Mohd. Jamal, Delhi V. ITO, New Delhi

ITA 3269/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3716 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 18-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 22-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU MUKHERJEE
• Assessee Lawyers: D M SINHA
• Keywords: Rejection of books of accounts; Non-deduction of tax
• Section: 144

Judgement Text

1 ITA NO. 3269/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER ITA NO. 3269 /DEL/201 5 ( A.Y 2012-13) MOHD. JAMAL C/O. D. M. SINHA, ADVOCATE, 621/9, VISHWAS NAGAR (18 QUARTER CHOWK) DELHI AGJPJ9907E (APPELLANT) VS ITO WARD-38(2) NEW DELHI (RESPONDENT) APPELLANT BY SH. D. M. SINHA, ADV RESPONDENT BY MS. RANU MUKHERJEE, SR. DR ORDER PER R. K. PANDA , AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 17/3/2015 OF THE CIT(A)-XX, NEW DELHI FOR ASSESSMEN T YEAR 2010-11. 2. THIS APPEAL WAS EARLIER DISMISSED BY THE TRIBUNA L FOR NON APPEARANCE. SUBSEQUENTLY, THE TRIBUNAL VIDE ORDER DATED 3 RD AUGUST, 2016 RECALLED ITS EARLIER ORDER. HENCE, THIS IS A RECALLED MATTER. 3. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY THE ASSESSEE, HOWEVER, THEY ALL RELATE TO THE ORDER OF THE LD.CIT (A) IN DISMISSING THE APPEAL FILED BY SUSTAINING THE ADDITION OF RS.33,45,341/- MADE BY THE A.O. AND FURTHER ENHANCING THE INCOME. DATE OF HEARING 18.01.2018 DATE OF PRONOUNCEMENT 02.02.2018 2 ITA NO. 3269/DEL/2015 4. THE ASSESSEE HAS ALSO TAKEN A LEGAL GROUND CHALL ENGING THE SERVICE OF NOTICE U/S 143(2) OF THE I.T ACT. 5. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. HE FILED HIS RETURN OF INCOME ON 14 TH OCTOBER, 2010 DECLARING TOTAL INCOME OF RS.6,06,43 0/-. THE CASE WAS SELECTED FOR SCRUTINY BY ISSUE OF STATUTORY NOTICES . HOWEVER, DESPITE ISSUE OF SUCH NOTICES THERE WAS NON-COMPLIANCE FROM THE SIDE OF THE ASSESSEE. THEREFORE, THE A.O. PROCEEDED TO COMPLETE THE ASSES SMENT U/S 144 OF THE ACT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. HE O BSERVED THAT THE ASSESSEE, DURING THE IMPUGNED ASSESSMENT, HAS SHOWN GROSS REC EIPT OF RS.2,11,86,575/- AND HAS SHOWN PROFIT OF RS.6,85,827/- WHICH COMES T O 3.23%. SINCE, THERE WAS NON-APPEARANCE FROM THE SIDE OF THE ASSESSEE AN D NO BOOKS OF ACCOUNTS WERE PRODUCED, HE DETERMINED THE INCOME OF THE ASSE SSEE @8% OF THE TURNOVER/GROSS RECEIPT AND DETERMINED THE INCOME A T RS.16,94,926/-. AFTER DEDUCTING THE NET PROFIT SHOWN OF RS.6,85,827/- DEC LARED BY THE ASSESSEE, HE MADE ADDITION OF RS.10,09,099/- TO THE TOTAL INCOME OF THE ASSESSEE. 6. HE FURTHER OBSERVED THAT IN THE BALANCE-SHEET F ILED BY THE ASSESSEE THE ASSESSEE HAS SHOWN SUNDRY CREDITORS TO THE TUNE OF RS.23,36,242/-. SINCE THIS COULD NOT BE VERIFIED DUE TO NON APPEARANCE OF THE ASSESSEE BEFORE HIM AND NON PRODUCTION OF BOOKS ACCOUNTS, THE A.O. ADDED THE SA ME TO THE TOTAL INCOME OF THE ASSESSEE. THE A.O ACCORDINGLY DETERMINED THE T AXABLE INCOME OF THE ASSESSEE AT RS.40,31,168/-. 7. BEFORE THE CIT(A) APART FROM CHALLENGING THE ADD ITION ON MERIT, THE ASSESSEE CHALLENGED THE NON-ISSUE OF NOTICE U/S 143 (2) OF THE I.T ACT AND REJECTION OF BOOKS OF ACCOUNTS. SO FAR AS THE ABOV E LEGAL ISSUE IS CONCERNED, THE LD.CIT(A) HELD THAT NOTICE U/S 143(2) WAS ISSUED WI THIN TIME AND HAS BEEN SENT BY SPEED POST AND THERE IS NO EVIDENCE THAT THE NOT ICE HAS BEEN RECEIVED BACK. FURTHER, NOTICE HAS BEEN SENT TO THE ADDRESS OF THE ASSESSEE AS PER RECORDS. IN 3 ITA NO. 3269/DEL/2015 VIEW OF THE ABOVE AND RELYING ON THE DECISION OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF MAYAWATI VS. CIT REPORTED IN 321 ITR 349, THE LD.CIT(A) REJECTED THE ABOVE GROUND. 8. SO FAR AS, THE VALIDITY OF REJECTION OF BOOKS OF ACCOUNT IS CONCERNED, HE ALSO REJECTED THE SAME ON THE GROUND THAT THE ASSES SEE DID NOT APPEAR BEFORE THE A.O. AND PRODUCE THE BOOKS OF ACCOUNTS. THEREF ORE, THE A.O. WAS FULLY JUSTIFIED IN REJECTING THE BOOK RESULTS. SO FAR AS THE ADDITION OF SUNDRY CREDITORS IS CONCERNED, THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE A.O. ON THE BASIS OF THE DETAILS PRODUCED BEFORE HIM. T HE A.O. IN THE REMAND REPORT SUBMITTED THAT THE ASSESSEE COULD NOT PRODUCE ANY E VIDENCE IN THE FORM OF BILLS IN RESPECT OF OTHER SUNDRY CREDITORS AMOUNTING TO R S.3,78,000/- AND IN RESPECT OF S. S. TRADERS AMOUNTING TO RS.76,902/-. THE LD.CIT(A), THEREFORE, CONFIRMED THE ADDITION IN RESPECT OF THE SUNDRY CRE DITORS TO THE TUNE OF RS.4,54,902/- RELATING TO THE ABOVE TWO PARTIES. I N RESPECT OF SUNDRY CREDITORS TO THE TUNE OF RS.18,81,240/-, THE LD.CIT(A) DELET ED THE ADDITION AND THE REVENUE IS NOT IN APPEAL BEFORE THE TRIBUNAL. 9. SO FAR AS, THE ESTIMATION OF PROFIT IS CONCERNE D, THE LD.CIT(A) UPHELD THE SAME. HE, HOWEVER, OBSERVED THAT THE ASSESSEE HAS MADE CERTAIN PAYMENTS TO DIFFERENT PARTIES THE GENUINENESS OF WHICH IS DOUBT FUL. HE, THEREFORE, ASKED THE A.O. TO VERIFY THE GENUINENESS OF THE EXPENSES TO T HE TUNE OF RS.27,32,119/- AND DIRECTED THE A.O. TO VERIFY WHETHER TDS HAS BEE N DEDUCTED. FROM THE REMAND REPORT FURNISHED BY THE A.O., HE OBSERVED TH AT THE ASSESSEE HAS NOT MADE THE PAYMENTS BY CHEQUE AND WAS UNABLE TO PROVE THE GENUINENESS OF THE EXPENSES INCURRED ON ACCOUNT OF LABOUR EITHER THROU GH DOCUMENTS OR ON THE BASIS OF BANK STATEMENT. FURTHER, THE ASSESSEE HAS NOT DEDUCTED ANY TDS OUT OF SUCH PAYMENT. THEREFORE, THE LD.CIT(A) ENHANCED THE INCOME BY RS.27,32,119/- ON ACCOUNT OF NON-DEDUCTION OF TAX A ND DOUBTING THE GENUINENESS OF SUCH PAYMENTS. FURTHER, HE OBSERVED THAT THE ASSESSEE HAS SHOWN LABOUR CHARGES PAYABLE AMOUNTING TO RS.13,03, 800/-. IN THE REMAND 4 ITA NO. 3269/DEL/2015 REPORT THE A.O. REPORTED THAT THE ASSESSEE COULD NO T PRODUCE ANY EVIDENCE IN SUPPORT OF SUCH WAGES PAYABLE. THE LD.CIT(A) HELD THAT NO LABOURER WAITS FOR TWO MONTHS FOR HIS WAGES AND, THEREFORE, PART OF TH E WAGES MUST HAVE BEEN PAID IN CASH. HE, THEREFORE, MADE ADDITION OF RS.6 ,51,900/- BEING 50% OF SUCH WAGES PAYABLE BY ENHANCING THE INCOME OF THE ASSESS EE TO THIS EXTENT. 10. AGGRIEVED WITH SUCH ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 11. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTR UCTION. I FIND DESPITE ISSUE OF STATUTORY NOTICES, THE ASSESSEE NEITHER APPEARED BEFORE THE A.O. NOR PRODUCED THE BOOKS OF ACCOUNT FOR WHICH, THE A.O. COMPLETED THE ASSESSMENT U/S 144 OF THE I.T ACT BY REJECTING THE BOOK RESULT S AND BY ESTIMATING THE PROFITS. THEREFORE, IN ABSENCE OF ANY COMPELLING C IRCUMSTANCES AS TO WHY THE ASSESSEE FAILED TO APPEAR BEFORE THE A.O. AND PRODU CE THE BOOKS OF ACCOUNTS, THE ORDER OF CIT(A) IN UPHOLDING THE ACTION OF THE A.O. IN COMPLETING THE ASSESSMENT U/S 144 BY REJECTING THE BOOK RESULTS IS JUSTIFIED. 12. SO FAR AS THE ESTIMATION OF PROFIT IS CONCERNE D, I FIND THE A.O. ESTIMATED THE PROFIT BY ADOPTING THE NET PROFIT RATE OF 8% OF THE TURNOVER. I FIND THE PROFIT RATE DECLARED BY THE ASSESSEE VARIES FROM 3.23% TO 5%. I FIND FOR THE ASSESSMENT YEAR 2009-10 THE ASSESSEE HAS DECLARED A NET PROFIT OF RS.6,50,520/-ON A CONTRACT RECEIPT OF RS.1,30,06,20 7/- WHICH GIVES A NET PROFIT RATE OF 5%. SIMILARLY, FOR THE ASSESSMENT YEAR 2011 -12 THE ASSESSEE HAS DECLARED NET PROFIT OF RS.3,49,402/- ON GROSS RECEI PT OF RS.77,64,509/-WHICH GIVES A NET PROFIT PERCENTAGE OF 4.49%. HOWEVER, I N THE INSTANT YEAR, THE ASSESSEE HAS DECLARED NET PROFIT RATE OF 3.23% WHIC H IN MY OPINION IS VERY LOW. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS O F THE CASE, AND CONSIDERING THE DECISION OF VARIOUS BENCHES OF THE TRIBUNAL IN SUCH TYPE OF CASES, I AM OF THE 5 ITA NO. 3269/DEL/2015 CONSIDERED OPINION THAT THE ADOPTION OF NET PROFIT RATE OF 6% UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE WILL MEET THE ENDS OF JUSTICE. I HOLD AND DIRECT ACCORDINGLY. 13. SO FAR AS, THE ADDITION MADE BY THE A.O. ON A CCOUNT OF SUNDRY CREDITORS WHICH HAS BEEN PARTLY SUSTAINED BY THE LD.CIT(A) AN D THE ORDER OF THE LD.CIT(A) IN ENHANCING THE INCOME OF THE ASSESSEE IS CONCERNE D, I AM OF THE CONSIDERED OPINION THAT NO SUCH ADDITION IS REQUIRED ONCE THE PROFIT OF THE ASSESSEE IS ESTIMATED BY REJECTING THE BOOKS OF ACCOUNT. SO FA R AS, THE GROUNDS RELATING TO NON SERVICE OF NOTICE U/S 143(2) IS CONCERNED I FIN D THE LD.CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT NOTICES WERE SENT BY SPEED POST AND SUCH NOTICES WERE NEVER RETURNED BACK AND THE ASSESSEE COULD NOT SUBS TANTIATE WITH ANY EVIDENCE THAT NOTICE U/S 143(2) WAS NOT ISSUED. IN ABSENCE OF ANY PLAUSIBLE EXPLANATION OR ANY EVIDENCE TO MY SATISFACTION, THE GROUND RELA TING TO SERVICE OF NOTICE U/S 143(2) IS DISMISSED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 02 ND FEBRUARY, 2018. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 02/02/2018 R. NAHEED */SUJEET COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT //TRUE COPY// ASSISTANT REGISTRAR ITAT NEW DELHI