ITO, New Delhi V. Mrs. Naema Begam, New Delhi

ITA 3990/DEL/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8846 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 26-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P DAM K AUNJNA
• Keywords: Assessment record
• Section: 144

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI B.C. MEENA , ACCOUNTANT MEMBER ITA NO. 3990 /DEL/201 1 ASSESSMENT YEAR 200 7 - 08 INCOME TAX OFFICER VS. MRS. NAEMA BEGAM, WARD - 29(2), L/R AND WIFE OF LATE MOHD. NASIM NEW DELHI. (ASSESSEE) PROP. M/S NATIONAL DRUG STORE, 94A, TILAK BAZAR, 1 ST FLOOR, GANDHI GALI, DELHI - 110006 (PAN AA BPN 0006 C ) ( APPELLANT) (RESPONDENT) DATE OF HEARING : 2 6 .02.2015 DA TE OF PRONOUNCEMENT : 27 . 2.2015 APPELLANT BY : NONE RESPONDENT BY: SH RI P. DAM K AUNJNA , SR. D.R. ORDER PER SHRI GEORGE GEORGE K , J M : 1. TH IS APPEAL , AT THE INSTANCE OF THE REVENUE , IS DIRECTED AGAINST THE CIT(A) S ORDER DATED 27 .0 6 .201 1 . THE RELEVANT ASSESSMENT YEAR IS AY 2007 - 08 . 2. THE GROUNDS RAISED READS AS FOLLOW: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) XXV, NEW DELHI HAS ERRED IN DELETING THE ADDITION OF RS.35,17,128/ - U/S 41 OF THE IT ACT. IT A NO. 3990 /DEL /201 1 2 2. ON T HE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) XXV, NEW DELHI HAS ERRED IN DELETING THE ADDITION OF RS.46,715/ - ON A/C OF LOW G.P. RATE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) XXV, NEW DELHI HAS ERRED IN D ELETING THE ADDITION OF RS. 26,761/ - U/S 68 OF THE IT ACT. GROUND NO.1 3. THE ASSESSEE IN ITS BOOKS OF ACCOUNT HAD SHOWN RS.37,17,128/ - AS SUNDRY CREDITORS. IN THE COURSE OF SCRUTINY ASSESSMENT, ASSESSEE WAS ASKED TO FILE THE DETAILS OF THE SUNDRY CREDIT ORS . S INCE THE ASSESSEE DID NOT FILE DETAILS / CONFIRMATION B EFORE THE AO , T HE ASSESSMENT WAS COMPLETED EX - PARTE U/S 144 OF THE ACT BY ADDING THE ENTIRE SUNDRY CREDITS TO THE TOTAL INCOME. 3.1 . AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE FILED AN APPEAL BEF ORE THE CIT(A). THE LD. REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD EXPIRED ON 22.02.2010 AND A CCOUNTANT OF THE ASSESSEE WAS NOT COOPERATED . IT WAS SUBMITTED THAT THE LEGAL HEIRS OF THE ASSESSEE BEING LADY COULD NOT REPRESENT THE CASE PR OPERLY BEFORE THE AO. 3.2 THE CIT(A) REDUCED THE ADDITION ON ACCOUNT OF SUNDRY CREDITOR TO RS.2 , 00 ,000/ - INSTEAD OF RS.37,17,128/ - MADE BY THE ASSESSING OFFICER. 3.3 THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD. D R RELIED ON THE ORDER OF TH E ASSESSMENT. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE 3.4 . WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL ON RECORD. THE CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER: - IT A NO. 3990 /DEL /201 1 3 PARA 7.3 I HAVE CONSIDERED THE ADDITION OF THE AO AND THE SUBMISSIONS OF TH E ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSEE. IT IS APPARENT FROM THE ORDER OF THE AO THAT THE ASSESSEE EVEN THOUGH TECHNICALLY THE ASSESSEE WAS NOT ABLE TO REPRESENT THE CASE PROPERLY DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE AO WAS NOT JUSTIFIED TO MAKE SUCH AD HOC ADDITION AND IN A SWEEPING MANNER AND IN A VERY HIGH PITCHED ASSESSMENT BY DISALLOWING T HE ENTIRE SUNDRY CREDITORS W ITHOUT INQUIRING THE GENUINENESS OF THE SUNDRY CREDITORS. PERUSAL OF THE ORDER OF THE AO AN D THE ASSESSMENT RECORD SHOWS THAT THE AO HAD GIVEN LIMITED OPPORTUNITY TO THE ASSESSEE TO REPRESENT THE CASE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NO FURTHER OPPORTUNITY OR INQUIRY WAS MADE DURING THE COURSE OF REMAND PROCEEDINGS. PARA 7.4 IT IS MATTER OF FACT THAT THE ASSESSEE IS A VERY SMALL ASSESSEE WITH NOMINAL INCOME AND HAS NOT BEEN ABLE TO COMPLY WITH THE RIGOROUS OF LA W ON THE ISSUE OF COMPLIANCE. BUT AT THE SAME TIME, IT IS APPARENT THAT THE AO HAS MADE THE EX - PARTE ASSESSMENT U/S 144 ON TECHNICAL GROUNDS AND THE ADDITION OF THE ENTIRE SUNDRY CREDITORS HAS BEEN MADE ON AN AD HOC MANNER WHICH DOES NOT SEEM TO BE LEGALLY SOUND AND PROPER AND APPROPRIATE. IT MAY ALSO BE MENTIONED THAT WHEN THE SUBMISSIONS OF THE ASSESSEE WERE REMANDED TO T HE AO, THE AO WAS DIRECTED TO GIVE FURTHER OPPORTUNITY TO THE ASSESSEE AND EXAMINE THE CLAIM OF THE ASSESSEE DURING THE COURSE OF THE REMAND PROCEEDINGS BUT IT IS SEEN THAT THE AO HAS JUST TRIED TO DEFEND HIS ORDER AND HAS SENT THE REMA N D REPORT BY S UMMARI SING THE ASSESSMENT ORDER WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSEE AND WITHOUT EXAMINING THE SUBMISSIONS AND CLAIM OF THE ASSESSEE. IT IS DIFFICULT AND IT WILL BE MISCARRIAGE OF JUSTICE IF THE ADDITION OF ENTIRE SUNDRY CREDITORS WHICH HAS BEEN MAD E IN AN AD HOC MANNER IS SUSTAINED. IT IS ALSO DIFFICULT TO SUSTAIN SUCH AD HOC ADDITION AS THE ASSESSEE IS A TOO SMALL ASSESSEE AND THE ASSESSEE HAS EXPIRED DURING THE PERIOD OF APPELLATE PROCEEDINGS. PARA 7.5 AFTER CONSIDERING ALL THE FACTS AND CIRCUMS TANCES OF THE CASE, I AM OF THE VIEW THAT IT WILL NOT BE INTEREST OF SUBSTANTIVE JUSTICE TO CONFIRM SUCH AD HOC ADDITION AND I AM CONSTRAINED TO DELETE THE AD HOC ADDITION MADE BY THE AO AS THE SAME HAS BEEN MADE WITHOUT ANY INQUIRY AND WITHOUT ALLOWING AN Y FURTHER OPPORTUNITY DURING THE COURSE OF REMAND PROCEEDINGS. AT THE SAME TIME, KEEPING THE INTEREST OF MIND THAT THERE HAS BEEN NO PROPER REPRESENTATION FROM THE ASSESSEE AND THERE MAY HAVE BEEN POSSIBLE LEAKAGE OF REVENUE, IT WILL BE IN THE INTEREST OF JUSTICE TO CONFIRM SOME LUMP SUM ADDITION AND ACCORDINGLY, A LUMP SUM ESTIMATED ADDITION OF RS.2,00,000/ - IS CONFIRMED TO PLUG THE POSSIBLE LEAKAGE OF REVENUE AND THE BALANCE ADDITION OF RS.35,17,128/ - IS DELETED. 3.5 THE ENTIRE SUNDRY CREDITOR S APPEARIN G IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS ADDED BY THE ASSESSING OFFICER IN THE COURSE OF BEST JUDGMENT IT A NO. 3990 /DEL /201 1 4 ASSESSMENT U/S 144 OF THE ACT. THE ASSESSING OFFICER HAD MADE THE ADDITION WITHOUT MAKING ANY ENQUIRY OR GRANTING OPPORTUNITY TO THE ASSESSEE DURING THE COURSE OF REMAND PROCEEDING. THE CIT(A) KEEPING IN VIEW , THE INTEREST OF JUSTICE AND EQUITY HAD REDUCED THE ADDITION TO RS.2 ,00,0 00 / - . THE REVENUE HAS NOT PLACED ANY MATERIAL /DOCUMENT TO ENHANCE THE ADDITION SUSTAINED BY THE CIT(A). ACCORDINGLY, WE CO NFIRM THE CIT(A) S ORDER ON THIS ISSUE . THEREFORE, GROUND NO.1 RAISED BY THE REVENUE IS REJECTED . GROUND NO.2 4 . THE ASSESSEE WAS IN THE BUSINESS OF SUPPLYING RAW MATERIAL FOR AYURVEDIC AND UNANI MEDICINE . O N A TOTAL TURNOVER OF RS.23,50,219/ - . THE A SSESS EE HAD DECLARED THE NET PROFIT OF RS.70,796/ - . T HE EX - PARTE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT WHEREIN AO MADE AN ADDITION OF RS. 46,715/ - BY ESTIMATING GP AT 5% ON THE TURN OVER OF RS.23,50,219/ - (1,17,511/ - - 70,796 / - ). 4.1 THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 4.2 THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 4.3 . WE HAVE HEARD LD. D R AND PERUSED THE MATERIAL ON RECORD. THE RELEVANT FINDING OF THE CIT(A) READS AS UNDER: - PARA 5.3 . I HAVE CONSIDERED THE ADDITION OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSEE. IT IS MATTER OF FACT THAT THE AO HAS MADE THE GP ADDITION PURELY ON ESTIMATED BASIS WITHOUT BRINGING ANY MATERIAL ON RECORD AND THE SAME IS APPAR ENTLY NOT JUSTIFIED. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THE AO IS NOT JUSTIFIED TO MAKE SUCH ESTIMATED ADDITION WITHOUT ANY PROPER FINDING OR BASIS AND ACCORDINGLY , THE SAME IS DELETED. IT A NO. 3990 /DEL /201 1 5 4.4 . THE CIT(A ) HA S CATEGORICALLY HELD THAT GP ADDITION MADE BY THE AO IS ON ESTIMATE BASIS WITHOUT ANY MATERIAL . THE REVENUE HAS NOT PRODUCED ANY MATERIAL /DOCUMENT TO UPHOLD THE GP ESTIMATED BY THE AO. THEREFORE, WE UPHOLD THE CIT(A) S ORDER ON THIS ISSUE A S CORRECT AND IN ACCORDANCE WITH LAW . HENCE, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED . GROUND NO.3 5 . THE AO MADE AN ADDITION OF RS.26,761/ - BEING CASH IN HAND. THE CIT(A) DELETED THE ADDITION BY OBSERVING THUS: - PARA 6.3. I HAVE CONSIDERED THE ADDITION OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSEE THAT THE AO HAS MADE THE ADDITION OF RS 26,761/ - MERELY ON THE BASIS OF DETAILS OF CASH IN HAND AS PER THE BOOKS OF ACCOUNTS WITHOUT ANY PROPER FINDING. AF TER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THE AO IS NOT JUSTIFIED TO MAKE SUCH AD HOC ADDITION MERELY ON TECHNICAL GROUNDS AND ACCORDINGLY, THE SAME IS DELETED. 5. 1 WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL O N RECORD. ON PERUSAL OF THE ASSESSMENT ORDER, WE NOTICE THAT THE AO HAD MADE THE ADDITION WITHOUT ANY BASIS. THE CASH IN HAND IS DULY REFLECTED IN THE BOOKS OF ACCOUNT. THEREFORE, THE CIT(A) S ORDER IS JUSTIFIED AND WE REFRAIN FROM INTERFERING WITH THE SAM E. IT IS ORDERED ACCORDINGLY. IT A NO. 3990 /DEL /201 1 6 6 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. TH E DECISION WAS PRONOUNCED IN THE OPEN COURT ON 27 TH FEBRUARY , 201 5 . SD/ - SD/ - ( B.C. MEENA ) (GEORGE GEORGE K.) A CCOUNTANT MEMBER J UDICIAL MEMBER DATED: 27 TH FEBRUARY , 201 5 . AKS/ - COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST . REGISTRAR, ITAT, NEW DELHI