ITO, New Delhi V. M/s. Dhara Prakashan (P) Ltd., Faridabad

ITA 4866/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8063 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 13-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T P S KANG
• Assessee Lawyers: ROBIN RAWAL
• Keywords: Rejection of books of accounts
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE , JUDICIAL MEMBER ITA NO. 2 546 / DEL/201 2 AY: 200 7 - 08 DHARA PRAKASHAN PVT.LTD. VS. ITO, WARD 10(3) 51 - 53, RAMNEET SHOPPING COMPLEX NEW DELHI TIKONA PARK, NIT FARIDABAD PAN: AABCD 4250 H ITA NO. 385 7 / DEL/201 2 AY: 200 7 - 08 ITO, WARD 10(3) VS. DHARA PRAKASHAN P.LTD. NEW DELHI FARIDABAD ITA NO. 4919/ DEL/201 2 AY: 200 9 - 10 DHARA PRAKASHAN P.LTD. VS. ITO, WARD 10(3) FARIDABAD NEW DELHI ITA NO. 4866/ DEL/201 2 AY: 200 9 - 10 ITO, WARD 10(3) VS. DHARA PRAKASHAN P.LTD. NEW DELHI FARIDABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SH. T.P.S.KANG, ADV. RESPONDENT BY : SH.R O BIN RAWAL, SR.D.R. ITA 2546/DEL/12 A.Y. 2007 - 08 ITA 3852/DEL/12 ITA 4919/DEL/12 A.Y. 2009 - 10 ITA 4866/DEL/12 DHARA PRAKASHAN PVT.LTD., FARIDABAD 2 ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) XVI DATED 24.02.2012 FOR THE A SSESSMENT Y EAR 20 07 - 08, AND DATED 12.07.2012 FOR THE A SSESSMENT Y EAR 2009 - 10. 2. FACTS IN BRIEF : - T HE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF PRINTING AND CIRCULATING OF NEWSPAPER IN THE NAME OF RAASTREYA DHA RA IN DELHI, FARIDABAD AND DEHRADUN. THE UNDISPUTED FACTS ARE THAT, THE ASSESSEE HAS MANIPULATED IT S A CCOUNTS BY INFLATING PURCHASES OF NEWSPRINT, AS WELL AS INFLATING JOB WORK EXPENSES AND SALES . T HE ASSESSEE ADMITTED THE SAME BEFORE THE REVENUE AUTHOR ITIES. THE ASSESSING O FFICER FOR BOTH THE A SSESSMENT Y EARS DISALLOWED EXPENSES ON VARIOUS GROUNDS SPECIFIED IN THE A SSESSMENT O RDER. 2.1. ON APPEAL, THE F IRST APPELLATE AUTHORITY REJECTED THE BOOKS OF ACCOUNT WHILE INVOKING THE PROVISIONS OF S. 145 (3) OF THE INCOME TAX ACT, 1961 (THE ACT ) , AND ESTIMATING THE PROFIT AT 1.4% OF THE TURNOVER. NEITHER THE REVENUE NOR THE ASSESSEE DISPUTES THE ACTION OF THE F IRST APPELLATE AUTHORITY REJECTING THE BOOKS OF ACCOUNT S UNDER SECTION 145(3) OF THE A CT. THE A SSESSEE DISPUTES THE ESTIMATION OF PROFIT AT 1.4 % OF THE TURNOVER BY THE LD.CIT(A) , AND THE REVENUE DISPUTES THE DELETION OF VARIOUS DISALLOWANCES MADE BY THE A.O. BY THE LD.CIT(A) , WITHOUT DISPUTING THE REJECTION OF BOOKS OF ACCOUNTS. UNDER THE CIRCUMSTAN CES, THE ONLY ISSUE THAT ARISES FOR OUR CONSIDERATION IN ALL THE FOUR APPEALS, IS WHETHER THE ESTIMATION OF PROFIT BY THE LD.CIT(A) AT 1.4% OF THE TURNOVER IS CORRECT OR NOT. ITA 2546/DEL/12 A.Y. 2007 - 08 ITA 3852/DEL/12 ITA 4919/DEL/12 A.Y. 2009 - 10 ITA 4866/DEL/12 DHARA PRAKASHAN PVT.LTD., FARIDABAD 3 3. WE HAVE HEARD SHRI T.P.S.KANG, THE LD.COUNSEL FOR THE ASSESSEE AND SHRI ROBIN RAWAL, LD.SR.D.R. ON BEHALF OF THE REVENUE. 4. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDERS OF LOWER AUTHORITIES AND CASE LAWS CITED, WE HOLD AS FOLLOWS . 5 . THE ASSESSEE HAS OFFERED INCOME AT THE RATE OF 0.75% OF TH E TURNOVER. WHEN QUESTIONED THE LD.COUNSEL FOR THE ASSESSEE COULD NOT SUBSTANTIATE THE BASIS ON WHICH THE ASSESSEE HAS ARRIVED AT THIS ESTIMATE OF 0.75% OF TURNOVER , AS PROFIT. THE PROFIT RATIOS DISCLOSED BY THE ASSESSEE FOR THE OTHER A SSESSMENT Y EARS RANGES BETWEEN 0.21% AND 0.07%. SIMILARLY THE COMPAR ABLES ON WHICH THE ASSESSEE RELIES , HAVE DISCLOSED PROFITS TO THE TUNE OF 0.32% APPROX IMATELY . T HUS BY OFFERING 0.75% OF THE TURNOVER AS PROFIT , THE ASSESSEE HAS ADMITTED BEFORE THE R EVENUE A UTHORIT IES THAT DUE TO MANIPULATION OF HIS ACCOUNTS BY WAY OF INFLATION OF PURCHASES ETC., THE ASSESSEE HAS EARNED MUCH MORE PROFIT THAN WHAT IS NORMALLY EARNED BY OTHER COMPANIES IN THIS LINE OF BUSINESS. THUS ALL THE COMPARABLES AND THE PREVIOUS HISTORY OF THE ASSESSEE ON THE ISSUE OF ESTIMATION OF PROFIT ARE OF NO RELEVANCE . 5 .1. THE LD.C OUNSEL FOR THE ASSESSEE ARGUES THAT, T HE LD.CIT(A) HAS NOT GIVEN ANY JUSTIFICATION FOR A RRIVING AT 1.4% OF TURNOVER AS ESTIMATED PROFIT. HE PLEADS THAT IN THE ABSENCE OF J USTIFICATION, THE PERCENTAGE OF PROFI T ARRIVED AT BY THE LD.CIT (A), SHOULD BE HELD AS ARBITRARY AND WITHOUT ANY BASIS AND THE ASSESSEE BE ASSESSED AT THE ESTIMATED PROFIT OF 0.75% OF TURNOVER AS OFFERED BY IT. 5 .2. IN OUR CONSIDERED VIEW, ESTIMATION OF PROFIT BY THE LD.CIT(A) HAS TO BE UPHELD IN THE ABSENCE OF ANY EVIDEN CE BEING LE A D BY THE ASSESSEE THAT ITS ESTIMATION OF PROFIT AT 0.75% IS JUSTIFIED. THIS IS A CASE WHERE THE ASSESSEE HAS ITA 2546/DEL/12 A.Y. 2007 - 08 ITA 3852/DEL/12 ITA 4919/DEL/12 A.Y. 2009 - 10 ITA 4866/DEL/12 DHARA PRAKASHAN PVT.LTD., FARIDABAD 4 MANIPULATED ITS ACCOUNTS. BOGUS TRANSACTIONS WE RE SHOWN . UNDER THE CIRCUMSTANCES WE DO NOT DEEM IT PROPER TO INTERFERE WITH THE ESTIMATION OF PROFIT MADE BY THE LD.CIT(A) . 6 . IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 7 . AS THE REVENUE HAS NOT DISPUTED THE FINDINGS OF THE F IRST A PPELLATE A UTHORITY ON THE ISSUE OF REJECTION OF BOOKS OF ACCOUNT S , CONSEQUENTIAL DISALLOWANCES CANNOT BE CHALLENGED, WHEN THE PROFITS HAVE BEEN ESTIMATED BY THE L D.CIT(A) , UNDER THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE. THUS WE DISMISS BOTH THE AP PEALS OF THE REVENUE. 8 . IN THE RESULT THE APPEALS OF THE ASSESSEE AS WELL AS THAT OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2016 . SD/ - SD/ - ( SUCHITRA KAMBLE ) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 27 TH APRIL, 2016 MANGA ITA 2546/DEL/12 A.Y. 2007 - 08 ITA 3852/DEL/12 ITA 4919/DEL/12 A.Y. 2009 - 10 ITA 4866/DEL/12 DHARA PRAKASHAN PVT.LTD., FARIDABAD 5 COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR