The Asstt. Commissioner of Income-tax, Amritsar. V. M/s. The Mattewal Co-operative L/C Society Ltd, Amritsar.

ITA 35/ASR/2013

• Counselvise Citation: 3520914 RSA 2013
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 14-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Opportunity of being heard
• Section: 133A; 145; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.35(ASR)/2013 ASSESSMENT YEAR:2006-07 PAN :AAAAT5385J ASSTT. COMMR. OF INCOME TAX, VS. M/S. THE MATTEWA L CO-OP L/C SOCIETY CIRCLE-IV, AMRITSAR. LTD. 143, GOLDEN AVENUE, AMRITSAR. (APPELLANT) (RESPONDENT) C.O.NO.5(ASR)/2013 (ARISING OUT OF I.T.A. NO.35(ASR)/2013) ASSESSMENT YEAR:2006-07 PAN :AAAAT5385J M/S. THE MATTEWAL CO-OP L/C SOCIETY VS. ASSTT. COMM R. OF INCOME TAX, LTD; 143 GOLDEN AVENUE, CIRCLE-IV, AMRITSAR. AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.TARSEM LAL, DR RESPONDENT BY:SH.P.N.ARORA, ADVOCATE DATE OF HEARING:18/11/2013 DATE OF PRONOUNCEMENT:22/11/2013 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A), AMRITSAR DATED 06.11.2012 FOR THE ASSESSMENT YEAR 2 006-07. THE ASSESSEE ITA NO.35(ASR)/2013 CO NO.5(ASR)/2013 2 HAS ALSO FILED C.O. IN THE APPEAL THE REVENUE HAS R AISED FOLLOWING GROUNDS OF APPEAL: 1.WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS GROSSLY ERRED IN APPLYING THE NET PROFIT RATE OF 6% ON TOTAL GROSS RECEIPTS INSTEAD OF APPLYING NET PROFIT RATE OF 8% WHICH WAS CORRECTLY APPLIED BY THE A.O. AFTER REJECTING THE BOOKS OF A CCOUNT. 2. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND OR MORE GROUNDS OF APPEAL AT THE TIME OF HEARING OF APPEAL. 2. IN THE C.O., THE ASSESSEE HAS RAISED FOLLOWING G ROUNDS OF APPEAL: 1. THAT THE LD. CIT(APPEALS) HAS GROSSLY ERRED IN APPLYING THE NET RATE OF 6% ON THE TOTAL GROSS RECEIPTS. 2. THAT THE LD. CIT(A) SHOULD HAVE ACCEPTED THE RATE O F PROFIT SHOWN BY THE ASSESSEE AND THE LD. CIT(A) SHOULD HAV E ACCEPTED THE GROSS PROFIT DISCLOSED BY THE ASSESSEE . 3. THAT THE CIT(A) DID NOT APPRECIATE THAT THE BOOKS O F ACCOUNTS WERE DULY MAINTAINED BY THE ASSESSEE AND NO SPECIFI C DEFECT HAS BEEN POINTED OUT BY THE AO, AS SUCH THE LD. CIT(A) WAS NOT JUSTIFIED IN APPLYING RATE OF 6%. THE ADDITION SUST AINED BY THE CIT(A) MAY BE DELETED IN TOTO. 4. THAT THE TOTAL ADDITION MADE BY THE AO SHOULD HAVE BEEN DELETED BY THE LD. CIT(A) AND THE LD. CIT(A) WAS NO T JUSTIFIED IN SUSTAINING THE ADDITION BY APPLYING NET RATE OF 6% ON THE GROSS RECEIPTS. THE ADDITION SUSTAINED BY THE LD. C IT(APPEALS) MAY BE DELETED AS NO ADDITION WHATSOEVER IS CALLED FOR. 5. ANY OTHER GROUND OF CROSS OBJECTION WHICH MAY BE UR GED AT THE TIME OF HEARING OF THE APPEAL. 3. THE BRIEF FACTS IN BOTH THE APPEAL OF THE REVENU E AND C.O. OF THE ASSESSEE ARE THAT THE ASSESSEE IS A CO-OPERATIVE SO CIETY BEING A CIVIL CONTRACTOR. IN THIS CASE, THE ORIGINAL ASSESSMENT W AS COMPLETED ON 3.9.2007 ITA NO.35(ASR)/2013 CO NO.5(ASR)/2013 3 WHICH WAS CANCELLED BY THE LD. CIT(A)-II VIDE ORDER DATED 12.03.2010 UNDER SECTION 263 OF THE ACT. THE AO PROCEEDED TO R EFRAME THE ASSESSMENT BY COMPUTING ASSESSEE SOCIETYS CONTRACT BUSINESS I NCOME AT RS.99,16,904/- BY APPLYING NET PROFIT RATE OF 8% ON GROSS CONTRACT RECEIPTS SHOWN AT RS.12,39,61,308/- AFTER REJECTING THE ASSESSEES BO OKS OF ACCOUNT U/S 145(3) OF THE ACT FOR NON-FURNISHING OF RELEVANT BILLS AND VOUCHERS OF EXPENSES CLAIMED, AS DURING COURSE OF SURVEY PROCEEDINGS U/S 133A CONDUCTED ON 27.03.2008 FOR THE PREVIOUS YEAR RELEVANT TO THE AS SESSMENT YEAR 2006-07, EXCEPT COMPUTERIZED CASH BOOK, LEDGER AND NO VOUCHE RS AND BILLS WERE FOUND. 4. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH E EXPLANATION WHICH WAS SENT TO THE AO AND THE REPORT WAS TAKEN. THE LD . CIT(A) VIDE PARA 8 OF HIS ORDER REJECTED THE GROUND RAISED BY THE ASSESSE E BEING NOT GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE SINCE TH E ASSESSEE HAD BEEN GIVEN OPPORTUNITIES FOR HEARING ON 16.12.2010, 21.12.2010 , 23.12.2010 AND FINALLY ON 24.12.2010. THE WRITTEN SUBMISSIONS OF THE ASSES SEE WERE TAKEN INTO CONSIDERATION BY THE AO, WHICH WERE DISCUSSED WITH THE ASSESSEES COUNSEL ON 23.12.2010. THE ASSESSEE OR HIS COUNSEL DID NOT SUBMIT RELEVANT BILLS AND VOUCHERS FOR EXPENSES EVEN ON THE DATE OF HEARING. THEREFORE, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS FAILED TO MAKE OUT A NY CASE IN THIS REGARD I.E. ITA NO.35(ASR)/2013 CO NO.5(ASR)/2013 4 THE ASSESSEE HAS NOT BEEN GIVEN A OPPORTUNITY OF BE ING HEARD AND ACCORDINGLY THE GROUND OF THE ASSESSEE WAS REJECTED. 5. AS REGARDS THE APPLICATION OF SECTION 145(3) OF THE ACT, THE LD. CIT(A) VIDE PARA 10 OF HIS ORDER OBSERVED THAT IT I S AN ADMITTED FACT THAT DURING THE REVISIONARY PROCEEDINGS U/S 263 DURING THE SURVEY PROCEEDINGS U/S 133A AND ALSO DURING THE RE-ASSTT. PROCEEDINGS CONSEQUENT TO REVISIONARY ORDER OF THE LD. CIT-II, AMRITSAR U/S 263, THE ASSE SSEE HAS MISERABLY FAILED TO ADDUCE TO FURNISH ALL THE RELEVANT BILLS/VOUCHERS I N RESPECT OF EXPENSES CLAIMED AND SINCE THE ASSESSEE SOCIETYS COMPUTERIZ ED LEDGER AND CASH BOOK WITHOUT RELEVANT EXPENSES BILLS AND VOUCHERS, THE A O HAS RECORDED HIS SATISFACTION THAT IT WAS A FIT CASE WHERE THE TRUE BUSINESS PROFIT CANNOT BE DEDUCED FROM THE BOOKS OF ACCOUNT PRODUCED BEING IN COMPLETE IN THE MANNER CLEARLY INDICATED/POINTED OUT, IT WAS NOT FE ASIBLE FOR HIM TO DETERMINE THE ASSESSEES TRUE TAXABLE INCOME AND AS SUCH HE IS WELL WITHIN HIS JURISDICTIONAL OBLIGATIONS TO REJECT THE ASSESS EES BOOK VERSION BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE AC T. FURTHER ONCE THE FACT OF NON-MAINTENANCE OF ANY BOOKS OF ACCOUNT WERE ALREAD Y ADMITTED AND CONCEDED DURING SURVEY PROCEEDINGS U/S 133A CONDUCT ED ON 27.03.2008 IN THE WAKE OF CATEGORICAL STATEMENTS RECORDED IN RES PECT OF ITS PRESIDENT AND SOME OF THE MAIN ACTIVE MEMBERS, THE ASSESSEE CANNO T BE ALLOWED TO RETRACT ITA NO.35(ASR)/2013 CO NO.5(ASR)/2013 5 FROM ITS EARLIER STAND BY FILING ITS PRESIDENTS AFFIDAVIT DATED 23.5.2012 BEFORE THE CIT(A) DURING THE APPELLATE PROCEEDINGS, BEING ADDITIONAL AND FRESH EVIDENCE NOT IN ACCORDANCE WITH THE PROVISION S OF RULE 46A OF THE I.T.RULES, 1962. 6. AS REGARDS THE ESTIMATION OF INCOME, THE LD. CIT (A) APPLIED A RATE OF 6% AS PER ITAT AMRITSAR BENCH ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 VIDE PARA 6.2 OF THE ORDER DATED 16.6.2011 IN ITA NO.355(ASR)/2010 AND ACCORDINGLY SUSTAINED THE ADDI TION. 7. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N. ARORA , ADVOCATE RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND THE LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE APPLICATION OF SECTION 145(3) OF THE ACT, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS NOT PRODUCED BILLS/V OUCHERS OF EXPENSES BEFORE THE AO, EVEN IN THE REVISIONARY PROCEEDINGS OR BEFO RE THE LD. CIT(A) AND EVEN BEFORE US. THEREFORE, IN THE FACTS AND CIRCUMS TANCES OF THE CASE, IT IS NOT POSSIBLE FOR THE AO TO DEDUCE ACCURATE INCOME AND A CCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RI GHTLY CONFIRMED THE ACTION OF THE AO IN INVOKING THE PROVISIONS OF SECTION 145 (3) OF THE ACT. ITA NO.35(ASR)/2013 CO NO.5(ASR)/2013 6 8.1. AS REGARDS THE ESTIMATION OF INCOME, THE ASSES SEE HAS DECLARED NET PROFIT RATE OF 5% AND THE LD. CIT(A) HAS APPLIED A NET PROFIT RATE OF 6% ON DECLARED TURNOVER ON THE BASIS OF ITAT, AMRITSAR B ENCH ORDER DATED 16.6.2011 IN ASSESSEES OWN CASE IN ITA NO.355(ASR) /2010 FOR THE A.Y. 2007-08. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N .ARORA, ADVOCATE HAS BROUGHT ON RECORD AT PB 1-14, THE DECISION OF ITAT, AMRITSAR BENCH IN ASSESSEES OWN CASE DATED 27.12.2012 IN ITA NO.450( ASR)/2012 FOR THE A.Y. 2008-09 WHERE NET PROFIT RATE OF 5% HAS BEEN DIRECT ED TO BE APPLIED IN ASSESSEES OWN CASE UNDER SIMILAR SET OF FACTS AND CIRCUMSTANCES. FURTHER, MR. P.N.ARORA, ADVOCATE PLACED ON RECORD AT PB 49 T O 57, DECISION OF ITAT AMRITSAR BENCH DATED 02.01.2013 IN ASSESSEES OWN C ASE IN ITA NOS. 434 & 435(ASR)/2012 FOR THE ASSESSMENT YEARS 2001-02 & 2006-07 WHERE THE ITAT AMRITSAR BENCH IN ASSESSEES OWN CASE HAS DIRE CTED TO APPLY NET PROFIT RATE OF 5.5% UNDER SIMILAR SET OF FACTS AND CIRCUMS TANCES. BY PERUSING THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE, THE LA TEST DECISION OF ITAT AMRITSAR BENCH IN ASSESSEES OWN CASE DATED 02.01 .2013 (SUPRA) AND ALSO DATED 27.12.2012 (SUPRA) WHERE NET PROFIT RATE OF 5.5% AND 5% HAVE BEEN DIRECTED TO BE APPLIED, IT WILL BE IN THE INTEREST OF JUSTICE, IF WE DIRECT THE AO TO APPLY A NET PROFIT RATE OF 5.5% ON THE DECLARED TURNOVER DURING THE IMPUGNED YEAR SINCE NOTHING HAS BEEN BROUGHT ON REC ORD BY THE REVENUE ITA NO.35(ASR)/2013 CO NO.5(ASR)/2013 7 REGARDING ANY CHANGE OF FACTS WITH REGARD TO THE AS SESSMENT YEAR MENTIONED HEREINABOVE. THIS WILL MEET BOTH ENDS OF JUSTICE A ND ACCORDINGLY THE AO IS DIRECTED TO APPLY NET PROFIT RATE OF 5.5% ON THE DE CLARED CONTRACT RECEIPTS AS DIRECTED HEREINABOVE. THUS, ALL THE GROUNDS OF APPE AL OF THE REVENUE ARE DISMISSED AND THE GROUNDS IN THE C.O. OF THE ASSES SEE ARE PARTLY ALLOWED. 9 IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA N 0.35(ASR)/2013 IS DISMISSED AND C.O. NO.5(ASR)/2013 OF THE ASSESSEE I S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND NOVEMBER, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22ND NOVEMBER, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:THE MATTEWAL CO-OP L/C SOCIETY LTD. AM RITSAR 2. THE ACIT, CIRCLE-IV, ASR 3. THE CIT(A), ASR 4. THE CIT,ASR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.