ACIT, Circle-2, Gwalior V. M/s Karan Development Service Pvt. Ltd., Gwalior

ITA 365/AGR/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2464 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: MAHESH AGARWAL
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO.365/AGR/2009 ASST. YEAR: 2006-07 ASSTT. COMMISSIONER OF INCOME TAX, VS. M/S. KARA N DEVELOPMENT SERVICES PVT CIRCLE-2, GWALIOR. LIMITED, INDER NAGAR, GWALIO R. (PAN : AAACK 8218 M) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. SHARMA, JR. D.R. RESPONDENT BY : SHRI MAHESH AGARWAL, C.A. ORDER PER H.S. SIDHU, J.M. : THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E ORDER DATED 28.05.2009 PASSED BY THE LD. CIT(A) ON THE FOLLOWING GROUND :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON NET PROF IT RATE AMOUNTING TO ` 22,08,325/- 2. THE ASSESSEE IS A COMPANY AND FILED ITS RETURN O F INCOME FOR THE ASSESSMENT YEAR IN DISPUTE ON 30.11.2006 DECLARING TOTAL INCOM E OF ` 3,42,15,080/- WHICH WAS PROCESSED BY THE ASSESSING OFFICER UNDER SECTION 14 3(1) OF THE INCOME TAX ACT, 2 1961 AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCR UTINY AND A NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 28.09.2007 WHICH WAS SERVED UPON THE ASSESSEE. THE ASSESSING OFFICER ISSUED NOTICE UNDE R SECTION 142(1) ACCOMPANIED BY A DETAILED QUESTIONNAIRE ON 16.07.2008 WHICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THE SAME, THE LD. AUTHORI SED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND ALSO PRODUC ED REGULAR BOOKS OF ACCOUNTS WHICH WERE MAINTAINED IN REGULAR COURSE OF BUSINESS ALONG WITH BILLS, VOUCHERS, WAGES & SALARY REGISTER, CLOSING STOCK, INVENTORY E TC. THE ASSESSING OFFICER VERIFIED THE SAME AND AFTER EXAMINING ALL THE ACCOU NTS, THE POSITION OF RECEIPTS, EXPENSES AND NET PROFIT DURING THE YEAR AND IN THE PRECEDING YEARS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE EXPLANATION F OR INCREASE IN EXPENSES WHICH RESULTED IN FALL IN THE NET PROFIT RATE AS COMPARED TO LAST YEAR. IN RESPONSE TO THE SAME, THE ASSESSEE SUBMITTED HIS EXPLANATION WHICH WERE NOT ACCEPTED BY THE ASSESSING OFFICER AND HE WAS OF THE VIEW THAT CERTA IN BILLS AND VOUCHERS WERE NOT MAINTAINED FOR THE EXPENSES INCURRED FOR MATERIAL A ND ALSO DAY TO DAY RECORD OF MATERIAL ITEMS CONSUMED HAVE NOT BEEN MAINTAINED. THE ASSESSING OFFICER DID NOT ACCEPT THE NET PROFIT SHOWN BY THE ASSESSEE AND HE APPLIED NET PROFIT RATE @ 7% ON THE BASIS OF PAST PROFIT ON THE GROSS RECEIPTS OF ` 44,56,19,045/- TO COVER UP THE LEAKAGE IN EXPENSES OF MATERIAL, CONSUMPTION OF MAT ERIAL WHICH RESULTED IN NET PROFIT OF ` 3,11,93,330/- AS AGAINST ` 2,89,85,005/- MADE THE ADDITION OF 3 ` 22,08,328/- BY COMPLETING THE ASSESSMENT IN DISPUTE ON 12.12.2008 UNDER SECTION 143(3) OF THE ACT. AGGRIEVED BY THE SAME, THE ASSE SSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO VIDE THE IMPUGNED ORDER DATED 28.05.2009 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW THE REVENU E HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 28.05.2009 PASSED BY THE CIT(A) GWALIOR. 3. AT THE TIME OF HEARING, THE LD. DEPARTMENTAL REP RESENTATIVE RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER. ON THE CONT RARY, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE BEING A COMPANY M AINTAINED ALL BOOKS OF ACCOUNTS IN THE NORMAL COURSE OF BUSINESS DULY SUPP ORTED BY BILLS AND VOUCHERS. THE ASSESSEE COMPANY IS SUBJECTED TO AUDIT UNDER TH E COMPANIES ACT AS WELL AS UNDER THE INCOME TAX ACT UNDER SECTION 44AB. THE A UDITORS HAVE NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS. HE FURTHER ST ATED THAT EVEN THE ASSESSING OFFICER HAS ALSO NOT POINTED OUT ANY DEFECT, SHORTC OMING OR DISCREPANCY IN THE BOOKS OF ACCOUNTS AND WRONGLY ADOPTED NET PROFIT RA TE AT 7% WITHOUT GIVING ANY SPECIFIC INSTANCES OF MISSING VOUCHERS NOR HAS POIN TED OUT ANY SPECIFIC EXPENSES BEING NOT INCURRED FOR THE PURPOSE OF BUSINESS. TH E LD. COUNSEL FOR THE ASSESSEE ALSO ARGUED THAT THE ASSESSING OFFICER HAS ARBITRAR ILY ASSUMED 7% NET PROFIT RATE WITHOUT GIVING ANY BASIS OR COMPARABLE CASES AND HA S WRONGLY APPLIED SECTION 145(3) OF THE ACT IN THE CASE OF THE ASSESSEE. FOR THESE REASONS, THE ADDITION IN 4 DISPUTE MAY BE DELETED. IN SUPPORT OF HIS CONTENTI ON, HE RELIED UPON THE ORDER PASSED BY THE I.T.A.T., AHMEDABAD BENCH IN THE CASE OF UNITOR INDUSTRIES REPORTED IN 53 TTJ 389. 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RELEVANT RECORDS AVAILABLE BEFORE US, ESPECIALLY THE ORDERS PASSED BY THE REVE NUE AUTHORITIES, WE ARE OF THE CONSIDERED OPINION THAT THE LD. FIRST APPELLATE AUT HORITY HAS PASSED A WELL REASONED ORDER ON THE BASIS OF THE 3 DECISIONS REND ERED BY THE I.T.A.T. BENCHES WHICH HE MENTIONED AT PAGE NO.2 OF HIS ORDER. WE H AVE GONE THROUGH THE SAME AND WE AGREE WITH THE REASONING MENTIONED BY THE LD . FIRST APPELLATE AUTHORITY IN DELETING THE ADDITION IN DISPUTE BECAUSE THE ASSESS ING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. EVEN OTHERWISE, HE HIMSELF HAS NOTED AT PAGE NOS. 2 & 3 OF THE ASSESSMENT ORDER THAT THE REGULAR BOOKS OF ACCOUNTS SAID TO HAVE BEEN MAI NTAINED IN THE REGULAR COURSE OF BUSINESS ALONG WITH BILLS, VOUCHERS, WAGES AND SALA RY REGISTERS, CLOSING STOCK INVENTORY ETC. WHICH WERE PRODUCED BY THE ASSESSEE BEFORE HIM AND HE HAS EXAMINED THE SAME AND HAS NOT POINTED OUT ANY DISCR EPANCY. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY, WE ARE OF THE CO NSIDERED OPINION THAT NO INTERFERE 5 IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY. WE UPHOLD THE SAME BY DISMISSING THE APPEAL FILED B Y THE REVENUE. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 18.03.2011 ). SD/- SD/- (P.K. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: AGRA DATE: 18 TH MARCH, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRI BUNAL, AGRA TRUE COPY