SHRI TEJENDRA SINGH RAJPAL, Indore V. THE ITO-5(1), Indore

ITA 533/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5689 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 15-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESHPANDE
• Keywords: Rejection of books of accounts; Opportunity of being heard
• Section: 80C; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 533/IND/2015 ASSESSMENT YEAR: 2008 - 09 SHRI TEJENDRA SINGH RAJPAL, 126/2 BAIRATHI COLONY, INDORE PAN: ABTPR3373D VS. ITO WARD 5(1), INDORE APPELLANT RESPONDENT APPELLANTS BY SHRI S. S. DESHPANDE, CA RESPONDENT BY SHRI MOHD. JAVED, SR. DR DATE OF HEARING 25.07.2016 DATE OF PRONOUNCEMENT 25.07.2016 O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-II, INDORE [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 27.02 .2015 AND PERTAINS TO ASSESSMENT YEAR 2008-09 AS AGAINST APPE AL DECIDED IN ASSESSMENT ORDER DATED OF ITO WARD 5(1) INDORE [HEREINAFTER REFERRED TO AS THE AO]. SHRI TEJENDRA SINGH RAJPAL, INDORE VS. ITO, 5(1), INDORE I.T.A .NO. 533/IND/2015 -A.Y. 2008-09. 2 2 2. THE ONLY GROUND OF APPEAL TAKEN BY THE ASSESSEE READS AS UNDER :- THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 3,20,622/- BY APPLYING THE NET PROFIT RATE OF 2%. THE ADDITION MAINTAINED MAY PLEASE BE DELETED OR IN THE ALTERNATIVE BE RESTRICTED TO A REASONABLE FIGURE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE GROUND IS RELATED TO THE APPLICATION OF 2 % NET PROFIT AFTER REJECTING THE BOOK RESULTS PARTICULARLY WHEN THE ASSESSEE HAS NOT MADE ANY COMPLIANCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO HAS BROUGHT OUT FACTS OF THE CA SE IN DETAIL. THE AO IN HIS ORDER STATED THAT NUMBER OF OPPORTUNITIES WERE GIVEN TO THE ASSESSEE TO FILE DE TAILS AND PRODUCED BOOKS OF ACCOUNTS IN SUPPORT OF RETURN OF INCOME. THE AO HAS ALSO GIVEN FINAL OPPORTUNITY TO THE ASSE SSEE AS TO WHY THE ASSESSMENT SHOULD NOT BE COMPLETED BY IS SUING NOTICE U/S 144 OF THE INCOME-TAX ACT, 1961.THE AO H AS MADE THE EX-PARTE ORDER AND APPLIED NET PROFIT RATE OF 2% AND THE NET ADDITION OF RS. 3,20,622/- WAS MADE. 4. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED WRITTEN SUBMISSION BEFORE THE CIT(A) STAT ING THAT THE ASSESSEE WAS NOT GIVEN THE OPPORTUNITY BEFORE F RAMING SHRI TEJENDRA SINGH RAJPAL, INDORE VS. ITO, 5(1), INDORE I.T.A .NO. 533/IND/2015 -A.Y. 2008-09. 3 3 THE ORDER. HE HAS NEITHER RECEIVED ANY NOTICE OF HE ARING NOR THE ORDER OF ASSESSMENT PASSED BY THE AO.AS SOON AS THE ASSESSEE CAME TO KNOW ABOUT THE ASSESSMENT AT THE T IME OF SERVICE OF NOTICE OF PENALTY U/S 271(1)(C) FIXING T HE DATE OF HEARING 4.4.2011, ASSESSEE IMMEDIATELY APPLIED FOR CERTIFIED COPY OF ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 20 08-09. THE SAME WAS RECEIVED BY THE ASSESSEE ON 26.4.2011 AND ASSESSEE FILED THE APPEAL AGAINST THIS ORDER. AS TH E ASSESSEE HAS NOT RECEIVED ANY NOTICE OF HEARING, HE HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT OF THE ASSESSMENT ORDER AND HENCE THE REJECTION OF BOOKS OF ACCOUNTS WITHOUT POINTING OUT ANY DEFICIENCY IN THE AUDITED ACCOUNTS IS NOT JUSTIFIED . THE AO HAS ON HIS WHIMS ESTIMATED THE NET PROFIT RATE AT 2 % AND INCREASED THE INCOME TO RS. 5,12,352/- FROM RS. 1,9 1,730/-, WHICH IS BAD IN LAW. THE ESTIMATE DONE BY THE AO I S NOT JUSTIFIED AS THE COMPARATIVE FIGURE OF TURNOVER, GR OSS PROFIT AND NET PROFIT OF EARLIER YEARS IS AS UNDER : A.Y. TURNOVER OVER G.P. % OF G.P. N.P. % OF N.P. 2008-09 25617639 1093957 4.27% 321970 1.25 2007-08 38488328 1613689 4.19% 434389 1.13 2006-07 38024992 1714573 4.51% 347295 0.91 SHRI TEJENDRA SINGH RAJPAL, INDORE VS. ITO, 5(1), INDORE I.T.A .NO. 533/IND/2015 -A.Y. 2008-09. 4 4 5. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS CONFIRMED THE ADDITION BY OBSERVING AS U NDER 3.2 I HAVE CONSIDERED THE REASONS BROUGHT OUT BY THE AO IN THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT FILED DURING THE COURSE OF APPEAL PROCEEDINGS. IT IS OBSERVED THAT THE APPELLANT HAS MAINLY CONTESTED THAT THE NOTICE WERE NOT PROPERLY SERVED AND OPPORTUNITIES WERE NOT PROVIDED. BUT FROM THE REPORT OF THE AO AND THE CONDUCT OF THE APPELLANT DURING THE COURSE OF APPEAL PROCEEDINGS, IT BECOMES CLEAR THAT THE APPELLANT HAS NEVER BEEN SERIOUS TO AVAIL THE OPPORTUNITY TO PRODUCE THE BOOKS OF ACCOUNTS IN SUPPORT OF RETURN OF INCOME. THE APPELLANT HAS NOT EVEN FILED COUNTER COMMENTS ON THE FACTS BROUGHT OUT BY THE AO IN THE AFORESAID REPORT. THEREFORE, THE AO IS FOUND JUSTIFIED IN PASSING THE ORDER EX- PARTE AND APPLYING NET PROFIT OF RATE 2%. ACCORDINGLY, THE NET ADDITION OF RS. 3,20,622/- IS HEREBY CONFIRMED. SHRI TEJENDRA SINGH RAJPAL, INDORE VS. ITO, 5(1), INDORE I.T.A .NO. 533/IND/2015 -A.Y. 2008-09. 5 5 6. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT THE GROSS PROFIT WAS INCREAS ED IN THE YEAR 2008-09 AS COMPARED TO THE YEAR 2007-08. THE N ET PROFIT IS ALSO INCREASED IN THIS YEAR. THE BUSINESS OF THE FIRM WAS CLOSED AS ON 31 ST MARCH, 2008 AND ALL THE STOCK WAS DISPOSED OF AND THERE WAS NO CLOSING STOCK AT THE E ND OF THIS YEAR. ALL THE VOUCHERS AND BILLS RELATING TO CLAIM OF EXPENSES WERE AVAILABLE WITH THE ASSESSEE AND THE SAME COULD NOT BE PRODUCED AS THE ASSESSEE HAS NOT RECEIVED ANY INFOR MATION OF HEARING. THE AUDITED BALANCE SHEET ALONG WITH PR OFIT AND LOSS ACCOUNT OF ALL THE ABOVE YEARS WERE ALSO SUBMI TTED BEFORE THE CIT(A). THE ASSESSEES CLAIM OF INTEREST ON HOUSING LOAN, DEDUCTION U/S 80C AND 80-D WERE NOT CONSIDERED IN ABSENCE OF EVIDENCES. THE BANK CERTIF ICATE FOR INTEREST ON HOUSE LOAN AND REPAYMENT OF HOUSING LOA N, LIP RECEIPTS AND COPY OF MEDICAL CLAIM WERE ALSO SUBMIT TED BEFORE THE CIT(A). THE LD. AUTHORIZED REPRESENTATIV E OF THE ASSESSEE CONCLUDED THAT THE ADDITION MADE BY THE AO IS TOTALLY ILLEGAL AND BASELESS. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE REQUESTED THAT THE A DDITION MAY PLEASE BE DELETED. SHRI TEJENDRA SINGH RAJPAL, INDORE VS. ITO, 5(1), INDORE I.T.A .NO. 533/IND/2015 -A.Y. 2008-09. 6 6 7. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE LD.CIT(A) HAS ALLOWED OPPORTUNITY OF BEING HEARD BY WAY OF REMAND REPORT, HOWEVER, THE ASSESSEE HAS FAILED TO SUBMIT COUNTER COMMENTS AGAINST THE REMAND REPORT AS DESIR ED BY LD. CIT(A). IN VIEW OF THESE CIRCUMSTANCES, WE FIND THE ESTIMATION MADE BY THE A.O. AS JUSTIFIED. HOWEVER , WE ARE AWARE OF THE FACTS THAT THE BOOKS OF ACCOUNTS WERE REJECTED BY THE AO WITHOUT POINTING OUT SPECIFIC DEFECTS. TH E ASSESSEE HAS ALSO FILED STATEMENT OF GP AND NP RATE DISCLOSED IN EARLIER YEARS SUPPORTING WITH TAX AUDI T REPORT. IT IS SEEN FROM FACTS APPEARING IN APPELLATE ORDER AND AS MENTIONED IN ABOVE PARA THAT THE ASSESSEE HAS DISCL OSED GP RATE AT 4.27% AND NP RATE AT 1.25% WHICH IS HIGHER THAN THE GP RATE OF 4.19% AND NP RATE OF 1.13% SHOWN IN PRECEDING ASSESSMENT YEAR. THEREFORE, ESTIMATION O F NP @ 2% ON TURNOVER ON NON-PRODUCTION OF BOOKS OF ACCOUN TS IS APPEARS TO BE ON HIGHER SIDE. THE LD. AR HAS ALSO C ONTENDED THAT THE ASSESSEE WAS UNABLE TO PRODUCE BOOKS OF AC COUNTS SHRI TEJENDRA SINGH RAJPAL, INDORE VS. ITO, 5(1), INDORE I.T.A .NO. 533/IND/2015 -A.Y. 2008-09. 7 7 AS BUSINESS OF THE ASSESSEE WAS CLOSED FROM 31.03.2 008 AND BOOKS OF ACCOUNTS WERE DESTROYED. CONSIDERING THESE CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO ACCE PT THE ALTERNATIVE GROUND OF THE ASSESSEE THAT ADDITION BE RESTRICTED TO REASONABLE FIGURE. THEREFORE, WE DEEM FIT REASONABLE IN THE INTEREST OF JUSTICE TO RESTRICT T HE NP ADDITION OF RS. 3,20,622/- TO RS. 1,50,000/-. WE OR DER ACCORDINGLY. THE APPEAL OF THE ASSESSEE IS THUS PAR TLY ALLOWED. 9. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 25TH JULY, 2016. (D.T.GARASIA) JUDICIAL MEMBER (O.P.MEENA) ACCOUNTANT MEMBER DATED :25TH JULY, 2016. CPU* COPY TO: 1. THE ASSESSEE. 2. THE A.O. CONCERNED. 3. THE LD. PCIT CONCERNED 4. THE LD. CIT(A) 5. THE D.R., INDORE 6. GUARD FILE. BY ORDER SHRI TEJENDRA SINGH RAJPAL, INDORE VS. ITO, 5(1), INDORE I.T.A .NO. 533/IND/2015 -A.Y. 2008-09. 8 8 ASSISTANT REGISTRAR I.T.A.T., INDORE