Praveen Kumar Mittal, Bulandshahr V. ITO, Bulandshahr

ITA 5540/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3938 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 16-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 21-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU MUKHERJEE
• Keywords: Bonafide mistake
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.5540/DEL/2015 ASSESSMENT YEAR : 2009-10 PRAVEEN KUMAR MITTAL, PROP. M/S AJAI ENGG. WORKS, KRISHNA NAGAR, BULANDSHAHR. VS. ITO, WARD- 3, BULANDSHAHR. PAN : ACPPM6011L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M. P. RASTOGI, ADV. DEPARTMENT BY : MS. RANU MUKHERJEE, SR.DR DATE OF HEARING : 15-01-2018 DATE OF PRONOUNCEMENT : 19-01-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 29.07.2015 OF CIT(A), GHAZIABAD RELATING TO ASSESSM ENT YEAR 2009-10. 2. THIS APPEAL WAS EARLIER DISMISSED BY THE TRIBUNA L FOR NON-APPEARANCE. SUBSEQUENTLY, THE TRIBUNAL VIDE ORDER DATED 24.11.2 017 IN M.A. NO.192/DEL/2017 RECALLED ITS EARLIER ORDER. HENCE, THIS IS A RECALLED MATTER. 3. THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER :- THAT THE NET PROFIT RATE OF 8%, AS APPLIED BY THE ASSESSING OFFICER AND SUSTAINED BY CIT (APPEALS) ON UNDISCLOSED TURNOVER OF RS.3,93,45 ,115/-, IS ARBITRARY, UNJUST, NOT BASED ON COMPARABLE AND AT ANY RATE VERY EXCESSIVE. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF HAND P UMPS PARTS UNDER THE NAME AND STYLE OF M/S AJAI ENGG. WORKS, BULANDSHAHR AS A SOLE PROPRIETOR. HE FILED 2 ITA NO.5540/DEL/2015 HIS ORIGINAL RETURN OF INCOME ON 11.09.2009 DECLARI NG TOTAL INCOME OF RS.4,20,077/-. SUBSEQUENTLY, NOTICE U/S 148 WAS IS SUED TO THE ASSESSEE TO ASSESS THE ESCAPED INCOME. THE ASSESSEE IN RESPONSE TO TH E SAME SUBMITTED THAT THE RETURN FILED ORIGINALLY MAY BE TREATED AS RETURN FI LED IN RESPONSE TO NOTICE U/S 148 OF THE I.T. ACT. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, IT CAME TO THE NOTICE OF THE ASSESSING OFFICER THAT THE ASSESSEE H AS ALSO MADE TRANSACTIONS IN HIS TWO SAVINGS BANK ACCOUNTS MAINTAINED WITH PNB, MOTI BAGH, BULANDSHAHR AND ICICI BANK, BULANDSHAHR, WHICH WERE NOT SHOWN I N THE BALANCE SHEET FILED BY THE ASSESSEE. THE ASSESSING OFFICER OBSERVED TH AT THE TOTAL CASH AND CHEQUE TRANSACTIONS APPEARING AS CREDIT ENTRIES IN THE ABO VE TWO ACCOUNTS WERE TO THE TUNE OF RS.3,93,45,115/-. FURTHER, BOTH THE ABOVE BANK ACCOUNTS WERE CLOSED IN THE FINANCIAL YEAR 2010-11 RELEVANT TO ASSESSMENT Y EAR 2011-12. THE ASSESSEE HAS DEPOSITED AND MADE WITHDRAWALS IN THESE ACCOUNT S REGULARLY. ON BEING QUESTIONED BY THE ASSESSING OFFICER, IT WAS SUBMITT ED THAT THE ASSESSEE HAD MADE BUSINESS TRANSACTIONS IN THESE BANK ACCOUNTS. AS HE IS ENGAGED IN THE MANUFACTURING AND SELLING OF HAND PUMPS PARTS, HE S OLD THESE PARTS ALL OVER INDIA EXCEPT DELHI. THE PARTIES WHO PURCHASED THES E PARTS HAD DEPOSITED THE AMOUNT AT DIFFERENT STATIONS AND THE WITHDRAWALS MA DE FROM THESE ACCOUNTS ARE RELATED TO EXPENDITURE INCURRED ON THIS BUSINESS. ACCORDING TO THE ASSESSING OFFICER, THE INCOME EARNED FROM THESE TRANSACTIONS MADE IN HIS BANK ACCOUNT IS UNDISCLOSED AND IS LIABLE TO BE ADDED IN THE ASSESS EES TOTAL INCOME AS 3 ITA NO.5540/DEL/2015 UNDISCLOSED INCOME. AFTER CONSIDERING THE SUBMISSI ON MADE BY THE ASSESSEE, THE ASSESSING OFFICER APPLIED PROFIT RATE OF 8% ON SUCH UNDISCLOSED TURNOVER OF RS.3,93,45,115/- AND ACCORDINGLY MADE ADDITION OF R S.31,47,610/- TO THE TOTAL INCOME OF THE ASSESSEE. 5. IN APPEAL, THE LD. CIT(A) UPHELD SUCH ADDITION M ADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER :- HAVING CONSIDERED FACTS OF THE CASE AND RIVAL CONT ENTIONS, I FIND THAT IT IS UNCONTROVERTED FACT THAT TURNOVER TO THE TUNE OF RS .3,93,45,115/- HAS NOT BEEN DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME. IT IS ALSO NOTEWORTHY THAT DISCLOSED TURNOVER OF THE ASSESSEE IS ONLY RS.1,56,51,413/-. THEREFORE, PLEA THAT TURNOVER WAS NOT DECLARED IN THE RETURN OF INCOME DUE TO UNINTEN TIONAL MISTAKE IS NOT TENABLE. WHEN MAJOR PORTION OF THE TURNOVER IS NOT DECLARED IN THE RETURN OF INCOME, IT CANNOT BE ACCEPTED AS UNINTENTIONAL MISTAKE. BY PRINCIPLE OF PREPONDERANCE OF PROBABILITY IT IS DELIBERATE CONCEALMENT OF TURNOVER. THE APPELLAN T HAS CONTENDED THAT 8% OF NET PROFIT IS EXCESSIVE AND HAS PLEADED THAT NET PROFIT RATE OF HIS DECLARED TURNOVER SHOULD BE ADOPTED. I DO NOT FIND ANY MERIT AND STRENGTH IN THIS CONTENTION OF THE APPELLANT AND RELIANCE PLACED ON THE JUDGMENT CITED IS ALSO M ISPLACED. THE ASSESSEE DEALS IN MANUFACTURING AND SELLING OF HAND PUMP PARTS. THE O VER HEAD EXPENSES THAT HAVE BEEN INCURRED AND SHOWN IN THE DECLARED BUSINESS WO ULD BE SUFFICIENT TO MEET THE UNDECLARED TURNOVER AS WELL I.E. NO SEPARATE EXPENS ES FOR UNDECLARED TURNOVER ARE AS SUCH REQUIRED. SECONDLY, MANUFACTURING EXPENSES WIL L ALSO BE NOT TO THE SAME EXTENT AS IN THE CASE OF DECLARED BUSINESS AS SOME OF THE EXPENSES ARE COMMON TO BOTH DECLARED AND UNDECLARED BUSINESS. IN THE DECLARED B USINESS, I FIND THAT THE APPELLANT HAS SHOWN PROFIT OF RS. 4,52,684/- ON TUR NOVER OF RS. 1,56,51,413/- WHICH MEANS EXPENSES ARE RS. 1.52 CRORE. THUS, I FI ND THAT EXPENSES OF THIS HIGH LEVEL COULD NOT BE FOR ONLY THE DECLARED TURNOVER. AT LEAST A PART OF THESE EXPENSES IS DEFINITELY ATTRIBUTED TO UNDECLARED BUS INESS. THEREFORE, IN MY CONSIDERED OPINION, THE A.O. HAS BEEN QUITE FAIR IN ESTIMATING N.P. @ 8% ON UNDECLARED TURNOVER. NO INTERFERENCE IS CALLED IN A CTION OF THE A.O. ADDITION IS CONFIRMED. GROUND OF APPEAL IS REJECTED. 6. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADOPTION OF NET PROFIT RATE OF 8% ON SUCH UNDISCLOSED TURNOVER IS EXCESSIVE AND , THEREFORE, THE NET PROFIT 4 ITA NO.5540/DEL/2015 RATE OF THE DECLARED TURNOVER SHOULD BE ADOPTED. H E SUBMITTED THAT THE DECLARED RATE OF PROFIT IS AROUND 2.89%, THEREFORE, THE SAME RATE SHOULD BE APPLIED. IN HIS ALTERNATE CONTENTION, HE SUBMITTED THAT THE PROFIT RATE OF 3% TO 4% MAY BE ADOPTED. 8. LD. DR ON THE OTHER HAND SUBMITTED THAT THE ASSE SSING OFFICER HAS VERY REASONABLY APPLIED THE RATE OF 8% ON SUCH UNDISCLOS ED TURNOVER WHICH HAS BEEN UPHELD BY THE LD. CIT(A). THEREFORE, THE ORDER OF THE LD. CIT(A) BEING A REASONED ONE SHOULD BE UPHELD. 9. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND PAPER BOOK FILE D ON BEHALF OF THE ASSESSEE. A PERUSAL OF THE MATERIAL AVAILABLE ON RECORD SHOWS THAT THE ASSESSEE HAS NOT DECLARED TURNOVER TO THE TUNE OF RS.3,93,45,115/- W HICH WERE ROUTED THROUGH THE TWO SAVINGS BANK ACCOUNTS, WHICH WERE NOT DECLARED IN THE BALANCE SHEET. I FIND THE ASSESSING OFFICER APPLIED NET PROFIT RATE OF 8% AFTER CONSIDERING THE VARIOUS WITHDRAWALS FROM THE SAID BANK ACCOUNTS WHI CH HAS BEEN UPHELD BY THE LD. CIT(A). IT IS THE SUBMISSION OF THE LD. COUNSE L FOR THE ASSESSEE THAT THE ADOPTION OF THE PROFIT RATE OF 8% ON SUCH TURNOVER IS VERY EXCESSIVE AND VERY HIGH AND THE ASSESSEE HAS NOT EARNED SUCH HUGE INCO ME. IT IS THE SUBMISSION OF THE LD. DR THAT THE LOWER AUTHORITIES HAVE ALREADY ADOPTED THE REASONABLE PROFIT RATE OF 8%. I FIND THE ASSESSEE ON HIS DISCLOSED T URNOVER HAS DECLARED NET PROFIT RATE OF 2.89%. IT IS NOT UNDERSTOOD AS TO HOW AND WHY THE TRANSACTIONS ROUTED 5 ITA NO.5540/DEL/2015 THROUGH THE TWO SAVINGS BANK ACCOUNTS REMAINED TO B E INCLUDED IN THE REGULAR TURNOVER. I FIND THE ASSESSING OFFICER AFTER CONSI DERING THE EXPLANATION OF THE ASSESSEE THAT THE VARIOUS WITHDRAWALS SHOWN IN THE BANK ACCOUNTS ARE EXPENSES INCURRED FOR MAKING SUCH SALE HAS ADOPTED 8% NET PR OFIT AS AGAINST THE NORMAL RATE OF PROFIT OF 2.89% SHOWN IN THE DECLARED TURNO VER. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUS TICE, I AM OF THE CONSIDERED OPINION THAT THE ADOPTION OF NET PROFIT RATE OF 5% ON SUCH UNDISCLOSED TURNOVER OF RS.3,93,45,115/- AS AGAINST 8% PROFIT RATE ADOPT ED BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) WILL MEET THE ENDS OF JUST ICE. I HOLD AND DIRECT ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH JANUARY, 2018. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 19-01-2018. SUJEET 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