ITO, New Delhi V. Sh. Mukesh Kumar Sharma, New Delhi

ITA 362/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97928 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: SSH GAUTAM JAIN
• Section: 44AD; 143(3); 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SH. C.M. GARG, JUDICIAL MEMBER AND SH. PRASHANT MAHARISHI , ACCOUNTANT MEMBER ITA NO . 362 /DEL/201 2 ASSESSMENT YEAR: 2008 - 09 INCOME TAX OFFICER, VS. SH. MUKESH KUMAR SHARMA, WARD - 38(2), C.R. BLDG., 77A, BHAWANI KUNJ, VASANT KUNJ, I.P. ESTATE, NEW DELHI NEW DELHI (PAN: AIKPS9750R) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P. DAM KANUNJNA, SR. DR RESPONDENT BY : S/SH GAUTAM JAIN & PIYUSH KUMAR KAMAL, ADVOCATES. DATE OF HEARING : 05.11.2015 DATE OF PRONOUNCEMENT: 23 .11.2015 ORDER PER PRASHANT MAHAR I SHI , A. M. : 01 . THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A), DATED 15.11.2011 PASSED FOR THE ASSESSMENT YEAR 2008 - 09 . THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: I . THE LD. CIT(A) HAS ERRED IN ARBITRARILY ESTIMATING THE NET PROFIT @ 1.30% OF GROSS RECEIPTS AS AGAINST 8% ESTIMATE D BY THE AO DESPITE THE FACT THAT THE ASSESSEE FAILED TO FURNISH BOOKS OF ACCOUNT ALONG WITH BILLS AND VOUCHERS EITHER BEFORE THE AO OR BEFORE THE LD. CIT(A). II . THE APPELLANT CRAVES TO ADD, AMEND OR MO DIFY THE GROUNDS OF APPEAL AT ANY TIME. 02 . T HE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 ON 29.09.2008 DECLARING INCOME OF RS. 4,96 , 190/ - . THE CASE HAS BEEN SELECTED FOR SCRUTINY AND NOTICE UNDE R SECTI O N 143(2) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT) . N OTICES UNDER SECTION S 142(1) & 143(2) AND THE SHOW CAUSE NOTICE FOR IMPOSITION OF PENALTY U/S 271(1 ) ( B) WERE ISSUED BUT THE SAME HAD NOT BEEN COMPLIED WITH BY THE ASSESSEE. HOWEVER, ON 29.10.2010 LD. AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE ASSESSING OFFICER AND FILED RECEIPTS OF RETURN FOR THE AY 2008 - 09, AUDIT REPORT & P&L ACCOUNT, BALANCE SHEET AND DETAILS OF EXPENSES. FURTHER, LD. AR APPEARED BEFORE THE ASSESSING OFFICER AND FIL ED FINANCIAL STATEMENTS . A SHOW - CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 26.11.2010 TO EXPLAIN AS TO WHY NOT THE CASE BE COMPLETED EX - PARTE UNDER SECTION 144 OF THE ACT AND WAS ASKED TO PRODUCE THE 2 COMPLETE BOOKS OF ACCOUNTS AS WELL AS THE ORIGINAL BILLS /VOUCHERS. BUT THE ASSESSEE DID NOT COMPLY THE SAME. LOOKING TO THE NON - COOPERATI VE ATTITUDE OF THE ASSESSEE, THE ASSESSING OFFICER HAD NO OPTION BUT TO REJECT THE FINANCIAL STATEMENT SUBMITTED BY THE ASSESSEE. HENCE, THE ASSESSING OFFICE COMPLETED ASSESSM ENT ORDER VIDE ORDER DATED 30.12.2010 PASSED UNDER SECTION 143(3)/144 OF THE ACT AND DETERMINED THE INCOME OF THE ASSESSEE AT RS. 36,05,346/ - AND MADE ADDITION OF RS. 31,09,156/ - WHICH HAS BEEN MADE BY REJECTING BOOKS OF ACCOUNT AND ADOPTING RATE OF 8% ON GROSS RECEIPTS OF RS. 4,50,66,632/ - AS AGAINST DECLARED NET PROFIT @ 1.10% I.E. RS. 31,09,156/ - . BEING AGGRIEVED FROM THE ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE ORDER DATED 15.11.2011 DELETED THE ADDITION OF RS. 30,1 8,940/ - OUT OF THE AGGREGATED ADDITION OF RS. 31,09,156/ - AND AS SUCH NET ADDITION IS SUSTAINED IS OF RS. 90,216/ - . BEING AGGRIEVED BY THE ORDER OF LD. CIT ( A), THE PRESENT APPEAL IS BEFORE US. 03 . BEFORE US LD DR CONTENDED THAT THE BOOKS OF ACCOUNTS WERE NOT PRODUCED BEFORE THE AO BUT ONLY PALTRY DETAILS WERE SUBMITTED THEREFORE AO HAS INVOKED THE PROVISION OF SECTION 44AD AND ESTIMATED THE INCOME OF THE ASSESSEE AT RS. 3605346/ - BEING 8 % OF THE GROSS RECEIPT OF RS. 45066832/ - . HE SUBMITTED THAT THE ADDITION IS RIGHTLY MADE BY AO. HE FURTHER SUBMITTED THAT CIT (A) HAS DELETED THE ADDITION WITHOUT ANY BASIS. 04 . LD AR OF THE APPELLANT SUBMITTED THAT ACCOUNTS OF THE ASSESSEE ARE AUDITED AND SAME WERE REJCTED WITHOUT A NY REASON. HE ALSO SUBMITTED THAT SUBSTANTIAL DETAILS HAVE BEEN FILED BY THE ASSESSEE. HE ALSO SUBMITTED THAT IN SUBSEQUENT YEARS THE AO HIMSELF HAS ASSESSED THE INCOME OF THE ASSESSEE AT SUBSTANTIALLY LOWER NET PROFIT RATE U/S 143(3) OF THE ACT. HE ALSO S UBMITTED A CHART SHOWING NET PROFIT OF THE ASSESSEE FROM AY 2005 - 06 TO 2011 - 12 WHERE NP RATIO IS IN THE RANGE OF 1.10 % TO 1.89 % AND THEREFORE HE SUBMITTED THAT CIT (A) HAS RIGHTLY DELETED THE ADDITION AND SUSTAINING THE N P RATIO @1.30 % OF THE GROSS R ECEIPT. 05 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO THE ORDERS OF LOWER AUTHORITIES. IN OUR VIEW CIT (A ) HAS RIGHTLY DELETED THE ADDITION MADE BY AO IN THE HANDS OF THE ASSESSEE ADOPTING N P RATE OF 8 % EVEN WHEN BOOKS OF ACCOUNTS ARE AUD ITED. WE ARE OF THE VIEW THAT ONCE THE ACCOUNTS ARE AUDITED U/S 44AB THE PROVISION OF SECTION 44AD CANNOT BE APPLIED WHICH IN FACT AO HAS CONTEMPLATED . FURTHER BASED ON THE PAST HISTORY OF THE ASSESSEE CIT (A ) HAS SUSTAINED THE ADDITION OF RS.90 , 216/ - ADOPTING THE N P RATIO OF 1.30 % OF THE GROSS RECEIPT. IN 3 ADOPTING THIS RATE CIT (A) HAS CONSIDERED THE CHART PRODUCED BY ASSESSEE. WE HAVE ALSO PERUSED THAT CHART WHERE FOR AY 2005 - 06 TO 2008 - 09 ASSESSEES NET PROFIT IS ACCEPTED AT THE RATE RANGING FROM 1.24 % TO 1.89 %. FURTHER FOR AY 2006 - 07 ASSESSEE WAS ASSESSED U/S 143(3) OF THE ACT A ND FOR OTHER YEARS U/S 143(1) OF THE ACT. FOR AY 2009 - 10 TO 2011 - 12 ASSESSEE HAS SHOWN NET PROFIT RATIO OF 1.21 % TO 1.39 % WHICH IS ACCEPTED BY AO IN ASSESSMENT U/S 143 (3) OF THE ACT WITHOUT MAKING ANY ADDITION ON ACCOUNT OF THE LOWER PROFITS. THEREFORE IN VIEW OF THE ABOVE ASSESSMENT HISTORY OF THE ASSESSEE , WE DID NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A ) AN D NONE WAS POINTED OUT BY REVENUE. HENCE , WE CONFIRM THE ORDER OF THE CIT (A) IN RESTRICTING THE ADDITION OF RS. 90216/ - ESTIMATING THE NET PROFIT RATE OF 1.30 % OF THE GROSS RECEIPT INSTEAD OF RATE OF 8 % ADOPTED BY AO. THEREFORE SOLITARY GROUND OF T HE APPEAL OF THE REVENUE IS DISMISSED. 06 . IN THE RESULT , APPEAL OF REVENUE IS DISMISSED. THE DECISION IS PRONOUNCED ON 23 RD NOVEMBER , 2015. - S D / - - S D / - ( C.M. GARG ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 R D NOVEMBER , 2015. RK/ - COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI