Sh. Inderjit Singh, Khanna V. DCIT, Ludhiana

ITA 710/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6956 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Presumptive income; Competent authority
• Section: 142(1); 153A; 132; 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.710 & 711/CHD/2016 ASSESSMENT YEARS: 2007-08 & 2009-10 SH. INDERJIT SINGH THROUGH VS. THE DCIT SH. RAVNEET SINGH (LEGAL HEIR) CENTRAL CIRCLE-I H.NO. 75, OPP. SHUKLA HOUSE, LUDHIANA NAI ABADI, KHANNA PAN NO. ACHPS2906G (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. PARIKSHIT AGGARWAL REVENUE BY : SH. MANJIT SINGH DATE OF HEARING : 10/08/2017 DATE OF PRONOUNCEMENT : 30/08/2017 ORDER PER B.R.R. KUMAR A.M. BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-5, LUDHIANA DT. 18/03/2016. 2. SINCE THE ISSUES ARE COMMON IN BOTH THESE APPEAL S THEREFORE THEY ARE BEING DECIDED BY A COMMON ORDER FOR THE SAKE OF CON VENIENCE. ITA NO. 710/CHD/2016 TAKEN AS A LEAD CASE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE WORTHY CIT (APPEALS) THROUGH THE ORDER DATED 18.03.2016 HA S ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF PROVISIONS OF SECTION 250(6) OF TH E INCOME TAX ACT, 1961. 2. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS. 1,26,679/- BY ADOPTING UNREASONABLE NP RATE OF 14% AND THAT TOO W ITHOUT ANY BASIS DESPITE THE FACT THAT DURING SEARCH OPERATION, NO INCRIMINATING DOCUMENT/EVIDENCE WAS FOUND. 3. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS. 1,26,679/- BY ADOPTING UNREASONABLE NP RATE OF 14% IN ASSESSMENT U/S 153A, WHEN THE ADDITION IS BASED ON QUERIES RAISED AT THE TIME OF ASSESSMENT, NO INCRIMINATING DOCUMENT WAS FOUND AT THE TIME OF SEARCH AND THE ASSESSMENT FOR THE YEAR WAS A COMPLETED ASSESSMENT. 4. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITIONS IN ASSESSMENT FRAMED U/S 153A WHICH ADDITIONS ARE BASED ON ALREADY DECLA RED INCOME FILED U/S 139 AND 2 ARE BASED ON QUERIES RAISED AT THE TIME OF ASSESSME NT, NO INCRIMINATING DOCUMENT WAS FOUND AT THE TIME OF SEARCH AND THE ASSESSMENT FOR THE YEAR WAS A COMPLETED ASSESSMENT. IN THE ABSENCE OF ANY INCRIMINATING MAT ERIAL, QUA THE YEAR IN QUESTION, THE ASSESSMENT FRAMED U/S 153A OF AN ALREADY COMPLE TED ASSESSMENT DESERVES TO BE QUASHED. 5. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT (A) HAS ERRED IN THE VALIDITY OF IMPUGNED ASSESSMENT EVEN W HEN THE LD. AO LACKED JURISDICTIONAL POWERS AS THE APPELLANT WAS BEING OR IGINALLY ASSESSED BY ITO, KHANNA BUT THE NOTICE U/S 142(1) R.W.S. 153A WAS ISSUED TO THE APPELLANT BY LD. AO, LUDHIANA WITHOUT ANY PROCEEDINGS AND/OR SERVICE OF TRANSFER ORDER OF JURISDICTION FROM KHANNA TO LUDHIANA BY COMPETENT AUTHORITY. 4. BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S 13 2 OF THE I.T. ACT WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF SH. INDERJ IT SINGH AND HIS FAMILY MEMBERS ON 04.10.2007. DURING SEARCH OPERATION, SOM E INCRIMINATING DOCUMENTS WERE FOUND & SEIZED. ACCORDINGLY, A NOTIC E U/S 153-A DATED 21.07.08 WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED HIS RETURN OF INCOME IN FORM-ITR-4 ON 21.10.0 9 DECLARING INCOME OF RS. 2,28,380/-. 5. THE ASSESSEE IS AN INDIVIDUAL AND IS PROPRIETOR OF M/S PUNJAB TRUNK & SAFE INDUSTRIES, KHANNA AND AS SUCH HAVING INCOME UNDER THE HEAD 'INCOME FROM BUSINESS OR PROFESSION'. IT IS STATED BY THE ASSESS EE THAT HE IS NOT MAINTAINING PERSONAL BOOKS OF ACCOUNTS AND HENCE ARE NOT PRODUC ED. BOOKS OF ACCOUNTS OF THE PROPRIETY CONCERN WERE ALSO NOT PRODUCED THO UGH IT IS REPORTED TO HAVE BEEN MAINTAINED. 6. DURING THE ASSESSMENT PROCEEDING, AO ASKED FOR BOOK S OF ACCOUNT WHICH CANNOT BE PRODUCED BY ASSESEE. 7. AO HELD THAT THE ASSESSEE IS A MANUFACTURER OF S TEEL ITEMS OF HOUSEHOLD USE ON RETAIL BASIS. THE NORMAL G.P. OUT OF SUCH TR ADE VARIES BETWEEN 20% TO 25% AND THE NET PROFIT OUT OF IT IS NORMALLY 12% TO 15%. THE ASSESSEE IN HIS RETURNS OF INCOME FILED FOR THE DIFFERENT ASSESSMEN T YEARS HAS DECLARED GROSS PROFIT RATE AND NET PROFIT RATE AS UNDER: SR. NO. ASSESSMENT YEAR G.P. RATE DECLARED N.P. RATE DECLAR ED 1. 2002-03 14.59% 13.25% 2. 2003-04 14.59% 13.25% 3. 2004-05 19.82% 7.48% 4. 2005-06 18.29% 3.66% 5. 2006-07 21.24% 11.51% 6. 2007-08 18.69% 3.46% 7. 2008-09 17.49% 9.99% 3 AND THE ASSESSING OFFICER CONSIDERED AN APPROXIMATE OF NET PROFIT @ 14% WHICH COMES TO 1,68,337/- AND ADDED AMOUNT OF RS. 1,26,67 9 TO THE TOTAL INCOME AFTER EXCLUDING RS. 41,658/- DECLARED BY THE ASSESSEE. 9. THE LD. CIT(A) CONFIRMED THE ADDITION ON THE GRO UNDS THAT THE ASSESSING OFFICER HAS ANALYSED THE GROSS PROFIT / NET PROFIT RATE DECLARED BY THE ASSESSEE WHICH WERE FOUND LOW AS COMPARED TO THE NORMAL PROF IT RATES IN THE LINE OF THE BUSINESS OF THE ASSESSEE. 10. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE US. 11. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE P ARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. 12. ON PERUSAL OF PROFIT IT WAS OBSERVED THAT THE N ET PROFIT OF THE ASSESSEE RANGED FROM 13.25% TO 3.46%. HENCE KEEPING IN VIEW THE PROVISION OF PRESUMPTIVE INCOME WE FEET IT APPROPRIATE IF THE AS SESSEE IS TAXED FOR NET PROFIT @ 8% ON THE TOTAL TURNOVER. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30/08/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR