Sidhartha Sawhney, Haridwar V. ITO, Ward-2, , Haridwar

ITA 2945/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7364 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 25-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LOSS ACCOUNT
• Assessee Lawyers: DK GANDHI ADV DEPARTM
• Keywords: Rule of consistency
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 2945/DEL/2018 ASSESSMENT YEAR: 2014-15 SIDHARTHA SAWHNEY RAJA RAM NIWAS, SHARVAN NATH NAGAR, HARIDWAR, UTTARAKHAND (PAN: DEEPS5760C) VS. ITO, WARD-2, HARIDWAR (APPELLANT) (RESPONDENT) ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE IMP UGNED ORDER DATED 28.2.2018 PASSED BY LD. CIT(A), HALDWANI RELE VANT TO ASSESSMENT YEAR 2014-15 ON THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) ORDER IS AGAINST LAW AND FACTS OF THE CASE WHICH WAS SELECTED UNDER CASS FOR LIMITED SCRUTINY BUT IN APPEAL APPLIED NET PROFIT RATE OF 3 .5%. 2. THAT THE LD. CIT(A) DID NOT CONSIDER THE OTHER SIMI LAR CASES WHERE IN APPEAL RATE OF 2.7% GROSS PROFIT WA S APPLIED AND APPROVED, WHEREAS THE APPELLANT HAD DISCLOSED 3.95% AS GROSS PROFIT WHICH OUGHT TO HAVE BEEN ACCEPTED. 3. THAT IN CASS ONLY TWO POINTS WERE TO BE CONSIDERED (I) LARGE OTHER EXPENSES CLAIMED IN PROFIT AND LOSS ACCOUNT AND (II) MISMATCH IN THE SALE TURNOVER REPORTED IN AUDIT REPORT IN ITR. BOTH POINTS WERE EXPLAINED. ASSESSEE BY SH. PIYUSH KUMAR KAMAL, ADV. & SH. DK GANDHI, ADV. DEPARTMENT BY SH. S.L. ANURAGI, SR. DR. 2 4. THAT THE ACCOUNTS HAVE BEEN KEPT IN SIMILAR FASHION AS IN THE PAST ALWAYS DULY AUDITED. THIS YEAR THE PROFIT WAS HIGHER THAN THE PAST YEARS WHICH WERE ACCEPTED. THE LD. CIT(A) DID NOT CONSIDER ALL FACTS AND THERE IS NO CONSISTENCY. 5. THAT THE AUDITED ACCOUNTS HAVING BEEN FILED WHICH OUGHT TO HAVE BEEN ACCEPTED AND GP RATE HAS BEEN SEPARATELY WORKED OUT, STILL THE LD. CIT(A) BELIEVE IN HIGH PITCHED ASSESSMENT. 6. THAT THE LD. APPELLATE AUTHORITY DID NOT CONSIDER T HE DIFFERENT POINTS, BUT CONSIDERED IS NEGATIVE WAY APPROVING THE LINE OF AO. 7. THAT THE PRINCIPLE OF REAL INCOME WAS NOT CONSIDERE D WHERE AS THE APEX COURT CLEARLY HELD TO ASSESS THE REAL INCOME, NOR THERE IS ANY CONSISTENCY IN APPROACH. 8. THAT THE APPELLATE CRAVES LEAVE TO ADD AMEND AND ALTER AND VARY AND WITHDRAW ANY GROUNDS OF APPEAL BEFORE THE SAME IS HEARD OR DISPOSED OF. 9. THAT NO INTEREST IS PAYABLE AS CHARGED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE FILED ITS E-RETURN OF INCOME DECLARING INCOME OF RS. 4,80,250/- ON 02.7.2 014, WHICH WAS LATER SELECTED UNDER LIMITED SCRUTINY THROUGH CASS. ACCORDINGLY, NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WAS ISSUED. LATER ON, THE CASE WAS TRANSFERRED TO WARD 1(3)(3), HARDWAR. NOTICE U/S. 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE WAS ISSUE D ON 25.4.2016 WAS ISSUED. IN RESPONSE TO THESE NOTICES THE AR OF TH E ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS AND FURNISHED THE COMPUT ATION OF INCOME, COPIES OF BANK STATEMENTS, FORM NO. 26AS. AO OBSER VED THAT ASSESSEE 3 IS MAINLY A TRANSPORT CONTRACTOR AND HAS SHOWN GRO SS RECEIPTS AT RS. 3,10,95,532/- AND IN THE ABSENCE OF REGULAR BOOKS O F ACCOUNT AND SUPPORTING BILLS/ VOUCHERS, HE ESTIMATED THE NET PR OFIT OF THE ASSESSEE @8% OF GROSS RECEIPTS AT RS. 24,87,642/- FROM HIS B USINESS AND ASSESSED THE INCOME AT RS. 24,92,580/- U/S. 143(3) OF THE ACT VIDE ORDER DATED 08.11.2016. AGAINST THE AFOREMENTIONED ASSESSMENT ORDER DATED 8.11.2016, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 27.02.2018 AND PARTLY ALLOWE D THE APPEAL OF THE ASSESSEE BY APPLY A NET PROFIT RATE OF 3.5% ON THE ASSESSEES GROSS RECEIPT I.E 3.5% ON RS. 3,10,95,532/- AND DIRECTED THE AO TO RECOMPUTED THE ASSESSEES NET PROFIT ACCORDINGLY. AGGRIEVED WITH THE IMPUGNED ORDER THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. LD. A.R. FOR THE ASSESSEE HAS STATED THAT THE CA SE OF THE ASSESSEE WAS SELECTED UNDER CASS FOR LIMITED SCRUTINY BUT IN APPEAL APPLIED NET PROFIT RATE OF 3.5%. HE FURTHER SUBMITTED THAT LD. CIT(A) DID NOT CONSIDER THE OTHER SIMILAR CASES WHERE IN APPEAL RATE OF 2.7 % GROSS PROFIT WAS APPLIED AND APPROVED, WHEREAS THE ASSESSEE HAD DISC LOSED 3.95% AS GROSS PROFIT WHICH OUGHT TO HAVE BEEN ACCEPTED. HE FURTHER SUBMITTED THAT IN CASS ONLY TWO POINTS WERE TO BE CONSIDERED (I) LARGE OTHER EXPENSES CLAIMED IN PROFIT AND LOSS ACCOUNT AND (II ) MISMATCH IN THE SALE TURNOVER REPORTED IN AUDIT REPORT IN ITR AND BOT H THE POINTS WERE EXPLAINED. THAT THE ACCOUNTS HAVE BEEN KEPT IN SIMI LAR FASHION AS IN THE PAST ALWAYS DULY AUDITED. THIS YEAR THE PROFIT WAS HIGHER THAN THE PAST 4 YEARS WHICH WERE ACCEPTED. THE LD. CIT(A) DID NOT C ONSIDER ALL FACTS AND DID NOT FOLLOW THE RULE OF CONSISTENCY. HENCE, HE R EQUESTED TO FOLLOW THE RULE OF CONSISTENCY IN THE CASE OF THE ASSESSEE. HE FILED A SMALL PAPER BOOK CONTAINING PAGES 1 TO 47 IN HE HAS ATTACHED TH E SYNOPSIS; COPY OF 1 ST APPEAL ORDER IN GURUNANK ROADLINES; COPY OF 1 ST APPEAL ORDER IN TEJINDER SINGH SINDHU, HARIDWAR, COPY OF TRADING PROFIT AND LOSS BALANCE SHEET DETAILS OF EXPENSES AND POWER OF ATTORNEY. ACCORDIN GLY, HE REQUESTED TO APPLY THE 2.7% NET PROFIT RATE ON THE ASSESSEES GR OSS RECEIPT INSTEAD OF 3.5% WHICH IS VERY HIGH. 4. ON THE CONTRARY, LD. DR HEAVILY SUPPORTED THE OR DER OF THE LD. CIT(A) AND SUBMITTED THAT LD. CIT(A) HAS REASONABLY ESTIMATED THE NP RATE @ 3.5%, WHICH DOES NOT NEED ANY INTERFERENCE. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GO NE THROUGH THE ORDERS OF LOWER AUTHORITIES AS WELL AS THE PAPER BOOK FILE D BY THE ASSESSEE WHICH CONTAINS PAGES 1 TO 47 IN WHICH HE HAS ATTACH ED THE SYNOPSIS; COPY OF 1 ST APPEAL ORDER IN GURUNANK ROADLINES; COPY OF 1 ST APPEAL ORDER IN TEJINDER SINGH SINDHU, HARIDWAR, COPY OF TRADING PROFIT AND LOSS BALANCE SHEET DETAILS OF EXPENSES AND POWER OF ATT ORNEY. I FIND THAT THE SOLE ISSUE FOR ADJUDICATION IS ESTIMATION OF NE T PROFIT RATE ON THE GROSS RECEIPT OF THE ASSESSEE. I FURTHER NOTE THAT LD. CIT(A) HAS NOTED IN HIS IMPUGNED ORDER THAT THE RATE TAKEN BY THE AO WAS HIGH AND HAS NOT BEEN JUSTIFIED BY THE AO BY ANY COMPARABLE CASES O R ITS OWN PAST YEARS DISCLOSED PROFIT. HENCE, HE APPLIED THE NET PROF IT RATE OF 3.5% ON THE ASSESSEES GROSS RECEIPT I.E. 3.5% ON RS. 3,10,95,5 32/- AND DIRECTED THE AO TO RECOMPUTED THE ASSESSEES NET PROFIT ACCORDI NGLY. I HAVE ALSO PERUSED THE 1 ST APPEAL ORDERS DATED 20.9.2017 RELEVANT FOR AY 2014 -15 OF THE LD. CIT(A), DEHRADUN IN THE CASE OF GURUNAN K ROADLINES AND 5 TEJINDER SINGH SINDHU, HARIDWAR WHEREIN ON IDENTIC AL FACTS AND CIRCUMSTANCES OF THE CASE I.E. WHERE THE AO HAD ES TIMATED 8% NP AND LD. CIT(A) IN THE AFORESAID APPEALS, HAS APPLIED TH E 2.7% NP. BUT THE LD. CIT(A), HALDWANI IN THE CASE OF THE PRESENT ASS ESSEE HAS APPLIED 3.5% NP RATE ON THE GROSS RECEIPTS, WHICH IS IN MY VIEW IS ON SLIGHTLY HIGHER SIDE AND NEEDS TO BE RESTRICTED. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PRECEDENTS, AS AF ORESAID AND IN THE INTEREST OF JUSTICE, I DEEM JUST AND PROPER TO EST IMATE THE NP RATE @ 3% INSTEAD OF NP RATE @3.5% ON THE GROSS RECEIPT OF RS . 3,10,95,532/-. I HOLD AND DIRECT ACCORDINGLY. THE AO IS DIRECTED TO RE-COMPUTE THE ASSESSEES NET PROFIT @ 3% ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. THE DECISION IS PRONOUNCED ON 15-01-2019. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 15.01.2019 SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI