Sh. Dharam Bir Singh, New Delhi V. ACIT, New Delhi

ITA 4099/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0836 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 21-07-2016
• Court: TRIBUNAL

Judgement Text

1 ITA NOS. 4099 & 4174/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 4099 /DEL/2 016 (A.Y 2012-13) DHARAM BIR SINGH 97, 2 ND FLOOR, SAVITA VIHAR NEW DELHI ABJPS5642N (APPELLANT) VS ACIT CIRCLE-62(1) NEW DELHI (RESPONDENT) I.T.A. NO. 4174 /DEL/20 16 (A.Y 2012-13) ACIT CIRCLE-62(1), ROOM NO. 2202, 2 ND FLOOR, CIVIC CENTRE, MINTO ROAD NEW DELHI (APPELLANT) VS DHARAM BIR SINGH 97, 2 ND FLOOR, SAVITA VIHAR NEW DELHI ABJPS5642N (RESPONDENT) APPELLANT BY SH. R. S. SINGHVI, CA & SH. SATYAJEET GOEL, ADV RESPONDENT BY MS. ASHIMA NEB, SR. DR ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE AGAINST THE ORDER DATED 23/05/2016 PASSED BY CIT(A) -20, NEW DELHI FOR ASSESSMENT YEAR 2012-13. DATE OF HEARING 26.02.2019 DATE OF PRONOUNCEMENT 27.03.2019 2 ITA NOS. 4099 & 4174/DEL/2016 2. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A. NO. 4099 /DEL/2016 (ASSESSEES APPEAL) 1 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 12,69,185/- BY ESTIMATING NET PROFIT RATE AT 8% AS AGAINST DECLARED NET PROFIT RATE OF 6.14 %. (II) THAT THE IMPUGNED ADDITION IS ILLEGAL AND UN JUSTIFIED AS NO SUCH ADDITION WAS MADE BY THE ASSESSING OFFICER. (III) THAT IN ANY CASE, THE ABOVE ADDITION BEING I N THE NATURE OF ENHANCEMENT AND IN THE ABSENCE OF PROPER OPPORTUNITY AS REQUIRED UNDER THE LAW, NO SUCH ADDITION IS CALLED FOR. 2(I). THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING 10% AD HOC DISALLOWANCE IN RESPECT OF CL AIM OF TRAVELLING, CONVEYANCE, TELEPHONE AND VEHICLE EXPENSES. (II) THAT IN THE ALTERNATIVE, IF THE ADDITION ON TH E BASIS OF NET PROFIT RATE OF 8% IS SUSTAINED, THERE IS NO JUSTIFICATION FOR ANY SUCH D ISALLOWANCE. 3(I). THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE OF RS. 60,000/- U/S. 40A(IA ) ON THE ALLEGED GROUND OF NON DEDUCTION OF TAX ON PAYMENT RELATING TO ACCO UNTING CHARGES. (II) THAT IMPUGNED DISALLOWANCE IS ILLEGAL, ARBITRA RY AND WITHOUT ANY FACTUAL AND LEGAL BASIS. 4(I). THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING ADDITION OF RS. 4,80,000/- ON ACCOUNT OF LOW WITHDRAWALS. (II) THAT ADDITION IS ILLEGAL, ARBITRARY AND OR HI GHLY EXCESSIVE. I.T.A. NO. 4174 /DEL/2016 (REVENUES APPEAL) 1. IN THE FACTS AND CIRCUMSTANCES, THE LD.CIT(A) HAS E RRED IN DELETING THE ADDITION OF RS. 3,43,82,544/- ON ACCOUNT OF CASH PA YMENT MADE U/S 43A(3) OF THE I T. ACT, 3 ITA NOS. 4099 & 4174/DEL/2016 2. IN THE FACTS AND CIRCUMSTANCES, THE LD.CIT(A) HAS ERRED BY REDUCING THE ADDITION FROM RS. 63,13,469/- TO RS. 12,69,185/- ON A/C OF SUNDRY CREDITORS. 3. IN THE FACTS AND CIRCUMSTANCES, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 10,63,256/- ON A/C OF LABOR AND WAG ES 4. IN THE FACTS AND CIRCUMSTANCES, THE LD.CIT(A) HAS ERRED IN REDUCING THE ADDITION FROM RS. 1.42,01,990/- TO RS. 60,000/- ON A/C OF NON DEDUCTION OF TDS U/S 40(A)(IA) OF THE I.T. ACT. 5. IN THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) HAS ERRED BY REDUCING THE ADDITION FROM RS. 15,88,935/- TO RS. 4,80,000/- ON A/C OF LOW HOUSEHOLD EXPENSES. 6. THAT THE APPELLANT, CRAVES, LEAVE TO ADD, AMEND OR MODIFY THE GROUND(S) OF APPEAL AT ANY TIME. 3. THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE SMALL ROAD PROJECTS FROM THE GOVERNMENT ONLY UNDER THE NAME AND STYLE O F M/S PRINKLE CONSTRUCTION COMPANY. RETURN OF INCOME WAS FILED O N 8/10/2012 DECLARING INCOME AT RS. 40,82,120/-. THE RETURN OF INCOME WA S PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961. SUBSEQUENTLY, THE CASE W AS SELECTED FOR SCRUTINY UNDER COMPULSORY SELECTION. FIST NOTICE U/S 143(2) WAS ISSUED ON 6/9/2013 WHICH WAS SERVED UPON THE ASSESSEE WITHIN THE STIPU LATED STATUTORY PERIOD. FOR THE NOTICES U/S 142(1) ALONG WITH DETAILED QUES TIONNAIRE WERE ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE THE ASSESSEE A ND C.A/AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE ASSESSM ENT PROCEEDINGS FROM TIME TO TIME AND FIELD DETAILS BEFORE THE ASSESSING OFFI CER. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO SUBMIT COMPA RATIVE CHART OF GP/NP RATIO FOR THE CURRENT ASSESSMENT YEAR AND THE PREVI OUS ASSESSMENT YEARS. THE FOLLOWING CHART WAS SUBMITTED:- A.Y SALES G.P G.P RATIO N.P N.P RATIO 2012-13 6,81,41,288/- 81,45,899/- 11.95% 41,82,118/- 6.14% 2011-12 3,60,20,509/- 55,10,442/- 15.30% 22,00,130/- 6.11% 2010-11 9,36,69,458/- 96,75,004/- 10.33% 21,24,640/- 2.27% 4 ITA NOS. 4099 & 4174/DEL/2016 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS, BILLS, VOUCHERS, MUSTER ROLLS, WAGE SHEETS, LOG BOOKS ETC. FOR VERIFICATION. HOWEVER, THE ASSESSEE ONLY PRODUCED COPY OF WAGE SHEET, MUSTER-ROLLS AND SOME RANDOM BILLS. AFTER V ERIFICATION OF THE SAME BY THE ASSESSING OFFICER FOLLOWING ADDITIONS/DISALLOWA NCES WAS MADE:- (I) ADDITION U/S 40A (3) AMOUNTING TO RS.3,43,82,54 4/- (II) DISALLOWANCE OUT OF LABOUR AND WAGES EXPENSES AMOUNTING TO RS.10,63,256/- (III)DISALLOWANCE U/S 40(A) (IA) AMOUNTING TO RS. 1 ,42,01,990/- (IV) ADDITION ON ACCOUNT OF GROSS RECEIPTS AMOUNTIN G TO RS. 4,26,044/- (V) DISALLOWANCE OUT OF SUNDRY CREDITORS AMOUNTING TO RS. 63,13,469/-. (VI) ADDITION ON ACCOUNT OF NIL DRAWINGS, AMOUNTING TO RS. 15,88,935/- (VII)DISALLOWANCE OUT OF TRAVELLING AND CONVEYANCE EXPENSES AMOUNTING TO RS. 48,045/-. (VIII)DISALLOWANCE OUT OF TELEPHONE EXPENSES AMOUNT ING TO RS. 6,253/- (IX) DISALLOWANCE OUT OF VEHICLE EXPENS3ES AMOUNT T O RS. 70,000/- THE ASSESSING OFFICER ALSO MADE ADDITION OF RS. 85, 00,000/- IN VIOLATION OF SECTION 269SS OF INCOME TAX ACT, 1961. THE ASSESSIN G OFFICER ASSESSED THE INCOME OF THE ASSESSEE AT RS.6,21,82,660/-. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL O F THE ASSESSEE. 6. THE LD. AR SUBMITTED THAT CIT(A) ESTIMATED THE N ET PROFIT @ 8% AS AGAINST DECLARED NET PROFIT RATE OF 6.14% BUT HAS N OT ALLOWED ANY EXPENSES TO THAT EXTENT. THE LD. AR AGREED THAT IF THE EXPENSE S ARE ALLOWED THE NET PROFIT RATE AT 8% SHOULD BE TAKEN INTO ACCOUNT BY THE TRIB UNAL. HENCE, GROUND NO. 1 WILL NOT BE PRESSED IF THE SAME IS KEPT BY ESTIMATI NG NET PROFIT AT 8% AS HELD BY 5 ITA NOS. 4099 & 4174/DEL/2016 THE CIT(A) AND, THEREFORE, GROUND NO. 1 IS NOT PRES SED TO THAT LIMITED EXTENT OF ASSESSEES APPEAL. 7. AS RELATED TO GROUND NO. 4 OF THE ASSESSEES APP EAL, THE LD. AR SUBMITTED THAT SUSTAINING ADDITION OF RS. 4,80,000/ - ON ACCOUNT OF LOW WITHDRAWALS IS ALSO NOT JUSTIFIED AS THE WITHDRAWAL S WERE FOR HOUSE HOLD EXPENSES. 8. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER AND FURTHER SUBMITTED THAT AS REGARDS REVENUES APPEAL. THE ST ATUTORY DISALLOWANCE HAS TO BE KEPT IN MIND BY ALLOWING THE NET PROFIT RATE 8% AS SUGGESTED BY THE LD. AR DURING THE HEARING. BUT THE REVENUE IS HEAVILY RE LYING ON THE ASSESSMENT ORDER AND SUBMITTED THAT THE ASSESSMENT ORDER SHOUL D PREVAIL. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. AS REGARDS ESTIMATION OF NET PROFIT AT 8%, THERE IS NO DISPUTE WITH THE NET PROFIT RATE WHICH IS SLIGHTLY INCREASED FOR ASS ESSMENT YEAR 2012-13. THUS, WE FIND THAT THE ESTIMATION OF PROFIT AT 8% IS REAS ONABLE ON THE FACTS OF THE PRESENT CASE AND SHOULD MEET THE ENDS OF JUSTICE. ONCE THE PROFIT, IF ESTIMATED ON GROSS RECEIPTS, NO FURTHER ADDITION NEEDS TO BE MADE ON THIS ACCOUNT. WE, THEREFORE, DO NOT INTERFERE WITH THE FINDINGS OF TH E CIT(A) AS FAR THE ESTIMATION OF THE PROFIT IS CONCERN. HOWEVER, IN OUR CONSIDER ED OPINION, ONCE NET PROFIT IS ESTIMATED AS A PERCENTAGE OF SALES NO FURTHER ALLOW ANCE SHOULD BE MADE IN THE PROFIT AND LOSS ACCOUNT. SINCE, WE HAVE CONFIRMED THE ESTIMATION OF NET PROFIT AT 8%. WE DO NOT FIND ANY MERIT IN THE ADDITIONS/D ISALLOWANCES MADE BY THE ASSESSING OFFICER. THUS, GROUND NO. 1 TO 3(II) ARE PARTLY ALLOWED. AS REGARDS TO GROUND NO. 4(I) TO 4 (III) IS CONCERNED THE SAID WI THDRAWALS ARE FOR HOUSEHOLD EXPENSES AND HENCE THE ASSESSING OFFICER AS WELL AS THE CIT(A) WAS NOT RIGHT IN MAKING THIS ADDITION. GROUND NO. 4(I) TO 4 (III) AR E ALLOWED. AS REGARDS TO REVENUES APPEAL IS CONCERNED, SINCE WE HAVE DECIDE D THE ISSUES IN ASSESSEES APPEAL THE SAME ARE ALSO PARTLY ALLOWED AS PER THE ISSUE-WISE DISCUSSIONS IN THE ABOVE PARAS. 6 ITA NOS. 4099 & 4174/DEL/2016 10. IN RESULT, ASSESSEES AND REVENUES APPEAL ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MARCH, 2019 . SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 27/03/2019 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NOS. 4099 & 4174/DEL/2016 DATE OF DICTATION 26.02.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.02.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 2 7 .0 3 .2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 7 .0 3 .2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 7 .0 3 .2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK