Ashok Kumar Arora, Rewari V. ITO, Rewari

ITA 5015/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3574 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-03-2017
• Assessment Year: misc
• Appeal Filed On: 22-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHAUDHURI
• Assessee Lawyers: ANUBHAV JAIN
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI S.V. MEHROTRA, VICE PRESIDENT ITA NO.5015/DEL/2016 ASSESSMENT YEAR : 2010-11 ASHOK KUMAR ARORA, H.NO.5330, NALBANDAN, REWARI VS. ITO, WARD- 1, REWARI. PAN : AAPPA 6575 P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANUBHAV JAIN, ADV. RESPONDENT BY : MS. BEDOBANI CHAUDHURI, SR.DR DATE OF HEARING : 02-03-2017 DATE OF PRONOUNCEMENT : 12-04-2017 O R D E R PER S.V. MEHROTRA, V.P. : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 30.08.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), ROHTAK, U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), RELATING TO ASSESSMENT YEAR 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT IN THE RELEVANT ASSESSMENT YEAR, ASSESSEE DERIVED INCOME FROM CIVIL CONSTRUCTION BUS INESS. HE HAD DECLARED INCOME OF RS.5,28,310/-. THE ASSESSING OFFICER NOT ICED THAT ASSESSEE HAD RECEIVED ALL THE PAYMENTS FROM EXECUTIVE ENGINEER, PWD-B & R BR., REWARI WHICH WERE RECORDED IN HIS BOOKS OF ACCOUNT. CERTIFICATE OF TDS IN FORM NO.16 FROM THE DEDUCTOR HAD ALSO BEEN PRODUCED BY THE ASSESSEE. 2 ITA NO.5015/DEL/2016 HOWEVER, NO VOUCHERS OF EXPENSES, BILLS, ETC. WERE PRODUCED AND THE ASSESSEE FINALLY ADMITTED THAT HE HAD NO OTHER MATE RIAL TO PRODUCE ACCEPT THE ACCOUNT BOOKS. THEREFORE, THE ASSESSING OFFICER, I NVOKING THE PROVISIONS OF SECTION 145(3), REJECTED THE BOOKS OF ACCOUNT. HE NOTED THAT THE ASSESSEE HAD SHOWN A NET PROFIT RATE OF 5.6%. IN THE ABSENC E OF ANY DOCUMENTARY EVIDENCE IN THE SHAPE OF PURCHASES AND EXPENSES, AS SESSING OFFICER ADOPTED THE PROFIT RATE OF 12% FOLLOWING THE DECISION IN TH E CASE OF CIT VS. PRABHAT KUMAR (2010) 323 ITR 675 (P&H) AND, ACCORDINGLY, MA DE AN ADDITION OF RS.6,57,819/-. THE ASSESSING OFFICER HAD ALSO MADE ANOTHER ADDITION OF RS.60,000/- ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSE HOLD EXPENSES. 3. LD. CIT(A) CONFIRMED THE ADDITION MADE BY ASSESS ING OFFICER BY APPLYING THE NET PROFIT RATE OF 12% BUT DELETED THE ADDITION MADE ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES. 4. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDI NGS AND, AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, LEVIED PENA LTY OF RS.2,03,267/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. LD. CIT (A), AFTER CONSIDERING THE DETAILED SUBMISSIONS OF ASSESSEE, CONFIRMED THE PENALTY, INTER-ALIA, OBSERVING THAT THE FACT REMAINED THAT THE BOOKS OF ACCOUNT WERE REJECTED AS NO VOUCHERS WERE PRODUCED. BEING AGGRIEVED WITH TH E ORDER OF LD. CIT(A), THE ASSESSEE IS IN APPEAL AGAINST THE CONFIRMATION OF THE PENALTY MADE BY ASSESSING OFFICER. 3 ITA NO.5015/DEL/2016 5. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND HAVE PERUSED THE RECORD OF THE CASE. ADMITTEDLY, THE AS SESSING OFFICER DETERMINED THE NET PROFIT BY APPLYING 12% RATE ON T HE BASIS OF DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PRABHAT KUMAR (SUPRA) ONLY BECAUSE THAT WAS ALSO A CASE OF CONTRA CTOR. HOWEVER, HE HAD NOT EXAMINED THE FACTS OBTAINING IN THE SAID CASE. BEFORE LD. CIT(A), THE ASSESSEE HAD, INTER-ALIA, SUBMITTED THAT EVEN IF NO BOOKS OF ACCOUNT WERE MAINTAINED, THE INCOME WAS TO BE TAKEN U/S 44AD AT THE RATE OF 8%. THE ASSESSEE HAD ALSO RELIED ON THE DECISION OF TRIBUNA L IN THE CASE OF SEHLANGA CO-OP L/C SOCIETY LTD. VS. ITO. HOWEVER, LD. CIT(A ) DID NOT AGREE WITH THE ASSESSEE OBSERVING THAT THE SAID DECISION DIFFE RED IN TERMS OF THE FACTS AND MERITS OF THE CASE. APPLYING RATE OF NET PROFI T ON THE BASIS OF BEST JUDGEMENT ASSESSMENT DEPENDS ON FACTS OBTAINING IN EACH CASE AND IN A GIVEN SITUATION WILL BE A QUESTION OF FACT. THE ES TIMATE OF 12% ADOPTED IN THE CASE OF OTHER ASSESSEE IN THE SAME LINE OF BUSI NESS CANNOT BE AN INDICATOR OF THE REAL INCOME EARNED IN THE HANDS OF ASSESSEE. IT IS PURELY A GUESS WORK AND THE ENTIRE ENDEAVOUR IS TO ARRIVE AT AS BEST TO THE REAL INCOME AS POSSIBLE BUT THAT CANNOT BE A BASIS TO SADDLE THE ASSESSEE W ITH PENALTY. LD. COUNSEL HAS RELIED ON THE DECISION OF HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS. AERO TRADERS (P.) LTD., (2010) 322 ITR 316 (DEL HI), WHEREIN, HONBLE DELHI HIGH COURT CONFIRMED THE DELETION OF PENALTY BY TRIBUNAL, WHICH WAS 4 ITA NO.5015/DEL/2016 LEVIED ON ESTIMATE BASIS AFTER REJECTION OF BOOKS O F ACCOUNT. LD. COUNSEL ALSO RELIED ON THE DECISION OF HONBLE PUNJAB & HAR YANA HIGH COURT IN THE CASE OF HARIGOPAL SINGH VS. CIT, 258 ITR 85 (P&H), WHEREIN ALSO THE PENALTY WAS DELETED WHICH WAS LEVIED ON THE BASIS O F ADDITIONS MADE ON ESTIMATE BASIS, INTER-ALIA, OBSERVING THAT THERE HAD TO BE A POSITIVE ACT OF CONCEALMENT ON THE PART OF THE ASSESSEE AND THE ONU S WAS TO PROVE THIS ON THE DEPARTMENT. LD. COUNSEL RELIED ON THE DECISION OF THE ITAT, LUCKNOW BENCH IN THE CASE OF SAHYOG SAHKARI SHRAM SAMVIDA S AMITI LTD. VS. ACIT, (2008) 25 SOT 23 (LUCKNOW) (URO), WHEREIN, THE TRIB UNAL DELETED THE PENALTY LEVIED ON ESTIMATE BASIS, WHEREIN ALSO, FOL LOWING THE VARIOUS CASE LAWS, THE PENALTY LEVIED ON ESTIMATE BASIS WAS DELE TED. IN VIEW OF ABOVE DISCUSSION, I AM OF THE CONSIDERED VIEW THAT NO PEN ALTY U/S 271(1)(C) OF THE ACT COULD BE VALIDLY LEVIED IN THIS CASE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF APRIL, 2017. SD/- (S.V. MEHROTRA) VICE PRESIDENT DATED : 12-04-2017. SUJEET 5 ITA NO.5015/DEL/2016 COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI