M/s KBC Estates Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 5970/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9155 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 23-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: IN CIRCUMSTANCES OF CA SE
• Assessee Lawyers: SHAFIQ KHAN SH PRADEEP SING
• Keywords: Unexplained expenditure; Condonation of delay
• Section: 69C; 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 5970/DEL/2016 ASSESSMENT YEAR: 2012-13 M/S KBC ESTATES PVT. LTD. A-1/21, JEEVAN JYOTI APARTMENTS, NEW DELHI 34 (PAN: AABCK7252Q) VS. ITO, WARD 14(1), NEW DELHI (APPELLANT) (RESPONDENT) ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE IMP UGNED ORDER DATED 08.08.2016 PASSED BY LD. CIT(A)-5, DELHI REL EVANT TO ASSESSMENT YEAR 2012-13 ON THE FOLLOWING GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN PARTIALLY SUSTAINING DISALLOWANCE U/S. 69C OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS. 19,19,401/- EVEN AFTER ACQUIESCENCE TO THE ASSESSEES CASE IN PRINCIPLE. THE ACTION BEING ARBITRARY, ERRONEOUS, UNLAWFUL AND UNJUST MUST BE QUASHED WITH DIRECTIONS FOR RELIEF. 2. IN THIS APPEAL THERE IS A DELAY OF 24 DAYS IN FI LING THE APPEAL BEFORE THE TRIBUNAL AND IN THIS BEHALF THE ASSESSEE HAS FI LED THE APPLICATION SEEKING CONDONATION OF DELAY IN FILING PRESENT APP EAL. AFTER PERUSING THE APPLICATION FOR CONDONATION OF DELAY, I FIND PLAU SIBLE REASONS FOR DELAY OF 24 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL , HENCE, THE DELAY IN DISPUTE IS CONDONED. ASSESSEE BY SH. SHAFIQ KHAN, ADVOCATE DEPARTMENT BY SH. PRADEEP SINGH GAUTAM, SR. DR. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF BUILDING AND CONTRACTOR. THE ASS ESSEE FILED ITS E-RETURN DECLARING INCOME OF RS.3,20,070/- ON 28.09.2012. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS AND STATUTORY NOTICES WERE SERVED. IN RESPONSE TO THE SAME, THE LD. AR OF THE ASSESSEE ATTENDED THE HEARING AND FILED THE NECESSARY DOCUME NTS. ON PERUSAL OF THE SUBMISSIONS, IT WAS NOTICED BY THE AO THAT DURING T HE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAD DONE THE CONTRACT WORK/JOB WO RK/REVENUE FROM OPERATION FOR RS.2,62,93,166/- FOR WHICH THE ASSESS EE PURCHASED MATERIAL WORTH RS.1,90,63,350/-. DURING THE ASSESSMENT PROCE EDINGS, THE ASSESSEE WAS ASKED TO PRODUCE THE ORIGINAL BILLS OF MATERIAL PURCHASED FOR RS.1,90,63,350/-. IN SPITE OF SUFFICIENT OPPORTUNIT IES, THE ASSESSSEE FAILED TO PRODUCE THE ORIGINAL BILLS. BUT ON 13.3.2015, TH E A/R OF THE ASSESSEE ATTENDED AND FILED WRITTEN SUBMISSIONS STATING THAT ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY IS NOT TRACEABLE AND EFFORTS A RE BEING MADE TO GET THE BILLS. ON 16.3.2015, THE A/R OF THE ASSESSEE AT TENDED THE PROCEEDINGS AND ONLY THREE ORIGINAL BILLS TOTALING TO RS.5,23,8 05/- WERE PRODUCED. WITH REGARD TO OTHER BILLS NO PLAUSIBLE EXPLANATION WAS OFFERED AND NO BILLS WERE PRODUCED FOR VERIFICATION. PRESUMING THAT THE ASSES SEE HAS NO EXPLANATION OF OFFER IN THIS REGARD THE AO PROCEEDED TO ADD AN AMOUNT OF RS.46,34,890/- TO THE TOTAL INCOME OF THE ASSESSEE, BEING 25% OF THE TOTAL MATERIAL PURCHASED (RS.1,90,63,350 - RS.5,23,805) A S UNEXPLAINED EXPENDITURE WITHIN THE MEANING OF SECTION 69C OF TH E IT ACT, TO COVER ANY LEAKAGES AND TO AVOID ANY LOSS OF REVENUE AND COMPL ETED THE ASSESSMENT AT RS. 49,54,960/- U/S. 143(3) OF THE I.T. ACT, 196 1 VIDE ORDER DATED 18.3.2015. AGAINST THE ASSESSMENT ORDER DATED 18.3 .2015, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGN ED ORDER DATED 08.8.2016 HAS SUSTAINED THE ADDITION OF RS. 19,19,4 01/- ON ACCOUNT OF TRADING RESULTS, BY APPLYING THE GP RATE OF 7.3% ON ESTIMATION BASIS BEING AVERAGE OF 02 PRECEDING YEARS. AGAINST THE IMPUGNED ORDER DATED 8.8.2016, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 3 4. LD. A.R. FOR THE ASSESSEE HAS STATED THAT DUE T O INEVITABLE CIRCUMSTANCES AND THE DIFFICULTIES, THE ASSESSEE FA ILED TO PRODUCE THE STOCK REGISTER AND THE VALUATION OF STOCK AGAINST WHICH THE LD. CIT(A) DREW THE DISTRUSTFUL INFERENCES AND REJECTED THE ACCOUNT BOO KS UNDER SECTION 145(3) OF THE ACT AND DISPOSED OFF THE APPEAL AND DETERMIN ED THE ASSESSABLE INCOME IN THE MANNER CONTEMPLATED UNDER THE ACT AND ASSESSED INCOME AT 7.3% OF GROSS RECEIPTS OF RS. 2,62,93,166/- BY A PPLYING THE PROVISIONS OF SECTION 145(3) R.W.S. 144 OF THE I.T. ACT AND DIRECTED THE AO TO APPLY THE AVERAGE GP RATE OF THE PRECEDING TWO YEARS I.E. 7.3% AS THE GP RATE ON THE TURNOVER FOR THE YEAR AGAINST AND THUS SUSTAINE D INCOME AT RS. 19,19,401/-. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) WHILE PASSING IMPUGNED ORDER MISERABLY FAILED TO APPRECIATE THAT FOR ADDING INCOME ON ESTIMATION BASIS ONLY THE NET INCOME WHICH IS TAXAB LE INCOME WAS REQUIRED TO BE CONSIDERED AND THEREFORE INSTEAD OF MAKING AD DITION TO THE RETURNED INCOME AT AVERAGE OF GROSS PROFITS, ONLY THE AVERAG E OF NET PROFIT WHICH WAS AROUND 2.27% SHOULD HAVE BEEN CONSIDERED. 5. ON THE CONTRARY, LD. DR HEAVILY SUPPORTED THE OR DER OF THE LD. CIT(A) AND SUBMITTED THAT LD. CIT(A) HAS REASONABLY ESTIMATED THE GP RATE @ 7.3% AND SUSTAINED THE ADDITION OF RS. 19,19 ,401/-, WHICH DOES NOT NEED ANY INTERFERENCE. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GO NE THROUGH THE ORDERS OF LOWER AUTHORITIES AS WELL AS THE PAPER BOOK FILE D BY THE ASSESSEE WHICH CONTAINS PAGES 1 TO 75 IN WHICH HE HAS ATTACH ED THE SYNOPSIS OF THE CASE; LIST OF DATES AND EVENTS; DETAILED ARGUME NT / WRITTEN SUBMISSION; ANNEXURE-1 COPIES OF AUDITED BALANCE SHEET FOR AY 2012- 13 & AY 2011-12 WITH ALL ANEXURE; ANNEXURE-2 COPI ES OF REPLIES / SUBMISSIONS MADE BY THE ASSESSEE COMPANY BEFORE THE AO; ANNEXURE-3-COPY OF APPEAL ORDER DATED 8.8.2016 PASS ED BY THE LD. CIT(A)-5, NEW DELHI AND ANNEXURE-4 COPY OF ASSES SMENT ORDER DATED 18.3.2015. I FIND THAT THE SOLE ISSUE FOR ADJUDICA TION IS ESTIMATION OF GP 4 RATE @ 7.3%. KEEPING IN VIEW OF THE FACTS AND CIRCU MSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, I DEEM JUST AND PR OPER TO ESTIMATE THE GP RATE @5% INSTEAD OF GP RATE @7.3%. I HOLD AND DIR ECT ACCORDINGLY. THE AO IS DIRECTED TO RE-COMPUTE THE ASSESSEES GP @ 5% AND MADE THE ADDITION ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. THE DECISION IS PRONOUNCED ON 13-01-2020. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 13.01.2020 SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI