Kalpna Jhawar , Indore V. DCIT 2(1), Indore

ITA 690/Ind/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2839 (ITAT-INDORE)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 07-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Opportunity of being heard; Set aside
• Section: 145; 143(3); 142(1); 133A; 201; 143(2)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE V. DURGA RAO, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.690/IND/2018 ASSESSMENT YEAR: 2015-16 ASSESSEE BY SHRI RAJESH MEHTA CA REVENUE BY SHRI K.G. GOYAL, SR. DR DATE OF HEARING 27.0 2 . 201 9 DA TE OF PRONOUNCEMENT 28 . 02 .2 01 9 O R D E R PER MANISH BORAD, AM: THIS APPEAL BY ASSESSEE PERTAINING TO A.Y. 2015-16 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-I INDORE, (IN SHORT CIT(A)), DATED 30.07.2018 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(HER EINAFTER CALLED KALPNA JHAWAR PROP. M/S. JHAWAR KOTA SAREE EMPORIUM, 61-62, BHARAT MARG, NALIYA BAKHAL, INDORE VS D CIT 2 ( 1 ) , INDORE ( APPELLANT ) (RESPONDENT ) PAN NO. AEDPJ9297B KALPANA JHAWAR ITA NO.690/IND/2018 2 AS THE ACT) FRAMED ON 21.12.2017 BY DCIT-2(1), IN DORE. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ADDITION ONRS.50,93,610/- ON ACCOUNT OF N.P. RA TE APPLIED TO THE TURNOVER & INCOME SURRENDERED DURING THE SURVEY IS WRONG:- THAT THE LD. ASSESSING OFFICER ERRE3D IN MAKING ADD ITION OF RS.86,03,097/- AND HON'BLE CIT(A) ERRED IN CONFIRMI NG THE ADDITION OF RS.50,93,610/- ON ACCOUNT OF N.P. RATE APPLIED TO THE TURNOVER & INCOME SURRENDERED DURING THE SURVEY TO THE INCOME BY REJECTING BOOKS OF ACCOUNTS U/S 45 OF THE ACT WI THOUT ANY BASIS AND WITHOUT LOOKING AT THE LAW AND FACTS OF T HE CASE & WITHOUT AFFORDING AN OPPORTUNITY OF HEARING. ADDIT6 ION OF RS.50,93,610/- TO THE INCOME IS ILLEGAL, WRONG & UN LAWFUL. HENCE NEEDS TO BE DELETED. THAT THE ASSESSMENT ORDER IS ARBITRARY, ILLEGAL, WR ONG, UNLAWFUL, BAD IN LAW AND ON THE FACTS OF THE CASE & THEREFORE ADDITIONS OF RS.86,03,097/- NEEDS TO BE DELETED. 2. BRIEF FACTS AS CULLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL RUNNING SOLE PROPRIETORSHIP CONCERN I N THE NAME OF M/S JHAWAR KOTA SAREE EMPORIUM ENGAGED IN THE WHOLE SALE BUSINESS OF GARMENTS. SURVEY U/S 133A OF THE ACT WA S CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 08.12.2 014. KALPANA JHAWAR ITA NO.690/IND/2018 3 UNACCOUNTED INCOME OF RS.1,50,14,992/- WAS SURRENDE RED ON ACCOUNT OF THE FOLLOWING: I. EXCESS CASH RS.8,14,960/- II. LOANS AND ADVANCES AGAINST HUNDIES RS.44,00,000 /- II. EXCESS STOCK RS.98,00,032/- TOTAL RS.1,50,14,992/- SUBSEQUENTLY, ASSESSEE FILED RETURN OF INCOME ON 05 .10.2015 DECLARING INCOME OF RS.86,15,730/- INTERALIA INCLUDING THE UNACCOUNTED INCOME SURRENDERED DURING THE COURSE OF SURVEY. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE SERVED UPON THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS LD. ASS ESSING OFFICER (AO) OBSERVED THAT IN THE IMMEDIATELY PRECEDING ASS ESSMENT YEAR NET PROFIT RATE OF 2.64% WAS DECLARED WHEREAS IN TH E YEAR UNDER ASSESSMENT LOSS OF RS.56,02,618/- HAS BEEN SHOWN. A S THE GROSS PROFIT RATE WAS BETTER DURING THE YEAR UNDER ASSESS MENT. LD. AO EXAMINED THE PROFIT AND LOSS ACCOUNT AND OBSERVED T HAT VARIOUS INDIRECT EXPENDITURE HAVE INCREASED ABNORMALLY. THE ASSESSEE ALSO FAILED TO PRODUCE NECESSARY DOCUMENTS IN SUPPO RT OF THE SOME EXPENSES INCLUDING SALARY EXPENSES WHICH WERE CLAIM ED AT RS.52,79,217/-. THE LD. AO WAS ALSO NOT SATISFIED W ITH THE KALPANA JHAWAR ITA NO.690/IND/2018 4 COMMISSION EXPENSES. ON FINDING SUCH ABNORMALITIES, LD. AO OPTED TO REJECT BOOKS OF ACCOUNT U/S 145 OF THE ACT AND A PPLIED THE NET PROFIT RATE OF THE PRECEDING YEAR I.E. 2.64% ON THE TURNOVER DISCLOSED BY THE ASSESSEE THEREBY MAKING ADDITION OF RS.86,03 ,097/-. 3. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE L D.CIT(A) AND PARTLY SUCCEEDED, AS LD. CIT(A) DELETED THE ADDITIO N OF RS.35,09,487/- BY DELETING THE DISALLOWANCE OF COMM ISSION EXPENSES OF RS.23,09,487/- AND ALSO DELETING DISALL OWANCE OF GODOWN RENT OF RS.12,00,000/-. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L CHALLENGING THE ADDITION CONFIRMED BY THE LD. CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. FROM BARE PERUSAL OF ASSESSMENT O RDER, WE FIND THAT LD. AO HAS REJECTED BOOK RESULTS AND APPLIED T HE NET PROFIT RATE OF 2.64% ON THE TURNOVER DISCLOSED BY THE ASSESSEE. THE LD. AO HAS NOWHERE DISALLOWED THE EXPENSES CLAIMED BY THE ASSE SSEE. LD. AO HAS ONLY RAISED OBJECTIONS ON THE GENUINENESS OF TH E EXPENDITURE THEREBY COMING TO A CONCLUSION THAT BOOKS OF ACCOUN TS ARE LIABLE TO KALPANA JHAWAR ITA NO.690/IND/2018 5 BE REJECTED AND ACCORDINGLY MADE THE ADDITION OF RS .83,03,097/- BY APPLYING NET PROFIT RATE OF 2.64%. 6. ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT( A), HOWEVER, THE LD. CIT(A) HAS GRANTED THE RELIEF BY DISCUSSING ABO UT THE NATURE OF EXPENSES, COMMISSION AND GODOWN RENT AND HAS DELETE D THE DISALLOWANCE OF COMMISSION AND GODOWN RENT. 7. WE ARE SURPRISED TO OBSERVE THAT WHEN THE ASSESS ING OFFICER HAS NOT DISALLOWED THE EXPENDITURE BUT HAS MADE ADDITIO N APPLYING NET PROFIT RATE POST REJECTING BOOKS OF ACCOUNT THEN HO W COME THE LD. CIT(A) HAS DELETED THE DISALLOWANCE OF COMMISSION A ND GODOWN RENT EXPENSES. THERE SEEMS TO BE A SERIOUS DEFECT IN THE FINDING OF LD. CIT(A) FROM THE FACE OF APPELLATE ORDER ITSELF. 8. IN THESE GIVEN FACTS AND CIRCUMSTANCES IT WILL B E JUSTIFIED THAT THE ISSUES RAISED IN THIS APPEAL BEFORE US NEEDS TO BE SET ASIDE TO THE FILE OF LD. CIT(A) FOR AFRESH ADJUDICATION AND LD. CIT(A) SHOULD RE- ADJUDICATE THE ISSUES RAISED BY THE ASSESSEE AGAINS T THE ADDITION MADE BY THE LD. AO AND DECIDE ACCORDINGLY BY WAY OF A SPEAKING ORDER. NEEDLESS TO MENTION THAT PROPER OPPORTUNITY OF BEING HEARD SHOULD BE PROVIDED TO THE ASSESSEE. KALPANA JHAWAR ITA NO.690/IND/2018 6 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28.02.201 9. SD/- SD/- (V. DURGA RAO) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 28.02.2019 PATEL/PS COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CI T(A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE