M/s. The Mattewal Co-operative, Amritsar. V. The Income-tax Officer, Amritsar.

ITA 435/ASR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0614 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 23-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Rejection of books of accounts
• Section: 44AD; 133A; 234B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS. 434 & 435(ASR)/2012 ASSESSMENT YEARS:2001-02 & 2006-07 PAN :AAAAT5385J M/S. THE MATTEWAL CO-OPERATIVE L/C VS. INCOME TAX O FFICER, SOCIETY LTD; AMRITSAR. WARD IV(3), AMRITSAR . (APPELLANT) (RESPONDENT) APPELLANT BY:SH. P.N.ARORA, ADVOCATE RESPONDENT BY:SH. TARSEM LAL, DR DATE OF HEARING: 01/01/2013 DATE OF PRONOUNCEMENT:02/01/2013 ORDER PER BENCH ; THESE TWO APPEALS FILED BY THE ASSESSEE ARISE FROM TWO DIFFERENT ORDERS OF CIT(A), AMRITSAR, EACH DATED 06.11.2012 R ELATING TO ASSESSMENT YEARS 2001-02 & 2006-07. 2. IN ITA NO.434(ASR)/2012, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA NOS. 434 & 435(ASR)/2012 2 1. THAT THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE ORDER OF THE LD. CIT(A) ARE BOTH AGAINST THE FACTS OF THE CA SE AND UNTENABLE IN LAW. 2. THAT THE ASSESSMENT ORDER PASSED IS ILLEGAL, INV ALID AND VOID-AB- INITIO AND AS SUCH THE SAME DESERVES TO BE CANCELLE D. 3. THAT WHILE COMPLETING THE ASSESSMENT THE AO HAS NOT APPLIED HIS MIND AND HAS STRAIGHT AWAY REJECTED THE ACCOU NT BOOKS WITHOUT PIN POINTING OUT ANY DEFECT/OMISSION OR COM MISSION IN THE BOOKS OF ACCOUNTS. 4. THAT THE BOOKS OF ACCOUNTS WERE DULY MAINTAINED AND ALL THE VOUCHERS ARE DULY AVAILABLE AND THEY WERE PRODUCED BEFORE THE A.O. IN RESPONSE TO THE REMAND REPORT WHICH WAS SU BMITTED TO THE CIT(A) BY THE AO. THUS, THE BOOKS OF ACCOUNTS A LONGWITH THE VOUCHERS ARE DULY MAINTAINED AND THERE WAS NO R EASON AND OCCASION FOR REJECTING THE SAME. AS SUCH THE ADDI TION MADE MAY BE DELETED. 5. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT RULE 6F(2) OF THE ACT, IS NOT APPLICABLE TO THE PRESENT ASSESSEE AND AS SUCH THE BASIS OF REJECTION OF BOOKS OF ACCOUNTS IS ILLEGAL AND THE BOOKS OF ACCOUNTS AS PRODUCED BEFORE THE ASSESSING OFFICE R IN RESPONSE TO THE REMAND REPORT SHOULD HAVE BEEN ACCE PTED WHICH WERE PRODUCED ALONG WITH THE VOUCHERS & OTHER DOCU MENTS. 6. THAT THE BOOKS OF ACCOUNT WERE PROPERLY AND REGULAR LY MAINTAINED ALONGWITH THE VOUCHERS WHICH WERE DULY P RODUCED BEFORE THE AO AND NO SPECIFIC DEFECT HAS BEEN POI NTED OUT BY THE A.O. OTHERWISE THE BOOKS OF ACCOUNTS AS PRODUC ED AND MAINTAINED ARE GENUINE AND IN VIEW OF THESE CIRCUMS TANCES THE BOOKS OF ACCOUNTS SHOULD HAVE BEEN ACCEPTED AND THE ADDITION MADE BY THE AO SHOULD HAVE BEEN DELETED IN TOTO. ALTERNATIVELY, THE ADDITION MADE IS VERY HIGH & EXC ESSIVE. ALTERNATIVELY WITHOUT PREJUDICE TO THE ABOVE THE RA TE SUSTAINED @ 6% BY THE LD. CIT(A) IS VERY HIGH AND EXCESSIVE. 7. THAT THE AUTHORITIES BELOW HAVE GROSSLY ERRED IN CHARGING INTEREST UNDER SECTION 234B & 244/234D OF THE ACT. THE AO ITA NOS. 434 & 435(ASR)/2012 3 DID NOT APPRECIATE THAT NO INTEREST U/S 234B, 244D/ 234D OF THE ACT, IS CALLED FOR AND THE SAME MAY BE DELETED. ALTERNATIVELY, THE INTEREST CHARGED U/S 234B & 244 /234D OF THE ACT, IS VERY HIGH & EXCESSIVE. 8. ANY OTHER GROUND OF APPEAL WHICH MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 3. IN ITA NO.435(ASR)/2012, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE ORDER OF THE LD. CIT(A) ARE BOTH AGAINST THE FACTS OF THE CA SE AND UNTENABLE IN LAW. 2. THAT THE ASSESSMENT ORDER PASSED IS ILLEGAL AND THE SME MAY BE CANCELLED AS THE ORDER OF THE CIT, PASSED U/S 263 O F THE INCOME TAX ACT, 1961 IS ILLEGAL, INVALID AND VOID-AB-INIT IO. AS SUCH THE ASSESSMENT DESERVES TO BE CANCELLED. 3. THAT WHILE COMPLETING THE ASSESSMENT THE AO HAS NOT APPLIED HIS MIND AND HAS STRAIGHT AWAY REJECTED THE ACCOU NT BOOKS WITHOUT PIN POINTING OUT ANY DEFECT/OMISSION OR COM MISSION IN THE BOOKS OF ACCOUNTS, WHICH ARE STILL LYING IN THE CUSTODY OF THE DEPARTMENT AND AS SUCH THE ASSESSMENT DESERVES TO B E CANCELLED. 4. THAT THE BOOKS OF ACCOUNTS WERE DULY MAINTAINED AND ALL THE VOUCHERS ARE DULY AVAILABLE AND THEY WERE PRODUCED BEFORE THE A.O. IN RESPONSE TO THE REMAND REPORT WHICH WAS SU BMITTED TO THE CIT(A) BY THE AO. THUS, THE BOOKS OF ACCOUNTS A LONGWITH THE VOUCHERS ARE DULY MAINTAINED AND THERE WAS NO R EASON AND OCCASION FOR REJECTING THE SAME. AS SUCH THE ADDI TION MADE MAY BE DELETED. THAT THE RESULTS SHOWN IN THE BOOKS OF ACCOUNTS SHOULD HAVE BEEN ACCEPTED AS THE BOOKS OF ACCOUNTS WERE DULY MAINTAINED IN ACCORDANCE WITH THE LAW. ITA NOS. 434 & 435(ASR)/2012 4 5. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT RULE 6F(2) OF THE ACT, IS NOT APPLICABLE TO THE PRESENT ASSESSEE AND AS SUCH THE BASIS OF REJECTION OF BOOKS OF ACCOUNTS IS ILLEGAL AND THE BOOKS OF ACCOUNTS AS PRODUCED BEFORE THE ASSESSING OFFICE R IN RESPONSE TO THE REMAND REPORT SHOULD HAVE BEEN ACCE PTED WHICH WERE PRODUCED ALONG WITH THE VOUCHERS & OTHER DOCU MENTS. A COPY OF THE LETTER ADDRESSED BY THE ACIT DATED 02.1 1.2012 IS MADE PART & PARCEL OF THE GROUNDS OF APPEAL. 6. THAT THE BOOKS OF ACCOUNT WERE PROPERLY AND REGULAR LY MAINTAINED ALONGWITH THE VOUCHERS NO SPECIFIC DEFE CT HAS BEEN POINTED OUT BY THE A.O. EXCEPT TWO BILLS FOR RS.27, 350/- AND RS.32,550/-. OTHERWISE THE BOOKS OF ACCOUNTS AS PR ODUCED AND MAINTAINED ARE GENUINE AND IN VIEW OF THESE CIRCUMS TANCES THE BOOKS OF ACCOUNTS SHOULD HAVE BEEN ACCEPTED AND THE ADDITION MADE BY THE AO SHOULD HAVE BEEN DELETED IN TOTO AS ALL THE BILLS AND VOUCHERS ARE AVAILABLE AND ARE DULY MAINTAINED AND THE TOTAL ADDITION MADE MAY BE DELETED. ALTERNATIVELY, THE ADDITION MADE IS VERY HIGH & EXC ESSIVE. ALTERNATIVELY WITHOUT PREJUDICE TO THE ABOVE THE RA TE SUSTAINED @ 6% BY THE LD. CIT(A) IS VERY HIGH AND EXCESSIVE. 7. THAT WITHOUT PREJUDICE TO THE ABOVE THE RATE SUS TAINED BY THE LD. CIT(A) @ 6% IS VERY HIGH & EXCESSIVE. THAT THE RESU LTS SHOWN IN THE BOOKS OF ACCOUNTS SHOULD HAVE BEEN ACCEPTED AS THE BOOKS OF ACCOUNTS WERE DULY MAINTAINED IN ACCORDANC E WITH THE LAW. 8. ANY OTHER GROUND OF APPEAL WHICH MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 4. SINCE THE ISSUES INVOLVED IN BOTH THE APPEALS A RE IDENTICAL AND THEREFORE, WE ARE DISPOSING OF THE SAID APPEALS BY THIS CONSOLIDATED ORDER. 5. IN ITA NO.434(ASR)/2012, THE BRIEF FACTS ARE THA T THE SURVEY PROCEEDINGS U/S 133A OF THE ACT WERE CONDUCTED ON 2 7.03.2008. DURING THE ITA NOS. 434 & 435(ASR)/2012 5 SURVEY, THE INCOME TAX DEPARTMENT FOUND COMPUTERIZE D CASH BOOK AND LEDGER AND NO SUPPORTING BILLS AND VOUCHERS WERE F OUND. THE A.O. OBSERVED THAT THE PRESIDENT OF THE SOCIETY CONCEDED ON 27.03 .2008 DURING THE SURVEY THAT THE BOOKS OF ACCOUNT ARE NOT MAINTAINED. THERE FORE, THE AO APPLIED THE PROVISIONS OF SECTION 145(3) OF THE ACT AND APPLIED THE NET PROFIT RATE OF 8% UNDER THE PROVISIONS OF SECTION 44AD OF THE ACT AND COMPUTED THE INCOME AT RS.2,24,096/- AS AGAINST LOSS OF RS.3340/- DECLAR ED BY THE ASSESSEE. 6. BEFORE THE LD. CIT(A), THE ASSESSEE MADE THE WRI TTEN SUBMISSIONS AND THE PAPER BOOK WHICH WERE SENT TO THE AO FOR THE RE MAND REPORT. THE LD. CIT(A) AFTER CONSIDERING THE REMAND REPORT AND THE REPLY OF THE ASSESSEE IN REJOINDER UPHELD THE APPLICATION OF SECTION 145(3) OF THE ACT, ON THE BASIS THAT ASSESSEES PRESIDENT HAD CONCEDED TO HAVE ACCE PTED THE BOOKS OF ACCOUNT ARE NOT MAINTAINED. THE LD. CIT(A) ON THE B ASIS THE NET PROFIT RATE 6% APPLIED IN ASSESSEES OWN CASE BY THE ITAT, AMR ITSAR BENCH FOR THE ASSESSMENT YEAR 2007-08 IN ITA NO.355(ASR)/2010 DAT ED 16.06.2011 APPLIED THE N.P. RATE OF 6% ON THE GROSS CONTRACT R ECEIPTS DECLARED BY THE ASSESSEE IN THE IMPUGNED YEAR. 7. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N. ARORA , ADVOCATE, AT THE OUTSET, ARGUED THAT N.P. RATE OF 5% BE APPLIED IN V IEW OF THE DECISION OF THE ITAT, AMRITSAR BENCH IN THE CASE OF MOHAN SINGH CON TRACTORS VS. ITO, ITA NOS. 434 & 435(ASR)/2012 6 GURDASPUR, IN ITA NO.59(ASR)/2012 DATED 05.06.2012 AND IN THE CASE OF I.T.O. NAWANSHAHAR VS. M/S. SURINDER PAUL NAYYAR CO NTRACTORS, NAWANSHHAR, IN ITA NO.366(ASR)/2010 DATED 30.04.201 2, WHERE ON IDENTICAL FACTS, THE ITAT, AMRITSAR BENCH HAS APPLIED A N.P. RATE OF 5% ON THE CONTRACT RECEIPTS DECLARED BY THE ASSESSEE. HE ALSO RELIED UPON THE EXPLANATION GIVEN IN THE FORM OF SUBMISSIONS AND TH E PAPER BOOK BEFORE THE LD. CIT(A) AND THE A.O. IN THE REMAND PROCEEDINGS, WHICH IS AVAILABLE ON RECORD. 8. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF BOTH THE AUTHORITIES BELOW AND ARGUED THAT THE INCOME TAX PR OCEEDINGS OF EVERY YEAR IS AN INDEPENDENT PROCEEDINGS AND THEREFORE, THE FA CTS OF EACH CASE ARE INDEPENDENT IN EACH YEAR, IN CASE OF EVEN THE SAME ASSESSEE. THEREFORE, THE LD. DR PRAYED TO CONFIRM THE ORDER OF THE LD. CIT(A ), WHO HAS RIGHTLY APPLIED N.P. RATE OF 6% FOLLOWING THE ORDER OF THE ITAT, AMRITSAR BENCH, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 . 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS PER ARGUMENTS MADE BY THE LD. COUNSEL FOR THE AS SESSEE, MR. P.N. ARORA, WHO HAS NOT PURSUED APPLICATION OF PROVISIONS OF S ECTION 145(3) OF THE ACT, BUT STRAIGHTWAY PRAYED THE BENCH TO APPLY N.P. RAT E OF 5% ON THE CONTRACT RECEIPTS DECLARED BY THE ASSESSEE. HE POINTED OUT T HAT IN THE REMAND ITA NOS. 434 & 435(ASR)/2012 7 PROCEEDINGS, THE BOOKS OF ACCOUNT WERE PRODUCED A ND ONLY CERTAIN VOUCHERS RELATING TO SOME EXPENSES COULD NOT BE PRODUCED AMO UNTING TO RS.60,355/-, RS.19,355/- AND RS.2250/- TOTALING RS.81960/-. THER EFORE, THERE IS NO DISPUTE TO THE APPLICATION OF SECTION 145(3) OF THE ACT IN THE PRESENT CASE. THE LD. CIT(A) IN THE PRESENT CASE APPLIED THE N.P. RATE OF 8% ON THE CONTRACT RECEIPTS DECLARED BY THE ASSESSEE. THE LD. CIT(A) H AS APPLIED N.P. RATE OF 6% FOLLOWING THE ORDER OF THE ITAT AMRITSAR BENCH I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 WHERE 6% N.P. RATE ON CONTRACT RECEIPTS HAVE BEEN APPLIED FOR COMPUTATION AS N.P. RATE. TH E LD. CIT(A) HAS NOT FOLLOWED THE PAST YEARS RESULT BUT OF THE FOLLOWIN G YEAR. 10. ON SEEING RECORD, IT HAS COME TO OUR NOTICE THA T IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09, THE ITAT, AMRITSAR BENCH IN ITA NO.450(ASR)/2012 VIDE ITS ORDER DATED 27.12.2012 HA S APPLIED N.P. RATE OF 5% WHICH HAS BEEN PLACED ON RECORD. THEREFORE, CONS IDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND IN THE REMAN D PROCEEDINGS, THE ASSESSEE COULD NOT PRODUCE VOUCHERS OF RS.81,960/- AND HAS ALSO PRODUCED BOOKS OF ACCOUNT BEFORE THE AO IS A MATTER OF RECOR D AND THEREFORE, TO MEET BOTH ENDS OF JUSTICE, WE DIRECT THE A.O. TO APPLY A N.P. RATE OF 5.5% ON THE CONTRACT RECEIPTS DECLARED BY THE ASSESSEE. THUS, T HE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NOS. 434 & 435(ASR)/2012 8 11. NOW, WE TAKE UP APPEAL OF THE ASSESSEE IN ITA N O.435(ASR)/2012, WHERE THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACC OUNT IN THE REMAND PROCEEDINGS AND THE A.O. APPLIED A N.P. RATE OF 8% WHILE COMPUTING THE INCOME OF THE ASSESSEE. 12. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED W RITTEN SUBMISSIONS AND THE PAPER BOOK, WHICH WAS SENT TO THE AO FOR REMAND REPORT. THE LD. CIT(A) FOLLOWING THE DECISION OF THE ITAT, AMRITSAR BENCH, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 APPLIED TH E N.P. RATE OF 6% ON THE CONTRACT RECEIPTS DECLARED BY THE ASSESSEE. THE ARG UMENTS OF BOTH THE ARTIES WERE SAME AS IN THE ASSESSMENT YEAR 2001-02. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IN THE PRESENT CASE ALSO, THE LD. COUNSEL FOR ASSES SEE, MR. P.N. ARORA, ADVOCATE, DID NO PURSUE THE APPLICATION OF SECTION 145(3) OF THE ACT AND PRAYED TO APPLY A N.P. RATE OF 5% ON THE BASIS OF T HE DECISIONS IN THE CASE OF MOHAN SINGH CONTRACTORS VS. ITO, GURDASPUR, IN ITA NO.59(ASR)/2012 DATED 05.06.2012 AND IN THE CASE OF I.T.O. NAWANSHA HAR VS. M/S. SURINDER PAUL NAYYAR CONTRACTORS, NAWANSHHAR, IN ITA NO.366( ASR)/2010 DATED 30.04.2012. FOLLOWING OUR ORDER FOR THE ASSESSMENT YEAR 2001-02 HEREINABOVE, WE DIRECT THE AO TO APPLY N.P. RATE OF 5.5% ON THE CONTRACT RECEIPTS DECLARED BY THE ASSESSEE, SINCE THE FACTS IN THE PRESENT CASE ARE ITA NOS. 434 & 435(ASR)/2012 9 FOUND TO BE IDENTICAL AS COMPARED TO THE FACTS IN A SSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02. ACCORDINGLY, BOTH THE ORDE RS OF THE LD. CIT(A) AND THE AO ARE MODIFIED ACCORDINGLY. THUS, THE APP EAL OF THE ASSESSEE IS PARTLY ALLOWED. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E IN ITA NO. 434(ASR)/2012 & ITA NO.435(ASR)/2012 ARE PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2ND JANUARY, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2ND JANUARY, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. THE MATTEWAL CO-OP. L/C SOCIETY L TD. ASR. 2. THE ITO WARD IV(3), ASR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.