Smt. Padmashree Madvaiya, Bhopal V. The I..T.O., Bhopal

ITA 30/IND/2010

• Counselvise Citation: 3022714 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR MITRA
• Assessee Lawyers: R C BAHETI
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C.SHARMA, ACCOUNTANT MEMBER PAN NO. : ADAPM0586C I.T.A.NO.563 & 30/IND/2010 A.Y. : 2006-07 SMT.PADAMSHRI MADVAIYA, ITO, 2(2), PROP.JAY STATIONARY, BHOPAL. VS BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI R.C.BAHETI C. A. RESPONDENT BY : SHRI PRADEEP KUMAR MITRA, SR. DR O R D E R PER R. C. SHARMA, A.M. I.T.A.NO. 563/IND/2010: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 24.5.2010 FOR THE ASSESSMENT YEAR 2 006-07 IN THE MATTER OF ORDER FRAMED U/S 144 OF THE INCOME-TA X ACT, 1961. -: 2: - 2 2. FIRST GRIEVANCE OF THE ASSESSEE RELATES TO NON SERV ICE OF NOTICE U/S 143(2) WITHIN THE STATUTORY TIME. 3. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT NOTICE U/S 143(2) DATED 20 TH JULY, 2007, WAS SENT BY THE ASSESSING OFFICER BY SPEED POST ON 24.7.2007, DOCUMENTARY EVIDENCE FOR HANDING OVER THE NOTICE BY SPEED POST IS ALSO PLACED ON RECORD. ACCORDINGLY, WE DO N OT FIND ANY MERIT IN THE ASSESSEES CONTENTION WITH REGARD TO N ON-SERVICE OF NOTICE U/S 143(2). 4. NEXT GRIEVANCE OF THE ASSESSEE RELATES TO ESTIMATIO N OF NET PROFIT RATE OF 3.5 % ON THE TURNOVER OF WHOLESA LE STATIONERY BUSINESS AND REJECTING THE NET LOSS DISCLOSED BY TH E ASSESSEE. 5. WE HAVE HEARD THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE AND LD. SENIOR D.R. AND FOUND FROM T HE RECORD THAT BECAUSE OF ASSESSEES FAILURE TO APPEAR BEFOR E THE AO, THE AO FRAMED ASSESSMENT U/S 144 WHEREIN HE COMPUTED TH E NET PROFIT AT 5 % IN RESPECT OF ITS BUSINESS OF STATIO NERY. ACCORDINGLY, TRADING ADDITION WAS MADE. FURTHER, BY THE IMPUGNED ORDER, THE LD. CIT(A) REDUCED NET PROFIT R ATE TO 3.5 % BY OBSERVING THAT THE ASSESSEE WAS ENGAGED IN WHOLE SALE -: 3: - 3 BUSINESS OF STATIONERY AND, THEREFORE, NET PROFIT R ATE OF 5 % AS APPLICABLE TO THE RETAIL TRADER U/S 44AF IS NOT APP LICABLE TO THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE ARGUED BEFORE US THAT THE LD. CIT(A) HAS CALLED A REMAND REPORT FROM THE AO AND THE ASSESSEE HAS PRODUCED ALL THE RECORDS AS REQUIR ED BY THE ASSESSING OFFICER AND ALSO THE NET PROFIT RATE OF LAST THREE YEARS, WHICH WERE IN THE RANGE OF 1.37 % AND ZERO P ER CENT IN THE ASSESSMENT YEAR 2003-04, 2004-05 AND 2005-06. T HE LD. AUTHORIZED REPRESENTATIVE FURTHER CONTENDED THAT IN VIEW OF THE PROFIT RATE SHOWN IN LAST THREE YEARS, THE LD. CIT(A) WAS NOT JUSTIFIED IN ESTIMATING NET PROFIT RATE OF 3.5 %. 6. ON THE OTHER HAND, THE LD. SENIOR D.R. ARGUED THAT BY CONSIDERING ASSESSEES NATURE OF BUSINESS OF BEING WHOLESALE, THE LD. CIT(A) HAS ALREADY GIVEN RELIEF OF 1.5 % BY REDUCING NET PROFIT RATE TO 3.5 % IN PLACE OF NET PROFIT RATE O F 5% APPLIED BY THE ASSESSING OFFICER. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM RECORD THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF WHOLESALE TRADING OF GOODS. WHILE FRAMI NG THE SCRUTINY ASSESSMENT, THE AO HAS ALSO WRITTEN THE NA TURE OF -: 4: - 4 ASSESSEES BUSINESS ON WHOLESALE TRADING IN STATION ERY ITEMS, THEREFORE, APPLICATION OF NET PROFIT RATE OF 5 % O N THE TURN OVER OF THE ASSESSEE WAS NOT JUSTIFIED. WE ALSO FOUND TH AT IN THE REMAND PROCEEDINGS, NO DEFECT WAS FOUND BY THE ASSE SSING OFFICER IN THE BOOKS OF ACCOUNT AND THE OTHER DOCUM ENTS SUBMITTED BY THE ASSESSEE. MERELY BY OBSERVING THAT SON OF THE ASSESSEE WAS WORKING AND THEY WERE PAID SALARY, THE AO APPLIED THE NET PROFIT RATE OF 5%. WE FOUND THAT IN EARLIER YEARS, THE NET PROFIT RATE OF ASSESSEE RANGES BETW EEN 0 TO 1.37 %. EVEN IN THE IMMEDIATELY SUCCEEDING ASSESSMENT YE AR I.E. 2007-08, THE ASSESSEE HAD SHOWN NET PROFIT RATE OF 2.7 %, THEREFORE, KEEPING INTO THE VIEW THE ENTIRETY OF FA CTS AND CIRCUMSTANCES AS DISCUSSED HEREINABOVE, WE DIRECT T HE AO TO APPLY NET PROFIT RATE OF 3 % (THREE PERCENT) ON TH E TURNOVER SHOWN BY THE ASSESSEE IN RESPECT OF ITS WHOLESALE S TATIONERY BUSINESS AND TO COMPUTE THE TRADING ADDITION ACCORD INGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. -: 5: - 5 I.T.A.NO. 30/IND/2010: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 22.10.2009 FOR THE ASSESSMENT YEAR 2006-07 IN THE MATTER OF ORDER PASSED U/S 271(1)(B) OF THE INC OME-TAX ACT, 1961. 9. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE, A LADY ENTREPRENEUR FILED THE RETURN OF INCOME ON 20 TH JULY, 2006, SHOWING INCOME OF RS. 1,43,550/- FOR THE ASSESSMENT YEAR 2006-07. ASSESSMENT WAS COMPLETED BY THE AO ON 31 ST JULY, 2008. IN THE PENALTY ORDER PASSED U/S 271(1)(B), TH E AO STATED AS UNDER :- A SHOW CAUSE NOTICE DATED 31.12.2008 WAS ISSUED ON 31.12.2008 FIXING THE CASE FOR HEARING ON 30.01.2009 AND AGAIN A NOTICE DATED 30.01.2009 WAS ISSUED FIXING THE CASE FOR HEARING ON 18.1.2009 BUT NOBODY ATTENDED NOR ANY WRITTEN REPLY WERE FILED BY THE ASSESSEE IN THE MATTER OF PENALTY PROCEEDINGS U/S 271(1)(B). -: 6: - 6 10. IT IS CLEAR FROM THE ABOVE OBSERVATION OF THE AO T HAT PENALTY WAS LEVIED FOR NON-COMPLIANCE OF NOTICE DAT ED 31 ST DECEMBER, 2008, WHEREIN CASE WAS FIXED FOR HEARING ON 30 TH JANUARY, 2009. AS THE ASSESSEE WAS ALLEGED TO BE NO T APPEARING ON 30 TH JANUARY, 2009, AGAIN NOTICE DATED 30 TH JANUARY, 2009, WAS ISSUED FIXING THE CASE FOR HEARI NG ON 18 TH FEBRUARY, 2009. SINCE NOBODY ATTENDED, THE AO LEVIE D PENALTY FOR RS. 10,000/- U/S 271(1)(B) OF THE ACT. BY THE I MPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY AND THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT NOTICE DATED 31 ST DECEMBER, 2008, WAS ISSUED IN CONNECTION WITH ASSESSMENT WHICH WAS UNDER SCRUTINY FOR ASSESSMENT YEAR 2006-07. THE ASSESSEE WAS ASKED TO APPEAR ON 30 TH JANUARY, 2009 AND THEREAFTER ON 18 TH FEBRUARY, 2009. WE FOUND THAT ASSESSMENT FOR ASSESSMENT YEAR 2006-0 7, FOR WHICH ASSESSEE WAS ASKED TO APPEAR ON 30 TH JANUARY, 2009, WAS ALREADY COMPLETED ON 31 ST DECEMBER, 2008. ACCORDINGLY, THE ASSESSEE WAS UNDER THE IMPRESSION THAT SINCE TH E ASSESSMENT HAS ALREADY BEEN COMPLETED ON 31 ST DECEMBER, -: 7: - 7 2008, THERE IS NO NEED TO APPEAR IN CONNECTION WITH THE ASSESSMENT ON 30 TH JANUARY, 2009, OR ON 18 TH FEBRUARY, 2009. COMPLETION OF ASSESSMENT PRIOR TO THE DATE FIXED FO R HEARING OF SUCH ASSESSMENT YEAR IS QUITE SUFFICIENT REASON FOR THE ASSESSEE TO PRESUME THAT SINCE ASSESSMENT HAS ALREA DY BEEN COMPLETED, THERE IS NO REASON TO APPEAR BEFORE THE AO IN CONNECTION WITH SUCH ASSESSMENT ON 30 TH JANUARY, 2009 OR 18 TH FEBRUARY, 2009, SINCE BOTH OF THESE DATES FALL AFT ER THE COMPLETION OF ASSESSMENT. ACCORDINGLY, LEVY OF PENA LTY IS NOT JUSTIFIED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 6 TH APRIL, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 6 TH APRIL, 2011. CPU* 674