Shri Ram Chandra Yadav, Basti V. The Income Tax Officer, Basti

ITA 595/LKW/2013

• Counselvise Citation: 59523714 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 26-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K C MEENA
• Keywords: Business income; Principle of natural justice; Reasonable cause; Non compliance
• Section: 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.595/LKW/2013 ASSESSMENT YEAR:2009 - 10 INCOME TAX OFFICER, BASTI. VS SHRI RAM CHANDRA YADAV, VILLAGE - FARDA, P.O. SAMASPUR, BASTI. PAN:ABXPY7545G (RESPONDENT) (APPELLANT) SHRI SHUBHAM RASTOGI, C. A. APPELLANT BY SHRI K. C. MEENA, D. R. RESPONDENT BY 18/11/2014 DATE OF HEARING 07 /01/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, LUCKNOW DATED 15/01/2013 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LD. C.I.T. (A) - II, LUCKNOW ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER PASSED U/S 144 OF I. T. ACT BY I.T.O., BASTI WITHOUT APPRECIATING THAT THERE WAS A REASONABLE CAUSE FOR NON COMPLIANCE. 2. THE LD. C. I. T. (A) - II, ERRED IN CONFIRMING THE NET PROFIT RATE OF 7% AS AGAINST 3.5% SHOWN BY THE ASSESSEE, WITHOUT APPRECIATING ASSESSEE IS A GOVERNMENT CONTRACTOR AND EXECUTED THE WORK AT VERY LOW MARGIN. 3. THE LD. C. I. T. (A) - II, ERRED ON FACTS AND IN LAW IN NOT DEDUCTING TRADE TAX AND ROYALTY OF RS.3,53,551/ - BEING 2 STAT UTORY DUES PAID TO STATE GOVERNMENT FROM THE NET PROFIT ESTIMATED. 4. THE LD. C.I.T. (A) - II, ERRED ON FACTS AND IN LAW IN RELYING ON THE DECISION OF M/S GUPTA CONTRACTORS IN I.T.A. NO.574/L/2005 WITHOUT APPRECIATING THAT THE SAME HAS NOT BEEN CONFRONTED T O THE APPELLANT AND SAME IS DISTINGUISHABLE FROM THE FACTS OF THE APPELLANT CASE. 5. THE LD. C.I.T. (A) - II, ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.3,90,436/ - U/S 68 OF I.T. ACT BEING OPENING BALANCE OF CAPITAL SHOWN IN THE BALANCE SHEE T. 5.1 THE LD. C.I.T. (A) - II DID NOT APPRECIATE THAT THE FUNDS BEING OPENING BALANCE WAS AVAILABLE IN PREVIOUS YEAR OUT OF PAST SAVINGS AND OUT OF AGRICULTURE INCOME. 6. THE ADDITION MADE ARE HIGHLY EXCESSIVE, CONTRARY TO THE FACTS, LAW AND PRINCIPLE OF NATURAL JUSTICE AND WITHOUT PROVIDING SUFFICIENT TIME AND OPPORTUNITY TO HAVE ITS SAY ON THE REASONS RELIED UPON BY HIM. 3. REGARDING GROUND NO. 1 TO 4, LEARNED A.R. OF THE ASSESSEE REITERATED THE SAME CONTENTIONS, WHICH WERE RAISED BEFORE CIT(A). REGAR DING GROUND NO. 5, HE FURTHER SUBMITTED IN ADDITION TO THE SUBMISSIONS MADE BEFORE CIT(A) THAT THE ASSESSEE DESERVES THE BENEFIT OF TELESCOPING IF THE ADDITION MADE ON ACCOUNT OF NET PROFIT IS CONFIRMED BECAUSE THE ASSESSING OFFICER HAS ASSESSED THE NET PR OFIT OF THE ASSESSEE AT RS.8,12,819/ - AS AGAINST THE RETURN OF INCOME AT RS.2,82,186/ - . HE ALSO SUBMITTED THAT THE ASSESSING OFFICER HAS STATED IN THE ASSESSMENT ORDER THAT THIS IS THE FIRST YEAR OF THE ASSESSEES BUSINESS. HE ALSO SUBMITTED THAT BALANCE SHEET FOR ASSESSMENT YEAR 2008 - 09 IS AVAILABLE ON PAGES 29 TO 30 OF THE PAPER BOOK. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGARDING GROUND NO. 1 TO 4 I.E. REGARDING ASSESSMENT U/S 144 AND ESTIMATING THE NET PROFIT BY APPLYING NET PROFIT RATE OF 7% AS AGAINST 3.5% SHOWN BY THE ASSESSEE, WE FIND THAT THE ISSUE HAS BEEN DECIDED BY CIT(A ) AS PER PARA 5 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 5. GROUND OF APPEAL NUMBER 1 RELATES TO THE ACTION OF THE AO IN MAKING AN ASSESSMENT ON INCOME OF RS.12,03,260/ - . THE AO ALLOWED AMPLE OPPORTUNITIES TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NO COMPLIANCE WAS MADE. NO BOOKS OF ACCOUNTS WERE PRODUCED. THE AO THEREFORE PROCEEDED TO COMPLETE THE ASSESSMENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 144 OF THE ACT. THE AO FOUND ON INQUIRIES T HAT THE ASSESSEE HAD RECEIPTS OF RS 1,16,11,694/ - BUT ONLY RS.80,62,460/ - WAS SHOWN. THE AO ESTIMATED THE INCOME AT RS . 8,12,819/ - BY ESTIMATING INCOME AT 7% OF THE RECEIPTS OF RS.1,16,11,694/ - . THE APPELLANT HAS FILED WRITTEN SUBMISSIONS IN WHICH IT IS CLA IMED THAT THE RATE FOR ESTIMATION IS NOT OF ANY ASSESSEE OF THE LOCALITY, I HAVE EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE. 1 FIND THAT ONCE COMPLIANCE IS NOT MADE AND BOOKS OF ACCOUNTS ARE NOT PRODUCED, THERE IS NO WAY IN WHICH THE AO CAN SATISFY H IMSELF OF THE CORRECTNESS AND COMPLETENESS OF THE BOOKS OF ACCOUNTS. FURTHER, THE RECEIPTS HAVE BEEN FOUND AT RS.1,16,11,694/ - IN CONTRADISTINCTION TO RS.80,62,460 / - SHOWN IN THE AUDITED ACCOUNTS, WHICH ITSELF RAISES DOUBTS ON THE CORRECTNESS AND COMPLETEN ESS OF THE BOOKS OF ACCOUNTS. UNDER THE CIRCUMSTANCES THE AO IS JUSTIFIED IN REJECTING THE BOOKS RESULTS AND PROCEEDING TO ESTIMATE THE INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 144 OF THE ACT. FURTHER, THE RATE OF 7% APPLIED BY THE AO IS QUITE R EASONABLE LOOKING AT THE TURNOVER OF THE ASSESSEE AND HAS ALSO FOUND BASIS IN THE DECISION OF HON'BLE ITAT, LUCKNOW IN THE CASE OF M/S GUPTA CONTRACTORS IN I TA NO. 574/LUC/05 DATED 10.03.20 0 6 CITED BY THE AO. THE ACTION OF THE AO IN ESTIMATING INCOME AT 7% OF THE RECEIPTS OF RS.1,16,11,694/ - , COMPUTING THE INCOME AT RS.8,12,819/ - IS THEREFORE CONFIRMED. THE GROUND OF APPEAL FAILS AND IS REJECTED. 5.1 FROM THE ABOVE PARA FROM THE ORDER OF LEARNED CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY HIM THAT A MPLE OPPORTUNITIES WERE PROVIDED BY THE 4 ASSESSING OFFICER TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT N O COMPLIANCE WAS MADE AND HENCE, COMPLETION OF ASSESSMENT U/S 144 IS JUSTIFIED. HE HAS ALSO GIVEN A FINDING THAT THE ASSESSING OFFIC ER FOUND FROM INQUIRIES THAT THE ASSESSEE HAD RECEIPTS OF RS . 1,16,11,694/ - AS AGAINST ONLY RS.80,62,460/ - SHOWN BY THE ASSESSEE AND THEREFORE, THERE IS NO WAY IN WHICH THE ASSESSING OFFICER COULD SATISFY HIMSELF ABOUT CORRECTNESS OF THE BOOKS OF ACCOUNT. REGARDING ADOPTING 7% NET PROFIT RATE, HE HAS GIVEN A FINDING THAT THIS IS SUPPORTED BY A TRIBUNAL DECISION IN THE CASE OF M/S GUPTA CONTRACTORS IN I TA NO. 574/LUC/05 DATED 10.03.2006 . THESE FINDING S OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED A.R. OF THE ASSESSEE AND HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE . ACCORDINGLY, GROUND NO. 1 TO 4 ARE REJECTED. 6. REGARDING GROUND NO. 5, WE FIND FORCE IN THE SUBMISSIONS OF LEARNED A.R. OF THE ASSESSEE. FIRST OF ALL, WE FIND THAT IN THE ASSESSMENT ORDER, IT IS NOTED BY THE ASSESSING OFFICER THAT THIS IS THE FIRST YEAR OF ASSESSEES BUSINESS AND SOURCE AND CAPACITY IS UNPROVED. ON THIS BASIS, HE MADE ADDITION BUT THIS FINDING OF THE ASSESSING OFFICER IS NOT CORRECT BE CAUSE THE ASSESSEE HAS FURNISHED COPY OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET AS PER WHICH THE ASSESSEE WAS HAVING TURNOVER OF RS.2,12,028/ - IN THAT YEAR AND EARNED PROFIT OF RS.546/ - IN THAT YEAR. IN THAT YEAR , THE ASSESSEE HAS SHOWN OPENING BALANCE OF RS. 1,20,000/ - , ADDITION OF CAPITAL ACCOUNT OF NET PROFIT OF RS.1,05,436/ - , TOTAL RS.6,72,622/ - FROM WHICH THE ASSESSEE HAS REDUCED WITHDRAWALS OF RS.35,000/ - AND WORKED CLOSING BALANCE OF RS.6,37,622/ - . IN THE PR ESENT YEAR , THE SAME A MO UNT WAS SHOWN. HOWEVER, IF THE ASSESSING OFFICER ACCEPTS THAT THIS MUCH WAS THE OPENING BALANCE THEN OBV IOUSLY NO ADDITION IS JUSTIFIED BUT EVEN IF THE ASSESSING OFFICER DOES NOT ACCEPT THIS CONTENTION AND HOLDS THAT THIS IS INCOME OF THE PRESENT YEAR AND NOT OPENING BALANCE THEN ALSO , THE ASSESSEE DESERVES THE BENEFIT OF TELESCOPING BECAUSE THE ASSESSING OFFICER HAS ALREADY MADE ADDITION OF RS.5,30,633/ - BY ASSESSING 5 THE BUSINESS INCOME OF THE ASSESSEE AT RS.8,12,819/ - AS AGAINST I NCOME DECLARED BY THE ASSESSEE AT RS.2,82,816/ - . THE SAID OPENING BALANCE IS LESS THAN THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NET PROFIT. THIS ADDITION HAS BEEN CONFIRMED BY CIT(A) AND ALSO BY US IN THE ABOVE PARA OF THIS ORDER. HENCE, THE ASSESSEE DESERVES THE BENEFIT OF TELESCOPING AND THEREFORE, THIS SEPARATE ADDITION IS NOT JUSTIFIED. WE, THEREFORE, DELETE THE SAME. GROUND NO. 5 IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07 /01/2015. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR