M/s. The Mattewal Co-operative, Amritsar. V. The Asstt. Commissioner of Income-tax, Amritsar.

ITA 450/ASR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63618 (ITAT-AMRITSAR)
• Duration Of Justice: 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 10-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: P N ARORA
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 69C

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. NO.450(ASR)/2012 ASSESSMENT YEAR:2008-09 PAN : AAAAT8385T M/S. THE MATTEWAL CO-OPERATIVE VS. THE ASSTT. COM MR. OF INCOME TAX, L/C SOCIETY LTD.143, GOLDEN CIRCLE IV, AMRITSAR. AVENUE, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. P.N.ARORA, ADVOCATE RESPONDENT BY:SH. R.L. CHHANALIA, DR DATE OF HEARING: 18/12/2012 DATE OF PRONOUNCEMENT:27/12/2012 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), AMRITSAR, DATED 20.11.2012 FOR THE ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ASSESSMENT AS WELL THE ORDER OF THE LD . CIT(A) ARE BOTH AGAINST THE FACTS OF THE CASE AND UNTENABLE IN LAW. 2. THAT THE AO HAS GROSSLY ERRED IN MAKING AN ADDIT ION OF RS.1,26,64,682/- BY REJECTING THE TRADING ACCOUNT. THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE SAME WIT HOUT ANY RHYME & REASON. THE ADDITION MADE IS UNCALLED FOR & UNJUSTIFIED AND THE SAME MAY BE DELETED. ITA NO.450(ASR)/2012 2 3. THAT THE AO HAS GROSSLY ERRED IN INVOKING THE PR OVISIONS OF SECTION 145(3) OF THE ACT. THE PROVISIONS OF SECTIO N 145(3) OF THE ACT ARE NOT AT ALL APPLICABLE IN THIS CASE. SIM ILARLY, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ORDER OF THE AO AND THE ADDITION MADE MAY BE DELETED. 4. THAT EVEN OTHERWISE THE AUTHORITIES DID NOT APPR ECIATE THAT ALL THE PURCHASES & SALES ARE VOUCHED AND THEY ARE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. IN VIEW OF THESE CIRC UMSTANCES, NO ADDITION IS AT ALL CALLED FOR AND THE ADDITION MADE MAY BE DELETED. 5. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT THERE WAS NO SUPPRESSION OF INCOME AND THE MATERIAL PURCHASED BY THE ASSESSEE WAS USED FOR THE CONSTRUCTION AND THE AUTH ORITIES BELOW DID NOT APPRECIATE THAT THE GOODS WERE RECEIVED MUC H EARLIER AND THE BILLS RECEIVED LATER ON. THE AUTHORITIES BE LOW DID NOT APPRECIATE THAT ALL THE PURCHASES AND SALES ARE DUL Y VOUCHED AND THEY ARE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT S AND AS SUCH THE ADDITION MADE MAY BE DELETED. 6. THAT THE ADDITION HAS BEEN MADE WITHOUT AFFORDING A NY REASONABLE OPPORTUNITY OF BEING HEARD AND MATERIAL COLLECTED AT THE BACK OF THE ASSESSEE CANNOT BE UTILIZED AGAINST THE ASSESSEE AND THE ADDITION MADE BY THE AO CONFIRMED BY THE LD . CIT(A) IS LIABLE TO BE DELETED. 7. THAT THE ADDITION HAS BEEN MADE PURELY ON THE BASIS OF CONJECTURES, SURMISES AND SUPPOSITION AND THE ADDIT ION MADE MAY BE DELETED. 2. THE BRIEF FACTS IN THE GROUNDS OF APPEAL OF THE ASSESSEE ARE THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF CIVIL CONTR ACTOR. IT WAS OBSERVED BY THE AO THAT THE CONTRACT PAYMENTS TO THE ASSESSEE A RE MADE BY THE PRINCIPAL ON THE BASIS OF MEASUREMENT BOOK. THE LAST CONTRACT PAYMENT WHICH WAS ITA NO.450(ASR)/2012 3 MADE TO THE ASSESSEE SOCIETY WAS OF RS.4,38,49,648/ - ON 27.03.2008. THE CONTRACT PAYMENT BY THE PAYER GOVT. AGENCY WAS WORK ED OUT ON THE BASIS OF DETAILS NOTED IN THE MEASUREMENT BOOK. THE ASSESSEE IN THEIR LEDGER HAS SHOWN PURCHASE OF MATERIAL FROM 26.03.2008 TO 31.03 .2008 TO THE TUNE OF RS.1,69,53,135/-. IT IS THE CASE OF THE A.O. THAT AS NO PAYMENT WAS RECEIVED BY THE ASSESSEE AFTER MEASUREMENT OF THEIR CONTRACT WORK ON 25.03.2008 BY THE S.E.GALIARA PROJECT, AMRITSAR, THE PURCHASES MA DE FROM 26.03.2008 TO 31.03.2008 TO THE EXTENT OF RS.1,69,563,135/- SHOUL D BE REFLECTED BY THE ASSESSEE EITHER IN THE CLOSING STOCK OR AS WORK IN PROGRESS, BUT THE ASSESSEE FAILED TO DO SO AND SHOWN THE CLOSING STOCK OF RS.4 3,88,453/- ONLY AND THEREBY SUPPRESSED THE INCOME OF RS.1,25,64,682/-. THE AO AFTER POINTING OUT FURTHER DEFICIENCIES AND DISCREPANCIES LIKE NON -MAINTENANCE OF LABOUR REGISTER ETC; PREFERRED TO MAKE ADDITION U/S 69C AM OUNTING TO RS.1,26,64,682/-, RATHER THAN MAKING GP RATE TRADIN G ADDITION OF RS.83,88,214/- BY APPLYING NET GP RATE OF 8% ON THE TOTAL GROSS RECEIPTS OF RS.27,76,99,115/-. 3. 3. BEFORE THE LD. CIT(A), THE ASSESSEE FILED TH E EXHAUSTIVE PAPER BOOK INCLUDING WRITTEN SUBMISSIONS ALONGWITH JUDGME NTS OF VARIOUS COURTS OF LAW. THE SAID SUBMISSIONS AND PAPER BOOK ETC. WE RE SENT TO THE AO FOR REMAND REPORT, WHO FURNISHED THE SAME BY REMAND REP ORT NO.3077 DATED ITA NO.450(ASR)/2012 4 12.10.2012. THE SAID REMAND REPORT WAS CONFRONTED T O THE ASSESSEE WHO SUBMITTED HIS REBUTTAL DATED 05.11.2012 AVAILABLE A T PAGES 5 TO 8. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND PAPER BOOK OF THE ASSESSEE AND THE REMAND REPORT AND THE REBUTTAL OF THE ASSESSEE CONFIRMED THE ACTION OF THE AO BY GIVING FOLLOWING FINDINGS AT PAGE 13 & 14 WHI CH ARE REPRODUCED FOR THE SAKE OF CLARITY: FOR THE SAKE OF BETTER APPRECIATION OF FACTS AND F OR THE SAKE OF CLARITY, I AM ENCLOSING HEREWITH ANNEXURE A, AS PAR T OF THIS APPELLATE ORDER, WHICH IS IN THE INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDING 31.3.2008 FILED BY THE APPELLANT HIMSELF. ON PERUSAL OF THE INCOME & EXPENDITURE ACCOUNT, IT IS CLEAR THAT ON T HE LEFT-HAND SIDE, THE APPELLANT HAS DEBITED ALL EXPENSES INCLUDING T HE ALLEGED PURCHASES, AS DISCUSSED ABOVE, WHEREAS ON THE RIGHT -HAND SIDE OF THIS INCOME & EXPENDITURE ACCOUNT, THERE ARE ONLY FOUR I TEMS I.E. CONTRACT INCOME, MISCELLANEOUS INCOME, DISCLOSURE AND FIGURE OF CLOSING STOCK. THE FIGURE OF CLOSING STOCK IS RS.43.88 LACS ONLY A ND NO REMAINING BALANCE OUT OF THESE ALLEGED PURCHASES IS BEING REF LECTED ON THIS SIDE EITHER UNDER THE HEAD OF CLOSING STOCK OR WORK IN PROGRESS OR FIGURE OF SALES OR FIGURE OF DISCLOSURE MEANING THEREBY TH AT IT IS A CRYSTAL CLEAR-CURT CASE OF NOT SHOWING THESE ALLEGED PURCHA SES REMAINED UNCONSUMED EITHER IN THE FIGURE OF CLOSING STOCK OR WORK IN PROGRESS. IT IS RATHER SURPRISING THAT PURCHASES ARE SHOWN ON THE DEBIT SIDE OF INCOME & EXPENDITURE ACCOUNT BUT THE CONSEQUENT FIG URE OF CONSUMPTION OF THE SAME OR SALE OUT OF THE SAME OR IT REMAINING IN CLOSING STOCK OR WORK IN PROGRESS IS NOT SHOWN. HE NCE, LOGICALLY ONE HAS TO FIND OUT AS TO WHY THIS FIGURE OF ALLEGED PU RCHASES BE NOT ADDED IN THE FIGURE OF APPELLANTS INCOME STRAIGHT-AWAY. AS SUCH, QUESTION OF APPLICATION OF NET GP RATE THEREON DOES NOT ARISE . WHAT IS GROSS PROFIT, THE GROSS PROFIT IS SALES MINUS PURCHASES. WHEREAS PURCHASES ARE SHOWN, BUT CONSEQUENT SALES/CONSUMPTION THEREOF HAS BEEN TOTALLY OMITTED. HAD, IT BEEN A CASE OF SALES AND PURCHASES , THEN IT WOULD HAVE BEEN PROPER CASE OF APPLICATION OF GP RATE. BU T HERE, IT IS A CLEAR-CUT CASE OF PURCHASES MADE AND THOUGH EVEN P URCHASES ARE INCLUDED IN THE DEBIT SIDE OF INCOME & EXPENDITURE ACCOUNT, BUT ITA NO.450(ASR)/2012 5 CONSEQUENT SALES OR CONSUMPTION OR RESIDUAL REMAINI NG FIGURE THEREFROM AS CLOSING-STOCK, OR WORK IN PROGRESS ARE OMITTED. THUS, HERE, THE QUESTION OF APPLICATION OF GP RATE IN THI S CASE DOES NOT ARISE AT ALL. IN TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF IMPOUNDED INCRIMINATING DOCUMENTS/BOOKS OF ACCOU NTS IMPOUNDED ON 27.03.2008 AT THE TIME OF SURVEY CONDUCTED U/S 1 33A & ALSO IN THE LIGHT OF ADMITTANCE, CONFESSIONAL STATEMENT CONCEDE D FORTHCOMING FROM HIS OFFERING ADDL. INCOME TO THE EXTENT OF RS. 1.30 CRORES AT THE CONCLUSION OF THE SURVEY PROCEEDINGS ON ACCOUNT OF UNRECORDED INVESTMENTS OF PARTNERS OF THE FIRMS IN BANKS FIXE D DEPOSITS, IMMOVABLE PROPERTIES ETC; BEND THE SCALE OF JURISPR UDENCE AGAINST THE APPELLANT, FIRSTLY NEITHER ANY LABOUR REGISTER WAS PRODUCED, NOR PURCHASES OF HIGH SCALE AMOUNTING TO RS.1,69,53,13 5/- BOOKED FOR THE PERIOD 26.3.08 TO 31.03.08 I.E. QUITE AT THE FAG EN D OF THE ACCOUNTING PERIOD/PREVIOUS YEAR ENDING 31.3.08 WERE SHOWN TRU LY EITHER IN THE CLOSING STOCK OR AS WORK IN PROGRESS IN THE TRADING ACCOUNT. FURTHER MOST OF THE PURCHASES ARE CLAIMED TO HAVE BEEN RECE IVED MUCH EARLIER BUT THE RELEVANT PURCHASE BILLS WERE ISSUED LATER O N, FOR THE REASONS BEST KNOWN TO THE APPELLANT. IN THE LIGHT OF FOREGO ING, I AM OF THE CONSIDERED OPINION THAT IN THE TOTALITY OF FACTS AN D CIRCUMSTANCES OF THE CASE, IT WOULD BE QUITE FAIR TO UPHOLD THE AOS FINDING OF MAKING SPECIFIC ADDITION U/S 69C AMOUNTING TO RS.1,26,64,6 82/- A{AFTER ADJUSTING/ACCOUNTING FOR THE DECLARE CLOSING STOCK OF RS.4388453/- OUT OF THE TOTAL PURCHASES OF RS.1,69,53,153/- FOR THE PERIOD 26.03.08 TO 31.03.08 I.E. AT THE FAG END OF THE ACCOUNTING YEAR } FIGURING NEITHER IN THE CLOSING STOCK NOR AS WORK IN PROGRESS WHICH THE AO OPTED IN PREFERENCE TO THE GP RATE ADDITION WORKED OUT AT RS .83,88,214/- [TRADING ADDITION ON THIS A/C THROUGH PROPOSED BUT NOT ACTUALLY MADE, IN THE LIGHT OF THE FACT THAT SPECIFIC ADDITION OF RS.1,26,64,682/- ON A/C OF INFLATED PURCHASES HAVING ALREADY BEEN MADE SEPA RATELY IN THIS CASE] AND SAME ADDITION IS HEREBY CONFIRMED BEING A PPROPRIATE AND JUSTIFIED IN THE EYES OF LAW. THIS DISPOSES OF GROU NDS OF APPEAL NO. 5 TO 11 AGAINST THE APPELLANT. 4. THE LD. COUNSEL FOR THE ASSESSEE, SH. P.N. ARORA , ADVOCATE, INVITED OUR ATTENTION AND ARGUED THAT THE MAIN OBJECTION OF THE AO AND THE LD. CIT(A) IN THE PRESENT APPEAL OF THE ASSESSEE IS T HAT PURCHASES WHICH HAVE ITA NO.450(ASR)/2012 6 BEEN MADE FROM 26.03.2008 TO 31.03.2008 TO THE EXTE NT OF RS.1,69,563,135/- SHOULD HAVE BEEN DECLARED AS CLOSING STOCK OR WORK IN PROGRESS, BUT THE ASSESSEE HAS DECLARED ONLY RS.43,88,453/- AS CLOS ING STOCK. THEREFORE, DIFFERENCE OF RS.1,26,64,682/- BEING LESS INVENTORY OR WORK IN PROGRESS DECLARED BY THE ASSESSEE HAS BEEN SUPPRESSED BY THE ASSESSEE AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. AT THE OU TSET, THE LD. COUNSEL FOR THE ASSESSEE, SH. P.N. ARORA, INVITED OUR ATTENTION THAT THE DIFFERENCE OF RS.1,69,53,135/- AND RS.43,88,453/- IS RS.1,25,64,6 82/- AND NOT RS.1,26,64,682/- AND THEREFORE, THIS DIFFERENCE OF ADDITION OF INCOME STRAIGHTWAY SHOULD BE DELETED BEING ARITHMETICAL C ALCULATION. 5. IT WAS FURTHER ARGUED BY SH. P.N.ARORA, THAT TH E ASSESSEE HAD SUBMITTED THE EXPLANATION BEFORE THE AO AS WELL BEF ORE THE LD. CIT(A) AND ALSO IN THE REBUTTAL BEFORE THE LD. CIT(A) THAT THE GOODS WERE RECEIVED EARLIER AND BILLS WERE RECEIVED LATER ON, FOR WHICH THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THE CERTIFICATES FROM THREE PARTIES WHICH CONCLUSIVELY PROVE THAT THE GOODS WERE RECEIVED MUCH EARLIER AND BILLS WERE RECEIVED LATER ON. NONE OF THE AUTHORITIES BELOW HAVE APPRECIATED SUCH CONC LUSIVE EVIDENCE PLACED BEFORE THE LD. CIT(A). THE AO IN THE REMAND PROCEED INGS HAS ALSO NOT APPRECIATED THE SAID FACTS PLACED ON RECORD. ITA NO.450(ASR)/2012 7 6. OUR ATTENTION WAS INVITED TO THE FACT THAT THE A SSESSEE APPEARED ON 27.12.2010 WHICH IS THE DATE OF FINALIZATION OF THE ASSESSMENT. THE AO CALLED S. SARABJIT SINGH, THE CONCERNED OFFICER OF GALIARA PROJECT AND FROM THE INSPECTION OF THE FILE FROM THE DEPARTMENT, IT IS CLEAR THAT WAS CONCLUDED WITH THE ASSESSEE, THE AO CALLED S. SARABJIT SINGH CONCERNED OFFICER OF GALIARA PROJECT SCHEME AND HIS STATEMENT WAS RECORD ED AND MATERIAL WAS COLLECTED IN THE ABSENCE OF THE ASSESSEE AND THE DE PARTMENT NEVER ALLOWED OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE M AKING THIS HEAVY AND UNCALLED ADDITION. THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N. ARORA RELYING UPON THE DECISION OF THE HONBLE SUP REME COURT OF INDIA IN THE CASE OF KISHIN CHAND CHELARAM REPORTED IN 125 I TR 713 ARGUED THAT NO ADDITION CAN BE MADE UNDER THE LAW, WHICH IS AGAINS T PRINCIPLE OF NATURAL JUSTICE, EQUITY AND CONSCIOUS. 7. IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSESSE E, MR. P.N.ARORA WITH REGARD TO THE INVOKING OF THE PROVISIONS OF SECTION 145(3) OF THE ACT, THE AO HAD ISSUED SHOW CAUSE NOTICE BY POINTING OUT MANY I RREGULARITIES IN THE ACCOUNTS AS TO WHY THE PROFIT OF THE BUSINESS SHOU LD NOT COMPUTED BY RESORTING TO PROVISIONS OF SECTION 145(3) OF THE AC T AT PAGES 3 TO 5 OF HIS ORDER. THE ASSESSEE HAD SUBMITTED THE EXPLANATION O F EACH AND EVERY QUERY OF THE AO AND HAD SUBMITTED BILLS AND VOUCHERS AND THE CONFIRMATION ETC; AS ITA NO.450(ASR)/2012 8 REQUIRED. IN FACT, THE PROVISIONS OF SECTION 145(3) OF THE ACT, CANNOT BE MADE APPLICABLE AND THIS IS THE GROUND OF APPEAL TAKEN BEFORE THE BENCH. THE AO AFTER APPLYING THE PROVISIONS OF SECTION 145(3) OF THE ACT APPLIED THE NP RATE OF 8% OF GROSS CONTRACT RECEIPTS OF RS.27,76,99,115 /- AND WORKED OUT THE NET INCOME AT RS.2,22,15,929/- AS AGAINST NP DECLARED BY THE ASSESSEE AT RS. 1,38,27,715/- WHICH SHOULD HAVE GIVEN RISE TO AN ADDITION OF RS.83,88,214/- . IN FACT, AS ARGUED EARLIER, MR. P.N.ARORA, LD. CO UNSEL FOR THE ASSESSEE FURTHER ARGUED THAT SINCE EACH AND EVERY EXPLANATION TO THE QUERY OF THE AO AND THE LD. CIT(A) AND THE AO IN THE REMAND PROCEEDINGS WE RE SUBMITTED AND WHICH ARE PART OF THE RECORD AND THEREFORE, PROVISI ONS OF SECTION 145(3) OF THE ACT, CANNOT BE MADE APPLICABLE. IN CASE, PROVIS IONS OF SECTION 145(3) ARE MADE APPLICABLE THEN NO SPECIFIC ADDITION CAN BE MA DE AS HAS BEEN DONE BY THE AO IN THE PRESENT CASE. THE AO CHOSE TO MAKE A DDITION ON ACCOUNT OF LESS DECLARATION OF THE CLOSING STOCK THAN APPLICAT ION OF NP RATE SINCE THE SAID VIEW FORMED BY THE AO WAS MORE BENEFICIAL TO T HE REVENUE. THIS APPROACH OF THE AO IS AGAINST THE SETTLED PRINCIPLE S OF LAW. THE LD. COUNSEL FOR THE ASSESSEE, ACCORDINGLY RELIED UPON THE DECIS ION OF THE ITAT AMRITSAR BENCH IN THE CASE OF AMARJIT SINGH BAJWA, CONTRACTO RS IN ITA NO. 371(ASR)/2010, ORDER DATED 26.07.2012 WHERE THE NET PROFIT RATE WAS APPLIED WHEN IRREGULARITIES IN THE MAINTENANCE OF BOOKS OF ACCOUNT WERE FOUND. THE ITA NO.450(ASR)/2012 9 LD. COUNSEL FOR THE ASSESSEE, MR. P.N.ARORA ALSO RE FERRED TO THE DECISION OF THE ITAT, AMRITSAR BENCH IN THE CASE OF SH. MOHAN S INGH CONTRACTOR VS. ITO PASSED IN ITA NO.59(ASR)/2012, DATED 5 TH JUNE, 2012 FOR APPLYING NP RATE OF 5%. 8. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPO N THE DECISION OF ITAT, AMRITSAR BENCH IN THE CASE OF ITO VS. SURINDE R PAL NAYYAR, CONTRACTORS, PASSED IN ITA NO.366(ASR).2010, WHERE VIDE ORDER DATED 30.04.2012 HAS ALLOWED NP RATE OF 5% ON IDENTICAL FACTS. THE LD. COUNSEL FOR THE ASSESSEE GAVE A WORKING THAT IF NP RATE OF 5% IS APPLIED THEN NET INCOME COMES AT RS.1,38,84,956/- AS AGAINST INCOME DECLARED AT RS.1,38,52,720/-, WHICH WILL CALL FOR AN ADDITION O F RS.32,236/- HE PRAYED THE BENCH IN CASE PROVISIONS OF SECTION 145(3) ARE APPLIED NET ADDITION OF RS.32,236/- BE CONFIRMED ALTERNATIVELY. 9. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE IN THE PRESENT CASE HAD SUBMITTED THE EXPLANATION THAT GOODS ARE RECEIVED EARLIER AND BILLS ARE RECEIVED LATER O N. THE ASSESSEE HAVING SUBMITTED CERTIFICATES FROM THREE PERSONS I.E. AMAR DEEP SINGH, GURMIT KAUR AND NAVJOT SINGH, PLACED AT PB 89, 90, & 91. NO DEF ECT IN THE SAME HAS BEEN ITA NO.450(ASR)/2012 10 POINTED OUT BY THE AO OR BY THE LD. CIT(A) OR EVEN BY THE AO IN THE REMAND PROCEEDINGS. THE SAID CERTIFICATES FOR THE SAKE OF CLARITY ARE REPRODUCED AS UNDER: AMARDEEP SINGH FLEET OWNERS & COMMISSION AGENT 97-A, PARTAP NAGAR, G.T.ROAD, AMRITSAR. DATED:10/01/2012 CERTIFICATE CERTIFIED THAT FOLLOWING MATERIAL WERE SUPPLIED TO THE MATTEWAL CO- OP. L/C SOCIETY LIMITED MUCH EARLIER BEFORE THE IS SUING OF THE BILLS AND ALSO CERTIFIED THAT THE ABOVE SAID MATERIAL SUP PLIED BEFORE DATE OF ISSUE THE BILLS. DATED BILL NO. AMOUNT 01/09/2007 1 149900 07/09/2007 2 200100 10/09/2007 3 199400 16/09/2007 4 200100 20/09/2007 5 200000 22/09/2007 6 199450 26/09/2007 7 201400 03/10/2007 8 201125 10/10/2007 9 252125 12/10/2007 10 96400 25/01/2008 11 395250 13/02/2008 12 313000 07/03/2008 13 181750 10/03/2009 14 150000 21/03/2008 15 210000 FOR AMAR DEEP SINGH SD/- AUTHORISED SIGNATORY PAN:BEPPS7516R WARD 3(1), ASR ITA NO.450(ASR)/2012 11 GURMEET KAUR FLEET OWNERS 97-A, PARTAP NAGAR, G.T.ROAD, AMRITSAR. DATED:18/01/2012 CERTIFICATE CERTIFIED THAT FOLLOWING MATERIALS WERE SUPPLIED TO THE MATTEWAL CO- OP. L/C SOCIETY LIMITED MUCH EARLIER BEFORE THE ISS UING OF THE BILLS AND ALSO CERTIFIED THAT THE ABOVE SAID MATERIAL SUP PLIED BEFORE DATE OF ISSUE THE BILLS FOR THE FINANCIAL YEAR 2007-09. FOR GUMEET KAUR SD/- AUTHORISED SIGNATORY PAN:AQQPK9818Q WARD 3(1), ASR. NAJOT SINGH FLEET OWNERS & COMMISSION AGENT PARTAP NAGAR, G.T.ROAD, AMRITSAR. DATED:27/01/2012 CERTIFICATE CERTIFIED THAT FOLLOWING MATERIAL WERE SUPPLIED TO THE MATTEWAL CO- OP. L/C SOCIETY LIMITED MUCH EARLIER BEFORE THE IS SUING OF THE BILLS AND ALSO CERTIFIED THAT THE ABOVE SAID MATERIAL SUP PLIED BEFORE DATE OF ISSUE THE BILLS. DATE BILL NOS. AMOUNT 07/01/2008 1 130400 13/01/2008 7 120500 18/01/2008 11 118250 24/01/2008 15 96750 31/01/2008 19 133600 06/02/2008 21 114750 11/02/2008 25 97925 15/02/2008 28 79800 ITA NO.450(ASR)/2012 12 24/02/2008 31 129375 29/02/2008 35 100825 06/03/2008 39 132150 10/03/2008 41 69850 18/03/2008 44 108000 25/03/2008 45 113500 30/03/2008 48 88000 FOR NAVJOT SINGH SD/- AUTHORISED SIGNATORY PAN:BWYPS1351P 10.1. IT IS NOT A CASE THAT THE ASSESSEE HAS NOT S UBMITTED SUCH EVIDENCE WHICH HAS NOT BEEN PLACED BEFORE THE AO. THE SAID E VIDENCES WERE PLACED BEFORE THE LD. CIT(A) WHICH IN TURN WERE SENT TO TH E AO FOR REMAND REPORT. THE AO AND THE LD. CIT(A) HAVE NOT ACCEPTED THE EX PLANATION OF THE ASSESSEE FOR NO COGENT REASONS. THE EXPLANATION GIV EN BEFORE THE LD. CIT(A) AND THE AO CANNOT BE BRUSHED ASIDE WITHOUT POINTIN G OUT ANY DEFECT IN THE SAME. THEREFORE, THE ASSESSEE HAVING RECEIVED THE M ATERIAL ON THE DATES AS MENTIONED HEREINABOVE IS AN EXPLANATION TO THE QUER Y OF THE A.O. AND THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS DECLARED A WRONG CLOSING STOCK VIS--VIS PURCHASES FROM 26.03.2008 TO 31.03. 2008 AS SUGGESTED BY THE AO. MOREOVER, THE INFORMATION COLLECTED AT THE BAC K OF THE ASSESSEE WITHOUT CONFRONTING THE ASSESSEE IS NOT INFORMATION IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CH ELARAM (SUPRA). THEREFORE, THE AO IS NOT JUSTIFIED IN MAKING THE AD DITION ON ACCOUNT OF LESS ITA NO.450(ASR)/2012 13 DISCLOSURE OF CLOSING STOCK TO THE TUNE OF RS.1,26, 64,682/- FOR WHICH THE ASSESSEE HAS SUBMITTED THE EXPLANATION BEFORE THE L D. CIT(A) AND THE AO IN THE REMAND PROCEEDINGS. ACCORDINGLY, THE ORDER OF T HE LD. CIT(A) IS REVERSED AND AO IS DIRECTED TO DELETE THE ADDITION OF RS.1,26,64,682/-. 10.2. AS REGARDS INVOKING THE PROVISIONS OF SECTIO N 145(3) OF THE ACT, THE AO HAS GIVEN THE SHOW CAUSE NOTICE FOR INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND HAS WORKED OUT THE ADDITION A T RS.83,88,214/- IF A NET PROFIT OF 8% IS APPLIED ON THE GROSS CONTRACT RECEI PTS DECLARED BY THE ASSESSEE. IN THE FIRST INSTANCE, SINCE THE AO HAS P OINTED OUT CERTAIN OTHER MISTAKES LIKE ASSESSEE HAS NOT PRODUCED LABOUR REGI STER ETC; THEREFORE, CERTAINLY THERE ARE IRREGULARITIES IN THE BOOKS OF ACCOUNT. THOUGH THE AO HAS NOT ULTIMATELY TAKEN COGNIZANCE OF THE ESTIMATION O F INCOME BUT CERTAINLY THERE ARE DEFICIENCIES IN THE BOOKS OF ACCOUNT AND THE BOOKS OF ACCOUNT ARE REQUIRED TO BE REJECTED AND NP RATE HAS TO BE APPLI ED. 10.3. THERE IS NO COMPARABLE CASE BROUGHT BY THE LD . DR BEFORE THIS BENCH AND ALSO THE AO OR THE LD. CIT(A) HAS NOT BROUGHT A NY COMPARABLE CASE FOR APPLICATION OF NP RATE OF 8%. THE LD. COUNSEL FOR T HE ASSESSEE, MR. P.N.ARORA HAS BROUGHT ON RECORD DECISIONS OF ITAT A MRITSAR BENCH IN THE CASE OF ITO VS. SURINDER PAL NAYYAR, CONTRACTORS, PASSED IN ITA NO.366(ASR).2010, ORDER DATED 30.04.2012 WHERE NP R ATE OF 5% IS APPLIED ITA NO.450(ASR)/2012 14 AND IN THE CASE OF SH. MOHAN SINGH CONTRACTOR VS. I TO PASSED IN ITA NO.59(ASR)/2012, DATED 5 TH JUNE, 2012, WHERE ALSO NP RATE OF 5% HAS BEEN APPLIED. THEREFORE, CONSIDERING THE IRREGULARITIES IN THE BOOKS OF ACCOUNT MENTIONED ABOVE, THE AO IS DIRECTED TO APPLY NP RAT E OF 5% ON THE NET CONTRACT RECEIPTS DECLARED BY THE ASSESSEE AND FURT HER DIRECTED TO DELETE THE ADDITION MADE OF RS.1,26,64,682/-. THE ASSESSEE GET S PART RELIEF ACCORDINGLY. THUS, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.450(ASR)/2012 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH DECEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27TH DECEMBER., 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. THE MATTEWAL CO-OP. L/C SOCIETY L TD. ASR. 2. THE ACIT, CIR.IV, 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.