THE DCIT-3(1), Indore V. Shri Sanjay Deshpande, Indore

ITA 345/IND/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9381 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-11-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 09-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: BHAVESH NAREKAR
• Keywords: Additional evidence
• Section: 143(3)

Judgement Text

[ITA 345/IND/2017] [SHRI SANJAY DESHPANDE, INDORE] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.345/IND/2017 ASSESSMENT YEAR: 2013-14 DCIT - 3(1) INDORE / VS. SHRI SANJAY DESHPANDE, 290, ANNAPURNA ROAD, LOKMANYA NAGAR, INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. ABJPD2910Q APPELLANT BY SHRI LAL CHAND, DR RESPONDENT BY SHRI BHAVESH NAREKAR, A.R. DATE OF HEARING: 03.12.2018 DATE OF PRONOUNCEMENT: 17.12.2018 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL IS DIRECTED AGAINST ORDER OF THE CIT(A)-3, INDORE DATED 21.2.2017 PERTAINING TO THE ASSESSMENT YE AR [ITA 345/IND/2017] [SHRI SANJAY DESHPANDE, INDORE] 2 2013-14. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION MA DE BY THE A.O. ON ACCOUNT OF DISALLOWANCES OF CLAIM UNDER CHAPTER VIA OF RS.1,00,000/-, ON ACCOUNT OF DISALLOWANCE OF 30% OF LABOUR AND WAGES EXPENSES OF RS.65,52,742/-, ON ACCOUNT OF DIS ALLOWANCE OF 20% OF SITE EXPENSES OF RS.2,16,988/-, ON ACCOUNT O F DISALLOWANCE OF AMOUNT PAID TO SUB CONTRACTOR OF RS.1,06,04,450/- O N ACCOUNT OF DISALLOWANCE OF 1/3 RD SUNDRY CREDITORS OF RS.99,36,941/- AND ON ACCOUNT OF DISALLOWANCE OF 1/3 RD BUILDING MATERIAL OF RS.1,81,50,793/-. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN LAW BY IGNORING THE FACTS THAT THE ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM DURING THE COURSE OF ASSE SSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. WHIL E IT IS SETTLED POSITION IN LAW THAT IT IS THE DUTY OF ASSESSEE TO JUSTIFY HIS CLAIM REGARDING CLAIM OF DEDUCTION/REDUCTION MADE BY HIM. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITIONS O N THE BASIS OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WITHOUT G IVING ANY OPPORTUNITY TO A.O. TO EXAMINE THE FACTS AS PER PRO VISION OF RULE 46A OF THE I.T. RULE, 1962. 4. THE APPELLANT RESERVES THE RIGHT TO ADD, AMEND OR A LTER THE GROUND OF APPEAL ON OR BEFORE THE DATE THE APPEAL IS FINALLY HEARD FOR DISPOSAL. 2. FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER CALLED AS THE ACT) WAS FRAMED VIDE ORDER DATED 29.3.2016. WHILE FRAMING THE ASSESSMENT, THE A.O. MAD E [ITA 345/IND/2017] [SHRI SANJAY DESHPANDE, INDORE] 3 VARIOUS ADDITIONS ON ACCOUNT OF DISALLOWANCE OF DEDUCTI ON CLAIMED UNDER CHAPTER VIA OF RS.1 LAKH DISALLOWANCE OUT OF LABOUR AND WAGE EXPENSES OF RS.65,52,752/- DISALLOWANCE OUT OF 20% SUCH EXPENSES OF RS.2,16,988/- AND DISALLOWANCE OF AMOUNT PAID TO SUB CONTRACTORS OF RS.1,06,04,450/-. FURTHER DISALLOWANCE OF 1/3 RD SUNDRY CREDITORS AMOUNTING TO RS.99,36,141/-. THE A.O. ALSO MADE DISALLOWANCE OUT OF BUILDING MATERIAL OF RS.1,81,50,793/-. 3. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS REJECTED BOOKS OF ACCOUNTS AND APPLIED NE T PROFIT ON THE BASIS OF THE PAST HISTORY. FURTHER, TH E LD. CIT(A) ALLOWED CLAIM OF DEDUCTION U/S CHAPTER VIA BY RECORDING THAT THE PROOF OF INVESTMENT OF RS.1 LAKH I N PPF IN STATE BANK OF UJJAIN WAS FURNISHED. NOW THE REVENUE IS [ITA 345/IND/2017] [SHRI SANJAY DESHPANDE, INDORE] 4 IN APPEAL BEFORE THIS TRIBUNAL AGAINST THE DECISION OF L D. CIT(A). 4. APROPOS TO GROUND NOS.1 TO 3, LD. D.R. SUBMITTED THAT LD. CIT(A) WAS NOT JUSTIFIED IN REVERSING THE FINDIN G OF THE A.O. WITHOUT GIVING OPPORTUNITY TO THE A.O. IT WAS FURTHER SUBMITTED THAT THE ADDITION EVIDENCES WERE ACCEPTED WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER. HE SUBMITTED THAT THE FINDING OF THE LD. CIT(A) IS CONT RARY TO THE LAW. 5. LD. COUNSEL FOR THE ASSESSEE OPPOSED THE SUBMISSI ONS OF THE LD. D.R. HE SUBMITTED THAT THE A.O. HAS MEREL Y MADE ADHOC ADDITION ON THE BASIS OF ESTIMATION. HE SUBMITTED THAT NO REASONING IS GIVEN BY THE A.O. FOR MAKING SUCH ADDITION. HE SUBMITTED THAT THE A.O. HAS ACCEPTED THE FACT THAT ASSESSEE HAS CARRIED OUT SOME WOR K. HE SUBMITTED THAT IF REASONING OF THE A.O. IS ACCEPTED , THEN NET INCOME OF THE ASSESSEE WOULD BE AT 56.55% OF GROS S [ITA 345/IND/2017] [SHRI SANJAY DESHPANDE, INDORE] 5 RECEIPTS, WHICH IS NOT POSSIBLE IN THE LINE OF THIS BUSINESS. HE SUBMITTED THAT ASSESSEE BEING CONTRACTOR, 8% OF THE NET PROFIT IS REASONABLY ACCEPTED. HE CONTENDED THAT THE ASSESSING OFFICER OUGHT TO HAVE GIVEN OPPORTUNITY TO THE ASSESSEE. LD. COUNSEL ALSO PLACED RELIANCE ON THE JUDGEMENT OF THE HON'BLE DELHI HIGH COURT IN ITA NO .80/ 2014 RENDERED IN THE CASE OF CIT VS. SUBODH GUPTA TO BUTTRESS THE CONTENTION THAT NET PROFIT RATE OF 8% IS REASONABLE IN TERMS OF 44AB OF THE ACT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY, THE A.O. HAS NOT REJECTED THE BOOK RESULTS. THE A.O. HAS PURELY MADE ADHOC DISALLOWANCES ON THE BASIS OF ESTIMATION. NO REASONING IS GIVEN AS TO HOW THE ESTIMATION IS MADE. WE FIND THAT BEFORE A.O., THE ASSESSEE FAILED TO FURNISH THE REQUIS ITE DETAILS AS OBSERVED IN THE ASSESSMENT ORDER. THIS FACT IS [ITA 345/IND/2017] [SHRI SANJAY DESHPANDE, INDORE] 6 NOT CONTRADICTED BY THE ASSESSEE. WHEN THERE WAS NO EVIDENCE IN SUPPORT OF THE EXPENSES, CLAIM BY THE ASS ESSEE IN OUR CONSIDERED VIEW THE A.O. OUGHT TO HAVE REJECT ED BOOKS OF ACCOUNTS AND MADE BEST JUDGEMENT ON THE BASIS OF MATERIAL AVAILABLE AND MAKING FURTHER INVESTIGATION. BU T THIS HAS NOT BEEN DONE. THE LD. CIT(A) DURING THE AP PEAL PROCEEDINGS REJECTED BOOKS OF ACCOUNTS AND PROCEEDED TO MAKE ESTIMATION OF PROFIT ON THE BASIS OF THE PAST HIS TORY. THE GRIEVANCE OF THE REVENUE IS THAT WHILE ADMITTING T HE ADDITIONAL EVIDENCES, LD. CIT(A) HAS NOT GIVEN OPPORT UNITY TO THE A.O. CONSIDERING THE TOTALITY OF FACTS, WE HE REBY MODIFY THE ORDER OF THE LD. CIT(A) AND DIRECT THE A. O. TO COMPUTE NET PROFIT ON THE BASIS OF AVERAGE OF PRECEDIN G 3 YEARS I.E. ASSESSMENT YEARS 2010-11, 2011-12 & 2012-13 EXCLUDING THE YEAR UNDER APPEAL. THE GROUNDS RAISED IN THE APPEAL ARE ALLOWED IN TERMS AS INDICATED HEREIN ABOVE. [ITA 345/IND/2017] [SHRI SANJAY DESHPANDE, INDORE] 7 7. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.345/IND/2017 IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 17.1 2.2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 17/12/2018 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE