Kamal Kishore, Patiala V. ITO, Patiala

ITA 578/CHANDI/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8521 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: RAJIV DUTTA
• Keywords: Principle of natural justice; Additional evidence
• Section: 133(6); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 578/CHD/2013 ASSESSMENT YEAR: 2009-10 SH. KAMAL KISHORE, VS. THE ITO, WARD-2, PATIALA PATIALA PAN NO. AOMPK0470L (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJIV DUTTA RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 04.01.2016 DATE OF PRONOUNCEMENT : 11.02.2016 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), PATIALA DATED 26.2.2013 RELATING TO ASSESSMENT YEA R 2009-10. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS:- 1. THAT THE ORDER OF THE LEARNED C.I.T.(A) IS AGA INST THE FACTS OF THE CASE AND IS BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LEARNED C.I.T.(A) HAS ERRED IN NOT ACCEPTING THE AD DITIONAL EVIDENCE WHICH WAS WITHIN HIS POWERS AND VITAL FOR THE ADJUDICATION OF THE CASE IN THE INTEREST OF NATURAL JUSTICE. 3. THAT NEITHER THE A.O. NOR THE LEARNED C.I.T.( A) HAS ANY MATERIAL TO APPLY/CONFIRM THE ARBITRARY G.P. RATE O F 1% ON THE TURNOVER. 2 4. THAT THE LEARNED C.I.T.(A) HAS ERRED IN NOT CO NSIDERING THE COMPARABLE CASES, WHILE CONFIRMING THE APPLICAT ION OF 1% G.P. RATE, INSPITE OF THE FACT THAT THE ASSESSEE FILED THE BALANCE SHEET AND PROFIT & LOSS ACCOUNTS AND TAX AU DIT REPORTS IN RESPECT OF ALL THE COMPARABLE CASE. 5. THE LEARNED C.I.T.(A) HAS ERRED IN CONFIRMING THE APPLICATION OF G.P. RATE OF 1% ON THE ENTIRE DEPOSI TS IN THE BANK IRRESPECTIVE OF THE NATURE OF DEPOSITS AND CON FIRMING THE ADDITION OF RS. 56,35,362/-. 6. THAT THE LEARNED C.I.T.(A) HAS ERRED IN CONFIR MING THE ADDITION OF RS. 1,00,000/-AND RS. 61,281/- MADE BY THE A.O. WITHOUT PASSING ANY SPEAKING ORDER. 3. GROUND NO.1 OF THE APPEAL IS GENERAL IN NATURE A ND, HENCE, NO COMMENTS ARE BEING GIVEN. 4. AS REGARDS GROUND NOS. 2 TO 5 OF THE APPEAL, THE RELEVANT FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF LABOUR CONT RACT WORKS, TO-LET SERVICES AND PROPERTY CONSULTANCY SERVICES. FOR THE ASSESSMENT YEAR 2009-10, THE ASSESSEE SUBMITTED HIS RETURN OF INCOME ON 29.12.2009 DECLAR ING TOTAL INCOME AT RS. 1,46,400/-. THE SAID RETURN WAS PROCESSED U/S 143(1 ) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AT THE RETURNED FIGURE. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER ISSUED NOTICES TO THE ASSESSEE WHICH WERE SERVED UPON THE ASSESSEE. AS PER THE ASSESSING OFFICER, THE ASSESSEE DID NOT COOPERATE IN FURNISHING INFORMATION FOR FINALIZATIO N OF ASSESSMENT PROCEEDINGS AND, THEREFORE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON THE BASIS OF THE FACTS OF THE CASE AND MATERIALS AVAILABLE ON RE CORD TO THE BEST OF HIS JUDGEMENT U/S 144 OF THE ACT. THE ASSESSING OFFICE R NOTED THAT THE BANK STATEMENT OF THE ASSESSEE WERE OBTAINED U/S 133(6) OF THE ACT FROM ICICI BANK, MANDI GOBINDGARH. ON GOING THROUGH THE TRANSACTION S IN THE BANK ACCOUNTS, THE 3 ASSESSING OFFICER NOTICED THAT HUGE DEPOSITS THROUG H CHEQUES AS WELL AS CASH WERE MADE BY THE ASSESSEE ON DAY TO DAY BASIS. THE ASSESSING OFFICER FURTHER NOTED THAT IN ACCOUNT NO. 045001502608, ALL THE DEP OSITS THROUGH TRANSFER ENTRIES WERE EITHER FROM BAJAJ ROLLING PRODUCTS OR SHIV SHANKER STEEL CORPN, MANDI GOBINDGARH. ACCORDING TO ASSESSING OFFICER, T HE CONCERN BAJAJ ROLLING PRODUCTS IS OWNED BY THE ASSESSEE. IN ACCOUNT NO. 0 45005000841 OF BAJAJ ROLLING PRODUCTS WHICH IS OWNED BY THE ASSESSEE, TH E TRANSACTIONS WERE MADE WITH VARIOUS PARTIES. FURTHER, IN ACCOUNT NO. 04500 1502619, ALL THE DEPOSITS THROUGH TRANSFER ENTRIES WERE EITHER FROM SHIV SHAN KER STEEL CORPN OR BAJAJ ROLLING PRODUCTS. THE ASSESSING OFFICER ALSO STATED THAT IN ACCOUNT NO. 040205001024 OF BAJAJ ROLLING PRODUCTS, THE TRANSAC TIONS WERE WITH VARIOUS PARTIES. THE ASSESSEE FAILED TO EXPLAIN THE NATURE OF THE BUSINESS ACTIVITIES CARRIED OUT THROUGH THESE BANK ACCOUNTS. THE ASSESS ING OFFICER OBSERVED THAT OUT OF THE FOUR ACCOUNTS REFERRED TO ABOVE, TWO ACCOUNT S WERE IN THE NAME OF ASSESSEE AND OTHER TWO ACCOUNTS BELONGED TO HIS CON CERN M/S BAJAJ ROLLING PRODUCTS. THE ASSESSING OFFICER OBSERVED THAT ALL T HESE ACCOUNTS ARE INTERLINKED BECAUSE THERE WERE HUGE TRANSFER ENTRIES FROM ONE ACCOUNT TO ANOTHER. THE ASSESSING OFFICER ALSO NOTICED CASH DEPOSITS OF RS. 7,50,000/- IN ACCOUNT NO. 045001502608 AND RS. 18 LAKHS IN ACCOUNT NO. 045001 502619. THE ASSESSEE DID NOT MAINTAIN THE BOOKS OF ACCOUNT. THE ASSESSEE HAS ALSO NOT SHOWN ANY INCOME IN HIS RETURN FILED FOR THE YEAR UNDER CONSIDERATIO N ON ACCOUNT OF DEPOSITS / RECEIPTS AS APPEARING IN HIS BANK ACCOUNTS. THE ASS ESSING OFFICER VIDE HIS LETTER DATED 23.12.2011 ASKED THE ASSESSEE AS TO WHY GROSS PROFIT RATE OF 1% SHOULD NOT BE APPLIED ON THE GROSS RECEIPTS OF RS. 56,35,36,20 4/-. THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE AFORESAID NOTICE ISSUED BY T HE ASSESSING OFFICER. ACCORDINGLY, THE ASSESSING OFFICER APPLIED GP RATE OF 1% ON GROSS RECEIPTS / DEPOSITS AND MADE THE ADDITION OF RS. 56,35,362/-. HOWEVER, NO SEPARATE ADDITION HAS BEEN MADE ON ACCOUNT OF CASH DEPOSITS APPEARING IN THE ABOVE BANK ACCOUNTS. 4 5. ON APPEAL, THE CIT(A) UPHELD THE ORDER OF THE AS SESSING OFFICER, OBSERVING AS UNDER:- 4.3 DURING THE COURSE OF APPELLATE PROCEEDIN GS ALSO, THE APPELLANT SUBMITTED THAT NET PROFIT IS COMPARAB LE CASE IS 0.09 TO 0.013% WHEREAS THE A.O. APPLIED NP OF 1%. IN RESPONSE, THE A.O. SUBMITTED THAT THIS AN ADD ITIONAL EVIDENCE WHICH SHOULD NOT BE ACCEPTED AS THE ASSESS EE WASN'T PREVENTED BY SUFFICIENT CAUSE IN PRODUCING EVIDENCE/DETAIL/INFORMATION BEFORE THE ASSESSING OF FICER DESPITE A NUMBER OF OPPORTUNITY ACCORDED TO HIM. I HAVE GONE THROUGH THE FACT OF THE CASE. FROM THE ASSESSM ENT RECORD, IT IS SEEN THAT THE APPELLANT WAS DULY ASKE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS TO WHY NET PROFIT SHOUD NOT BE TAKEN I.E. HOWEVER, THE APPELLANT DID NOT SUBMIT ANY REPLY. THEREFORE, THE ADDITIONAL EVIDENC E FILED NOW CANNOT BE ACCEPTED. NO SUCH GROUND WAS TAKEN DU RING THE ASSESSMENT PROCEEDINGS ALSO. THUS, LOOKING INTO ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, TH E ADDITION MADE BY ASSESSING OFFICER IS CONFIRMED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI RAJIV DUTTA, LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE GP RATE OF 1% APPLIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) IS NOWHERE COMP ARABLE WITH ANY CONCERN ENGAGED IN THE SIMILAR BUSINESS. HOWEVER, THERE IS NO MATERIAL ON RECORD TO SUBSTANTIATE THE ABOVE CONTENTION MADE BY SHRI RAJI V DUTTA, LD. COUNSEL FOR THE ASSESSEE. HE FURTHER POINTED OUT THAT POWER TO MAK E BEST JUDGEMENT ASSESSMENT BY THE ASSESSING OFFICER IS NOT ARBITRARY, AND SPEC IFIC FINDINGS ARE REQUIRED IN SUPPORT OF THE SAME. WE DO NOT SEE ANY MERIT IN THE ABOVE CONTENTION OF SHRI RAJIV DUTTA, LD. COUNSEL FOR THE ASSESSEE BECAUSE T HE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT. FURTHERMORE, THE ASSESSEE DID NOT FILE ANY REPLY TO THE QUERIES RAISED BY THE ASSESSING OFFICE R. IT IS ALSO NOTICED THAT AMPLE OPPORTUNITY WAS GIVEN TO THE ASSESSEE BY THE ASSESS ING OFFICER TO EXPLAIN THE 5 NATURE AND SOURCES OF BANK DEPOSITS. EVEN THE ASSES SING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY GP RATE OF 1% SHOULD NOT BE APPLIED ON THE GROSS RECEIPTS OF RS. 56,35,36,204/-. HOWEVER, THE ASSESSEE DID NOT FILE ANY REPLY TO THE SAID NOTICE. IN OUR OPINION, THE ASSES SING OFFICER HAS APPLIED A REASONABLE RATE OF GROSS PROFIT IN THIS CASE AND TH E SAME CANNOT BE HELD ARBITRARY BY ANY MEANS. IT IS ALSO NOTICED THAT ASSESSEE HAD SUBMITTED A COMPARISON CHART OF GROSS PROFIT AND NET PROFIT RATE IN SUPPORT OF A PPLICATION OF A PROFIT RATE BEFORE THE CIT(A). A COPY OF THE SAME IS AVAILABLE AT PAGE 2 OF THE ASSESSEES PAPER BOOK. THE LD. CIT(A) DID NOT CONSIDER THE AFORESAID CHART HOLDING THAT THE ASSESSEE HAD FAILED TO PROVE THAT HE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING SAID CHART BEFORE THE ASSESSING OFFICER. IN OUR OPINION, THE CIT(A) HAS TAKEN THE CORRECT VIEW IN THE MATTER. ON A PER USAL OF THE SAID CHART, IT IS NOT DISCERNIBLE THE TRUE NATURE OF BUSINESS OF THE SO C ALLED COMPARABLE CASES. THE ASSESSEE HAS NOT SUBMITTED THE ASSESSMENT ORDERS AN D OTHER RELEVANT DOCUMENTS OF THESE CONCERNS. EVEN THE SAID CHART, CANNOT BE T REATED AS AN ADDITIONAL EVIDENCE BY ANY MEANS. 7. IN VIEW OF THE ABOVE, DISCUSSION, WE REJECT GROU ND NOS. 2 TO 5 OF THE APPEAL. 8. VIDE GROUND NO. 6 OF THE APPEAL, THE ASSESSEE H AS CHALLENGED THE ACITON OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS. 1 LAKH AND RS. 61,281/- MADE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER MAD E A SEPARATE ADDITION OF RS. 1 LAKH APPEARING IN ACCOUNT NO. 045001502608 BECAUS E BEFORE THAT ON WHICH DAY THIS AMOUNT WAS DEPOSITED, THERE WAS NO WITHDRA WAL FROM THE BANK. THE ASSESSING OFFICER ALSO MADE AN ADDITION OF RS. 61,2 81/- ON ACCOUNT OF UNEXPLAINED DEPOSITS IN BANK ACCOUNT NO. 1620152393 0. WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCES O F THE ABOVE DEPOSITS, THE ASSESSEE VIDE HIS LETTER DATED 19.12.2011 STATED TH AT THERE IS A HOUSING LOAN BY 6 HIS MOTHER SMT. SURINDER KUMARI AND CASH WAS DEPOSI TED BY HIS MOTHER. BOTH THE AUTHORITIES BELOW HAVE CATEGORICALLY STATED THA T NO DOCUMENTARY EVIDENCE REGARDING SOURCES OF THE ABOVE DEPOSITS WERE SUBMIT TED BY THE ASSESSEE. 9. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, WE ARE OF THE VIEW THAT THE CIT(A) WAS JUSTIFIED IN CONFIRMING TH E ADDITION OF RS. 1 LAKH DEPOSITED ON 3.5.2008 IN BANK ACCOUNT NO. 045000150 2608 BECAUSE BEFORE THAT DATE THERE WAS NO WITHDRAWAL IN ANY BANK AND THE AS SESSEE COULD NOT EXPLAIN THE NATURE AND SOURCE OF THE DEPOSIT. REGARDING THE DE POSIT OF RS. 61,281/- ALSO, THE ASSESSEE COULD NOT EXPLAIN THE NATURE AND SOURCE OF THIS DEPOSIT. NO DOCUMENTARY EVIDENCE WAS PRODUCED TO SUBSTANTIATE H IS CLAIM BY THE ASSESSEE. IN THE ABSENCE OF ANY EXPLANATION AND DOCUMENTARY EVID ENCE, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN CONFIRMI NG THE IMPUGNED ADDITIONS. ACCORDINGLY, WE REJECT GROUND NO. 6 OF THE APPEAL. 10. NO OTHER POINT WAS RAISED OR ARGUED BEFORE US. 11. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.02.2016 SD/- SD/- (ANNAPRUNA MEHROTRA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 11 TH FEBRUARY, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR