Jagat Raj Singh, Lucknow V. Asstt. Commissioner of Income Tax, Lucknow

ITA 615/LKW/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87767 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PUNIT KUMAR
• Assessee Lawyers: SHYAM LAL
• Section: 44AD; 144

Judgement Text

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.615/LKW/2013 ASSESSMENT YEAR:2009-2010 JAGAT RAJ SINGH 58, RAVINDRA GARDEN SECTOR E, ALIGANJ LUCKNOW V. ACIT RANGE II LUCKNOW TAN/PAN:AOYPS6994R (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. SHYAM LAL, FCA RESPONDENT BY: SHRI. PUNIT KUMAR, D.R. DATE OF HEARING: 24 02 2015 DATE OF PRONOUNCEMENT: 11 03 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON VARIOUS GROUNDS, WHICH ARE AS UNDER:- I. SHRI. ATUL KUMAR GUPTA THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) I LUCKNOW (HEREINAFTER CALLED CIT APPEAL) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ASSESSMENT MADE BY LEARNED AO AT AN INCOME OF RS. 2292450.00. II. A) THE LEARNED CIT (APPEAL) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING REJECTION OF ACCOUNTS U/S 145(3) OF IT ACT 1961, IN THE PRESENT CASE IGNORING THE FACT THAT APPELLANT WAS UNABLE TO PRODUCE EXPENSES BILLS & VOUCHERS, WHICH WERE LOST BY ACCOUNTANT AND HAD BEEN CONFIRMED BY HIM IN AFFIDAVIT FILED IN SUPPORT OF THE SAME. :- 2 -: B) THE LEARNED CIT (APPEAL) HAS MENTIONED ABOUT NON MAINTENANCE OF STOCK REGISTER WHICH HAS NOT BEEN POINTED OUT BY LEARNED ASSESSING OFFICER. C) THE LEARNED AO HAS NOT POINTED ANY DEFECTS IN BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT. D) THAT ACCOUNTS ARE AUDITED U/S 44AB OF IT ACT, 1961. III. A) THE LEARNED CIT (APPEAL) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING ADDITION OF RS. 367777.00 MADE BY LEARNED AO, WHILE PASSING ORDER U/S 144 OF IT ACT, 1961 ON ACCOUNT OF ENHANCEMENT OF NET PROFIT @ 8.81% (M/S AASHI ENTERPRISES) INSTEAD OF NET PROFIT OF 7.44% DISCLOSED BY APPELLANT, IN THE PRESENT CASE, IGNORING THE FACT BOOKS OF ACCOUNT, VOUCHERS ETC. WERE NOT IN CONTROL OF APPELLANT. B) THE LEARNED CIT (APPEAL) HAS ERRED ON FACTS AND IN LAW IN MENTIONING THAT AS REGARDS PURCHASE (M/S AASHI ENTERPRISES) ONLY PHOTO COPIES OF FEW BILLS HAVE BEEN FURNISHED, IGNORING THE FACT OF HAVING PRODUCED PURCHASES BILLS FOR VERIFICATION BEFORE LEARNED ASSESSING OFFICER, AND FEW BILLS WERE FURNISHED AS SAMPLE CASES FOR RECORD. IV. A) THE LEARNED CIT (APPEAL) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF BUSINESS LOSS OF RS. 308110.00 ( M/S J S ENTERPRISES) MADE BY LEARNED ASSESSING OFFICER IGNORING THE SUBMISSION MADE IN THIS BEHALF, AND DESPITE OF HAVING PRODUCED LEDGER, CASH BOOK, BANK BOOK & JOURNAL, WHICH INDICATED HAVING INCURRED EXPENDITURES OF FIXED NATURE VIZ SALARY, OFFICE RENT, ACCOUNTING CHARGES, OFFICE & SITE EXPENSES, CONVEYANCE, BANK CHARGES AND TRAVELLING EXPENSES, IRRESPECTIVE OF LEVEL OF OPERATION OF BUSINESS ACTIVITY BY APPELLANT. B) THAT APPELLANT HAD MADE A MEAGER TURNOVER OF RS.27204.00 DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2009-10 AS THE APPELLANT DID NOT GET ANY NEW CONSTRUCTION WORK ALLOTTED DURING THE PREVIOUS YEAR AND HE CONTINUED BUSINESS, IN THE :- 3 -: EXPECTATION OF ALLOTMENT OF NEW CONSTRUCTION WORKS, HENCE HAD TO INCUR UNAVOIDABLE EXPENSES FOR RUNNING THE ESTABLISHMENT. C) THE LEARNED CIT (APPEAL) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE NET PROFIT CALCULATED @ 8% OF TURNOVER (M/S J.S. ENTERPRISES) U/S 44AD OF IT ACT, 1961, IGNORING THE FACT THAT SCHEME LAID DAWN U/S 44AD IS OPTIONAL AND APPELLANT HAD MAINTAINED BOOKS OF ACCOUNT WHICH HAD SHOWN A NET LOSS OF RS. 308110.00. 2. DURING THE COURSE OF HEARING, OUR ATTENTION WAS INVITED TO THE FACT THAT THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ESTIMATED THE NET PROFIT RATE AT 8.81% IN THE CASE OF M/S AASHI ENTERPRISES AND AT 8% IN THE CASE OF M/S J.S. ENTERPRISES AND THE INCOME WAS ASSESSED AT RS.22,92,449/- AS AGAINST RS.16,08,541/- DECLARED BY THE ASSESSEE. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), BUT DID NOT FIND FAVOUR WITH HIM. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND DURING THE COURSE OF HEARING, IT HAS BEEN NOTED THAT THE BOOKS OF ACCOUNT WERE REJECTED ON ACCOUNT OF NON-PRODUCTION OF THE BILLS AND VOUCHERS. SINCE THE EXPENSES CLAIMED BY THE ASSESSEE ARE NOT OPEN FOR VERIFICATION, THE BOOKS OF ACCOUNT WERE REJECTED. THE REJECTION OF THE BOOKS OF ACCOUNT WAS CONFIRMED BY THE LD. CIT(A). THOUGH THE ASSESSEE HAS CONTENDED THAT THE BOOKS OF ACCOUNT ARE PROPERLY MAINTAINED, BUT THE LD. COUNSEL FOR THE ASSESSEE COULD NOT REBUT THE FINDINGS OF THE LD. CIT(A) THAT THE EXPENDITURES CLAIMED WERE NOT OPEN FOR VERIFICATION. HE, HOWEVER, HAS CONTENDED THAT ESTIMATION MADE BY THE ASSESSING OFFICER WAS HIGHER IN THE LIGHT OF PAST RECORD OF THE ASSESSEE. :- 4 -: 5. THE LD. D.R., ON THE OTHER HAND, HAS CONTENDED THAT THE REVENUE AUTHORITIES HAVE PROPERLY ESTIMATED THE NET PROFIT OF THE ASSESSEE AFTER REJECTING THE BOOKS OF ACCOUNT WHEN THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT AND THE RELEVANT VOUCHERS FOR EXPENSES CLAIMED FOR ITS VERIFICATION. 6. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT IN THE ABSENCE OF VERIFIABLE DETAILS OF THE BOOKS OF ACCOUNT. THE VOUCHERS OF VARIOUS EXPENSES WERE ALSO NOT PRODUCED, THEREFORE, THE EXPENSES CLAIMED BY THE ASSESSEE WERE NOT OPEN FOR VERIFICATION. AFTER REJECTING THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER HAS ESTIMATED THE NET PROFIT RATE AT 8.1% IN THE CASE OF M/S AASHI ENTERPRISES AND AT 8% IN THE CASE OF M/S J.S. ENTERPRISES, WHICH WERE LATER ON CONFIRMED BY THE LD. CIT(A). SINCE THE FINDINGS OF THE LOWER AUTHORITIES WITH REGARD TO THE BOOKS OF ACCOUNT ARE NOT PROPERLY REBUTTED BY THE ASSESSEE BY PRODUCING THE RELEVANT EVIDENCE/VOUCHERS FOR EXPENSES CLAIMED BY IT, WE ARE OF THE VIEW THAT THE REJECTION OF THE BOOKS OF ACCOUNT IS PROPER AND ONCE THE BOOKS OF ACCOUNT ARE REJECTED THE NET INCOME IS TO BE ESTIMATED. 7. IN THE CASE IN THE CASE OF M/S AASHI ENTERPRISES, THE ASSESSING OFFICER HAS APPLIED THE NET PROFIT RATE OF 8.1% WHEREAS IN THE CASE OF M/S J.S. ENTERPRISES, HE HAS APPLIED THE NET PROFIT RATE OF 8%. WE ARE NOT CONVINCED WITH THE APPLICATION OF TWO RATES IN DIFFERENT ENTITIES OF THE ASSESSEE. ONCE THE BOOKS OF ACCOUNT ARE REJECTED, COMMON NET PROFIT RATE SHOULD BE APPLIED IN BOTH THE ENTITIES. ACCORDINGLY, WE MODIFY THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT RATE AT 8% IN BOTH THE ENTITIES, M/S AASHI ENTERPRISES AND M/S J.S. ENTERPRISES. :- 5 -: 8. IN THE CASE OF M/S J.S. ENTERPRISES, THE ASSESSING OFFICER HAS ALREADY APPLIED 8%, BUT HE HAS DISALLOWED THE BUSINESS LOSS OF RS.3,08,110/-. ONCE THE BOOKS OF ACCOUNT ARE REJECTED ANY BUSINESS LOSS CLAIMED BY THE ASSESSEE CANNOT BE ALLOWED. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THE CASE OF M/S J.S. ENTERPRISES. BUT SO FAR AS M/S AASHI ENTERPRISES IS CONCERNED, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO APPLY 8% NET PROFIT RATE IN THE CASE OF M/S AARSHI ENTERPRISES ALSO. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS MODIFIED AND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO RE-COMPUTE THE NET PROFIT IN TERMS INDICATED ABOVE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:11 TH MARCH, 2015 JJ:2402 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR