Asstt. Commissioner of Income Tax, Lucknow V. Shri Bhawan Rawat, Lucknow

ITA 796/LKW/2014

• Counselvise Citation: 79623714 RSA 2014
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 28-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAKESH MISHRA
• Keywords: Business income; Opportunity of being heard
• Section: 145

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.796/LKW/2014 ASSESSMENT YEAR 2010-11 SHRI BHAWAN RAWAT, PLAZA, LALBAGH, CIVIL LINES, BARABANKI PAN A JWPR 1755 Q VS ASSTT. COMMISSIONER OF INCOME TAX, RANGE-V, LUCKNOW (RESPONDENT) (APPELLANT) SHRI AMIT NIGAM , DR APPELLANT BY S HRI RAKESH MISHRA, ADVOCATE RESPONDENT BY 07/10/2015 DATE OF HEARING 19/11/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER OF LD. CIT (A)-II, LUCKNOW DATED 22.07.2014 FOR THE AY 2010-11. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE COMMISSIONER OF INCOME-TAX (APPEALS), LUCKN OW HAS ERRED IN LAW AND ON FACTS OF THE CASE IN REDUCING THE NET PROFIT RATE FROM 5% TO 4.7% BY ACCEPTING THE SUBMISSION OF THE ASSESSEE REGARDING PROFIT RATE APPLIED IN EARLIER YEAR, EVEN AFTER APPRECIATING THE ACTION TAKEN BY THE AO U/S 145 OF THE INCOME- TAX ACT, 1961. 2. THE COMMISSIONER OF INCOME-TAX (APPEALS), LUCKNO W HAS ERRED IN LAW AND ON FACTS OF THE CASE IN RESTRICTING THE ADDITION TO RS. 4,59,878/- FROM RS. 76,56,972/- MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF UNDISCLOSED RECEIPTS WITHOUT APPRECIA TING THE FACT THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS , BILLS/VOUCHERS FOR VERIFICATION OF EXPENSES. 2 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY ONE OR MORE OF THE GROUNDS OF APPEALS, AS STATED ABOVE, AS AND WHEN NEED TO DO SO ARISES WITH THE PRIOR PERMISSION OF T HE COURT. 3. LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT AS PER THE ASSESSMENT ORDER, IT IS NOTED BY THE AO THAT THE GR OSS RECEIPTS OF THE ASSESSEE AS PER 26AS STATEMENT WAS RS.7,06,15,659/- AS AGAINST RS.6,29,58,687/- SHOWN IN THE PROFIT AND LOSS ACCOUNT. THERE WAS A DIFFERENCE OF RS.76,56,972/-. THE AO MADE ADDITION OF THIS ENTIRE AMOUNT OF UNDISCLOSED RECEI PTS ON THIS BASIS THAT WHILE COMPUTING THE ASSESSEE BUSINESS INCOME AT THE RATE OF 5% ON DISCLOSED RECEIPT, DEDUCTION WAS ALLOWED TO THE ASSESSEE FOR ALL BUSIN ESS EXPENSES AND THEREFORE, NO FURTHER DEDUCTION FOR ANY EXPENDITURE IS ALLOWABLE. WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), HE HELD THA T THE AO SHOULD APPLY NET PROFIT RATE OF 4.7% FOR BOTH THE DISCLOSED RECEIPT AS WELL AS UNDISCLOSED RECEIPT AS AGAINST 5% NET PROFIT RATE APPLIED BY THE AO FOR DISCLOSED RECEIPT AND 100% ADDITION ON ACCOUNT OF UNDISCLOSED RECEIPT. 5. WE ARE OF THE CONSIDERED OPINION THAT IN THE FAC TS OF THE PRESENT CASE, APPLYING OF NET PROFIT RATE OF 4.7% IN RESPECT OF D ISCLOSED RECEIPT IS PROPER AND REASONABLE BECAUSE IN THE AY 2009-10, ASSESSEE HAS SHOWN NET PROFIT OF 4.7% AND IN THE PRESENT YEAR, THE ASSESSEE HAS SHOWN NET PRO FIT OF RATE 2.7% AND NO THE CASE HAS BEEN MADE OUT BY THE AO FOR INCREASING NET PROFIT RATE IN THE PRESENT YEAR TO 5% AS AGAINST 4.7% IN AY 2009-10. HENCE, ON THIS ASPECT, WE CONFIRM THE ORDER OF LD. CIT(A) AND GROUND NO.1 IS REJECTED. 6. REGARDING GROUND NO.2 I.E. NET PROFIT RATE AT 4. 7% ON UNDISCLOSED RECEIPT, WE FEEL THAT INSTEAD OF APPLYING NET PROFIT RATE FO R COMPUTING INCOME IN RESPECT OF 3 UNDECLARED TURNOVER, GROSS PROFIT RATES SHOULD BE A PPLIED WITHOUT ALLOWING ANY FURTHER DEDUCTION ON ACCOUNT OF ADMINISTRATIVE AND OTHER EXPENSES BECAUSE SUCH EXPENSES ARE ALREADY ALLOWED WHILE ASSESSING NET PR OFIT OF DISCLOSED RECEIPTS. SINCE GROSS PROFIT RATE OF THE ASSESSEE IS NOT AVAILABLE BEFORE US, WE FEEL IT PROPER TO RESTORE THIS MATTER BACK TO THE FILE OF THE AO FOR FRESH DECISION WITH THE DIRECTION THAT HE SHOULD COMPUTE THE INCOME FROM UNDISCLOSED TURNOVER OF RS.76,56,972/- BY APPLYING GROSS PROFIT RATE EARNED BY THE ASSESSEE I N AY 2009-10 BECAUSE LD. CIT(A) HAS ACCEPTED NET PROFIT AND GROSS PROFIT RAT E DISCLOSED BY THE ASSESSEE IN AY 2009-10 AND THE ASSESSEE HAS ALSO ACCEPTED THIS DEC ISION OF CIT(A) AND THEREFORE, FOR THE PURPOSE OF COMPUTING INCOME IN RESPECT OF U NDISCLOSED TURNOVER ALSO, THE GROSS PROFIT RATE SHOWN BY THE ASSESSEE IN AY 2009- 10 SHOULD BE APPLIED. THE AO SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. ACCORDINGLY, GROUND NO.2 OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPO SES. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K . GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 19/11/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR