ACIT, New Delhi V. Sh. Rajender Singh, New Delhi

ITA 3843/DEL/2012

• Counselvise Citation: 384320114 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 14-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 24-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M B REDDY; MANOJ KUMAR CHOPRA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F N EW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI J.S. REDDY , ACCOUNTANT MEMBER IT A NO . 3843 / DEL / 20 1 2 ( A . Y . 2009 - 10 ) ACIT, CIRCLE - 38(1), VS. SH. RAJENDER SINGH R.NO. - 212, C.R. 14 2, LAKE VIEW BUILDING, I.P. ESTATE, APARTMENTS, SECTOR - 9, NEW DELHI 110002 ROHINI, DELHI - 110085 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAUTAM JAIN , FCA RESPONDENT BY : S HRI M.B. REDDY, CIT.D.R. AND SHRI MANOJ KUMAR CHOPRA , SR. D.R. ORDER PER J.S. REDDY , A . M : 1. THIS IS AN APPEAL FILED BY THE REVENUE , DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - XX VIII, NEW DELHI DATED 18 .0 5 .201 2 FOR THE A.Y. 2009 - 10 . 2. T HE A SSESSEE IS A N INDIVIDUAL. HE IS E NGAGED IN THE BUSINESS OF CONSTRUCTION. HE FILED ITS RETURN OF INCOME FOR THE A.Y. 2009 - 10 ON 29.09.2009 DECLARING A TOTAL INCOME OF RS.42,99,587/ - . THE ASSESSING OFFICER PASSED AN ORDER UNDER SECTION 143(3) OF THE INCOME T AX ACT, 1961 ON 28.12.2011 DETERMINING THE TOTAL INCOME AT RS.1,17,92,350/ - . THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AND ESTIMATED THE NET PROFIT AT THE RATE OF 5%. AGGRIEVED ASSESSEE ITA NO. 3843 /DEL/201 2 2 CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LD. CIT(A) HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT BY APPLYING SECTION 145(3) OF THE ACT AND ESTIMATING THE NET PROFIT AT THE RATE OF 5% OF THE GROSS RECEIPTS. SHE FURTH ER HELD THAT THE NET PROFIT RATE OF 5% OF GROSS RECEIPTS APPLIED BY THE ASSESSING OFFICER WAS ADHOC AND ARBITRARY AS THE SAME WAS DONE WITHOUT REFERENCE TO ANY COMPARABLE CASES. SHE ESTIMATED THAT THE NET PROFIT AT THE RATE OF 2%. AGGRIEVED THE REVENUE IS IN APPEAL ON THE FOLLOWING GROUNDS: - 1. THAT THE LD. CIT(A) ERRED IN ESTIMATING THE NET PROFIT RATE OF THE ASSESSEE AT 2.0%OF THE GROSS RECEIPT AS AGAINST 5% ESTIMATED BY THE A.O. AFTER REJECTING THE BOOKS OF ACCOUNT TOWARDS NON - MAINTENANCE OF STOCK REGIS TER, UNVERIFIABLE PURCHASES AND CREDITORS, NEGATIVE CASH BALANCE IN CASH BOOK, NON PRODUCTION OF BILLS AND VOUCHERS. 2. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 3. WE HAVE HEARD SHRI MANOJ KUMAR CHOPRA, LD. SR. DEPARTMENTAL REPRES ENTATIVE ON BEHALF OF THE REVENUE AND MR. GAUTAM JAIN, FCA ON BEHALF OF THE ASSESSEE. 4. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD AND ORDER OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOWS. 5. THE REVENUE HAS NOT CHALLENGED THE FINDING S OF THE FIRST APPELLATE AUTHORITY THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT. IN THE ABSENCE OF SUCH A CHALLENGE TO THIS FACTUAL FINDING OF THE FIRST APPELLATE AUTHORITY, THE GROUN D RAISED AGAINST THE PERCENTAGE OF PROFIT TO BE ADOPTED FOR THE PURPOSE OF ITA NO. 3843 /DEL/201 2 3 ESTIMATING THE NET PROFIT DOES NOT SURVIVE . ONCE THE BOOKS OF ACCOUNT ARE NOT REJECTED, THEN THE ONLY COURSE OPEN TO THE A.O. IS TO ACCEPT THE BOOK RESULT AND AT BEST MAKE CERTAIN D ISALLOWANCE ETC. IN THIS CASE, THE FIRST APPELLATE AUTHORITY HAS COMMITTED AN ERROR IN APPLYING RATE OF 2% OF GROSS RECEIPT AS NET PROFIT AS THIS IS ALSO AN ADHOC ACTION AFTER UPHOLDING THE BOOK RESULTS . AS THE ASSESSEE HAS NEITHER FILED ANY APPEAL NOR FIL ED A CROSS OBJECTION ON THIS ERROR OF THE LD. CIT.D.R , WE DO NOT INTERFERE IN THESE FINDINGS OF THE FIRST APPELLATE AUTHORITY. 6. BOTH THE PARTIES RELIED ON CERTAIN DECISIONS AND JUDGMENTS OF THE HIGH COURTS. WE HAVE CONSIDERED THE SAME. SUFFICE TO SAY TH AT THESE BEING A FACTUAL MATTER S , THE JUDGMENTS IN QUESTION ARE DISTINGUISHABLE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 .0 8 .2014 SD/ - SD/ - ( DIVA SINGH ) ( J.S. REDDY ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 29 .0 8 .2014 A KS* COPY OF THE ORDER FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CI T CONCERNED 5. D.R., ITAT, ASSISTANT REGISTRAR