Deep Construction Co. Sonepat, Rohtak V. JCIT, Sonepat

ITA 5504/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7360 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Keywords: Opportunity of being heard
• Section: 40A(3); 143(3)

Judgement Text

ITA NO. 5504/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 5504/DEL/2012 A.Y. : 200 9 - 10 DEEP CONSTRUCTION CO. SONEPAT, 675/11, JIND ROAD, BEHIND GURUDWARA, ROHTAK-124001 (HARYANA) (PAN:-AADFD5495K) VS. JOINT COMMISSIONER OF INCOME TAX, SONEPAT RANGE, SONEPAT (HARYANA) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. RS SINGHVI, CA DEPARTMENT BY : MS. PARWINDER KAUR, SR. D.R. DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 02 0202 02- -- -09 0909 09- -- -2014 2014 2014 2014 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 10 1010 10- -- -09 0909 09- -- -2014 2014 2014 2014 ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU : : : : J JJ JM MM M THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), ROHTA K DATED 28.8.2012 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED IN THE APPEAL READ AS UNDER :- 1. THAT THE DISMISSAL OF THE APPEAL BY THE LD. AP PELLATE AUTHORITY AND THE ASSESSMENT DONE BY THE LD. ASSESSMENT OFFICER IS AGAINST LAW AND FACTS OF THE CASE. ITA NO. 5504/DEL/2012 2 2. THAT THE LD. ASSESSMENT OFFICER ERRED IN DISALL OWING A SUM OF RS. 80,61,648/- U/S. 40A(3) OF THE I.T. ACT AND ADDING IT TO HE TOTAL INCOME OF THE APPELLANT. 3. THAT THE LD. ASSESSMENT OFFICER ERRED IN ADDING RS. 4200000/- ON ACCOUNT OF PURCHASES MADE FROM M/S PA RAS RAM BASANT LAL, ALTHOUGH ALL THE PURCHASES ARE PRO PERLY VOUCHED AND ACCOUNTED FOR. 4. THAT THE LD. ASSESSMENT OFFICER ERRED IN ADDING RS. 48,06,000/- TO THE TOTAL INCOME OF THE APPELLANT ON ACCOUNT OF CASH DEPOSITS IN THE BANK ACCOUNT ALT HOUGH ALL THE CASH DEPOSITS ARE FROM THE CASH AVAILABLE I N THE BOOKS OF ACCOUNT OF THE APPELLANT. 5. THAT THE LD. ASSESSMENT OFFICER ERRED IN REJECTI NG THE BOOKS OF THE APPELLANT U/S. 145(3) OF THE I.T. ACT, 1961. 6. THAT THE ASSESSMENT OFFICER ERRED IN NOT COMPUTI NG THE TOTAL INCOME OF THE ASSESSEE BY APPLYING NP RATE @ 8% AS PROVIDED U/S. 44A(D) OF THE IT ACT, 1961 AND THE AMOUNT OF RS. 1,75,29,320/- AS TOTAL INCOME IS WRON G AND THE ADDITION MADE U/S. 40A(3) ARE INCORRECT. 7. THAT THE ASSESSEE RESERVES ITS RIGHT TO ADD OR A LTER ANY GROUND OF APPEAL. ITA NO. 5504/DEL/2012 3 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE H AD FILED ITS RETURN FOR A.Y. 2009-10 WITH A NET PROFIT OF RS. 4 ,61,670/- ON A TOTAL WORK RECEIPTS OF RS.6,39,01,601/- AND MISC. INCOME OF RS. 58,650/- ON WHICH THE ASSESSING OFFICER HAS ASS ESSED THE TOTAL INCOME OF RS. 1,75,29,320/- U/S. 143(3) OF THE I.T. ACT, 1961 VIDE ORDER DATED 26.12.2011. 4. AGAINST THE ABOVE ORDER OF THE ASSESSING OFFICER PASSED U/S. 143(3) OF THE I.T. ACT, 1961 DATED 26.12.2011, ASSE SSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 28.8.2012 DISMISSED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED BY THE AFORESAID ORDER OF THE LD. CIT( A) DATED 28.8.2012, ASSESSEE APPEALED BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BE LOW AND REQUESTED THE SAME MAY BE UPHELD. 6.1 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE HAS FILED THREE SMALL PAPERS BOOKS VIZ. THE FIRST PAPER BOOK DATED NIL CONTAINING PAGES 1 TO 20 HAVING THE DETAILS AND RECORDS OF THE LOWERS AUTHORITIES BELOW; SECOND ONE IS A PAPER BOOK DAT ED 10.10.13 CONTAINING PAGES 1 TO 8 HAVING THE WRITTEN ARGUMENT S OF THE ASSESSEE ALONGWITH PHOTOCOPY OF JUDGEMENT OF HONB LE PUNJAB AND HARYANA HIGH COURT IN ITA NO. 293 OF 2008 IN THE CA SE OF CIT VS. M/S PRABHAT KUMAR CONTRACTOR, SIRSA AND LAST ONE IS A P APER BOOK DATED 1.4.2014 HAVING PAGES 1 TO 26 CONTAINING REVISED FO RM 36 AND ITA NO. 5504/DEL/2012 4 COPIES OF ORDERS PASSED BY THE LOWER AUTHORITIES. DURING THE HEARING LD. COUNSEL OF THE ASSESSEE DREW OUR ATTEN TION TOWARDS THE FIRST PAPER BOOK DATED NIL VIDE PAGE NO. 1 WHICH SH OWS A COMPARATIVE CHART OF TRADING RESULTS IN RESPECT OF THE ASSESSEE SHOWING THE RESULTS OF NET PROFIT RATE AS DETERMIN ED BY THE AO AS WELL AS RELIEF GIVEN BY THE LD. FIRST APPELLATE AUT HORITY. HE ALSO SUBMITTED THAT REASONABLE NET PROFIT MAY BE ADOPTED . LASTLY HE REQUESTED THAT ASSESSEE IS IN A POSITION TO PRODUCE ALL THE DOCUMENTARY EVIDENCE FOR SUBSTANTIATING ITS CLAIM . HE ALSO REQUESTED THAT IF THIS TRIBUNAL IS NOT AGREED WITH THE SUBMISSIONS OF THE ASSESSEE ADVANCED BY HIM THEN THE ENTIRE EVIDEN CES FILED BY THE ASSESSEE IN THE SHAPE OF PAPER BOOKS AS STATED, TH E ISSUES MAY BE SET ASIDE TO THE FILE OF THE AO TO DECIDE THE SAME IN ACCORDANCE WITH LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEA RD AS WELL AS AFTER CONSIDERING ALL THE MATERIALS ON RECORD. A S PER ASSESSEE, THE NET PROFIT ADOPTED BY THE AO IN THE EARLIER YEARS AND ALSO IN SUBSEQUENT ASSTT. YEARS ARE AS UNDER:- 2007-08 - TRADING RESULTS ACCEPTED. 2008-09 - 12% 2009-10 - 27.43% 2010-11 - TRADING RESULTS ACCEPTED. 2011-12 - 8% 6.2 IT WAS ALSO THE CONTENTION OF THE ASSESSEE THA T IN RESPECT OF THE PRESENT ASSESSMENT YEAR I.E. 2009-10 THE NET PR OFIT RATE WAS ADOPTED @ 27.43% OF THE GROSS RECEIPTS IS NOT ONLY ILLOGICAL, ITA NO. 5504/DEL/2012 5 EXAGGERATED AND EXORBITANT BUT ALSO OUT OF TUNE OF GENERAL PRACTICES OF THE TRADE IN WHICH THE ASSESSEE WAS ENGAGED AND THE PREVALENT MARKET CONDITIONS DURING THE ASSESSMENT. HE ALSO PRAYED THAT TOTAL INCOME AS ASSESSED BY THE AO VIDE HIS ORDER DATED 26.12.2011 AT TOTAL RS. 1,75,29,320/- MAY BE SET AS IDE AS IT IS ARBITRARY AND PERVERSE. HE FURTHER SUBMITTED THA T IN PARAGRAPH 8 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER REJE CTED THE BOOKS OF ACCOUNT OF THE ASSESSEE UNDER SECTION 145(3). ONCE THE BOOKS OF ACCOUNT ARE REJECTED, THE PROPER COURSE OF ACTION W OULD BE TO APPLY A REASONABLE NET PROFIT RATE KEEPING IN VIEW THE NE T PROFIT DISCLOSED BY THE ASSESSEE AND ACCEPTED BY THE REVENUE IN THE PRECEDING AS WELL AS SUBSEQUENT YEARS. HE ALSO SUBMITTED THAT T HE ITAT MAY DIRECT THE APPLICATION OF SUITABLE RATE OF NET PROF IT. HE FURTHER STATED THAT ONCE A NET PROFIT RATE IS APPLIED, NO OTHER AD DITION/DISALLOWANCE AS MADE BY THE ASSESSING OFFICER IS REQUIRED. THER EFORE, THE SEPARATE ADDITIONS MADE BY THE ASSESSING OFFICER MA Y BE DELETED. THE LEARNED COUNSEL ALTERNATIVELY SUBMITTED THAT IF THE BENCH DOES NOT AGREE WITH THE ABOVE SUGGESTION OF THE LEARNED COUNSEL, THEN THE MATTER MAY BE SET ASIDE TO THE FILE OF THE ASSE SSING OFFICER WITH A DIRECTION TO ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND HE GAVE THE UNDERTAKING ON BEHALF OF T HE ASSESSEE TO PRODUCE ALL THE RELEVANT DOCUMENTS AND EVIDENCES BE FORE THE ASSESSING OFFICER. 6.3 LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF AUTHORITIES BELOW AND SHE STATED THAT THE ASSESSING OFFICER HAD REJECTED THE BOOKS OF ACCOUNT BUT HAS NOT APPLIED T HE NET PROFIT RATE. SINCE THE NET PROFIT RATE WAS NOT APPLIED, THE SEPA RATE ADDITIONS ITA NO. 5504/DEL/2012 6 MADE BY HIM HAVE TO BE CONSIDERED ON MERITS AND CAN NOT BE DELETED MERELY BECAUSE THE ASSESSING OFFICER HAS RE JECTED THE BOOKS OF ACCOUNT. SHE, THEREFORE, SUBMITTED THAT EITHER THE ORDER OF THE ASSESSING OFFICER SHOULD BE SUSTAINED OR THE MATTER MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER PROVIDED THE ASSESSEE GIVES AN UNDERTAKING TO PRODUCE ALL THE RELEVANT DETAILS BEFORE THE ASSESSING OFFICER. 6.4 IN THE REJOINDER, THE LEARNED COUNSEL REITERATE D HIS UNDERTAKING ON BEHALF OF THE ASSESSEE TO PRODUCE ALL THE RELEVA NT MATERIAL BEFORE THE ASSESSING OFFICER. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE U S. IN OUR OPINION, IT WOULD MEET THE ENDS OF JUSTICE IF THE O RDERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE MATTER RESTORED T O THE FILE OF THE ASSESSING OFFICER. WE ORDER ACCORDINGLY AND THE A SSESSING OFFICER IS DIRECTED TO ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE ALL THE DETAILS, EVIDENCES AND EXPLANATION BEFORE THE ASSESSING OFFI CER. THEREAFTER, THE ASSESSING OFFICER WILL PASS THE ASSESSMENT ORDE R AFRESH IN ACCORDANCE WITH LAW. ITA NO. 5504/DEL/2012 7 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DEE MED TO BE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10/9/2014. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL] ]] ] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 10/9/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 5504/DEL/2012 8