Yashpal Singh Aulakh, New Delhi V. ITO, New Delhi

ITA 4512/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5565 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 24-02-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 27-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: V CHOURS
• Section: 143(3)

Judgement Text

ITA NO. 4512/DEL/2009 A.Y. 2004-05 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH I: NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 4512/DEL/2009 A.Y. : 2004-05 SHRI YASHPAL SINGH AULAKH, VS. ITO, B-XI/8002, GROUND FLOOR, WARD 24(4), NEW DELHI VASANT KUNJ, NEW DELHI [PAN: AAHPA3339A] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. CHOURS, ADV. DEPARTMENT BY : MS. ANUSHA KHURANA, DR O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDERS OF THE LD. CIT(A) DATED 23.10.2009 PERTAINING TO ASSES SMENT YEAR 2004-05. 2. THE FIRST ISSUE RAISED IS THAT LD. CIT(A) HAS E RRED IN CONFIRMING THE ADDITION MADE BY THE AO BY APPLYING ADHOC RATE OF 10% ON GROSS RECEIPTS. THE NEXT ISSUE RAISED IS THAT LD. C IT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN CONSIDERING RS. 24,62,045/- AS PART OF THE GROSS RECEIPTS. 3. IN THIS CASE, THE ASSESSEE IN HIS COMPUTATION OF INCOME ENCLOSED WITH THE RETURN CALCULATED HIS INCOME BY A PPLYING 8% NET ITA NO. 4512/DEL/2009 A.Y. 2004-05 2 PROFIT RATE ON GROSS RECEIPTS OF RS. 2,19,29,767/-. NO PROFIT AND LOSS ACCOUNT, BALANCESHEET ETC. HAD BEEN FILED NOR THE A UDIT REPORT OF THE CA AS REQUIRED UNDER SEC. 44AB OF THE IT ACT WAS OB TAINED AND FILED WITH THE RETURN. IT WAS SUBMITTED BY THE ASSESSE E THAT HIS ACCOUNTANT HAD LEFT SERVICES AND THEREFORE HE COULD NOT MAINTAIN EVEN BOOKS OF ACCOUNT IN RESPECT OF THE GROSS RECEI PTS OF CONTRACT. THE ASSESSEE HAD ALSO ENCLOSED A LEDGER ACCOUNT IN WHICH THE TOTAL GROSS RECEIPTS AMOUNTING TO RS. 2,43,91,812/- HAD BEEN SHOWN. HOWEVER, THE ASSESSEE HAD DEBITED A SUM OF RS. 24,62,045/- AND HAD ESTIMATED PROFITS ON A TOTAL SU M OF RS. 2,19,29,767/-. 4. ON AOS ENQUIRY IN THIS REGARD THE ASSESSEE SUB MITTED THAT IN THE PAST ASSESSEES INCOME HAD BEEN BELOW 8%. FOR A SSESSMENT YEAR 2003-04 WHICH WAS COMPLETED UNDER SECTION 143( 3) AND THE NET PROFIT HAD BEEN ASSESSED AT 6% APPROXIMATELY ON GROSS RECEIPTS. HOWEVER, THE AO FELT THAT PERHAPS THE ASSESSEE HAD MORE INCOME THAN 8% CALCULATED BY THE ASSESSEE. HENCE HE PRO CEEDED TO ESTIMATE THE NET PROFIT @ 10% ON GROSS RECEIPTS OF RS. 224391812/- WHICH WORKED OUT AT RS. 2439181/-. 5. UPON ASSESSEES APPEAL LD. CIT(A) CONFIRMED THE AOS ACTION. 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT ADMITTEDLY THE ASSESSEE HAS NOT SUPPL IED THE PROFIT AND LOSS ACCOUNT, BALANCESHEET AND RELEVANT BOOKS. IN SUCH CIRCUMSTANCES, THERE WAS NO ALTERNATIVE, BUT TO ES TIMATE THE ITA NO. 4512/DEL/2009 A.Y. 2004-05 3 INCOME. THIS ESTIMATE HAS TO BE REASONABLE ONE IN THE ABSENCE OF THE OTHER RECORDS. IT SHOULD HAVE BEEN BASED UPON PAST HISTORY OF THE ASSESSEE COMPANY OR THE RATES PREVALENT IN THE INDUSTRY. IN THIS CASE THE ASSESSEE CLAIMED THAT IN THE PAST TH E ASSESSED PROFIT HAD BEEN BELOW 8%. IN FACT IN THE PRECEDING YEAR THE PERCENTAGE ADOPTED IN ASSESSMENT U/S 143(3) WAS 6% APPROXIMATE LY. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE OFFER OF NET PR OFIT @8% BY THE ASSESSEE. AO HAD PROCEEDED TO ADOPT 10% RATE WITHO UT ANY BASIS AND AS SUCH WHEN THE PAST HISTORY OF THE ASSESSEE S HOWS INCOME EARNED @ BELOW 8% THERE IS NO REASON TO APPLY 10%. HENCE WE ALLOW THE FIRST ISSUE RAISED BY THE ASSESSEE. 6.1 AS REGARDS THE GROSS RECEIPTS IS CONCERNED, TH E LEDGER ACCOUNTS SUBMITTED BY THE ASSESSEE SHOWED GROSS REC EIPTS OF RS. 2,43,91,812/-. IN THIS ASSESSE HAD DEBITED A SUM OF RS. 2462045/-. NO EXPLANATION FOR THE SAID DEBIT HAD BEEN GIVEN BY THE ASSESSEE TO THE AO, DESPITE THE AO MAKING T HE SPECIFIC ENQUIRY IN THIS REGARD. BEFORE THE LD. CIT(A) THE ASSESSEE HAS NOT GIVEN ANY SUBMISSIONS IN THIS REGARD. UNDER THE C IRCUMSTANCES, WHEN THE ASSESSEE IS NOT PROVIDING ANY INFORMATION WHATSOEVER ITA NO. 4512/DEL/2009 A.Y. 2004-05 4 REGARDING RS. 2462015/- DEBITED IN THE GROSS RECEI PTS, THERE IS NO REASON TO ACCEPT THE SAME. IN THE GROUNDS OF APPEA L IT HAS BEEN MENTIONED THAT THE SAID AMOUNT REPRESENTS VALUE OF MATERIAL SUPPLIED BY CUSTOMERS AND THERE CAN BE NO ELEMENT OF PROFIT IN SUCH AMOUNT. HOWEVER, NO EVIDENCE IN THIS REGARD HAS BEEN SUBMITTED BEFORE US. UNDER THE CIRCUMSTANCES, WE A RE UNABLE TO ACCEPT THE SUBMISSIONS OF THE ASSESSEE. ACCORDINGL Y, WE UPHOLD THE GROSS RECEIPTS OF RS. 2,43,91,812/-. 7. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/02/2010 UPON CONCLUSION OF THE HEARING. SD/- SD/- [C.L. SETHI) [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 24/02/ 2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES