M/s. Ram Kunwar Contractor, Rohtak V. ITO, Sonepat

ITA 4366/DEL/2011

• Counselvise Citation: 436620114 RSA 2011
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 15-03-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPOTA
• Keywords: Assessment record
• Section: 44AD; 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.4366 /DEL/2011 ASSESSMENT YEAR : 2008-09 M/S RAM KUNWAR CONTRACTOR, ITO, 191-OLD HOUSING BOARD COLONY, WARD-4, ROHTAK. (HARYANA). V. SONEPAT. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AABFR AABFR AABFR AABFR- -- -0387 0387 0387 0387- -- -A AA A APPELLANT BY : SHRI NAVIN GUPTA, ADVOCATE. RESPONDENT BY : SMT. RENUKA JAIN GUPOTA, SR. DR ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A)- ROHTAK DATED 22.7.2011 FOR ASSESSMENT YEAR 200 8-09. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THAT THE ORDER OF LD CIT(A) IS AGAINST LAW AND FAC TS. 2. THAT THE LD CIT(A) ERRED IN NOT ALLOWING THE GRO UND OF THE APPELLANT THAT NO NOTICE U/S 143(2) OF THE IT ACT WA S SERVED UPON THE APPELLANT WITHIN STATUTORY TIME ALLOWED I.E. BEF ORE 30.9.2009 AND NOTICE RECEIVED THEREAFTER WAS BARRED BY LIMITAT ION AND THUS THE WHOLE ASSESSMENT IS NULL AND VOID. ITA NO4366/DEL/2011 2 3. THAT THE LD CIT(A) ERRED IN NOT ALLOWING THE GRO UND OF APPEAL OF THE APPELLANT THAT THE LD ADDL. CIT ISSUED DIRECT IONS U/S 144A OF THE IT ACT TO THE LD ASSESSING OFFICER IN GROSS VIOLAT ION OF PROVISIONS OF SEC. 144A SINCE THESE DIRECTIONS WERE ISSUED WITHOUT GIVING AN OPPORTUNITY OF HEARING TO THE APP ELLANT. MOREOVER, THE WHOLE ASSESSMENT WAS FRAMED BY THE ASSESSING OFFICER UNDER INSTRUCTIONS OF LD ADDL. CIT WHICH IS EV IDENT FROM HIS ASSESSMENT ORDER ALSO. SINCE THERE IS NO INDEPENDENT APPLICATION OF MIND ON THE PART OF THE LD ASSESSING OFF ICER, THE ASSESSMENT FRAMED BY THE LD ASSESSING OFFICER IS ILLEGAL AND INVALID. 4. THAT THE LD CIT(A) ERRED IN NOT ACCEPTING THE AU DITED BOOKS RESULTS OF THE ASSESSEE MERELY BECAUSE THE BOOKS OF ACCOUNT S COULD NOT BE PRODUCED AS THE SAME WERE GET LOST. 5. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD OR ALT ER ANY GROUND OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP CONCERN, WORKING AS A CIVIL CONTRACTOR. IT HAD FILE D ITS RETURN OF INCOME ON 10.10.2008 DECLARING AN INCOME AT `.41,500/-. TH E CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. THE ASSESSEE WAS ISSUED NOTICE ON 4.9.2009 BUT NOBODY ATTENDED. THEN ON 7.9.2009 NOTI CE U/S 142(1) WAS ISSUED AND CERTAIN INFORMATION WAS CALLED FOR BUT NOBO DY ATTENDED ON THAT DATE ALSO. THEN ON 3.11.2009 NOTICE WAS ISSUED AND THE ASSESSEE WAS ASKED TO FILE AUDIT REPORT AND PRODUCE BOOKS OF AC COUNTS. AGAIN NOTHING WAS FILED. THE ASSESSING OFFICER DIRECTLY OBTAIN ED AUDIT REPORT FROM CA WHO HAD CONDUCTED THE AUDIT OF BOOKS OF ACCO UNTS OF THE ASSESSEE. THE ASSESSING OFFICER AGAIN SENT A NOTICE FOR PROD UCTION OF ITA NO4366/DEL/2011 3 BOOKS OF ACCOUNTS FAILING WHICH HE STATED THAT WE WILL APPLY 12% NET PROFIT RELYING UPON THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PARBHAT CHANDRA, CONTRACTOR, SI RSA V. CIT. IN RESPONSE TO THIS NOTICE, SHRI RS BALHARA, ITP ATTENDED THE PROCEEDINGS AND FILED COPY OF AUDIT REPORT BUT DID NOT PRODUCE ANY BOOKS OF ACCOUNTS AND THE CASE WAS ADJOURNED TO 18.1.2010 WHEN ALSO NOBODY APPEARED. FINALLY ON 9.11.2010 INSTEAD OF FURNISHIN G THE INFORMATION, THE COUNSEL OF THE ASSESSEE SUBMITTED A WRITTEN REPLY STAT ING THEREIN THAT THE BOOKS OF ACCOUNTS AND BILLS/VOUCHERS OF THE ASSE SSEE COULD NOT BE PRESENTED SINCE THE SAME GET LOST ON 2.2.2010AND HAD ALSO FILED A PHOTO COPY OF FIR, POLICE STATION, KANSALA. 3. THE ASSESSING OFFICER IN THE ABSENCE OF RELEVANT INFO RMATION SUCH AS VOUCHERS, BOOKS OF ACCOUNTS ETC. COULD NOT VERIFY T HE GENUINENESS OF THE EXPENSES AND HE APPLIED NET PROFIT RATE OF 12% ON THE GROSS RECEIPTS OF `.1,33,86,606/- AND COMPUTED ITS NET TAX ABLE INCOME AT `.16,06,393/-. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A). 4. THE LD CIT(A) AFTER CONSIDERING THE PLEADINGS OF T HE ASSESSEE OBSERVED THAT APPELLANTS RETURNED VERY MEAGER PROFIT OF 0.31% ON THE GROSS RECEIPTS OF `.1,33,86,606/- AND NO JUSTIFICATION/ REASONING HAS BEEN GIVEN FOR SUCH LOW RATE OF PROFIT. HE FURTHER O BSERVED THAT THE FACTS OF SHRI PRABHAT CHANDRA CONTRACTOR, SIRSA (SUP RA) THOUGH DIFFERENT WITH THAT OF APPELLANT AND THEREFORE IT WOULD NOT B E FAIR AND REASONABLE TO ADOPT THE RATE OF PROFIT AT 12%. HOWEVER, HE APP LIED RATE OF PROFIT AT 8% AS PRESCRIBED U/S 44AD IN THE CASE OF TURNOVER OF LE SS THAN `.40 LAKHS ON THE BASIS THAT AT LEAST THIS RATE CAN BE TAKE N AS GUIDELINES FOR ESTIMATING THE PROFIT IN THE ABSENCE OF BOOKS OF ACCOU NTS. ITA NO4366/DEL/2011 4 5. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL B EFORE THIS TRIBUNAL. THE ASSESSEE HAS TAKEN FIVE GROUNDS IN THE AP PEAL BEFORE US. GROUND NO.1 & 5 ARE GENERAL IN NATURE. GROUND NO.2 OF THE APPELLANT IS NOT TENABLE, AS FROM THE ASSESSMENT ORDER, IT IS APPAREN T THAT NECESSARY NOTICES WERE ISSUED ON 19.8.2009 THROUGH REGIST ERED POST AS WELL AS THROUGH NOTICE SERVER. THEREAFTER, ON 7.2.2 009 NOTICE U/S 142(1) WAS ALSO ISSUED CALLING FOR CERTAIN INFORMATION AND THE HEARING WAS FIXED FOR 17.9.2009. IT SEEMS THAT ASSESSEE DID NOT AC KNOWLEDGE THE RECEIPT OF NOTICES INTENTIONALLY. THE CASUAL APPR OACH OF THE ASSESSEE CAN BE JUDGED FROM THE FOLLOWING FACTS THAT ON 3.11.2009 FRESH NOTICE WAS SENT AND CASE WAS FIXED FOR HEARING ON 30.11.2009 BUT NOBODY ATTENDED THE PROCEEDINGS. IT WAS ONLY ON 8.1. 2010 AN ITP ATTENDED ON BEHALF OF THE ASSESSEE AND FILED CERTAIN DO CUMENTS AND THE CASE WAS ADJOURNED TO 18.,1.2010 ON WHICH DATE AL SO NOBODY ATTENDED THE PROCEEDINGS. IN VIEW OF THIS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD CIT(A) AS REGARDS TO THIS GROUND OF APPEAL. 6. GROUND NO.3 RELATES TO GIVING NO OPPORTUNITY TO THE ASSESSEE AGAINST THE DIRECTION OF LD ACIT U/S 144A OF THE ACT . FROM THE ASSESSMENT RECORD, IT IS APPARENT THAT ASSESSEE DID NOT COOP ERATE WITH THE ASSESSMENT PROCEEDINGS AND RATHER DID NOT ATTEND THE PROCEEDINGS ON MANY DATES. THE DIRECTIONS U/S 144A WERE ISSUED ONL Y ON 29.1.2010 I.E. AFTER MANY OPPORTUNITIES WERE GIVEN B Y THE ASSESSING OFFICER TO ATTEND THE PROCEEDINGS. MOREOVER, THE EXP LANATION ATTACHED TO SECTION 144A CLARIFIES THAT NO DIRECTION AS TO THE LINE ON WHICH AN INVESTIGATION CONNECTED WITH THE ASSESSMENT SHOULD BE MA DE SHALL BE DEEMED TO BE A DIRECTION PREJUDICIAL TO THE ASSESSEE. IN THE PRESENT CASE, THE CIT, SONEPAT RANGE HAD ONLY DIRECTED THAT IF THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNTS AND SUPPORTING DOC UMENTS, THE ITA NO4366/DEL/2011 5 ASSESSMENT ORDER MAY BE COMPLETED AFTER FOLLOWING THE J UDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE PRAB HAT CHANDRA CONTRACTOR V. CIT. KEEPING IN VIEW THE NATURE OF D IRECTION ISSUED BY THE LD CIT IT IS APPARENT THAT THE SAME FELL WITHIN THE M EANING OF EXPLANATION TO SECTION 144A AND HENCE WE UPHOLD THE VIEW OF LD CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE ON THIS GROUND ALSO. 7. GROUND NO.4 RELATES TO NON ACCEPTANCE OF AUDITED ACCOUNTS BY THE ASSESSING OFFICER. THE LD AR ARGUED BEFORE US THAT LD CIT(A) SHOULD HAVE ACCEPTED THE AUDITED RESULTS AND FURTHER I NSISTED THAT NP RATIO APPLIED BY THE LD CIT(A) IS STILL ON A VERY HIG HER SIDE SPECIFICALLY KEEPING IN VIEW THE FACT THAT ASSESSMENT FOR NEXT YEAR I.E. ASSESSMENT YEAR 2009-10 WHEREIN THE ASSESSMENT WAS COMPLETED U/S 14 3(3), THE NP RATE COMES OUT TO BE 3.55% OF TOTAL RECEIPTS. HE FURTHER REITERATED THAT IF THE AUDITED ACCOUNTS ARE NOT TO BE ACCEPTED AND ONLY NP RATIO IS TO BE APPLIED THEN THE NP RATIO ACCEPTED BY THE DEP ARTMENT IN THE NEXT YEAR SHOULD BE APPLIED. 8. THE LD DR STRESSED UPON THAT THE RATIO APPLIED BY LD CIT(A) IS VERY MUCH IN LINE WITH THE GENERAL NP RATIO IN THE TRADE AND GUIDANCE CAN BE TAKEN FROM THE PROVISION OF SECTION 44AD WHICH PRESCRIBES 8% NP RATIO IN CASE OF NON MAINTENANCE OF BOOKS OF ACCOU NTS. 9. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. THE MAIN POINT TO BE DECIDED I N THIS CASE IS THAT IF APPLYING NET PROFIT RATE, THE ASSESSING OFFICER APPLIED RATE OF `12% RELYING UPON THE JUDGMENT OF HON'BLE PUNJAB & HARYA NA HIGH COURT IN THE CASE OF PRABHAT CHANDR CONTRACTOR SIRSA V. CIT. O N THE OTHER HAND, CIT(A) TOOK GUIDANCE FROM THE PROVISIONS OF SECTION 44 AD AND APPLIED THE RATE OF 8%. WE UNDERSTAND THAT ESTIMATION INVOLVE S SOME GUESS ITA NO4366/DEL/2011 6 WORK BUT ESTIMATION SHOULD BE AS CLOSE TO ACTUALS AS POSSI BLE. IN THE PRESENT CASE, THE ASSESSMENT OF THE ASSESSEE FOR THE SUCCEEDI NG YEAR WAS COMPLETED U/S 143(3) AND THE NET PROFIT WORKED OU T TO BE 3.5% OF TOTAL RECEIPTS. KEEPING IN VIEW THE OVERALL FACTS, WE ARE OF THE VIEW THAT NP RATE OF 5% ON GROSS RECEIPTS WILL MEET THE END OF J USTICE. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 13TH D AY OF APRIL, 2012. SD/- SD/- (RAJPAL YADAV) (T.S. KAPOO R) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 13.4.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).