ITO, SURATGARH V. Sh. Pokar Lal Bhat, SURATGARH

ITA 364/JODH/2013

• Counselvise Citation: 36423314 RSA 2013
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: MAHENDRA RATHI
• Keywords: Presumptive income; Additional evidence
• Section: 44AD; 143(3); 148; 144; 11

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.363 TO 365/JODH/2013 (A.YS. 2006-07 & 2005-06) ITO, VS. SHRI POKAR LAL BHAT, SURATGARH. PROP. M/S. POKAR LAL CIVIL CONTRACTOR, WARD NO. 17, OPP. TELEPHONE EXCHANGE, SURATGARH. PAN NO. AHDPB 5820 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHENDRA RATHI DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 13/11/2013. DATE OF PRONOUNCEMENT : 25/11/2013. O R D E R PER N.K.SAINI, A.M THESE THREE APPEALS BY THE DEPARTMENT AGAINST THE SEPARATE ORDERS EACH DATED 13/03/2013 OF LD. CIT (A), BIKANER. SOM E ISSUES INVOLVED IN THESE APPEALS ARE COMMON AND WERE HEARD TOGETHER, S O THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. 2 2. FIRST WE WILL DEAL WITH I.T.A.NO. 363/JODH/2013. T HE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN :- 1. DELETING ADDITION OF RS. 2,15,000/- MADE ON ACCO UNT OF INVESTMENT IN RESIDENTIAL HOUSE. 2. DELETING ADDITION OF RS. 5,28,782/- MADE ON ACCO UNT OF CAPITAL ACCOUNT. 3. DELETING ADDITION OF RS. 8,24,850/- MADE ON ACCO UNT BALANCE AMOUNT OF PERSONAL CAPITAL ACCOUNT. 4. DELETING ADDITION OF RS. 4,01,214/- MADE ON ACCO UNT OF CONTRACT EXPENSES. 5. DELETING ADDITION OF RS. 10,585/- MADE ON ACCOUN T OF EXPENSES DEBITED IN P & L ACCOUNT 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 31/10/2006 DECLARING AN INCOME OF RS. 2,6 2,501/-, WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE I.T. ACT, 196 1 (HEREINAFTER REFERRED TO AS ACT, IN SHORT) ON 28/02/2007. LATER ON, CA SE WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT. SINC E THE ASSESSEE DID NOT COMPLY THE NOTICE, THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 144 OF THE ACT AND COMPLETED THE ASSESSMENT AT AN INCOME OF RS. 22,42,941/- AS UNDER:- 01 INCOME SHOWN IN RETURN OF INCOME 262510 02 ADDITION ON A/C OF INVESTMENT IN HOUSE 215000 03 ADDITION ON A/C OF ENHANCED CAPITAL TH R OUGH PERSONAL BOOKS (ON PROTECTIVE BASIS) 528782 04 ADDITION ON A/C OF PERSONAL CAPITAL ON 824850 3 (PROTECTIVE BASIS) 05 DISALLOWANCE OUT OF CONTRACT EXP. 401 214 06 DISALLOW A NCE OUT OF EXP. DEBITED TO P & L A/C 105 85 TOTAL ASSESSED INCOME 2242941 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED AS UNDER:- 1. THE TURNOVER DURING THE YEAR UNDER CONSIDERATION WAS MORE THAN 40 LACS WHICH WAS AT RS. 45,07,087/-, REQUIRING THE AU DITS OF THE ACCOUNTS MAINTAINED BY THE ASSESSEE, THE ACCOUNTS W ERE DULY AUDITED AND THE AUDIT REPORT STOOD FILED ACCORDING TO WHICH THE OPENING BALANCE OF RS. 9,52,782/- WAS CORRECTLY REC ORDED IN THE BOOKS OF ACCOUNTS, SINCE THE MATTER RELATING TO ASS ESSMENT YEAR 2005-06 IS ALSO PENDING FOR ADJUDICATION BEFORE THE HON'BLE CIT (A) IN WHICH THE ISSUE OF CAPITAL ACCUMULATION OF RS. 1 3,54,850/- IS UNDER THE PROCESS OF DECISION FOR WHICH ADDITIONAL GROUNDS HAVE BEEN ADDUCED BY THE ASSESSEE WHICH ARE UNDER CONSID ERATION FOR ADMITTANCE .AND THEREFORE THE ADDITION OF RS. 5,28, 782/- MADE AS PROTECTIVE DESERVES TO BE SET ASIDE. 2. AFTER TRANSFER OF 5,30,000/- OUT OF ACCUMULATED FUNDS OF RS. 13,54,850/- IN PERSONAL BOOKS, THE REMAINING AMOUNT OF RS. 8,24,850/- OF WHICH ADDITION HAVE BEEN MADE ON PROT ECTIVE BASIS TOO DESERVES TO BE SET ASIDE IN VIEW OF THE FACT TH AT ADDITION OF ENTIRE AMOUNT OF RS. 13,54,850/- HAVE BEEN MADE ON SUBSTANTIVE BASIS DURING THE A.Y. 2005-06 WHICH IS UNDER ADJUDI CATION BEFORE THE HON'BLE CIT(A). 3. AN AMOUNT OF RS.2,15,000/- STATED TO HAVE BEEN UTILIZED OUT OF THE REMAINING FUNDS OF RS. 8,24,850/- IN PERSONAL BOOKS FOR THE ACQUISITION OF RESIDENTIAL HOUSE, SINCE THE SOURCE STOOD EXPLAINED THE ADDITION UNDER THIS HEAD DESERVES TO BE SET ASI DE. 4 . SINCE AS AGAINST GROSS CONTRACT RECEIPTS OF RS . 45,07,087/-, THE NET PROFIT SHOWN ARRIVES AT RS. 3,55,389/- GIVING N.P. RATE OF 7.9% WHICH 4 IN VIEW OF THE JUDGMENTS OF PREM KUMAR V/S. JCIT (I .T. ACT, 1961 NO. 400/JU/2005) REPORTED IN TAX WORLD VOL XXXV ON PAGE NO 2-3 AND SWAI MADHOPUR V/S. VASUDEV GUPTA CONTRACTOR, KARAUL I (ITA NO. 705/JAIPUR/2010) REPORTED IN TAX WORLD VOL. XL, VI ON PAGE NO. 184- 185 WHERE IN N.P. RATE OF 5% HAVE BEEN DECLARED TO BE JUSTIFIED, THEREFORE DISALLOWANCE OUT OF TRADING EXP. OF 40,12 ,140/- @ L0% RS. 4,01,214/- AND DISALLOWANCE OF 10% OUT OF EXP. OF 1 ,05,850/- DEBITED TO P&L A/C ARE ILLEGAL DESERVES BE SET ASID E. 5. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE, DELETED ALL THE ADDITIONS MADE BY THE ASSESSING OFF ICER BY OBSERVING IN PARA NOS. 3 TO 7 OF THE IMPUGNED ORDER, WHICH READ AS UNDER:- 3. THE AMOUNT OF RS. 2,15,000/- STATED TO HAVE BEEN UTILIZED OUT OF THE REMAINING FUNDS OF RS.8,24,850/- WHICH APPEARS TO B E EXPLAINED AND THEREFORE THE ADDITION UNDER THIS HEAD IS DELETED. 4. THE ADDITION OF RS.5,28,7821- ON PROTECTIVE BASI S, THIS AMOUNT HAVE BEEN ADDED BACK ON SUBSTANTIVE BASIS IN THE PRECEDI NG YEAR A.Y. 2005-06 SINCE THIS ISSUE HAVE ALREADY BEEN DECIDED THERE, THEREFORE THIS ADDITION MADE ON PROTECTIVE BASIS IS DELETED F OR THIS YEAR A.Y. 2006-07. 5. ADDITION OF RS.8,24,850/- THIS YEAR HAVE BEEN MA DE ON PROTECTIVE BASIS WHICH IS COVERED UNDER THE AMOUNT OF RS. 13,5 4,850/- ADDITION OF WHICH HAVE BEEN MADE ON SUBSTANTIVE BASIS IN THE PRECEDING YEAR A.Y. 2005-06 AND THE ISSUE STOOD DECIDED THERE, THE REFORE THE AMOUNT OF RS. 8,24,850/- WHICH HAS BEEN ADDED ON PR OTECTIVE BASIS DURING A.Y. 2006-07 IS DELETED. 6. ADDITION ON ACCOUNT OF DISALLOWANCE @ L0% OUT OF TRADING EXPENSES OF RS.40,12,140/- I.E. RS. 4,01,214/- IN VIEW OF TH E FACT THAT ASSESSEE HAVE ALREADY DISCLOSED N.P. RATE OF 7.90% WHICH IN VIEW OF THE RATIO OF JUDGMENT IN THE CASE OF PREM KUMAR V/S. JCIT AND SWAI MADHOPUR V/S. VASUDEV GUPTA CONTRACTOR, KARAULI WHEREIN 5% N .P. RATE HAVE BEEN CONSIDERED TO BE JUSTIFIED, THEREFORE THE ADDI TION OF RS. 4,01,214/- MADE BY THE AO IS DELETED. 5 7. THE ADDITION OF RS. 10,585/- AT THE RATE OF L0% OUT OF EXP. RS.1,05,850/- DEBITED TO P&L A/C TOO IS DELETED IN VIEW OF THE FACT THAT ASSESSEE HAVE ALREADY DISCLOSED N.P. RATE OF 7 .90% WHICH IN VIEW OF THE RATIO OF JUDGMENT IN THE CASE OF PREM K UMAR V/S. JCIT AND SWAI MADHOPUR V/S. VASUDEV GUPTA CONTRACTOR, KA RAULI WHERE IN 5% N.P. RATE HAVE BEEN CONSIDERED TO BE JUSTIFIE D, THEREFORE THE ADDITION OF RS. 10,585/- IS DELETED. NOW, THE DEPARTMENT IS IN APPEAL. 6 . DURING THE COURSE OF HEARING, LEARNED D.R. ALTHO UGH SUPPORTED THE ORDER OF THE ASSESSING OFFICER, BUT COULD NOT CONTR OVERT THE FINDINGS GIVEN BY THE LEARNED CIT(A). 7. IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER MADE THE ADDITIONS WITHOUT APPREC IATING THE FACTS AND THE LEARNED CIT(A) AFTER CONSIDERING THE FACTS IN R IGHT PERSPECTIVE, DELETED THE IMPUGNED ADDITIONS. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT APPEARS THAT THE ASSESSING OFFICER MADE TH E IMPUGNED ADDITIONS WITHOUT APPRECIATING THE FACTS IN RIGHT PERSPECTIVE AND SOME OF THE ADDITIONS WERE MADE ON PROTECTIVE BASIS. LEARNED C IT(A) APPRECIATED THE FACTS AND CATEGORICALLY STATED THAT THE NP RATE SHO WN BY THE ASSESSEE WAS 6 BETTER THAN THE COMPARABLE CASE, THEREFORE, TRADING ADDITIONS WERE NOT JUSTIFIED. HE ALSO OBSERVED THAT THE PROTECTIVE AD DITIONS WERE ALREADY CONSIDERED IN THE PRECEDING YEARS ON SUBSTANTIVE BA SIS. IN OUR OPINION, THE LEARNED CIT(A) HAD TAKEN A JUST VIEW, WE THEREF ORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A). ACCORDINGLY, DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 9. IN I.T.A.NO. 364/JODH/2013, THE ONLY GROUND RAISED BY THE DEPARTMENT READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS. 13,54,850/- MADE ON ACC OUNT OF CAPITAL ACCUMULATED. 10. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 28/07/2005 DECLARING AN INCOME OF RS. 1,35,000/-, WHICH WAS REVISED ON 09/09/2005 DECLARING AN INCOME OF RS. 1,46,000/-. THE SAID RETURN OF INCOME WAS PROCESSED UNDER SECTI ON 143(1) OF THE ACT. LATER ON, CASE WAS SELECTED FOR SCRUTINY. THE ASSE SSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 144 OF THE ACT AT AN I NCOME OF RS. 5,00,850/- BY MAKING ADDITION OF RS. 13,54,850/-, W HICH WAS CLAIMED TO BE ACCUMULATED CAPITAL BROUGHT FORWARD. 7 11. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND THE SUBMISSIONS MADE AS INCORPORATED AT PAGES 4 TO 6 OF THE IMPUGNED ORDER ARE AS UNDER:- 1. THE RETURN IN QUESTION FOR THE A.Y. 2005-06 WAS FILED U/S 44AD WHICH DOESN'T REQUIRE MAINTENANCE OF BOOKS OF ACCOUNTS FO R THE CONTRACTOR SHIP BUSINESS IF THE TURNOVER IS LESS THAN 40 LACS. DURI NG THE YEAR UNDER CONSIDERATION THE TURNOVER OF THE ASSESSEE WAS AT 1 8,18,132/- WHERE FROM PRESUMPTIVE INCOME SHOWN WAS AT RS. 1,46,000/- GIVI NG N.P. RATE OF 8.03%, THEREFORE NON PRODUCTION OF BOOKS OF ACCOUNT DOESN'T AT ALL VIOLATIVE OF THE PROVISIONS OF THE INCOME TAX ACT. THERE IS NOTHING ON RECORD THAT THE PERSONAL BOOKS WERE ALSO LOST, WHIC H WERE VERY WELL WITH THE ASSESSEE AND WERE NOT ASKED BY THE A.O. TO BE P RODUCED. DURING THE ASSESSMENT PROCEEDING FOR THE A.Y. 2006 -07 HOWEVER THE ACCOUNT MAINTAINED IN PERSONAL BOOKS WHERE A SUM OF RS.13,54,850/- WAS SHOWN ACCUMULATED WHERE FROM AN AMOUNT OF RS.5,30,0 00/- STOOD TRANSFERRED FROM PERSONAL BOOKS TO BUSINESS BOOKS R ESULTING IN THE CAPITAL ACCOUNT ENDING ON 31.03.2005 AS UNDER. WITHDRAWAL 78068 OPENING BALANCE 354850 CLOSING BALANCE 952782 TRANSFER FROM PERSONAL CAPITAL A/C IN PERSONAL BOOKS 530000 PROFIT U/S 44AD 146000 1030850 1030850 WAS PROVIDE TO THE A.O. BASED ON WHICH HE INITIATE D THE PROCEEDINGS U/S 148 RESULTING IN THE HIGH PITCH ASSESSMENT FRAM ED RESULTING AN ADDITION OF RS. 13,54,850/- OF THE ENTIRE CAPITAL A CCUMULATED IN THE PERSONAL BOOKS, OUT OF WHICH ONLY 5,30,000/- STOOD TRANSFERRED FOR CARRYING OUT CONTRACTOR SHIP BUSINESS. THE APPELLANT RELIES UPON THE CASE OF DCIT V/S. LA TE MALI RAM SONI (ITA NO. 85 TO 95 DECIDED BY ITAT BENCH, JAIPUR) PU BLISHED IN TAX WORLD VOL. XXXVII ON PAGE NO. 13 TO 21, WHERE IN IT WAS H ELD THAT GENUINENESS OF 8 FAMILY CASH BOOK CAN NOT BE IGNORED, IT WAS FURTHER HELD THAT FAMILY CASH BOOK MAINTAINED IN THE VILLAGES FORM PART OF REGULA R BOOKS OF ACCOUNTS, IT WAS FURTHER HELD THAT FAMILY INCOME RECORDED IN FAM ILY CASH BOOKS FOR VARIOUS YEARS HAS TO BE CONSIDERED VALID. THEREFORE ACCUMULATION OF FUNDS/CAPITAL AMOUNTING TO RS. 13,54,850/- AND TRAN SFER OF A SUM OF RS. 5,30,000/- CAN'T BE CONSIDERED AS INVALID AS HAS BE EN DONE AT THE LEVEL OF A.O. 12. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION BY OBSERVING AS UNDER:- 1. THE RETURN FOR THE YEAR UNDER CONSIDERATION I.E. A.Y. 2005-06 STOOD FILED U/S 44AD ACCORDING TO WHICH AS AGAINST GROSS CONTRACT RECEIPTS 18,18,132/-, THE INCOME RETURNED AMOUNTED TO RS.1,4 6,000/- GIVING N.P. RATE OF 8.03%, THIS BEING A PRESUMPTIVE INCOME AS P ER THE PROVISIONS OF SEC. 44AD IN MY CONSIDERED OPINION THE ASSESSEE WAS NOT REQUIRED TO PRODUCED BOOKS OF ACCOUNT EVEN IF MAINTAINED AS THE SAME STATED TO HAVE BEEN LOST, THEREFORE NO ADVERSE INFERENCE CAN BE DR AWN FOR MAKING THE HIGH PITCH ASSESSMENT BY ADDING WHOLE AMOUNT OF CAPITAL ACCUMULATED AT RS. 13,54,850/- OUT OF WHICH A SUM OF RS. 5,30,000/- ST OOD TRANSFERRED IN THE BUSINESS. 2. THE ASSESSEE DURING THE COURSE OF APPELLATE PROC EEDINGS HAVE FILED CAPITAL ACCOUNT COMMENCING FROM 1 ST APRIL 1994 UP TO TILL 31 ST MARCH, 2007 OF PERSONAL BOOKS, THE EXISTENCE OF WHICH CAN'T BE OUT RIGHTLY REJECTED IN VIEW OF THE RATIO OF JUDGMENT AS CITED ABOVE. RESUL TING IN ACCUMULATION OF CAPITAL AMOUNTING TO RS. 13,54,850/- AND TRANSFER O F RS. 5,30,000/- OUT OF IT TOWARDS CONTRACTOR SHIP BUSINESS, WHICH HAS BEEN AC CEPTED AS AN ADDITIONAL EVIDENCE AFTER HAVING CONSIDERED THE REPORT OF THE ASSESSING OFFICER. NOW THE DEPARTMENT IS IN APPEAL. 13. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE IMPUGNED ADDITION MADE BY THE 9 ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE C OULD NOT EXPLAIN THE ACCUMULATION OF CAPITAL PROPERLY. ON THE CONTRARY, LEARNED CIT(A) EXAMINED THE CAPITAL ACCOUNT OF THE ASSESSEE COMMEN CING FROM 01/04/1994 TILL 31/03/2007 IN THE PRECEDING BOOKS. SINCE, THE AMOUNT IN QUESTION WAS AVAILABLE WITH THE ASSESSEE IN HIS PER SONAL BOOKS OF ACCOUNTS, THEREFORE, WE ARE OF THE VIEW THAT THE LE ARNED CIT(A) RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 14. NOW WE WILL DEAL WITH THE APPEAL IN I.T.A.NO. 365/J ODH/2013. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN:- 1. QUASHING THE ASSESSMENT ORDER PASSED U/S 143(3)/ 148. 2. DELETING ADDITION OF RS. 6,00,000/- MADE ON ACCO UNT OF SILT CLEARING EXPENSES. 3. DELETING ADDITION OF RS. 4,09,500/- MADE ON ACCO UNT OF DISALLOWANCE U/S 40A(IA) OF THE IT ACT. 4. DELETING ADDITION OF RS.1,79,340/- MADE ON ACCOU NT OF LABOUR EXPENSES. 5. DELETING ADDITION OF RS. 74,600/- MADE ON ACCOUN T OF RECEIPTS FROM INDURE PVT. LTD. 15. FIRST ISSUE IN THIS APPEAL RELATES TO THE QUASHING OF ASSESSMENT ORDER PASSED UNDER SECTION 143(3)/148 OF THE ACT. 16. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE A SSESSEE FILED RETURN OF INCOME ON 30/09/2009 DECLARING AN INCOME OF RS. 3,79,214/-. THE 10 ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEC LARED GROSS RECEIPTS OF RS. 72,57,109/- IN THE RETURN OF INCOME WHEREAS AS PER 26AS THE DETAILS OF PAYMENTS CREDITED TO ASSESSEES ACCOUNT WAS RS. 73,31,709/-. THUS, THERE WAS A DIFFERENCE OF RS. 74,600/-. THE ASSESS ING OFFICER ISSUED NOTICE UNDER SECTION 148 OF THE ACT AFTER CONSIDERI NG THE AFORESAID AMOUNT AS CONCEALED INCOME OF THE ASSESSEE. THE AS SESSEE OBJECTED THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSING OFFICER DID NOT FIND MERIT IN THE OBJECTION OF THE ASSESSEE AND REJECTED THE SAME. 17. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT THE ISSUANCE OF NOTICE BA SED ON 26AS WAS TOTALLY WRONG AND ILLEGAL WITHOUT GOING IN DEPTH OF THE STATEMENT OF ACCOUNTS ON RECORD SINCE THE CONTRACT RECEIPTS OF R S. 74,600/- WAS NOT REALIZED DURING THE YEAR UNDER CONSIDERATION WHICH WAS PART OF THE WORK IN PROGRESS OF RS. 1,08,500/-. IT WAS FURTHER SUB MITTED THAT THE AMOUNT OF RS. 74,600/- WAS DUE ON ACCRUAL BASIS IN NEXT YE AR AND THE ASSESSING OFFICER WAS REQUIRED JUST TO HAVE AN ENQUIRY FROM T HE ASSESSEE BY MERELY WRITING A LETTER ASKING FOR CLARIFICATION OF SHORT RECEIPT OF CONTRACT PAYMENTS HAVING SHOWN IN THE TRADING ACCOUNT AS WOR K IN PROGRESS. ACCORDINGLY, IT WAS SUBMITTED THAT THE ISSUANCE OF NOTICE UNDER SECTION 11 148 OF THE ACT WAS NOT JUSTIFIED AND WAS ILLEGAL. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- 1. CIT VS. MANOHAR LAL GUPTA (DBIT REFERENCE APPLIC ATION NO. 54/1994) A.Y. 1980-81 DATED 04/10/2010 TAX WORLD VOL. XXXIV PAGE NO. 24 & 25. 2. GEMINI LEATHER STORES VS. ITO 1975 CTR (SC) 1127 /(1975) 100 ITR 1 (SC) 18. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE AMOUNT OF RS. 74,600/- STOOD INCL UDED IN THE WORK IN PROGRESS OF RS. 1,08,500/- SHOWN IN TRADING ACCOUNT AND WAS SUBJECTED TO TAX SINCE INCOME THEREON HAD BECOME TAXABLE INCOME SHOWN IN COMPUTATION OF INCOME. HE FURTHER OBSERVED THAT MER ELY ON THE BASIS OF STATEMENT 26AS DEEMING IT TO HAVE NOT BEEN INCLUDED IN TOTAL CONTRACT RECEIPTS AND WITHOUT ASKING FROM THE ASSESSEE, THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT WAS NOT LEGAL, THEREFO RE, THE ASSESSMENT UNDER SECTION 143(3)/148 OF THE ACT WAS NOT PROPER. THE LEARNED CIT(A), ACCORDINGLY, QUASHED THE ASSESSMENT ORDER. LEARNED CIT(A) ALSO DELETED THE VARIOUS ADDITIONS ON MERIT. NOW THE DEPARTMENT IS IN APPEAL. 19. DURING THE COURSE OF HEARING, LEARNED D.R. SUBMITTE D THAT CASE WAS REOPENED AFTER RECORDING THE REASONS, THEREFORE, LE ARNED CIT(A) WAS NOT JUSTIFIED IN QUASHING THE ASSESSMENT ORDER. 12 20. IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND STRONGLY SUPPORTED THE IMPUGNED ORDER. 21. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IT IS NOTICED THAT THE ASSESSING OFFICER IN THE BODY OF THE ASSES SMENT ORDER CLEARLY STATED THAT THE ASSESSEE OBJECTED ISSUANCE OF NOTIC E UNDER SECTION 148 OF THE ACT, BUT HE HAD NOT DISCUSSED THE OBJECTIONS RA ISED BY THE ASSESSEE AND ALSO HOW THOSE WERE MET OUT. ON THE CONTRARY, THE EXPLANATION OF THE ASSESSEE WAS THAT THE AMOUNT OF RS. 74,600/- ON THE BASIS OF WHICH, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED WAS ALREADY INCLUDED IN WORK IN PROGRESS, WHICH WAS SHOWN IN TRADING ACCOUN T AND WAS SUBJECTED TO TAX. SINCE THE RECEIPTS AMOUNTING TO RS. 74,600 /- WERE ALREADY INCLUDED BY THE ASSESSEE IN WORK IN PROGRESS AND SH OWN IN THE TRADING ACCOUNT WHICH WAS AVAILABLE TO THE ASSESSING OFFICE R, THEREFORE, THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT CON SIDERING THE SAID AMOUNT AS CONCEALED INCOME OF THE ASSESSEE WAS NOT JUSTIFIED. ACCORDINGLY, WE ARE OF THE VIEW THAT THE LEARNED CI T(A) WAS FULLY JUSTIFIED IN TREATING THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT AS ILLEGAL AND QUASHING THE ASSESSMENT ORDER. 13 22. SINCE WE HAVE UPHELD THE FINDINGS OF THE LEARNED C IT(A) THAT THE REASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W. S. 148 OF THE ACT WAS NOT PROPER AND WAS RIGHTLY QUASHED, THEREFORE, NO F INDINGS ARE GIVEN ON OTHER ISSUES AGITATED BY THE DEPARTMENT. 23. IN THE RESULT, APPEALS OF THE DEPARTMENT ARE DISMIS SED. (ORDER PRONOUNCED IN THE COURT ON 25 TH NOVEMBER, 2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH NOVEMBER , 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.