M/s. Naresh Agarwal Constructions (P) Ltd., Ghaziabad V. DCIT, Ghaziabad

ITA 3856/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2717 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 01-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K BANSAL SENIOR
• Keywords: Business income; Opportunity of being heard; TDS; Set aside
• Section: 234B; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3856/DEL./2016 (ASSESSMENT YEAR : 2012-13) M/S. NARESH AGARWAL CONSTRUCTIONS VS. DCIT, CIRCLE 2, (P) LTD., GHAZIABAD. C/O L.M. AGARWAL & CO., CHARTERED ACCOUNTANT, KA 32, KAVI NAGAR, GHAZIABAD. (PAN : AACCN0347A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KAPIL GOEL, ADVOCATE REVENUE BY : SHRI N.K. BANSAL, SENIOR DR DATE OF HEARING : 06.06.2019 DATE OF ORDER : 14.06.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. NARESH AGARWAL CONSTRUCTIONS (P) L TD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 27.04.2016 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), GHAZIABAD QUA THE ASSESSMENT YEAR 2012-13 ON THE GROUNDS INTE R ALIA THAT :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD CIT(A) HAS GROSSLY ERRED IN LAW IN REJECTING GROUND NO.1. THAT THE ASSESSMENT ORDER ITA NO.3856/DEL./2016 2 NULL & VOID AS ITS ISSUE IN THE NAME OF M/S NARESH KUMAR AGARWAL CONSTRUCTION (P) LTD. INSTEAD OF M/S NARESH AGARWAL CONSTRUCTION (P) LTD. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE THE D CIT(A) HAS FURTHER GROSSLY ERRED IN CONFIRMING THE PROVISI ONS OF SECTION 145(3} WITHOUT ANY JUSTIFICATION. THE ASSESSEE HAS MAINTAI NED REGULAR AND PROPER BOOKS OF ACCOUNTS DULY AUDITED BY CHARTERED ACCOUNT ANT AND ALL PURCHASES, EXPENSES AND RECEIPT ARE VOUCHED AND VERIFIABLE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE THE LD CIT(A} HAS FURTHER GROSSLY ERRED IN CONFIRMING N.P. RATE @ 8% AGAINST THE DECLARED N.P. RATE @ 6.03% INCLUDING FDR INTEREST AND INTERE ST IN I. TAX REFUND. 4. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE THE LD CIT(A} HAS FURTHER ERRED IN LAW IN CONFIRMING THE ADDITION OF RS.8,63,130/- BEING INTEREST RECEIVED ON BANK FDR AND ON I. TAX REFUND WHILE THE ABOVE INCOME IS THE INTERNAL PART OF TOTAL BUSINESS INCOME OF THE COMPA NY AND CREDITED IN PROFIT AND LOSS ACCOUNT. 5. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE THE LD CIT(A) ERRED IN REJECTING THE GROUND NO.6 AND NOT ISSUE AN Y DIRECTION TO RECTIFY THE TAX CALCULATION MISTAKE, GRANT OF TDS CREDIT AND MI STAKE IN CALCULATION OF INTEREST U/S 234B AND 234C OF I. TAX ACT. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS A CIVIL AND E LECTRICAL CONTRACTOR MAINLY EXECUTED THE WORK FOR UTTAR PRADE SH STATEMENT DEPARTMENT WHO HAS SHOWN HIS GROSS RECEIPT AT RS.16 ,53,81,214/- AND HAS SHOWN NET INCOME OF RS.99,70,986/- WHICH IS 6.03% OF THE RECEIPT. IN PARA 2 OF THE ASSESSMENT ORDER, AO REC ORDED THAT THE BOOKS OF ACCOUNTS WERE PRODUCED AND TEST CHECKED. THEREAFTER, AO RECORDED THAT DESPITE SEVERAL OPPORTUNITIES, THE ASSESSEE HAS FAILED TO PRODUCE COMPLETE BOOKS OF ACCOUNT. AO ON THE BASIS OF HIS FINDINGS THAT NO CASH BOOK AND LEDGER WERE PROD UCED, NO STOCK REGISTER HAS BEEN MAINTAINED AND THE PRIMARY EVIDEN CE SUPPORTING BOOKS WERE NOT PRODUCED FOR VERIFICATION AND TO VER IFY THE ITA NO.3856/DEL./2016 3 QUANTITATIVE DETAILS, NO STOCK REGISTER HAS BEEN MA INTAINED AND THEREBY PROCEEDED TO REJECT THE BOOKS OF ACCOUNTS U NDER SECTION 145 (3) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AND ASSESSED THE NET PROFIT @ 8% AS AGAINST 6.03% OF TH E RECEIPTS SHOWN BY THE ASSESSEE AND THEREBY ASSESSED THE TOTA L INCOME AT RS.1,34,45,887/-. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITION BY DISMI SSING THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME U P BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. BARE PERUSAL OF THE ASSESSMENT ORDER GOES TO PRO VE THAT IN PARA 2, THE AO HAS CATEGORICALLY RECORDED THAT THE BOOKS OF ACCOUNTS WERE PRODUCED AND TEST CHECKED. THEN IN P ARA 3, IT IS RECORDED BY THE AO THAT DESPITE GIVING NUMBER OF OP PORTUNITIES, ASSESSEE HAS FAILED TO PRODUCE COMPLETE BOOKS OF AC COUNTS WITHOUT NARRATING AS TO WHICH PART OF THE BOOKS OF ACCOUNTS HAS BEEN WITHHELD BY THE ASSESSEE. AO THEN IN PARA 3 AT PAG E 3 AGAIN RECORDED THAT ON 26.02.2015, ASSESSEE APPEARED AND PRODUCED ITA NO.3856/DEL./2016 4 BOOKS OF ACCOUNTS AND BILLS AND INVOICES AVAILABLE WITH HIM, HOWEVER ASSESSEE DID NOT FURNISH COMPLETE SET OF BO OKS OF ACCOUNTS. IN PARA 3 AT PAGE 4, IT IS SPECIFICALLY RECORDED BY THE AO THAT THE LD. AR FOR THE ASSESSEE HAS REITERATED TH AT BOOKS OF ACCOUNTS ARE AUDITED, HENCE SHOULD NOT BE REJECTED, BUT HE FAILED TO GIVE ANY CONVINCING AND REASONABLE GROUND FOR NOT R EJECTING THE BOOKS OF ACCOUNTS U/S 145 (3) OF THE ACT AND ESTIMA TING THE PROFIT @ 8% OF THE GROSS RECEIPTS. 6. WHEN WE EXAMINE THE FINDINGS RETURNED BY THE AO IN THE ASSESSMENT ORDER IN ENTIRETY, IT IS DIFFICULT TO WO RK OUT AS TO WHICH PART OF THE BOOKS OF ACCOUNTS HAVE NOT BEEN PRODUCE D BY THE ASSESSEE RATHER AO HAS RETURNED SELF-CONTRADICTORY, IN OTHER WORDS, CRYPTIC FINDINGS AND JUMPED TO ESTIMATE THE PROFIT RATE AT 8% AS AGAINST 6.03% SHOWN BY THE ASSESSEE. ALL THESE FAC TS HAVE NOT BEEN EXAMINED BY THE LD. CIT (A) IN APPEAL RATHER C ONFIRMED THE ORDER PASSED BY THE AO AS IT IS. 7. WHEN UNDISPUTEDLY BOOKS OF ACCOUNTS OF THE ASSES SEE ARE AUDITED ONE, WHICH FACT HAS NOT BEEN CONTROVERTED B Y THE AO AS WELL AS LD. CIT (A) IN THE IMPUGNED ORDERS, AO/CIT( A) WERE NOT SUPPOSED TO JUMP TO THE CONCLUSION WITHOUT SPECIFIC ALLY POINTING OUT AS TO WHICH PART OF THE BOOKS OF ACCOUNTS AND W HICH OF THE BILLS AND VOUCHERS HAVE NOT BEEN PRODUCED BY THE ASSESSEE DURING ITA NO.3856/DEL./2016 5 ASSESSMENT PROCEEDINGS. AT EVERY STAGE, AO HAS RET URNED CRYPTIC FINDINGS BY STATING THAT, HE PRODUCED CASH BOOK, B ANK STATEMENT AND LEDGER OF EXPENSES DEBITED IN THE PROFIT & LOSS ACCOUNT SUCH AS BANK CHARGES, INTEREST PAYMENT, TELEPHONE, LABOUR, CESS AUDIT FEE, OFFICE EXPENSES, GENERAL EXPENSES, MEDICAL EXPENSES , LEGAL AND PROFESSIONAL EXPENSES, TRAVELLING AND CONVEYANCE EX PENSES. THEN, IN THE SAME BREATH, AO HELD THAT ON PERUSAL O F THE SAME, IT WAS NOTICED THAT SEVERAL EXPENSES HAVE BEEN INCURRED IN CASH FOR WHICH NO BILLS AND VOUCHERS WERE PRODUCED DESPITE S EVERAL OPPORTUNITIES. 8. MOREOVER, ASSESSEE HAS GIVEN THE NET PROFIT RATE EARNED BY THE COMPANY IN THE PRECEDING AND SUCCEEDING YEARS W HICH HAS BEEN ACCEPTED BY THE REVENUE AND IS LESS THAN THE NET PR OFIT RATE GIVEN BY THE ASSESSEE DURING THE YEAR UNDER ASSESSMENT. FOR READY PERUSAL, NET PROFIT RATE OF THE ASSESSEE DURING THE PRECEDING AND SUCCEEDING YEARS IS AS UNDER :- ASSESSMENT YEAR 2011-12 5.96% ASSESSMENT YEAR 2010-11 6.53% ASSESSMENT YEAR 2009-10 4.65% ASSESSMENT YEAR 2013-14 4.59% ASSESSMENT YEAR 2014-15 5.48% ASSESSMENT YEAR 2015-16 4.99% ASSESSMENT YEAR 2016-17 1.66% ASSESSMENT YEAR 2017-18 4.46% ITA NO.3856/DEL./2016 6 9. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT WHEN ASSESSEE HAS PROVIDED BOO KS OF ACCOUNTS AS PER QUARRIES RAISED BY THE AO, SPECIFIC FINDINGS REGARDING EACH AND EVERY ENTRY WERE REQUIRED TO BE RETURNED. SO, TO MEET WITH THE ENDS OF JUSTICE, THE MATTER IS REQUIR ED TO BE REMANDED BACK TO THE AO TO DECIDE AFRESH AFTER PERUSING THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS AND AUDITED FINANCIALS AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CON SEQUENTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 14 TH DAY OF JUNE, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 14 TH DAY OF JUNE, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.