Income Tax Officer -I, Bahraich V. Shri Ijhar Ahmad Shah, Bahraich

ITA 406/LKW/2012

• Counselvise Citation: 40623714 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 25-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 20-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAYANK MOHAN MISHRA
• Keywords: Additional evidence
• Section: 143(3); 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.406/LKW/2012 ASSESSMENT YEAR:2009 - 10 SHRI IJHAR AHMAD SHAH, PROP. M/S AWADH TRADERS, KAZIPURA, BAHRAICH. PAN:AYPPS7384A VS INCOME TAX OFFICER - 1, BAHRAICH. (RESPONDENT) (APPELLANT) SHRI RAJNISH YADAV, D. R. APPELLANT BY SHRI MAYANK MOHAN MISHRA, ADVOCATE RESPONDENT BY 25/11/2014 DATE OF HEARING 07 /01/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, LUCKNOW DATED 21/05/2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE LD. COMMISSIONER OF INCOME - TAX (APPEAL) - II, LUCKNOW HAS CONSIDERED THE ADDITIONAL EVIDENCES WITHOUT REMANDING THE MATTER TO THE ASSESSING OFFICER WHICH IS CONTRARY TO RULE. 2. BECAUSE THE LD. COMMISSIONER OF INCOME - TAX (APPEAL) - II , LUCKNOW HAS WRONGLY INTERPRETED THE FACTS OF THE CASE. 3. KEEPING IN VIEW OF THE CASE REASON RECORDED BY AO IN THE ASSESSMENT ORDER, RELIEF ALLOWED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEAL) - II, LUCKNOW MAY BE REJECTED AND ORDER U/S 143(3) MAY KINDLY BE RESTORED. 4. AS PER FORM 35 IN VERIFICATION COLUMN NAME OF SRI BAL MUKUND YADAV HAS BEEN WRITTEN AND SIGNED BY APPELLANT SRI IZHAR AHMAD SHAH. THEREFORE, APPEAL FILED BY THE ASSESSEE IS ERRONEOUS AND CONSIDERING THE SAME IS BAD IN LAW. 2 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT BEFORE CIT(A), TWO ISSUES WERE RAISED BY THE ASSESSEE AS TO WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE BOOKS OF THE ASSESSEE AND THE SECOND ISSUE WAS ON MERIT AS TO WHETHER THE ESTIMATE OF PROFIT @5% OF THE TURNOVER IS JUSTIFIED OR NOT. 5. ON THE FIRST ISSUE I.E. REGARDING REJECTION OF BOOKS U/ S 145(3), THE ISSUE WAS DECIDED BY CIT(A) AGAINST THE ASSESSEE AND THIS ISSUE HAS BECOME FINAL BECAUSE THE ASSESSEE HAS NOT FILED ANY APPEAL ON THIS ISSUE AGAINST THE ORDER OF CIT(A). ON THE SECOND ISSUE, IT WAS HELD BY LEARNED CIT(A) THAT ADOPTION OF RAT E OF 5% IS EXCESSIVE AND ARBITRARY. IT IS ALSO NOTED THAT NO REASONS HAVE BEEN ADVANCED BY ASSESSING OFFICER TO ADOPT THE FIGURE OF 5% FOR ESTIMATING THE PROFITS. HE HAS ALSO GIVEN A FINDING THAT NO PARALLELS HAVE BEEN DRAWN WITH THE CASE OF M/S UNIVERSA L CONSTRUCTION VS. INCOME TAX OFFICER, CITED BY THE ASSESSING OFFICER. HE HAS ALSO NOTED THAT IN THE PRECEDING YEAR, THE PROFIT RATE DISCLOSED BY THE ASSESSEE WAS 5.1% ON TURNOVER OF RS.49.57 LAC WHEREAS IN THE PRESENT YEAR, THE PROFIT RATE IS 1.59% ON TU RNOVER OF RS.370 LAC. HE HAS NOTED THAT THE TURNOVER HAS INCREASED ABOUT FOUR TIMES AND THAT THE INCREASE IN TURNOVER IS USUALLY ACCOMPANIED BY A CORRESPONDING FALL IN PROFIT RATE AS ANY BUSINESSMAN IS PRONE TO COMPROMISE ON PROFITS TO INCREASE THE TURNOV ER. THEREAFTER, HE HAS HELD THAT ADOPTING 2.5% OF TURNOVER AS PROFIT WILL BE REASONABLE IN THE FACTS OF THE PRESENT CASE. HENCE, IT IS SEEN THAT CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ADOPT LESSER PERCENTAGE OF TURNOVER A S PROFIT AT 2.5% AS AGAIN ST 5% FOR THE REASON THAT THE TURNOVER IN THE PRESENT YEAR HAS INCREASED ALMOST FOUR TIMES. THIS DECISION OF CIT(A) APPEARS TO BE REASONABLE AND HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THIS ISSUE. HENCE, WE DECLINE TO INTERFERE IN T HE ORDER OF CIT(A) ON THIS ISSUE. 3 6. THE SECOND OBJECTION OF REVENUE IS REGARDING DELETION OF ADDITION MADE BY ASSESSING OFFICER OF RS.5 LAC U/S 68 OF THE ACT. ON THIS ISSUE, IT IS HELD BY CIT(A) THAT THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS BY PROVI NG THE IDENTITY OF CREDITORS BY GIVING HIS COMPLETE ADDRESS AND PAN ETC. AND IT HAS ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES. IN OUR CONSIDERED OPINION, SIMPLY BECAUSE THE AMOUNT IN QUESTION IS RECEIVED BY THE ASSESSEE BY WAY OF ACCOUNT PAYEE CHEQUE, IT CANNOT BE SAID THAT THE ASSESSEE HAS ESTABLISHED THE CREDITWORTHINESS OF THE CREDITOR. THE WRITTEN SUBMISSIONS, FILED BY THE ASSESSEE BEFORE THE CIT(A), ARE AVAILABLE BEFOR E US ON PAGE NO. 1 & 2 OF THE PAPER BOOK AND IN THE SAME , THERE IS NO WHISPER ABOUT THE CREDITWORTHINESS OF THE LOAN CREDITOR. BEFORE US ALSO, NOTHING HAS BEEN FURNISHED IN SUPPORT OF THE CREDITWORTHINESS OF THE LOAN CREDITOR. HENCE, ON THIS ISSUE, WE RE VERSE THE ORDER OF CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. ON THIS ISSUE, IT IS ALSO HELD BY CIT(A) THAT ONCE THE BOOKS OF ACCOUNT ARE REJECTED, NO FURTHER ADDITION U/S 68 CAN BE MADE BUT AS PER A RECENT JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT, THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE AND THEREFORE, THERE IS NO MERIT IN THIS STAND OF THE CIT(A) ALSO. THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07 /01/2015. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR