ACIT, Meerut V. Sh. Rajendra Kumar Agarwal, Meerut

ITA 3269/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65376 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 26-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S MINSHAS
• Assessee Lawyers: S K KALRA
• Keywords: Onus to prove
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH F FF F : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.3269/DEL/2012 3269/DEL/2012 3269/DEL/2012 3269/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2007 2007 2007 2007- -- -08 0808 08 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -2, 2,2, 2, MEERUT. MEERUT. MEERUT. MEERUT. V VV VS. S.S. S. SHRI RAJENDRA KUMAR AGARWAL, SHRI RAJENDRA KUMAR AGARWAL, SHRI RAJENDRA KUMAR AGARWAL, SHRI RAJENDRA KUMAR AGARWAL, B BB B- -- -243, SHASTRI NAGAR, 243, SHASTRI NAGAR, 243, SHASTRI NAGAR, 243, SHASTRI NAGAR, MEERUT. MEERUT. MEERUT. MEERUT. PAN : AASPA7011R. PAN : AASPA7011R. PAN : AASPA7011R. PAN : AASPA7011R. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S.MINSHAS, DR. RESPONDENT BY : SHRI S.K.KALRA, ADVOCATE. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : IN THIS APPEAL BY THE ASSESSEE, FOLLOWING GROUNDS ARE RAISED:- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD.COMMISSIONER OF INCOME TAX (APPEALS) WAS JUS TIFIED IN FACT AND LAW IN DELETING THE DISALLOWANCES OF RS.6,07,254/- AND RS.8,81,271/- MADE BY THE A.O. ON ACCOUNT OF LABOUR CHARGE AND MATERIAL PURCHASED RESPECTIVELY BY HOLDING THAT NON MAINTENANCE OF LAB OUR REGISTER AS WELL AS ABSENCE OF PURCHASE VOUCHERS FO R CASH PAID AND CLAIMED AS EXPENSES COULD NOT BE GROUND FO R POSSIBLE LEAKAGE. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN LAW IN DELETING THE ADDITIONS OF RS.6,07,254/- AND RS.8,81,271/- MADE BY THE A.O. IGNORING THE FACT TH AT ONUS TO PROVE THE PURCHASES OF THE MATERIAL LIKE RODI, D UST ETC. ITA-3269/DEL/2012 2 AS CLAIMED WAS UPON THE ASSESSEE WHICH REMAINED TOT ALLY UNDISCHARGED. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN FACT AND LAW BY RELYING UPON THE PAST HISTORY OF TH E CASE IN DELETING THE ADDITIONS OF RS.6,07,254/- AND RS.8,81 ,271/- MADE BY THE A.O. IGNORING THE FACT THAT EACH ASSESS MENT YEAR IS A SEPARATE UNIT AND RESJUDICATA IS NOT AP PLICABLE IN INCOME TAX PROCEEDINGS. RELIANCE IS PLACED OF T HE FOLLOWING:- I. CIT VS. SYED SADDIQUE IMAM AND OTHERS (PATNA) 11 1 ITR 475. II. TAMIL NADU CHOLRATES VS. JCIT (ITAT, CHENNAI) 9 8 ITD 1. III. NEW JHANGIR VAKIL MILLS CO.LTD. VS. CIT (SC) 4 9 ITR 137. IV. KOTAK MAHINDRA FINANCE LTD. VS. DCIT(BOM) 265 I TR 114. V. K.BHASKARAN NAIR VS. CIT (KERALA) 177 TAXMAN 478 . 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 2. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE ASSESSING OFFICER DISALLOWED THE SU M OF ` 6,07,254/- OUT OF WAGES EXPENSES ON THE GROUND THAT THE ASSESSEE C OULD NOT PRODUCE THE MUSTER ROLL OR THE REGISTER FOR LABOUR PAYMENT. IN THE ABSENCE OF SUCH EVIDENCE, THE ASSESSING OFFICER DISALLOWED 10% OF THE WAGES WHICH AMOUNTED TO ` 6,07,254/-. THE ASSESSING OFFICER ALSO DISALLOWED ITA-3269/DEL/2012 3 10% OUT OF THE MATERIAL PURCHASED ON THE GROUND THA T THE ASSESSEE COULD NOT PRODUCE BILLS AND VOUCHERS FOR ALL THE MA TERIAL PURCHASED DURING THE YEAR UNDER CONSIDERATION. 3. ON APPEAL, LEARNED CIT(A) DELETED THE ADDITION W ITH THE FOLLOWING FINDING:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. I FIND THAT THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUN T IN THE REGULAR COURSE OF BUSINESS. NO DEFECTS AS SUCH WERE FOUND BY THE AO THEREIN. MERE NON-MAINTENANCE OF L ABOUR REGISTER OR ABSENCE OF CERTAIN VOUCHERS FOR CASH PA ID COULD NOT BE A REASON TO SUSPECT POSSIBLE LEAKAGE OF REVE NUE. THE NATURE OF BUSINESS ACTIVITY, HISTORY OF THE CAS E ETC. ARE ALSO RELEVANT CONSIDERATION BEFORE MAKING A GENERAL IZED DISALLOWANCE. THE ASSESSEE HAS DECLARED NET PROFIT AT THE RATE OF 8.15% WHICH IS NOT ONLY IN KEEPING WITH THE PAST HISTORY, BUT ALSO IN MY CONSIDERED VIEW, A VERY CRE DIBLE RATE OF PROFIT SHOWN. THERE BEING NO SOUND BASIS O N THE PART OF THE AO FOR THE DISALLOWANCE, THE ADDITION I S DELETED. 4. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDE S AND THE FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF LEARNED CIT(A). IF THE ASSESSEE HAS NOT MAINTAINED PROPER BILLS AND VOUCHERS FOR THE MATERIAL PURCHASED OR REGISTER FOR LABOUR PAYMENT, THE PROPER COURSE OF ACTION WOULD HAVE BEEN THE REJECTION OF BOOKS OF ACCOUNT AND THE APPLICATION OF FAIR AND REASONABLE RATE OF NET PROF IT. THE ASSESSEE DERIVES INCOME FROM CONTRACT WORK AND THE TOTAL REC EIPT IS ` 1.60 CRORES. THE NET PROFIT RATE DISCLOSED BY THE ASSES SEE IS 8.15%. IN OUR OPINION, THE NET PROFIT RATE OF 8.15% IN THE CASE O F A CONTRACTOR IS QUITE FAIR AND REASONABLE. WE MAY ALSO MENTION THAT SECT ION 44AD PROVIDES ITA-3269/DEL/2012 4 A PRESUMPTIVE RATE OF TAXATION IN THE CASE OF A CON TRACTOR. THOUGH SECTION 44AD IS APPLICABLE WHERE TURNOVER IS BELOW ` 40 LAKHS, HOWEVER, THE RATE OF NET PROFIT PROVIDED THEREIN GI VES A GOOD GUIDANCE WHILE APPLYING THE NET PROFIT RATE IN OTHER CASES. IN SECTION 44AD, NET PROFIT RATE OF 8% IS PROVIDED. THEREFORE, IN OUR O PINION, WHEN THE ASSESSEE HAD DECLARED NET PROFIT RATE OF MORE THAN 8%, NO FURTHER ADDITION IS CALLED FOR EVEN IF, TECHNICALLY, THE AS SESSEES BOOKS OF ACCOUNT ARE REQUIRED TO BE REJECTED AND NET PROFIT IS REQUIRED TO BE ESTIMATED. IN VIEW OF THE ABOVE, WE UPHOLD THE ORD ER OF LEARNED CIT(A) AND DISMISS THE REVENUES APPEAL. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2012. SD/- SD/- ( (( (RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 31.08.2012 VK. COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -2, MEERUT. 2, MEERUT. 2, MEERUT. 2, MEERUT. 2. RESPONDENT : SHRI RAJENDRA KUMAR AGARWAL, SHRI RAJENDRA KUMAR AGARWAL, SHRI RAJENDRA KUMAR AGARWAL, SHRI RAJENDRA KUMAR AGARWAL, B B B B- -- -243, SHASTRI NAG 243, SHASTRI NAG 243, SHASTRI NAG 243, SHASTRI NAGAR, AR,AR, AR, MEERUT. MEERUT. MEERUT. MEERUT. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR