ACIT, New Delhi V. Sh. Birender Singh, New Delhi

ITA 5673/DEL/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8832 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAI
• Keywords: Rejection of books of accounts; Source of fund
• Section: 143(3)

Judgement Text

ITA NO. 5673/ DEL/ 2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A , NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A.NO. 5673 /DEL/201 2 A.Y. : 200 9 - 10 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 38(1), ROOM NO. 212, 2 ND FLOOR, CR BUILDING, NEW DELHI - 1 VS. SH. BIRENDER SINGH PROP. BIRENDER CONSTRUCTION CO. BF - 149, SHALIMAR BAGH PURVI, DELHI (PAN: ABAPS6676B) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. VIKRAM SAHAI, DR ASSESSEE BY : SH. GAUTAM JAIN, CA DATE OF HEARING : 2 9 - 0 1 - 201 5 DATE OF ORDER : 0 2 - 0 2 - 201 5 ORDER PER H.S. SIDHU : J M THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 14 / 8 /20 1 3 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - X XVIII , NEW DELHI ON THE FOLLOWING GROUNDS: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN: (I) THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 43,01,460/ - MADE BY THE A.O. BY ADOPTING NET PROFIT RATE OF 8 % ON GROSS TURNOVER, AFTER REJECTION OF BOOKS OF ACCOUNTS OF THE ASSEESSEE. ITA NO. 5673/ DEL/ 2012 2 (II) THE CIT(A) HAS FAILED TO APPRECIATE THAT THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED CONSIDERING VARIOUS DISCREPANCIES, SUCH AS NON - MAINTENANCE OF STOCK RE - REGISTER/PURCHASE R EGISTER/COMPLETE BOOKS OF ACCOUNTS, UNVERIFIABLE PURCHASES/ CREDITORS, UNVERIFIABLE LABOUR CHARGES AND OTHER EXPENSES, THREE DIFFERENT CASH BOOKS ETC. THE CIT(A) HAS ALSO FAILED TO APPRECIATE THAT SUFFICIENT OPPORTUNITY WAS PROVIDED TO THE ASSESSEE DURING ASSESSMENT PROCEEDING. AS THE ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM, AO WAS JUSTIFIED IN REJECTION THE BOOKS AND APPLYING NET PROFIT @8% ON GROSS TURNOVER. (III) THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13,10,100/ - ON THE GROUND THAT THERE WAS PRECEDING CASH WITHDRAWALS OF RS. 13,10,100/ - WHILE DOING SO, THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD SUBMITTED BEFORE THE AO THAT THE DEPOSITS IN THE SAID BANK ACCOUNT IS AGAINST THE WITHDRAWAL FROM CURRENT ACCOUNT/GETTING PAY ORD ERS AGAINST EARNEST MONEY. THE LD. CIT(A) ALSO FAILED TO APPRECIATE THAT NEITHER SUCH CREDIT ENTRIES WERE FOUND IN CASH BOOK NOR THE ASSESSEE COULD SUBSTANTIATE THE SOURCE OF FUNDS. (IV) THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. ITA NO. 5673/ DEL/ 2012 3 ( V) THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR MODIFY ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE APPEAL. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NOT DISPUTED BY BOTH PARTIES, THEREFORE, NO NEED TO REPEAT THE SAME FOR T HE SAKE OF CONVENIENCE. THE AO COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 145(3) OF THE INCOME TAX ACT, 1961 ON 23.12.2011 AND MADE THE VARIOUS ADDITIONS. 3. AGAINST THE ORDER OF THE AO DATED 23/12/2011 ASSESSEE FILED AN APPEAL BEFORE THE ID. FIRST APP ELLATE AUTHORITY WHO VIDE IMPUGNED ORDER DATED 14/8/2012 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5 . LD. COUNSEL OF THE ASSESSEE HAS FILED TWO PAPER BOOKS ONE IS CONTAINING PAGES 1 TO 78 HAVING THE ASSESSEE S CONTENTION IN BRIEF AND COPY OF THE CORRESPONDENCE MADE WITH THE AO AND SOME COPY OF TRIBUNAL S DECISIONS. THE SECOND PAPER BOOK CONTAINING PAGES 123 TO 151 HAVING THE REPLY FILED BY THE ASSESSEE TO THE AO, COPY OF ACKNW. OF RETURN OF INCOME AND COPY OF SALE DEED. 6 . AT THE TIME OF HEARING LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL . 7 . WE HAVE HEARD BOTH THE PARTIES, PERUSED AND CONSIDERED THE RELEVANT RECORD AVAILABLE WITH US SPECIALLY THE IMPUGNED ORDER S PASSED BY THE REVENUE AUTHORITIES; PAPER BOOKS FILED BY THE ASSESSEE S COUNSEL . WE FIND THAT LD. FIRST APPELLATE AUTHORITY HAS E LABORATELY DISCUSSED THE ISSUE S IN DISPUTE BY CONSIDERING THE ITA NO. 5673/ DEL/ 2012 4 SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE AND ADJUDICATED THE ISSUE S IN GROUND NO. 1 VIDE PARA NO. 38 PAGE NO. 22 OF THE IMPUGNED ORDER WHICH READS AS UNDER: - 38. I HAVE CAREFULLY PERUSED TH E ASSESSMENT ORDER AND THE DETAILED SUBMISSIONS OF THE APPELLANT. THE AO HAS NOT CONSIDERED THE SUBSTANTIAL IMPROVEMENT IN THE CONTRACT RECEIPTS AND THE NET PROFIT SHOWN BY THE APPELLANT FOR THIS YEAR AS COMPARED WITH THE CONTRACT RECEIPTS AND THE NET PRO FIT FOR EACH OF THE PRECEDING TWO YEARS. THE AO HAS NOT REFERRED TO ANY COMPARABLE CASE. THE APPLICATION OF ADHOC NET PROFIT RATE OF 8% APPLIED BY THE AO IS WITHOUT ANY VALID BASIS. THE ADDITION OF RS. 43,01,460/ - MADE BY THE AO IS WITHOUT ANY PROPER B ASIS. THE IMPUGNED ADDITION MADE BY THE AO IN THE NET PROFIT OF RS. 77,27,853/ - SHOWN BY THE APPELLANT IS NOT SUSTAINABLE. THE SAME IS THEREFORE DELETED. SIMILARLY, LD. CIT(A) HAS ALSO ADJUDICATED THE ISSUE IN GROUND NO. 2 VIDE PARA NO. 43 PAGE 25 OF T HE IMPUGNED ORDER WHICH READS AS UNDER: - 43. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT ON THIS ACCOUNT. THE SAME ARE SUPPORTED BY THE ORDERS OF THE CIT(A), INCOME TAX TRIBUNAL, HIGH COURT AND SUPREME COURT JUDGMENTS. THE PRECEDING BANK CASH WIT HDRAWAL OF RS. 13,10,000/ - HAVE TO BE TAKEN INTO ACCOUNT IN THE SUBSEQUENT BANK CASH DEPOSITS. SIMILARLY, THE ADDITION OF RS. 1,97,710/ - MADE FOR THE ASSESSMENT YEAR 2008 - 09 HAS TO BE TAKEN INTO ACCOUNT IN RESPECT OF THE SAID ITA NO. 5673/ DEL/ 2012 5 BANK CASH DEPOSITS. ON DOI NG THIS, THE UNEXPLAINED CASH DEPOSITS STANDS EXPLAINED TO THE EXTENT OF RS. 15,07,710/ - AND THE BALANCE AMOUNT OF RS. 11,97,790/ - IS UNEXPLAINED. THE APPELLANT GETS RELIEF OF RS. 15,07,710/ - AND THE ADDITION WILL BE SUSTAINED OF RS. 11,97,790/ - . 8 . AFTER GOING THROUGH THE ABOVE SAID RELEVANT ORDER ON THE ISSUES IN DISPUTE, WE FIND THAT CIT(A) HAS DECIDED THE ISSUE S IN DISPUTE IN FAVOR OF THE ASSESSEE AFTER APPRECIATING THE EVIDENCE FILED BY THE ASSESSEE AS WELL AS DECISION RENDERED BY THE HON BLE S UPREME COURTS, HON BLE HIGH COURT S AND THE TRIBUNAL. 8 .1 W ITH REGARD TO GROUND NO. I & II IS CONCERNED, WE FIND THAT LD. CIT(A) HAS OBSERVED THAT THE METHOD OF ACCOU N TING HAS BEEN ACCEPTED FOR SEVERAL YEARS ON SAME SET OF FACTS AND PLACED R ELIANCE O N 294 ITR 655 (GAUHATI) MKB (ASIA) P LTD. VS. COMMISSIONER OF INCOME TAX. LD. CIT(A) HE FURTHER OBSERVED THAT NON MAINTENANCE OF STOCK REGISTER CANNOT BE A GROUND FOR REJECTION OF ACCOUNT IN EVERY CASE AND IT DEPENDS UPON THE NATURE OF BUSINESS. HE RELI ED UPON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX. VS. JAS JACK ELEGANCE EXPORTS 324 ITR 95 (DELHI) AND COMMISSIONER OF INCOME TAX. VS. POONAM RANI 192 TAXMAN 167 (DELHI) . THE ONUS WAS ON THE REVENUE TO SHOW THAT ACCOUNTS WERE INCOMPLETE OR INCORRECT AND TRUE PROFITS COULD NOT BE DEDUCTED FROM THE BOOKS OF ACCOUNTS MAINTAINED AND TRUE PROFITS COULD NOT BE DEDUCED FROM THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WHICH WERE ALSO DULY AUDITED AND NO ADVERSE INFE RENCE WAS DRAWN BY THE AUDITOR. IF EXPENSES CLAIMED, REMAINED UNEXPLAINED, THE AO COULD HAVE DISALLOWED THE SAME WITHOUT REJECTING THE BOOKS OF ACCOUNTS . HE RELIED UPON THE HON BLE HIGH COURT OF DELHI DECISION IN THE CASE OF CIT VS. PARADIS HOLIDAYS 325 ITR 13 (DELHI) . LD. CIT(A) ITA NO. 5673/ DEL/ 2012 6 HAS FURTHER OBSERVED THAT THE REVENUE HAS NOT PROVIDED THE DETAILS OF COMPARABLE CASES RELIED UPON 68 ITR 796 (KERALA ) AND 210 ITR 103 (CALCUTTA) CIT VS. EASTERN COMMERCIAL ENTERPRISSES (RELIED UPON 125 ITR 713 SC) KISHINCHAND C HELLARAM VS. CIT, BOMBAY CITY - II. LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE SHOULD HAVE BEEN PROVIDED WITH AN OPPORTUNITY TO REBUT BEFORE REJECTING THE BOOKS OF ACCOUNTS AND ESTIMATING THE PROFITS , HE FURTHER RELIED UPON THE OTHER JUDGMENTS VIZ. 6 4 ITR 175 (AP) S. SARABHAIAH SETTY AND SONS. VS. CIT, AP AND 62 ITR 528 (AP ) YAKUB VERSEY LALIJEE AND ANR. VS. CIT, AP. LASTLY LD. CIT(A) AND HAS OBSERVED THAT ESTIMATE SHOULD BE BASED ON SOME EVIDENCE AND MATERIAL, HE RELIED UPON THE HON BLE SUPREME COUR T OF INDIA JUDGMENT IN THE CASE OF RAGHUBAR MANDAL 8 STC 770 (SC) ASSESSMENT TO BE MADE (ESTIMATION SHALL HAVE A RATIONAL NEXUS TO THE AVAILABLE MATERIALS AND THE CIRCUMSTANCES OF THE CASE) RELIED UPON THE HON BLE APEX COURT DECISION REPORTED IN 60 IT R 239 (SC) STATE OF KERALA VS. C. VELUKUTTY. WE FIND THAT LD. CIT(A) IN VIEW OF THE HAS OBSERVED THAT THE AO HAS NOT CONSIDERED THE SUBSTANTIAL IMPROVEMENT IN THE CONTRACT RECEIPTS AND THE NET PROFIT SHOWN BY THE ASSESSEE FOR THIS YEAR AS COMPARED WITH T HE CONTRACT RECEIPTS AND THE NET PROFIT FOR EACH OF THE PRECEDING TWO YEARS. HE FURTHER OBSERVED THAT THE AO HAS NOT REFERRED TO ANY COMPARABLE CASE. THE APPLICATION OF ADHOC NET PROFIT RATE OF 8% APPLIED BY THE AO IS WITHOUT ANY VALID BASIS. THE ADDI TION OF RS. 43,01,460/ - MADE BY THE AO IS WITHOUT ANY PROPER BASIS. THEREFORE, THE LD. CIT(A) HAS RIGHTLY CONCLUDED THAT THE IMPUGNED ADDITION MADE BY THE AO IN THE NET PROFIT OF RS. 77,27,853/ - SHOWN BY THE ASSESSEE IS NOT SUSTAINABLE AND HE DELETED THE SAME. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT(A), HENCE, WE UPHOLD THE SAME . ITA NO. 5673/ DEL/ 2012 7 8 .2 WITH REGARD TO GROUND NO. III IS CONCERNED, WE FIND THAT LD. CIT(A) HAS CONSIDERED TH E SUBMISSION OF THE ASSESSEE ON THIS ACCOUNT. HE OBSERVED THAT THE SAME ARE SUPPORTED BY THE ORDERS OF THE CIT(A), INCOME TAX TRIBUNAL, HIGH COURT AND SUPREME COURT JUDGMENTS. THE PRECEDING BANK CASH WITHDRAWAL OF RS. 13,10,000/ - HAVE TO BE TAKEN INTO A CCOUNT IN THE SUBSEQUENT BANK CASH DEPOSITS. LD. CIT(A) FURTHER OBSERVED THAT SIMILARLY, THE ADDITION OF RS. 1,97,710/ - MADE FOR THE ASSESSMENT YEAR 2008 - 09 HAS TO BE TAKEN INTO ACCOUNT IN RESPECT OF THE SAID BANK CASH DEPOSITS. ON DOING THIS, THE UNEX PLAINED CASH DEPOSITS STANDS EXPLAINED TO THE EXTENT OF RS. 15,07,710/ - AND THE BALANCE AMOUNT OF RS. 11,97,790/ - IS UNEXPLAINED. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT(A), HENCE, WE UPHOLD THE SAME. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 0 2 / 0 2 /20 1 5 . S D / - S D / - [ G.D. AGRAWAL] [ H.S. SIDHU ] VICE PRESIDENT JUDICIAL MEMBER DATE 0 2 / 0 2 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES