M/s M.K. Industries, Ludhiana V. ITO, Ludhiana

ITA 748/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2408 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 18-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S R CHHABRA
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 748/CHD/2012 ASSESSMENT YEAR: 2007-08 M/S M.K. INDUSTRIES, V THE ITO, WARD-1(4), LUDHIANA LUDHIANA PAN NO. AAJFM7090F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.R.CHHABRA RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 13.06.2013 DATE OF PRONOUNCEMENT : 21.06.2013 ORDER PER T.R. SOOD, AM THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A)-II, LUDHIANA DATED 21.6.2012. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEAL)- II, LUDHIANA HAS ERRED IN LAW AND ON THE FACTS OF THE C ASE:- A. BY ARBITRARILY AND WRONGLY UPHELD DISALLOWANCE OF EXPENSES MADE U/S 144 OF THE INCOME TAX ACT, 1961 FOR RS. 4,43,000/- OUT OF TOTAL DISALLOWANCE 2 OF RS. 6,48,000/- AND THEREBY ALLOWED ONLY PART RELIEF OF RS. 2,05,000/- 2. THAT THE ABOVE SAID ORDER IS BAD IN LAW AND CONT RARY TO THE FACTS OF CASE. 3. IT IS THEREFORE, PRAYED THAT THE APPEAL MAY PLEA SE BE ACCEPTED AND SUCH RELIEF MAY KINDLY BE ALLOWED WHIC H MAY BE DEEMED FIT AND PROPER UNDER THE CIRCUMSTANCES OF THE CASE. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT ASSE SSEES CASE WAS SELECTED FOR SCRUTINY AND VARIOUS OPPORTUNITIES WERE GIVEN T O ASSESSEE TO PRESENT HIMSELF ALONG WITH BOOKS OF ACCOUNT, HOWEVER, NO CO MPLIANCE WAS MADE. THE ASSESSING OFFICER ULTIMATELY FRAMED ASSESSMENT U/S 144 OF THE ACT. HE MADE VARIOUS DISALLOWANCES OF EXPENSES AFTER PERUSI NG THE DETAILS GIVEN IN THE WRITTEN SUBMISSIONS WHICH WERE CREATED ON COMPU TER. THE DETAILS OF DISALLOWANCES ARE AS UNDER:- FREIGHT RS. 29,640/- RS. 10,000/- DISALLOWED FOR WA NT OF DETAILS AND VOUCHERS. POWER & FUEL RS. 1,86,145/- RS. 50,000/- DISALLOWED FOR WANT OF DETAILS AND BILLS INTT. PAID RS. 5,512/- RS. 5,000/- DISALLOWED FOR WANT OF DETAILS SALES IS RS. 7,53,750/- RS. 1,50,000/-DISALLOWED FO R WANT OF DETAILS OTHER INSURANCE RS. 32,456/- RS. 15,000/- DISALLOWED FOR WANT OF DETAILS OTHER EXPENSES RS. 8,92,976/- RS. 4,00,000/-DISALLO WED FOR WANT OF DETAILS AUDIT FEE RS. 18,000/- DISALLOWED AS THE ASSESSEE H AS NOT FILED ANY AUDIT REPORT. 3 4. ON APPEAL BEFORE THE LD. CIT(A), IT WAS SUBMITTE D THAT EVEN IF THE ASSESSMENT IS MADE ON BEST JUDGMENT BASIS, THE SAM E HAS TO BE DONE JUDICIOUSLY AND ON FAIR BASIS. IN THIS REGARD, REL IANCE WAS PLACED ON VARIOUS CASE LAWS. IT WAS FURTHER POINTED OUT THAT PROFIT W AS REASONABLY COMPARABLE TO THE LAST TWO YEARS, THEREFORE, RETURNED INCOME S HOULD HAVE BEEN ACCEPTED. THE DETAILS OF LAST THREE YEARS ARE AS UNDER:- PARTICULARS A.Y. 2007-08 A.Y. 2006-07 A.Y. 2005-06 SALES & JOBWORK 87,21,688 55,55,516 39,45,215 GROSS PROFIT 10,90,211 6,89,888 4,93,700 (12.5%) (12.4%) (12.5%) NET PROFIT 32797 103 12301 (0.378%) (0.001%) (0.311%) 5. THE LD. CIT(A) AFTER EXAMINING THE OBJECTIONS TO VARIOUS ADDITIONS, REDUCED THE SAME BY A SUM OF RS. 2,05,000/-. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT VARIOUS NOTICED RECEIVED WERE HANDED OVER TO THE C.A. OF TH E ASSESSEE AND THE ASSESSEE WAS ALWAYS UNDER THE IMPRESSION THAT C.A. HAS MADE APPEARANCES. IN ANY CASE, THE ASSESSING OFFICER HAS ALSO LEVIED PENALTY FOR NON-COMPLIANCE OF NOTICES U/S 271(1)(B) OF THE ACT BUT WHEN THIS F ACT WAS POINTED OUT, THE PENALTY PROCEEDINGS WERE DROPPED, THEREFORE, ASSESS EE HAS JUSTIFIED REASONS FOR NON APPEARING. ON MERIT HE REITERATED THE SU BMISSIONS MADE BEFORE THE 4 CIT(A) AND EMPHASIZED THAT EVEN WHEN THE BEST ASSES SMENT IS MADE, THE SAME IS ON THE BASIS OF A FAIR ESTIMATE AND THE RE SULTS OF LAST YEAR OF THE ASSESSEE ARE THE BEST INDICATORS FOR REACHING SUCH FAIR ESTIMATE. HOWEVER, IT WAS ADMITTED THAT NO SCRUTINY HAS BEEN TAKEN UP IN ASSESSEES CASE FOR LAST MANY YEARS. 7. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND CIT(A). 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT NO APPEARANCE WAS MADE BEFORE THE ASSESSING OFFICER DESPITE VARIO US OPPORTUNITIES. IT WAS ADMITTED BEFORE US THAT NO ACTION HAS BEEN TAKEN AG AINST THE C,.A. THE ASSESSEE COULD HAVE AT LEAST FILED A COMPLAINT WITH THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA AS C.A. WAS ENGAGED BY THE ASS ESSEE WHO HAS NOT CARRIED OUT HIS ASSIGNMENT AS PER PROFESSIONAL CODE OF CONDUCT. NON APPEARANCE SEEMS TO BE ONLY BECAUSE ASSESSEE DID NO T PRODUCE THE BOOKS OF ACCOUNT. DELETION OF PENALTY PROCEEDINGS CANNOT PR OVE THAT THERE IS NO FAULT ON THE PART OF ASSESSEE. THIS IS CLEAR FROM THE FAC T THAT THE MANAGER SHRI AMARDEEP SINGH OF THE ASSESSEE HAD APPEARED BEFORE THE ASSESSING OFFICER ON 23.11.2009 AND PROMISED TO ATTEND ON 30.11.2009 BUT NOBODY APPEARED ON THAT DATE. THIS CLEARLY SHOWS THAT ASSESSEE WAS AW ARE THAT C.A. WAS NOT APPEARING BEFORE THE ASSESSING OFFICER BECAUSE MANA GER OF THE ASSESSEE MUST HAVE INFORMED THE ASSESSEE. 5 9. WE AGREE THAT IT IS A SETTLED LAW THAT ASSESSING OFFICER HAS TO MAKE A BEST JUDGMENT ASSESSMENT, THE SAME HAS TO BE JUDICI OUS AND ON FAIR BASIS BUT IN THE CASE BEFORE US, FAIR BASIS CANNOT BE ASSESSE ES OWN RESULTS FOR EARLIER YEARS BECAUSE SUCH ASSESSMENT WERE NEVER SUBJECTED TO SCRUTINY. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF BOTTLING PLANTS AND HAD TURN OVER OF RS. 87,21,688/-. IT IS VERY D IFFICULT TO BELIEVE THAT ASSESSEE HAS EARNED ONLY A NET PROFIT OF RS. 32,799 /- IN THE CURRENT YEAR. IN ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS SHOWN ONL Y A PROFIT OF RS. 103/-. WE HAVE PERUSED THE PROFIT AND LOSS ACCOUNT FOR LAS T THREE YEARS AND IT WAS NOTICED THAT ASSESSEE HAS NOT PAID ANY SALARY OR IN TEREST TO THE PARTNERS. IT WAS STATED BEFORE US THAT ASSESSEE CONSISTS OF TWO PARTNERS AND THE PARTNERS DO NOT HAVE ANY OTHER INCOME. WE FAIL TO UNDERSTAN D HOW THE ASSESSEE WAS RUNNING HIS HOUSEHOLD IF NO SALARY WAS DRAWN FROM T HE FIRM IN THE ABSENCE OF ANY OTHER INCOME. IN ANY CASE WITHOUT ANY CHARGE O F INTEREST AND SALARY TO PARTNERS NET PROFIT SHOWN BY ASSESSEE IS UNREASONAB LY LOW. THE ESTIMATE MADE BY LD. CIT(A) SEEMS TO BE MORE THAN REASONABLE AND, THEREFORE, WE FIND NOTHING WRONG WITH HIS ORDER AND WE CONFIRM TH E SAME. 10. IN THE RESULT, THE APPEAL IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 21.06.2013 ) SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 21 ST JUNE, 2013 RKK 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR