ITO, New Delhi V. M/s Usha Pollutech Engineering Pvt. Ltd., New Delhi

ITA 5449/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97469 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 09-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P CHANDREKAR
• Assessee Lawyers: ASHUTOSH JAIN
• Keywords: Additional evidence
• Section: 144; 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH H HH H : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 5449/DEL/2010 5449/DEL/2010 5449/DEL/2010 5449/DEL/2010 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2006 2006 2006 2006 - -- - 07 0707 07 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -18(2), 18(2), 18(2), 18(2), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S M/S M/S M/S USHA POLLUTECH ENGINEERING USHA POLLUTECH ENGINEERING USHA POLLUTECH ENGINEERING USHA POLLUTECH ENGINEERING PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., 690, TOP FLOOR, RAJINDER NAGAR, 690, TOP FLOOR, RAJINDER NAGAR, 690, TOP FLOOR, RAJINDER NAGAR, 690, TOP FLOOR, RAJINDER NAGAR, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : AAACU0218K. PAN : AAACU0218K. PAN : AAACU0218K. PAN : AAACU0218K. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.P. CHANDREKAR, SR.DR. RESPONDENT BY : SHRI ASHUTOSH JAIN, CA. DATE OF HEARING : 09.09.2015 09.09.2015 09.09.2015 09.09.2015 DATE OF PRONOUNCEMENT : 05.10.2015 05.10.2015 05.10.2015 05.10.2015 ORDER ORDER ORDER ORDER PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA, VP , VP , VP , VP : :: : THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 200 6-07 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXI, N EW DELHI DATED 15 TH SEPTEMBER, 2010. 2. THE GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDER: - THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW BY DELET ING ADDITION OF RS.25,82,476/- MADE U/S 44AD OF THE ACT, BY RELYING ON THE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. DEV MUSIC LIGHTING (P) LTD. AND BY ADMITTING ADDI TIONAL EVIDENCE IGNORING THAT (I) THE CASE OF THE ASSESSEE IS DISTINGUISHABLE ON FACTS FROM THE CASE OF CIT VS DEV MUSIC LIGHTING (P) LTD. 31 6 ITR 209 (DEL) SINCE THE DETAILS AND DOCUMENTS ADMITTED BY THE LD.CIT(A) ARE NOT MERE CERTIFICATES BUT ARE IMPORTAN T DOCUMENT VERY MUCH PERTINENT TO UNDERSTAND THE NATUR E OF ITA-5449/DEL/2010 2 BUSINESS AS WELL AS TO DECIDE THE ISSUE AS HELD BY THE LD.CIT(A) HIMSELF IN HIS ORDER AT PAGE 3. (II) THE TAX AUDIT REPORT IN FORM 3CD IS NOT A MERE CERTIFICATE BUT AN EXHAUSTIVE REPORT ON VARIOUS ASPEC TS OF THE ASSESSEES BUSINESS AND HEALTH ARRIVED AT AFTER AUDIT O F ITS AFFAIRS. (III) IN THE FACTS OF THE CASE, THE ADDITIONAL DETAIL S AND DOCUMENTS FURNISHED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS SHOULD HAVE BEEN SENT TO THE AO FOR REMAN D REPORT SINCE THE SAME WERE NOT FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS DESPITE ADEQUATE OPPORTUNITY. (IV) THE CONDITIONS LAID DOWN FOR ADMITTING ADDITION AL EVIDENCE U/S RULE 46A ARE NOT SATISFIED IN THIS CASE. 3. LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) HAS A CCEPTED ADDITIONAL EVIDENCE IN THE FORM OF VARIOUS DETAILS AN D DOCUMENTS WHICH WERE NOT SENT TO THE ASSESSING OFFICER BY THE CIT(A) FOR REMAND REPORT AND, THEREFORE, THIS IS A CLEAR CASE OF VIOLATION OF R ULE 46A BY ADMITTING ADDITIONAL EVIDENCE. 4. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PR OVISION OF SECTION 44AD OF THE ACT WAS WRONGLY INVOKED IN THIS C ASE AS THE TURNOVER OF THE ASSESSEE FOR THE RELEVANT YEAR WAS MUCH MORE THAN THE LIMIT OF `40 LAKHS LAID DOWN U/S 44AD OF THE ACT. HE RELIED ON THE ORDER OF THE LEARNED CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). WE FI ND THAT THE ASSESSING OFFICER HAS MADE THE ADDITION BY APPLYING A FL AT NET PROFIT RATE OF 8% ON THE TURNOVER OF THE ASSESSEE BY INVOKING THE SPECIAL PROVISIONS OF SECTION 44AD OF THE ACT. WE FIND THAT THE PROVISIONS OF SECTION 44AD COULD BE INVOKED ONLY WHEN THE TURNOVE R OF THE ASSESSEE WAS LESS THAN `40 LAKHS IN A PARTICULAR ACCOUNTING PERI OD. IN THIS CASE ITA-5449/DEL/2010 3 BEFORE US, THE ASSESSEES GROSS CONTRACT RECEIPTS WERE TO TH E TUNE OF `4.26 CRORES AND, THEREFORE, WE HOLD THAT THERE WAS N O JUSTIFICATION FOR INVOKING THE PROVISIONS OF SECTION 44AD OF THE ACT AN D APPLYING A FLAT RATE OF 8% AS NET PROFIT ON THE GROSS TURNOVER OF THE ASSESSEE. 6. HOWEVER, WE FIND THAT THE ASSESSEE WAS NON-COOPERATIV E AT THE TIME OF ITS ASSESSMENT BEFORE THE ASSESSING OFFICER AND ASSESSM ENT WAS FRAMED U/S 144 OF THE ACT. THE ASSESSEE HAS NOT FILE D THE REQUISITE DETAILS BEFORE THE ASSESSING OFFICER. THE DETAILS AND DO CUMENTS WERE FURNISHED BY THE ASSESSEE BEFORE THE CIT(A) AND THE CIT( A) FAILED TO SEND THE SAME TO THE ASSESSING OFFICER FOR THE REMAND REP ORT OR FOR GETTING THE COMMENTS OF THE ASSESSING OFFICER. IN THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ORDER OF LEARNED C IT(A) IS NOT SUSTAINABLE IN LAW AND, ACCORDINGLY, WE SET ASIDE THE O RDER OF THE LEARNED CIT(A) TO HIS FILE WITH THE DIRECTION TO PASS A DE NOVO APPELLATE ORDER IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNI TY TO BOTH THE SIDES. THE ASSESSEE SHALL BE AT LIBERTY TO FILE ANY EVIDENCE IN SUPPORT OF ITS CASE BEFORE THE CIT(A) AND THE CIT(A) IS DIRECTED TO GIVE OPPORTUNITY TO THE ASSESSING OFFICER TO FILE ITS REMAND REPORT ON THE E VIDENCE WHICH MAY BE RELIED UPON BY THE ASSESSEE AND TO GIVE HIS COMME NTS THEREON AND THE LEARNED CIT(A) SHALL PASS THE APPELLATE ORDER ON THE ISSUES BEFORE HIM. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER, 2015. SD/- SD/- ( (( ( PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI ) )) ) (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. ITA-5449/DEL/2010 4 COPY FORWARDED TO: - 1. APPELLANT : INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD- -- -18(2), 18(2), 18(2), 18(2), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 2. RESPONDENT : M/S USHA POLLUTECH ENGINEERING PVT.LT D., M/S USHA POLLUTECH ENGINEERING PVT.LTD., M/S USHA POLLUTECH ENGINEERING PVT.LTD., M/S USHA POLLUTECH ENGINEERING PVT.LTD., 690, TOP FLOOR, RAJINDER NAGAR, NEW DELHI. 690, TOP FLOOR, RAJINDER NAGAR, NEW DELHI. 690, TOP FLOOR, RAJINDER NAGAR, NEW DELHI. 690, TOP FLOOR, RAJINDER NAGAR, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR