GBS ASSOCIATES, NAVI MUMBAI V. A.C.I.T. CIR.15(3), MUMBAI

ITA 6927/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84539 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 09-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 14-11-2012
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Assessee Lawyers: DR P DANIAL
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 6927/M/2012 ( AY: 200 9 - 2010 ) M/S. GBS ASSOCIATES, 703, AKSHAR BLUECHIP, CORPORATE PARK, THANE - BELAPUR ROAD, TURBHE NAKA, NAVI MUMBAI 400 705. / VS. ACIT - CIRCLE 15(3), MUMBAI. ./ PAN : AAFFG 1075 Q ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI DR. P. DANIAL / REVENUE BY : SHRI PAVAN KUMAR BEERLA, DR / DATE OF HEARING :09.12.2014 / DATE OF PRONOUNCEMENT : 18 .12.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 14.11.2012 IS AGAINST THE ORDER OF THE CIT (A) - 26, MUMBAI DATED 26.9.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN NOT ESTIMATING THE NET PROFIT RATE ON THE ALLEGED SUPPRESSED SALES OF RS. 11,96,065/ - AS THE SAME COULD NOT BE RECONCILED DURING THE REMAND PROCEEDINGS AND TREATING THE SAME AS INCOME OF THE ASSESSEE. 2. THE LD CIT(A) ERRED IN NOT GRANTING THE TELESCOPING THE ADDITION O F RS.5,87,675/ - AGAINST THE UNRECONCILED DIFFERENCE OF RS.11,96,065/ - . 3. IN THE ALTERNATIVE, THE C IT(A) SHOULD HAVE DIRECTED THE AO TO ESTIMATE THE NET PROFIT PERCENTAGE ON THE ADDITION MADE OF RS.5,87,675/ - BEING THE ALLEGED UNACCOUNTED CONTRACT RECEIPT S. 4. THE LD CIT(A) ERRED IN NOT DIRECTING THE AO TO ALLOW THE RENT PAID FOR THE SUBSEQUENT YEARS AMOUNTING TO RS. 53,000/ - IN THE SUBSEQUENT YEARS. 2 3. AT THE OUTSET, LD COUNSEL FOR THE ASSESSSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS AND MENTIONED T HAT GROUND NO.1 AND 4 ARE NOT PRESSED. AFTER HEARING BOTH THE PARTIES IN THIS REGARD, WE DISMISS THE SAID GROUND NOS.1 & 4 AS NOT PRESSED. THAT LEAVES GROUND NOS.2 AND 3 FOR OUR ADJUDICATION. 4. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF PROVIDING SECURITY PERSONNEL AND HOUSEKEEPING. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 21,23,743/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 1,59,12,810/ - . IN THE ASSESSMENT, AO MADE CERTAIN ADDITIONS I.E., (I) SUPPRESSED SALES AS PER AIR OF RS.1,30,00,653/ - ; (II) UNACCOUNTED CONTRACT RECEIPTS OF RS.5,87,675/ - ; (III) EXCESS CLAIM OF RENT AMOUNTING TO RS.73,026/ - AND (IV) RENT PAYMENT OF RS .1,27,714/ - TOTALLING TO RS.1,37,89,068/ - . AGGRIEVED WITH THE ABOVE ADDITIONS MADE BY THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE , CIT (A) PARTLY ALLOWED THE ASSESSEES APPEAL WITH REGARD TO SUPPRESSED SALES AND DISMISSED THE GROUND RELATING TO UNACCOUNTED CONTRACT RECEIPTS. IN TOTO CIT (A) PARTLY ALLOWED THE APPEAL. AGAIN AGGRIEVED WITH THE DECISION OF THE CIT (A), ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND NOS.2 AND 3. 6. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE ASSSESSEE FILED JUDGMENTS OF VARIOUS HIGH COURTS TO SUGGEST THAT WH EN THE P U R C H A S E S ARE UNDOUBTED MAKING ADDITION ON ACCOUNT OF SUPPRESSION OF SALES IS NOT SUSTAINABLE IN LAW. HE FURTHER SUBMITTED THAT IN SUCH CIRCUMSTANCES, MAKING ADDITION ON ACCOUNT OF NET PROFIT IS PROPER AND NOT THE GROSS SALES. IN THIS REGARD HE HEAV ILY RELIED ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. JAI BHAVANI TOURIST HOTEL [2000] 156 TAXATION 299 (BOM ). HE FURTHER MENTIONED THAT I N THE INSTANT CASE 3 .03% IS THE GP THEREFORE, THE SAME MAY BE TAKEN INTO ACCOUNT. 3 7. ON THE OTHER HAND, LD DR RELIED DUTIFULLY ON THE ORDERS OF THE REVENUE AUTHORITIES. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE JUDGMENTS OF VARIOUS HIGH COURTS PLACED BEFORE US. THE SAID JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. JAI BHAVANI TOURIST HOTEL [2000] 156 TAXATION 299 (BOM), DATED 27.3.2000 IS RELEVANT FOR THE PROPOSITION THAT WHEN THE SALES ARE OUTSIDE THE BOOKS OF ACCOUNTS, THE PROFIT RATE CAN BE ADDED AND AO I S NOT EMPOWER ED TO ASSESS THE PROFIT ARBITRARILY. SIMILAR VIEW WAS TAKEN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. PRESIDENT INDUSTRIES [2002] 258 ITR 654 (GUJ) AND HONBLE DELHI HIGH COURT IN THE CASE OF ACTION ELECTRICALS VS. DCIT [2002] 258 ITR 188 (DE L). CONSIDERING THE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION THAT THE MATTER SHOULD BE REMANDED TO ASSESSING OFFICER TO DECIDE THE ISSUE IN THE LIGHT OF THE ABOVE CITED JUDGMENT OF THE JURISDICTIONAL HIGH COURT. AO IS DIRECTED TO TAKE THE GP OF THE IMPUGNED SALES AND COMPUTE THE ADDITION AFRESH AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NOS. 2 AND 3 ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, APPEAL OF THE ASSSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 TH DECEMBER, 2014. S D / - S D / - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 8 .12 .2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 4 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI