Pathak Roadlines, Palwal V. ITO WARD -II(1), Faridabad

ITA 2941/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9556 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 04-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR CHOPRA
• Assessee Lawyers: NIPPUN MITTAL
• Keywords: Opportunity of being heard; Set aside
• Section: 101

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 2941/DEL/2019 ASSESSMENT YEAR: 2015-16 PATHAK ROADLINES, VS. INCOME TAX OFFICER, NH-2, FF. HUDA CHOWK WARD-II(1), FARIDABAD NEAR DHARAM PUBLIC SCHOOL, PALWAL, HARYANA (PAN:AANFP9615P) (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI NIPPUN MITTAL, CA REVENUE BY : SH. MANOJ KUMAR CHOPRA, SR. DR. ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 08.01.2019 PASSED BY THE LD. CIT(A), FARIDABAD, REL ATING TO ASSESSMENT YEAR 2015-16 ON THE FOLLOWING GROUNDS:- (1) THAT THE APPELLANT WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE FOR NOT APPEARING BEFORE THE ASSESSING OFFICE R AS WELL AS BEFORE THE LD. CIT(A) AS THE REQUISITE INFORMATION COULD N OT BE PLACED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) BY THE PREVIOUS COUNSEL ENGAGED BY THE APPELLANT AND ACCORDINGLY BO TH THE AUTHORITIES PASSED THE ORDER EX-PARTE (2) THAT THE APPELLANT REMAINED UNREPRESENTED BEFOR E THE ASSESSING OFFICER AS WELL AS BEFORE THE LD. CIT(A) IN VIEW OF THE FACT THAT THE ASSESSEE'S PREVIOUS COUNSEL DID NOT ATTEND THE PROC EEDINGS AND FILED REQUISITE INFORMATIONS, THUS THE NOTICES REMAINED U NCOMPLIED WITH AND EX-PARTE ORDERS WERE PASSED (3) THAT THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAS ERRED IN DISMISSING THE APPEAL OF THE APPELLATE WITHOUT SHOW ING AS TO HOW THE ASSESSING OFFICER WAS JUSTIFIED IN ADOPTING NET PRO FIT RATE OF 2%AND MADE ADDITION OF RS. 20,29,500/- ON ACCOUNT OF NET PROFIT MARGIN WAS 2 LOWER IN THE INSTANT ASSESSMENT YEAR UNDER APPEAL A S COMPARED TO PRECEDING ASSESSMENT YEAR. (4) THAT THE ASSESSING OFFICER MADE THE ASSESSMENT EX-PARTE AND THE LD. CIT(A) DISMISSED THE APPEAL OF THE APPELLANT BY PASSING AN EX- PARTE ORDER. EVEN IF THE ASSESSEE DOES NOT APPEAR B EFORE THE ASSESSING OFFICER AS WELL THE CIT(A) DESPITE THEN BOTH THE AU THORITIES ARE DUTY BOUND TO ADJUDICATE THE ISSUES BEFORE HIM ON MERITS AND CANNOT DISREGARD THE FACT THAT TAX AUDIT REPORT ALONGWITH ITS ANNEXURES WERE AVAILABLE WITH THE RETURN OF INCOME ON DEPARTMENTAL E- FILING PORTAL AND THUS THERE IS NO CASE OF ESTIMATION OF NET PROFIT A T 2 PER CENT OF GROSS TURNOVER. (5) THAT THE MERE FACT THAT THERE WAS A LESS RATE O F NET PROFIT DECLARED BY AN ASSESSEE AS COMPARED TO THE PREVIOUS YEAR WOU LD NOT BY ITSELF BE SUFFICIENT TO JUSTIFY THE ADDITION WHEN NO COGEN T MATERIAL HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE ASSESSEE HAS MA NIPULATED ITS ACCOUNTS TO SUPPRESS PROFITS. (6) THAT IT IS WELL-SETTLED LAW THAT MERELY ON THE GROUND OF LOW NET PROFIT RATIO, THE ADDITION TO THE ASSESSEE'S RETURN ED INCOME CANNOT BE MADE. IT HAS TO BE EXAMINED WHETHER THE ASSESSING O FFICER ADOPTED THE RATIONAL BASIS FOR MAKING THE ADDITION. IN THE PRESENT CASE, THE ASSESSING OFFICER MERELY REFERRED TO PREVIOUS YEAR' S 1.70% NET PROFIT BUT DID NOT DEMONSTRATE AS TO HOW THAT AFFECTED THE NET PROFIT DECLARED BY THE ASSESSEE. (7) THAT THE ASSESSING OFFICER AS WELL AS THE LD. C IT(A) HAD NOT BROUGHT ON RECORD ANY COMPARABLE CASE, WHEREIN, THE NET PROFIT DECLARED BY A TAX PAYER IN THE SIMILAR BUSINESS, WA S HIGHER, THAN THE ONE DECLARED BY THE ASSESSEE. THE HON'BLE DELHI HIG H COURT IN THE CASE OF CIT V. AERO CLUB [2011] 336 ITR 400 HAS UPHELD T HE TRIBUNAL'S ORDER UNDER SUCH CIRCUMSTANCES. (8) THAT THE ASSESSING OFFICER HAS REJECTED THE BOO KS OF ACCOUNT SOLELY FOR THE REASON THAT THE ASSESSEE HAVE SHOWN THE LOW ER NET PROFIT RATE. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, NO OTHER DEFECT WAS MENTIONED. IT MAY ALSO BE MENTIONED THAT THE LOWER PROFIT SHOWN BY THE ASSESSEE BY ITSELF CANNOT BE A GROUND FOR REJEC TION OF THE BOOKS OF ACCOUNT RESULTS, AS PER THE RATIO LAID DOWN IN THE FOLLOWING CASES: I. S. N. NAMASIVAYAMCHETTIAR V. CIT [1960] 38 ITR 579 (SC); II. PANDIT BROS. V. CIT [1954] 26 ITR 159 (P&H); III. S. VEERIAHREDDIAR V. CIT [1960] 38 ITR 152 (KE R); IV. INTERNATIONAL FOREST CO. V. CIT [1975] 101 ITR 721 (J&K). 3 (9) THAT MERELY BECAUSE NET PROFIT MARGIN IS LOWER IN THE INSTANT ASSESSMENT YEAR UNDER APPEAL VIS-A-VIS PRECEDING AS SESSMENT YEAR CANNOT BE A GROUND OF ADDITIONS TO THE INCOME OF TH E ASSESSEE UNLESS THE REVENUE POINTS OUT PARTICULAR DEFECT OR DISCREP ANCIES IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THEREFORE, THERE ARE NO REASONS OR JUSTIFICATION IN MAKING THE ADDITION OF RS. 20,77,989/- MERE FALL IN THE NET PROFIT RATIO AND IN THE ABSENCE OF ANY COGENT REASONS COULD NOT BE A GROUND TO HOLD THAT THE PROPER INCOM E COULD NOT BE DEDUCED FROM THE AUDITED ACCOUNTS MAINTAINED BY THE ASSESSEE NO ADDITION COULD HAVE BEEN MADE MERELY ON ACCOUNT OF LOWER PROFIT DECLARED BY THE ASSESSEE. (10) THAT IT IS A SETTLED LAW THAT THE EACH ASSESSM ENT YEAR IS AN INDEPENDENT TO EACH OTHER AND THE ASSESSMENT PROCEE DINGS ARE DISTINCT AND SEPARATE. THE FINDINGS OF ONE ASSESSMENT YEAR A UTOMATICALLY CANNOT BE JUSTIFIED IN MAKING THE ADDITION TO THE O THER ASSESSMENT YEAR. (11) THAT IN THESE CIRCUMSTANCES, AS NARRATED ABOVE , THE ASSESSEE WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE FOR NO T APPEARING FOR HEARINGS BEFORE THE ASSESSING OFFICER AS WELL AS BE FORE THE LD. CIT(A). IN THIS FACTUAL MATRIX OF THE CASE AND IN THE INTER EST OF SUBSTANTIAL JUSTICE THE ORDER MAY BE RESTORED TO THE ASSESSING OFFICER FOR A PROPER APPRECIATION AND ADJUDICATION OF FACTS. THE APPELLA NT GIVE HIS ORAL UNDERTAKING THAT IN THE EVENTUALITY THE ISSUES ARE RESTORED THE ASSESSEE WOULD FULLY PARTICIPATE IN THE PROCEEDINGS . 2. SHRI NIPPUN MITTAL, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED AND STATED THAT THE LEARNED FIRST APPELLAT E AUTHORITY HAS PASSED EX PARTE ORDER WITHOUT HEARING THE ASSESSEE. HE REQ UESTED THAT THE ISSUES IN DISPUTE MAY BE SET ASIDE TO THE LEARNED FIRST AP PELLATE AUTHORITY TO DECIDE THE SAME AFRESH, AS PER LAW, AFTER GIVING RE ASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 3. LEARNED DR HAS NOT RAISED ANY SERIOUS OBJECTION ON THE REQUEST OF THE LEARNED AR. 4 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE OR DERS PASSED BY THE REVENUE AUTHORITIES ESPECIALLY THE IMPUGNED ORDER D ATED 08.01.2019 AND FOUND THAT LEARNED FIRST APPELLATE AUTHORITY HAS PA SSED THE EX PARTE ORDER AGAINST THE ASSESSEE WITHOUT PROVIDING SUFFICIENT O PPORTUNITY OF HEARING TO THE ASSESSEE. IN VIEW THE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE AND IN THE INTEREST OF JUSTICE, I AM OF THE VIEW THAT I SSUES IN DISPUTE BE SET ASIDE TO THE LEARNED FIRST APPELLATE AUTHORITY TO D ECIDE AFRESH, AS PER LAW, AFTER GIVING OPPORTUNITY TO THE ASSESSEE. ACCORDING LY, I SET ASIDE THE ISSUES IN DISPUTE TO THE FILE OF LD. CIT(A) TO DECI DE THE SAME AFRESH, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. 5. KEEPING IN VIEW THE NON COOPERATION OF THE ASSES SEE BEFORE THE LEARNED FIRST APPELLATE AUTHORITY, I AM DIRECTING T HE ASSESSEE THROUGH HIS AUTHORIZED REPRESENTATIVE TO APPEAR BEFORE THE LEAR NED FIRST APPELLATE AUTHORITY ON 24.03.2020 AT 10:00 AM BEFORE THE LEAR NED FIRST APPELLATE AUTHORITY. IT IS MADE CLEAR THAT NO SEPARATE NOTICE SHALL BE ISSUED TO THE ASSESSEE FOR 24.03.2020 BECAUSE THIS ORDER HAS ALRE ADY BEEN PRONOUNCED IN THE OPEN COURT. 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED ON 07/01/2020. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 07/01/2020 SH 5 COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES