Sant Electr4icals, New Delhi V. ACIT, circle-62(1), New Delhi

ITA 7600/DEL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3910 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 30-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRDEEP SINGH GAUTUAM
• Assessee Lawyers: RANO JAIN MS MANSI JAIN
• Keywords: Business income; Additional evidence
• Section: 143(3); 145(3); 148

Judgement Text

1 , . . , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH S.M.C, NEW DELHI , BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT . / ITA NO.7600/DEL/2018 / ASSESSMENT YEAR 2010-11 M/S SANT ELECTRICALS, G-144, NARAINA VIHAR NEW DELHI-110028 PAN-AACFS7193J .......... /APPELLANT VS ACIT, CIRCLE-62(1), E-2-BLOCK PRATYAKASHKAR BHAWAN, CIVIC CENTRE, NEW DELHI . / RESPONDENT / APPELLANT BY : MS. RANO JAIN, ADVOCATE, MS. MANSI JAIN, C.A / RESPONDENT BY : SHRI PRDEEP SINGH GAUTUAM, SR. DR. / DATE OF HEARING : 13.01.2020 / DATE OF PRONOUNCEMENT: 21.02.2020 / ORDER PER SUSHMA CHOWLA, VP THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF THE CIT(A)-20, NEW DELHI, DATED 10/09/2018, RELATING TO ASSESSMENT YEAR 2010-11 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). ITA NO.7600/DEL/2018 ASSESSMENT YEAR 2010-11 2 2. THE ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPE AL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY THE ID. CIT(A) IS BAD BOTH IN THE EYES OF LAW AND ON THE FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACTUAL MATRIX OF RECONCILIATION OF RECEIPTS/ T URNOVER IN 26AS WITH RECEIPTS/TURNOVER IN PROFIT AND LOSS A/C. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) ERRED IN UPHOLDING THE OBSERVATION OF ASSESSMENT OFFICER A) THAT THE 'FINANCIAL RESULT OF THE APPELLANT ARE NOT RELIABLE 'EVEN WHEN BOOKS OF ACCOUNT HAVE BEEN ACCEPTED AND HAVE NOT INVOKING TH E PROVISION OF 145(3) OF THE INCOME TAX ACT. B) THAT 'INFORM NO. 3CB THIS FACT HAS NOT MENTIONED BY THE AUDITOR THAT TWO PROFIT AND LOSS ACCOUNT AND BALANCE SHEET WAS PREPARED' WH EN THE COMPLETE FINANCIAL STATEMENT FILED WITH THE TAX AUDIT REPORT . C) THAT ' THE DISALLOWANCE MADE BY THE ASSESSING OFFIC ER OF RS 41,89,681 IS RESTRICTED TO RS 13,16,171' AFTER HOLDING THAT ' TH E ASSESSING OFFICER IS ALSO NOT CORRECT IN MAKING THE ADDITION OF THE ENTIRE GROSS RECEIPT OF RS 41,89,680 SHOWN IN 26AS AS INCOME OF THE APPELLANT' . 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID . CIT(A) ERRED IN LAW IN ENHANCING THE INCOME OF APPELLANT BEING 10% OF TURNOVER WITHO UT GIVING THE OPPORTUNITY AS PER SECTION 251(2) OF THE INCOME TAX ACT AFTER DELETING THE ADDITION OF RS. 41,89,681 MADE BY THE LD. AO. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) ERRED IN ESTIMATING THE APPELLANT BUSINESS INCOME TO RS 13,16,171 BEING 10% OF TURNOVER AGAINST THE INCURRED BUSINESS LOSS OF RS .1,90,371. 6. WITHOUT PREJUDICE TO ABOVE GROUNDS OF APPEAL, ON T HE FACTS AND CIRCUMSTANCES OF THE LD CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS 13,16,171. 7. THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PREJU DICE TO EACH OTHER. 3. THE GROUND OF APPEAL NOS.1 AND 7 BEING GENERAL I N NATURE ARE NOT PRESSED BY THE ASSESSEE, HENCE THE SAME ARE DISMISS ED AS NOT PRESSED. 4. THE GROUND OF APPEAL NO.2 IS ALSO NOT PRESSED BY THE ASSESSEE, HENCE THE SAME IS DISMISSED AS NOT PRESSED. 5. THE ISSUE RAISED VIDE GROUNDS OF APPEAL NOS.3 TO 6 IS AGAINST THE ESTIMATION OF INCOME IN THE HANDS OF THE ASSESSEE B Y APPLYING GP RATE OF 10%. 6. BRIEFLY IN THE FACTS OF THE CASE, THE ASSESSEE F OR THE YEAR UNDER CONSIDERATION HAD NOT FURNISHED ANY RETURN OF INCOM E. THE CASE OF THE ITA NO.7600/DEL/2018 ASSESSMENT YEAR 2010-11 3 ASSESSEE WAS REOPENED UNDER SECTION 147/148 OF THE ACT. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF ELECTRICAL CONTRACTOR. I N RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT, THE ASSESSEE F ILED RETURN OF INCOME DECLARING LOSS OF RS.76,692/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNTS AND CER TAIN DISCREPANCIES WERE NOTED IN THE SAID BOOKS OF ACCOUNTS. THE ASSESSEE A LSO COULD NOT PRODUCE THE BILLS AND VOUCHERS OF EXPENSES CLAIMED IN THE PROFI T & LOSS ACCOUNT. THE ASSESSING OFFICER ALSO NOTED VARIANCE IN THE TAX DE DUCTION AT SOURCE. THE ASSESSING OFFICER THUS TREATED THE TOTAL RECEIPT AS PER FORM NO.26AS AMOUNTING TO RS.41,89,681/- AS INCOME OF THE ASSESS EE. 7. BEFORE THE CIT(A), THE ASSESSEE POINTED OUT THAT THERE WERE TWO PROFIT & LOSS ACCOUNTS, ONE FOR THE PERIOD OF 01.04.2009 TO 06.09.2009 AND OTHER FOR THE PERIOD OF 07.09.2009 TO 31.03.2010, ON ACCOUNT OF DEATH OF THE PARTNER LATE SHRI SANT SINGH. THE ASSESSEE ALSO POINTED OUT THAT THE TOTAL TURNOVER WAS RS.1,30,75,916/- INSTEAD OF RS.74,49,613/- AS O BSERVED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE FURNISHED FRESH EVIDENCES IN THE FORM OF RECONSTITUTED PARTNERSHIP DEED, DEATH CERTIFICATE OF THE PARTNER AND SUMMARY OF P & L ACCOUNT FROM 01.04.2009 TO 06.09.2009 AND FROM 07.0 9.2009 TO 31.03.2010. THE ADDITIONAL EVIDENCE WAS CONFRONTED TO THE ASSES SING OFFICER WHO IN-TURN FILED REMAND REPORT WHICH IS REPRODUCED AT PAGE 8 A ND 9 OF THE APPELLATE ORDER. THE ASSESSEE FILED REJOINDER TO THE SAME WHI CH IS ALSO REPRODUCED BY THE CIT(A) VIDE PARA 6.5 AT PAGE 14. THE CIT(A) NOT ED THAT 26AS IN THIS CASE IS ITA NO.7600/DEL/2018 ASSESSMENT YEAR 2010-11 4 NOT RELIABLE AS THIS SHOW ONLY THE FIGURE OF RS.41, 03,883/- WHEREAS THE APPELLANT HAS SHOWN THE TOTAL GROSS RECEIPT OF RS.1 ,31,61,714/-. IN THE REMAND REPORT ALSO THE ASSESSING OFFICER HAS NOT GI VEN ANY COMMENT ON THESE ISSUES DURING THE COURSE OF ASSESSMENT PROCEEDING WHETHER THE GROSS RECEIPT OF RS.74,49,613/- SHOWN BY THE ASSESSEE IN THE RET URN OF INCOME IS CORRECT OR RS.1,31,61,714/- ADMITTED BY THE ASSESSEE SUBSEQ UENTLY. THE CIT(A) CONCLUDED THAT THE AUDITOR HAS AUDITED THE ACCOUNTS OF THE ASSESSEE OF THE TWO PERIODS, WHERE THE GROSS RECEIPTS OF THE ASSESS EE HAD BEEN SHOWN AT RS.1,31,61,714/- AND NOT RS.41,89,681/- OF 26AS. TH E ASSESSING OFFICER WAS HELD TO BE NOT CORRECT IN NOT CONSIDERING THE GROSS RECEIPT AT RS.1,31,61,714/- WITHOUT ANY BASIS. THE ASSESSING OFFICER WAS ALSO N OT CORRECT IN MAKING THE ADDITION OF THE ENTIRE GROSS RECEIPT OF RS.41,89,68 1/- SHOWN IN 26AS AS INCOME OF THE APPELLANT. THE CIT(A) HELD AS UNDER:- AS THE APPELLANT IS DEALING IN TRADING OF ELECTRIC AL GOODS AND ELECTRICAL CONTRACTS AND AS THE TURNOVER SHOWN IN B OTH THE P & L ACCOUNT IS OF RS.1,31,61,714/-, TOTAL INCOME OF RS. 13,16,171/- WHICH IS 10% OF THE GROSS RECEIPT IS REASONABLE TO BE CONFIRMED. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF T HE CIT(A). 9. THE LD. AR FOR THE ASSESSEE REFERRED TO THE WRIT TEN SUBMISSIONS FILED ON RECORD AND STRESSED THAT IN THE TOTALITY OF FACTS, APPLICATION OF RATE OF 10% ON TOTAL TURNOVER WAS EXCESSIVE. 10. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON T HE ORDER OF THE CIT(A). 11. ON THE PERUSAL OF THE RECORD AND AFTER HEARING BOTH THE AUTHORIZED REPRESENTATIVES, THE LIMITED ISSUE WHICH ARISES IN THE PRESENT APPEAL IS THE ITA NO.7600/DEL/2018 ASSESSMENT YEAR 2010-11 5 APPLICATION OF NET PROFIT RATE TO COMPUTE THE INCOM E IN THE HANDS OF THE ASSESSEE. THE TOTAL TURNOVER/RECEIPTS OF THE ASSESS EE WERE TO THE TUNE OF RS.1,31,61,714/-. THE ASSESSEE WAS ELECTRICAL CONTR ACTOR; IN SUCH CIRCUMSTANCES, IT IS DEEM FIT THAT RATE OF 8% BE AP PLIED TO TOTAL TURNOVER TO DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RE-COMPUTE THE INCOME IN THE HANDS OF THE ASSESSEE. GROUND OF APPEAL NOS. 3 TO 6 ARE PRESSED BY THE ASS ESSEE AND ARE THUS PARTLY ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2020. SD/- SD/- (DR. B.R.R.KUMAR) (SUSHMA CHOWLA) /ACCOUNTANT MEMBER /VICE PRESIDENT / DATED : 21 ST FEBRUARY, 2020 SHEKHAR, SR. P.S. / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ! ( ) / THE CIT(A) 4. # ! / THE PR. CIT 5. 6. , , ' / DR, ITAT, DELHI ) / GUARD FILE. / BY ORDER , -. , , ASSISTANT REGISTRAR, ITAT, DELHI