 (ASSESSMENT YEAR : 2008-09) SHRI PUNEET PANDEY, VS. ITO, WARD 3, C/O RAJ KUMAR & ASSOCIATES, CAS NOIDA (U.P.). L 5A (LGF), SOUTH EXT. PART 2, NEW DELHI 110 049. (PAN : AMZPP0202G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJ KUMAR GUPTA, ADVOCATE SHRI SUMIT AGGARWAL, ADVOCATE REVENUE BY : SHRI AMIT KATOCH, SENIOR DR DATE OF HEARING : 21.01.2019 DATE OF ORDER : 19.02.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, SHRI PUNEET PANDEY (HEREINAFTER REF ERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 31.03.2016 PASSED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS)-I, NOIDA QUA THE ASSESSMENT YE AR 2008-09 ON THE GROUNDS INTER ALIA THAT :- 1. THAT UNDER FACTS AND CIRCUMSTANCES, LD. CIT (A) GROSSLY ERRED IN LAW AS WELL AS ON MERITS IN DISMIS SING ITA NO.2891/DEL./2016 2 THE APPEAL AS INFRUCTUOUS AND NON-MAINTAINABLE AND CONSEQUENTLY IN NOT DECIDING THE VARIOUS GROUNDS OF APPEAL PREFERRED BEFORE HIM. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE LD. AO GROSSLY ERRED IN LAW AS WELL AS ON MERITS IN REJ ECTING THE BOOKS OF ACCOUNTS U/S. 145 (3) OF THE I.T. ACT AND IN ESTIMATING THE N.P. FROM BUSINESS @ 16% THEREBY MAKING AN ADDITION OF RS.8,04,916/-. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS PROPRIETOR OF M/S. P.V. ENGINEERS AND ENGAGED INTO THE BUSINESS AS TRADING RETAILERS. FROM THE PERUSAL OF TRADING RESULTS, ASSESSING OFFI CER NOTICED THAT GROSS PROFIT OF THE ASSESSEE HAS BEEN DECREASED FRO M 34.47% OF THE TOTAL TURNOVER TO 26.16% OF THE TURNOVER WHEREAS TU RNOVER HAS INCREASED FROM RS.51,36,448/- TO RS.85,65,633/- DUR ING THE YEAR UNDER ASSESSMENT. AO ALSO GOT THE BUSINESS PREMISES OF THE ASSESSEE INSPECTED THROUGH INSPECTOR, WHO HAS MENTI ONED THAT IT IS NOT POSSIBLE TO CARRY OUT THE COMMERCIAL ACTIVITIES IN THE SAID PREMISES WHICH IS A RESIDENTIAL COMPLEX. SO THE AO CAME TO THE CONCLUSION THAT NATURE OF BUSINESS DISCLOSED BY THE ASSESSEE I.E. RETAIL TRADING IS JUST A FARCE AS HE HAS NO STORAGE OR TRANSMISSION OF GOODS THROUGH THE BUSINESS PREMISES. ASSESSEE HAS A LSO NOT PRODUCED STOCK REGISTER TO ASCERTAIN THE GENUINENES S OF THE OPENING AND CLOSING STOCK. CONSEQUENTLY, AO AFTER INVOKING THE PROVISIONS ITA NO.2891/DEL./2016 3 CONTAINED UNDER SECTION 145(3) OF THE INCOME-TAX AC T, 1961 (FOR SHORT THE ACT) PROCEEDED TO ESTIMATE THE NET PROF IT FROM THE BUSINESS AT 16% AND THEREBY MADE ADDITION OF RS.8,0 4,916/- IN ADDITION TO THE PROFIT OF RS.5,65,585/- ALREADY SHO WN BY THE ASSESSEE. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL BEING NOT MAINTAINABLE ON THE GROUND THAT SINCE DURING THE PENDENCY OF THE PRESENT APPEAL CIT, NOIDA PASSED AN ORDER UNDER SECTION 263 OF THE ACT ON 30.032013 QUA THE IMPUGNED ASSESSMENT ORDER, PRESEN T APPEAL IS NOT MAINTAINABLE. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT AP PEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. INITIALLY, THE LD. AR FOR THE ASSESSEE CONTENDED THAT SINCE DURING THE PENDENCY OF THE APPEAL BEFORE THE LD. CI T(A) WHO HAS PASSED THE IMPUGNED ORDER, ANOTHER ORDER UNDER SECT ION 263 OF THE ACT WAS PASSED BY THE LD. CIT HOLDING THAT THE ASSE SSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE AND DIRECTED THE AO TO MODIFY THE ASSESSMEN T ORDER ON ITA NO.2891/DEL./2016 4 THE ISSUES DISCUSSED IN THE ORDER UNDER SECTION 263 , PRESENT APPEAL BE REMANDED BACK TO AO TO DECIDE AFRESH. 6. HOWEVER, WHEN LD. AR FOR THE ASSESSEE HAS BEEN C ONFRONTED WITH THE FACT THAT ISSUES RAISED BY THE LD. CIT IN THE ORDER UNDER SECTION 263 ARE HAVING SEPARATE SUBJECT MATTER, THE PRESENT APPEAL HAS BEEN FILED JUST CHALLENGING THE ESTIMATION OF T HE NET PROFIT BY THE AO AND THE SAME CAN BE DECIDED INDEPENDENTLY, H E HAS AGREED WITH THE PROPOSAL AND THEN BENCH DECIDED TO PROCEED WITH THE PRESENT APPEAL. 7. UNDISPUTEDLY, THE ASSESSEE HAS FAILED TO PRODUCE THE STOCK REGISTER SO AS TO EXAMINE THE TERMS OF THE SALES, P URCHASES, OPENING STOCK AND CLOSING STOCK SHOWN BY THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS ACCEPTED THE FACT THA T THE FINDINGS RETURNED BY THE AO THAT SALES, PURCHASES, OPENING S TOCK AND CLOSING STOCK SHOWN BY THE ASSESSEE IS DOUBTFUL AND HAS NOT CHALLENGED THE REJECTION OF BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT. 8. LD. AR FOR THE ASSESSEE HAS CHALLENGED THE ESTIM ATION OF THE NET PROFIT BY THE AO AT 16% ON THE GROUND THAT THE SAME IS ON HIGHER SIDE AS THE TRADING RESULT OF A PARTICULAR Y EAR DEPENDS UPON NUMEROUS FACTORS AND CANNOT BE COMPARED WITH TRADIN G RESULTS OF PRECEDING AND SUCCEEDING YEARS. LD. AR FOR THE ASSE SSEE BROUGHT ITA NO.2891/DEL./2016 5 ON RECORD TRADING RESULTS OF PRECEDING AS WELL AS S UCCEEDING YEARS WHICH ARE EXTRACTED FOR READY PERUSAL AS UNDER :- AY SALES (IN RS.) GP (IN RS.) GP (IN %) NP (IN RS.) NP (IN %) 2006-07 3,37,053 2,15,703 64% 1,15,316 34.21% 2007-08 51,36,449 17,70,559 34.47% 6,79,531 13.22% 2008-09 85,65,633 22,40,769 26.16% 5,65,585 6.6% 2009-10 89,75,730 23,94,916 26.68% 7,83,701 8.72% 9. PERUSAL OF THE TRADING RESULTS OF THE ASSESSEE E XTRACTED ABOVE GOES TO PROVE THAT NET PROFIT RATE OF THE ASSESSEE IS NOT STATIC AS IN AY 2006-07, THE NET PROFIT RATE WAS 34.21% WHEREAS IN AY 2007- 08 IT WAS REDUCED TO 13.22% AND IN AY 2008-09, THE YEAR UNDER ASSESSMENT, IT IS SHOWN AT 6.6 % AND AGAIN IN THE S UCCEEDING YEAR 2009-10, IT IS SHOWN AT 8.72 %. SINCE TRADING RESU LTS ARE CERTAINLY DEPEND UPON NUMEROUS FACTORS AND CANNOT BE SOLELY B ASED UPON TURNOVER AND KEEPING IN VIEW THE THROAT CUT COMPETI TION IN THE BUSINESS, WE ARE OF THE CONSIDERED VIEW THAT FAIR A ND REASONABLE NET PROFIT DURING THE YEAR UNDER ASSESSMENT SHOULD BE 9 %. WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS ERRED IN THIS DISMISSING THE APPEAL MERELY ON MAINTAINABILITY RATHER THE ISS UE IN CONTROVERSY COULD HAVE BEEN DECIDED INDEPENDENTLY EVEN IN THE F ACE OF THE ORDER PASSED UNDER SECTION 263 BY THE LD. CIT, WHIC H IS ADMITTEDLY ON DIFFERENT SUBJECT MATTER. ITA NO.2891/DEL./2016 6 9. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, AO IS DIRECTED TO APPLY THE NET PROFIT RATE AT 9% INSTEAD OF 16% ASSE SSED BY THE AO. HOWEVER, IT IS MADE CLEAR THAT AO SHALL MAKE THE AS SESSMENT FIRST PURSUANT TO THE ORDER PASSED BY LD. CIT UNDER SECTI ON 263 OF THE ACT. CONSEQUENTLY, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF FEBRUARY, 2019. SD/- SD/- (B.R.R. KUMAR) (KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 19 TH DAY OF FEBRUARY, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, NOIDA. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.