ACIT, New Delhi V. Sh. Surya Prakash, New Delhi

ITA 368/DEL/2012

• Counselvise Citation: 36820114 RSA 2012
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 21-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 24-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY
• Assessee Lawyers: N O N E
• Section: 44AD; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G : NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUN TANT MEMBER ITA NO. 368/DEL/2012 ASSESSMENT YEAR: 2007- 2008 ASSTT. COMMISSIONER OF INCOME TAX, VS. SHR I SURYA PRAKASH, CIRCLE 38(1), NEW DELHI. G-803, IIND FLOOR, KALKAJI, NEW DELHI. (APPELLANT) (RESPO NDENT) APPELLANT BY : SMT. SURJANI MOHANTY, SR. DR RESPONDENT BY : NON E DATE OF HEARING : 21-08-2012 DATE OF PRONOUNCEMENT : ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELLA TE ORDER ON THE FOLLOWING GROUNDS :- 1. THE LD. CIT(A) ERRED IN ARBITRARILY ESTIMATI NG THE NET PROFIT @ 5.01% OF GROSS RECEIPTS WHERE AS THE NET PROFIT AGAINST 8% ESTIMATED BY THE AO DESPITE THE FACT THAT THE ASSESSEE FAILED TO FURNISH BOOKS OF ACCOUNT ALONG WITH BILLS AND VOUC HERS EITHER BEFORE THE AO OR BEFORE THE CIT(A). 2. THE CIT(A) ERRED IN ACCEPTING THE NET PROFIT @ 5.01% OF GROSS RECEIPTS WHEREAS THE NET PROFIT DISCLOSED BY THE ASSESSEE HIMSELF IS @ 5.05% OF GROSS RECEIPTS. ITA NO. 368/DEL/2012 2 2. THE GRIEVANCE OF THE REVENUE AS CONTENDED BY THE LD. DR IS THAT THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE ESTIMATING THE NET PROFIT @ 5.01% OF GROSS RECEIPTS AGAINST NET PROFIT RATE APPLIED AT 8 % BY THE AO DESPITE THE FACT THAT ASSESSEE HAD FAILED TO FURNISH BOOKS OF ACCOUN TS ALONGWITH BILLS AND VOUCHERS BEFORE THE AUTHORITIES BELOW. HE SUBMITTED FURTHER THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT ASSESSEE HIMSELF HAS DECLARED NET PROFIT @ 5.05% OF GROSS RECEIPTS. 3. HAVING GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW WE FIND THAT THE ASSESSMENT ORDER HAS BEEN PASSED U/S 144 OF THE ACT IN ABSENCE OF THE ASSESSEE. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMIT TED THAT NOTICE U/S 143(2) WAS SENT BY THE AO ON THE OLD ADDRESS OF THE ASSESS EE DESPITE THIS FACT THAT NEW ADDRESS OF THE ASSESSEE WAS INTIMATED TO THE OFFICE OF THE AO. DUE TO THIS REASON THE ASSESSEE WAS NOT SERVED WITH THE NOTICE ISSUED U/S 143(2). THERE WAS NO REASON TO DOUBT THE SUBMISSION OF THE ASSESSEE AS I N ITS REMAND REPORT THE AO HAS ALSO POINTED OUT THAT NOTICES U/S 143(2) DATED 22.10.2009 WAS SERVED THROUGH A FIXTURE FOR 28.10.2009 AND ON THAT DATE A LSO NO ONE ATTENDED ON BEHALF OF THE ASSESSEE. IN THE RESULT ASSESSMENT U/S 144 W AS FRAMED ON 31.12.2009. IN THE SAID ASSESSMENT NET PROFIT ESTIMATED @ 8% OF GR OSS RECEIPT AND ACCORDINGLY ADDITION OF RS. 24,56,430/- WAS MADE. FURTHER ADDIT ION OF RS. 21,32,000/- WAS MADE ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN. A DE TAILED SUBMISSIONS WERE MADE BY THE ASSESSEE BEFORE THE LD. CIT(A) SUPPORTE D WITH SOME DOCUMENTS IN EVIDENCES. THE LD. CIT(A) REMANDED THE MATTER TO TH E FILE OF THE AO TO HAVE ITA NO. 368/DEL/2012 3 COMMENTS ON THOSE SUBMISSIONS OF THE ASSESSEE AND T HE EVIDENCE FILED IN SUPPORT. AFTER OBTAINING REMAND REPORT THE LD. CIT( A) ALSO SOUGHT REJOINDER OF THE ASSESSEE. AFTER CONSIDERING ALL THESE MATERIALS ON RECORD LD. CIT(A) HAS DELETED THE ADDITION OF RS. 21,32,000/0 MADE U/S 68 OF THE ACT ON ACCOUNT OF UNSECURED LOAN. THIS ACTION OF THE LD. CIT(A) HAS N OT BEEN QUESTIONED BY THE REVENUE IN THE PRESENT APPEAL. IN TRADING ADDITION THE LD. CIT(A) CONSIDERING THE PAST RESULT AND TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE AS FOUND IT REASONABLE TO ESTIMATE THE PROFIT BY APPLYING NET P ROFIT RATE AT 5.01% OF THE GROSS RECEIPT. THIS ACTION HAS BEEN QUESTIONED BY THE REVENUE BEFORE THE TRIBUNAL ON THE BASIS THAT IN ABSENCE OF BOOKS OF A CCOUNTS, DETAILS AND VOUCHERS THE AO HAD RIGHTLY ESTIMATED PROFIT BY APPLYING NP RATE AT 8% OF THE GROSS RECEIPT. FURTHER CONTENTION OF THE LD. DR REMAINED THAT THE ASSESSEE HIMSELF HAS SHOWN NP RATE AT 5.05% OF THE GROSS RECEIPT. ON PER USAL OF ORDERS OF AUTHORITIES BELOW ON THIS ISSUE, WE FIND THAT BEFORE THE LD. CI T(A) THE ASSESSEE WAS ABLE TO FURNISH BILLS AND VOUCHERS AND DETAILS OF PAYMENT, MASTER ROLL, WAGES EXPENSES RELATING TO PAYMENT MADE TO SUB CONTRACTOR AND TDS PAID IN THIS RESPECT , SALARY AND BONUS PAID, INTEREST AND BANK CHARGES ETC. THE MATTER WAS REMANDED TO THE FILE OF THE AO. THE AO VERIFIED ALL THESE AND DID N OT FIND ANY SERIOUS DEFECT THEREIN. THOUGH CERTAIN SMALL EXPENSES WERE ALSO NO T FULLY VERIFIABLE. KEEPING ALL THESE FACTS IN MIND ESPECIALLY THAT IN THE ASSESSME NT YEAR 2006-07, THE ASSESSEE HAD SHOWN NET PROFIT @ 5.14% AND 4.80% FOR THE ASST T. YEAR 2007-08 (APPEARS TOBE SOME TYPOGRAPHICAL MISTAKE) HE HAS CONSIDERED NP RATE AT 5.01% STATED TO ITA NO. 368/DEL/2012 4 BE SHOWN BY THE ASSESSEE AS BETTER THAN THE LAST YE AR. THOUGH WE HAVE NO ANY REASON TO DEVIATE FROM APPROACH OF THE LD. CIT(A) T HAT APPLICATION OF NP RATE AT 8% OF THE GROSS RECEIPT BY THE AO TO ESTIMATE THE P ROFIT WAS NOT REASONABLE BECAUSE THE GUIDELINES GIVEN IN SECTION 44AD OF THE ACT WAS NOT APPLICABLE IN THE CASE OF THE ASSESSEE HAVING TURN OVER BEYOND RS. 40 LACS AND THAT NO SERIOUS DEFECT WAS POINTED OUT IN THE BOOKS AND DOCUMENTS M AINTAINED BY THE ASSESSEE. WE FIND THAT SOME MISTAKE IS THERE IN THE FIRST APP ELLATE ORDER IN PARA NO. 14 AT PAGE 9 THAT NET PROFIT RATE AT 4.80% HAS BEEN NOTED TO HAVE BEEN SHOWN BY THE ASSESSEE IN THE ASSESSMENT YEAR 2007-08 WHICH IS IN DEED THE YEAR UNDER CONSIDERATION WHERE THE NET PROFIT RATE SHOWN BY TH E ASSESSEE AS PER LD. DR IS @ 5.05% OF GROSS RECEIPT. IT APPEARS THAT THERE IS TYPOGRAPHICAL MISTAKE IN SHOWING NP RATE OF 4.80% AGAINST THE ASSESSMENT YEA R 2007-08 AGAINST SOME PAST / FUTURE ASSESSMENT YEAR. IT NEEDS TO BE CORRE CTED AFTER VERIFYING THE RECORD. WE FURTHER FEEL THAT THE NP RATE SHOWN AT 5 .01% DURING THE YEAR UNDER CONSIDERATION BY THE ASSESSEE AS NOTED BY THE LD. C IT(A) IN PARA NO. 14 OF THE FIRST APPELLATE ORDER IS ALSO REQUIRED TO BE VERIFI ED, IN VIEW OF THE CONTENTION OF THE LD. DR THAT IT IS @ 5.05% OF THE GROSS RECEIPT. WE THUS REMAND THE MATTER TO THE FILE OF THE LD. CIT(A) TO VERIFY THE MISTAKE S IF ANY WHICH HAS BEEN POINTED OUT HEREINABOVE IN THE FIRST APPELLATE ORDER IN PAR A NO. 14 AND RECTIFY THE SAME. AS DISCUSSED ABOVE WE ARE OF THE VIEW THAT THE NET PROFIT RATE SHOWN BY THE ASSESSEE DURING THE YEAR IN THE ABSENCE OF ANY SERI OUS DEFECT IN THE BOOKS MAINTAINED BY THE ASSESSEE @ 5.01% IS REASONABLE BU T IN ANY CASE IF THE ITA NO. 368/DEL/2012 5 ASSESSEE HAS SHOWN NET PROFIT RATE AT 5.05% OF THE GROSS RECEIPT AS CONTENDED BY THE LD. DR, THE SAME SHOULD BE UPHELD. THE GROUN DS ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 4. IN THE RESULT APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20.11.2012. SD/- SD/- (T.S. KAPOOR) ( I.C. SU DHIR ) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATE 20.11.2012 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT