Sh. Harinder Sharma, Gurgaon V. ITO, New Delhi

ITA 812/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2118 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: V S DUBEY
• Keywords: Rejection of books of accounts; Opportunity of being heard; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: C, NEW DELHI) BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO:- 812/DEL/2014 ( ASSESSMENT YEAR: 2009-10) SH. HARINDER SHARMA, FLAT NO. 504, KARAMYOGI APARTMENTS, GURGAON. PAN NO.-ABQPH4090L VS. ITO, WARD 38(3), NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY : SH. V.S. DUBEY, ADV. REVENUE BY : SH. ARUN KUMAR YADAV, SR. DR DATE OF HEARING : 10.08.2018. DATE OF PRONOUNCEMENT : 04/09/2018. ORDER PER: BHAVNESH SAINI, JM THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(A)- XXVIII, NEW DELHI, DATED 06.11.2013 FOR ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) ERRED IN FACT AND IN LAW IN CO NFIRMING THE ADDITION OF RS. 11,78,847/- WHICH IS NOT ONLY BAD IN LAW BUT ALSO A GAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO. 812/DEL/2014. SH. HARINDER SHARMA. 2. THE LD. CIT(A) ERRED IN FACT AND IN LAW IN CONF IRMING THE ACTION OF AO FOR MAKING ESTIMATION OF PROFIT @ 5% AND THEREBY REJECT ING THE BOOKS OF ACCOUNTS WHICH IS NOT ONLY BAD IN LAW BUT ALSO AGAI NST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. EARLIER THIS APPEAL WAS DISMISSED FOR DEFAULT VID E ORDER DATED 25 MAY, 2017. THE APPEAL WAS HOWEVER RESTORED ON ALLOWING THE MISCELL ANEOUS APPLICATION FILED BY THE ASSESSEE, VIDE ORDER DATED 04.08.2017, THEREFORE AP PEAL WAS FIXED FOR HEARING ON MERIT. 3. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 4. ACCORDING TO THE OFFICE, THE APPEAL IS TIME BARR ED BY 3 DAYS. THE ASSESSEE FILED AN APPLICATION FOR CONDONATION OF DELAY STATING THE REIN THAT ASSESSEE HAS AUTHORIZED THE CHARTERED ACCOUNTANT TO FILE THE APPEAL BUT THERE W AS DELAY ON HIS PART. THE ASSESSEE WAS SUFFERING FROM SOME DISEASE AT THE TIME OF FILI NG THE PRESENT APPEAL AND HE COULD NOT ENQUIRE ABOUT THE FILING OF THE APPEAL FROM THE CHARTERED ACCOUNTANT. THE ASSESSEE THEREFORE PRAYED THAT NOMINAL DELAY IN FIL ING THE APPEAL MAY BE CONDONED. CONSIDERING THE EXPLANATION OF THE ASSESSEE AND THA T THERE IS NOMINAL DELAY IN FILING THE APPEAL BY 3 DAYS ONLY, WE ACCEPT THE EXPLANATION OF THE ASSESSEE AND CONDONE THE DELAY IN FILING THE APPEAL BEYOND PERIOD OF LIMITAT ION. 5. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED RETURN OF INCOME DECLARING INCOME OF RS. 5,30,030/-. IT WAS TAKEN UP FOR SCRU TINY ASSESSMENT. THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED THE BUSINESS OF FABRICATI ON OF GARMENTS FOR EXPORTS HOUSES ON CONTRACT BASIS AND HAS DECLARED INCOME FROM BUSINES S & PROFESSION. THE ASSESSEE HAS 3 ITA NO. 812/DEL/2014. SH. HARINDER SHARMA. DECLARED NP RATE FOR PERIOD UNDER CONSIDERATION AT 1.74% ON DECLARING A TURNOVER OF RS. 3,61,77,535/- AS AGAINST NP RATE OF 1.90% IN THE IM MEDIATELY PRECEDING YEAR AT A TURNOVER OF RS. 1,39,95,104/-. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PRODUCE BOOKS OF ACCOUNTS ALONG WITH SUPPORTING BILLS AND VOUCHERS FOR EXAMINATION. HOWEVER, NO ONE ATTENDED THE PROCEEDINGS ON APPOINTED DATE. THE ASSESSEE WAS CONTACTED BY THE AO OVER PH ONE ON MANY SUBSEQUENT OCCASIONS BUT EVEN THEN NOBODY APPEARED BEFORE AO T ILL 29.12.2011. ON 29.12.2011, ASSESSEES COUNSEL APPEARED BEFORE AO AND FILED DET AILS BUT THE BOOKS OF ACCOUNTS, THE SUPPORTING BILLS AND VOUCHERS WERE NOT PRODUCED, DE SPITE GIVEN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AO THEREFORE, PROCEEDED TO DECIDE THE CASE ON THE BASIS OF THE INFORMATION AVAILABLE ON RECORD. THE AO NOTED THAT ASSESSEE HAS BEEN GIVEN SUFFICIENT OPPORTUNITIES TO PRODUCE THE BOOKS OF AC COUNTS AND THE REQUIRED DETAILS BUT THE SAME HAVE NOT BEEN PRODUCED. THE AO FOUND FROM THE RECORD THAT ASSESSEE WAS REQUIRED TO FILE THE DETAILS OF THE EXPENSES CLAIME D ON ACCOUNT OF REPAIR AND MAINTENANCE ETC. BECAUSE ASSESSEE DID NOT OWN ANY F IXED ASSETS ON WHICH SUCH EXPENSES HAVE BEEN CLAIMED. HOWEVER, NO DETAIL HAS BEEN FURNISHED BY THE ASSESSEE. THE AO ACCORDINGLY REJECTED THE BOOKS OF ACCOUNTS A ND APPLIED NP RATE OF 5% ON THE RECEIPT DECLARED BY THE ASSESSEE AND MADE THE ADDIT ION OF RS. 11,78,847/-. 6. THE ASSESSEE CHALLENGED THE ABOVE ADDITION AND R EJECTION OF THE BOOKS OF ACCOUNT BEFORE LD. CIT(A). THE WRITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE APPELLATE ORDER IN WHICH ASSESSEE BRIEFLY EXPLAINED THAT, ASSESSEE IS ENGAGED IN THE BUSINESS OF FABRICATION OF GARMENTS AS PROPRIETORSH IP. ALL THE GOODS AND MATERIALS FOR 4 ITA NO. 812/DEL/2014. SH. HARINDER SHARMA. JOB WORK IS SUPPLIED BY EXPORTER AND THE CONSUMABLE S LIKE THREAD AND NEEDLES ARE DEBITED TO THE ACCOUNT OF THE ASSESSEE. ALL THE MA CHINERY FOR JOB WORK IS ARRANGED BY THE CONTRACTEE AND THE REPAIR PART IS DEBITED TO TH E ACCOUNT OF ASSESSEE. THE AO MADE ADDITION WITHOUT GIVING AN OPPORTUNITY TO THE ASSES SEE TO REBUT THE ALLEGATION. THE AO WAS NOT JUSTIFIED IN ESTIMATING THE NET PROFIT BY A PPLYING NP RATE OF 5%. ALL THE EXPENSES ARE ENTERED INTO THE BOOKS OF ACCOUNTS WHI CH ARE AUDITED. THE AO FAILED TO APPRECIATE THAT TOTAL EXPENSES OF RS. 355.47 LACS A RE BOOKED IN THE BOOKS OF ACCOUNTS, IN WHICH A SUM OF RS. 3.02 LACS WERE INCURRED IN CA SH WHICH CONSTITUTES LESS THAN 1% OF THE EXPENSES. IT WAS FURTHER SUBMITTED THAT ASSESS EE HAS BEEN SHOWING NP RATE IN THE RANGE OF 1.5% TO 2% SINCE INCEPTION OF BUSINESS, TH EREFORE, ESTIMATION OF THE NP RATE OF 5% IS UNJUSTIFIED. 7. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE IN THE LIGHT OF THE MATERIAL ON RECORD, NOTED THAT THE ASSESSEE INSPITE OF REPEATED OPPORTUNITIES DID NOT COMPLY WITH THE ORDER OF THE AO AND DID NOT PRODUCE THE BOOKS OF ACCOUNTS ALONGWITH SUPPORTING BILLS AND VOUCHERS TO SUBSTANTIATE THE D ECLARED RESULTS. THE DETAILS OF REPAIR AND MAINTENANCE EXPENSES WERE NOT JUSTIFIED BECAUSE THE ASSESSEE DID NOT OWN ANY FIXED ASSETS. THE LD. CIT(A), FURTHER, NOTED THAT WHATEVER CLAIM WAS MADE BY THE ASSESSEE WAS NOT PROVED. THE LD. CIT(A) IN ORDER T O VERIFY THE EXPENSES CLAIMED BY ASSESSEE, VERIFIED THE EVIDENCE OF SALARY SHEET AND EVIDENCE OF DISBURSEMENT OF SALARY FOR PART PERIOD. THE LD. CIT(A) ON PERUSAL OF THE SAME FOUND THAT THE SIGNATURE OF THE NUMBER OF PERSONS TO WHOM SALARY HAS BEEN CLAIMED T O HAVE BEEN PAID DID NOT TALLY IN VARIOUS MONTHS I.E. THE SIGNATURE OF THE SAME PERSO N WHO HAD ALLEGEDLY RECEIVED THE 5 ITA NO. 812/DEL/2014. SH. HARINDER SHARMA. SALARY DID NOT MATCH WITH HIS SIGNATURE IN THE PREC EDING MONTH EVEN THOUGH THE OTHER PARTICULARS I.E. NAME, AMOUNT OF SALARY ETC. WERE S AME. THE LD. CIT(A) RECORDED SPECIFIC INSTANCE WHEN THE SIGNATURE DID NOT MATCH FOR DIFFERENT MONTHS IN RESPECT OF THE SAME PERSON. IN MOST OF THE CASES AGAINST ESI N UMBER, IT HAS BEEN MENTIONED THAT APPLIED FOR. NONE OF THE SIGNATURES WERE AFFIXED ON REVENUE STAMP. THE LD. CIT(A) ALSO NOTED THAT ASSESSEE WAS ASKED TO JUSTIFY THE C LAIM OF EXPENSES OF RS. 2.61 CRORES CLAIMED AS SALARY AGAINST TURNOVER OF RS. 3.61 CROR ES. THE ASSESSEE WAS DIRECTED TO PRODUCE TO COPY OF AGREEMENT FOR JOB WORK AND EVIDE NCE OF EXPENDITURE ON THREAD AND NEEDLE AND CONVEYANCE EXPENSES AND THE SALARY SHEET S OF PALWAL CRAFT. HOWEVER, THE DETAILS ASKED FOR WERE NOT PRODUCED. THE LD. CIT(A ) ACCORDINGLY CONFIRM THE REJECTION OF THE BOOKS OF ACCOUNT AND ESTIMATION OF NP RATE O F 5% BECAUSE THE EXPENSES DEBITED IN THE BOOKS OF ACCOUNTS WERE NOT AUTHENTIC, AND WE RE NOT SUPPORTED BY BILLS AND VOUCHERS. THE EXPENSES WERE FOUND TO BE INFLATED, THEREFORE THIS APPEAL IS DISMISSED BY THE LD. CIT(A). 8. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO N OT FIND ANY JUSTIFICATION TO INTERFERE IN THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS, SUPPORTING BILLS AND VOUCHERS OF THE EXPENSES BEFORE THE AUTHORITIES BELOW. THE LD. COUNSEL FOR THE ASSESSEE, DURING THE COURSE OF ARGUMENTS HAD NOT BEEN ABLE TO SUBSTANTIATE, IF ANY , BOOKS OF ACCOUNT PRODUCE WERE BEFORE THE AUTHORITIES BELOW ALONG WITH SUPPORTING DOCUMENTS. THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS AND SUPPORTING DOCUME NTS EVEN BEFORE THE TRIBUNAL TO JUSTIFY THE CLAIM OF DEDUCTION OF THE EXPENDITURE. THEREFORE, AUTHORITIES BELOW WERE 6 ITA NO. 812/DEL/2014. SH. HARINDER SHARMA. JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS U/S 14 5(3) OF THE IT ACT, FOR THE PURPOSE OF ESTIMATING THE PROFIT OF THE ASSESSEE. THE LD. COU NSEL FOR THE ASSESSEE CONTENDED THAT BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED, REIT ERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND ALSO FILED CHART OF NP RA TE APPLIED IN SUBSEQUENT YEARS FOR ASSESSMENT YEARS 2010-11 TO 2012-13 RANGES FROM 1.8 1%, 1.75% AND 1.77%. HOWEVER, THIS WOULD NOT HELP THE ASSESSEE IN ANY MA NNER. THE AUTHORITIES BELOW HAVE SPECIFICALLY NOTED THAT ASSESSEE MADE CLAIM OF EXPE NSES ON ACCOUNT OF REPAIR AND MAINTENANCE BUT THE ASSESSEE DID NOT OWN ANY FIXED ASSETS TO JUSTIFY SUCH EXPENSES. THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN SUPPOR T OF THE SAME. WHATEVER EXPLANATION WAS GIVEN BY ASSESSEE WAS FURTHER EXAMI NED BY THE LD. CIT(A) BY VERIFYING THE SALARY EXPENSES. IT WAS FOUND FROM THE MATERIA L AVAILABLE ON RECORD THAT SIGNATURE ON THE SALARY SHEET DID NOT MATCH FOR PRECEDING MON THS. SPECIFIC INSTANCE HAVE BEEN GIVEN AND QUOTED AT PAGE 7 OF THE APPELLATE ORDER O F THE LD. CIT(A). NO ESI NUMBER HAVE BEEN PROVIDED FOR THE PERSONS TO WHOM SALARY P AYMENT HAVE BEEN MADE. NO PERSON HAS SIGNED THE SALARY RECEIPT ON REVENUES S TAMP. THE ASSESSEE HAS DECLARED TURNOVER OF RS. 3.61 CRORES AGAINST WHICH ASSESSEE HAS CLAIMED SALARY EXPENSES OF RS. 2.61 CRORES. THEREFORE, BURDEN WAS UPON ASSESSEE T O PROVE THAT SALARY WAS PAID TO THE PERSONS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF B USINESS. HOWEVER, THE ASSESSEE DID NOT PRODUCE COMPLETE BILLS AND VOUCHERS OF THE SALA RY EXPENSES AND WHATEVER DETAIL IS PRODUCED ON ACCOUNT OF SALARY PAYMENT, THERE WERE D IFFERENCE IN THE SIGNATURE AND THAT THEY WERE NOT SUBJECTED TO ESI. IT THEREFORE, CASTS DOUBT ON THE EXPLANATION OF THE ASSESSEE. WHEN THE LD. CIT(A) ASKED FOR THE FURTHE R EXPLANATION OF THE ASSESSEE WITH 7 ITA NO. 812/DEL/2014. SH. HARINDER SHARMA. REGARD TO EXPENSES, SALARY SHEET OF PALWAL CRAFT AL ONG WITH EXPENSES INCURRED ON THREAD AND NEEDLE AND CONVEYANCE EXPENSES, THE ASSESSEES COUNSEL DID NOT APPEAR BEFORE THE LD. CIT(A) AND DID NOT PRODUCE THE REQUIRED DETAILS . IT WOULD THEREFORE SHOWS THAT THE ASSESSEE DID NOT MAKE ANY COMPLIANCE TO THE QUERY O F THE AO AND THE LD. CIT(A). THEREFORE, THE SOLE CONTENTION OF THE LD. COUNSEL F OR THE ASSESSEE THAT BOOKS ARE SUBJECT TO AUDIT WOULD NOT HELP THE ASSESSEE IN ANY MANNER. SINCE THE EXPENSES WERE CLAIMED OF RS. 2.61 CRORES AGAINST TURNOVER OF RS. 3.61 CRORES AND THE SAME HAVE NOT BEEN SUBJECTED TO PRODUCTION OF COMPLETE BILLS AND VOUCHERS, THEREFORE, THE CLAIM OF THE ASSESSEE CANNOT BE ALLOWED AS SUCH. THE AUTHORITIE S BELOW WERE THEREFORE JUSTIFIED IN APPLYING NP RATE OF 5%. THE ADDITION WAS MADE OF R S. 11,78,847/- TO THE RETURNED INCOME OF ASSESSEE IS REASONABLE AS AGAINST HUGE CL AIM OF EXPENDITURE. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE IN THE ORDERS OF THE AUTHORITIES BELOW, THEREFORE, WE DISMISS THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/9/2018. SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04.09.2018 POOJA/- 8 ITA NO. 812/DEL/2014. SH. HARINDER SHARMA. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 9 ITA NO. 812/DEL/2014. SH. HARINDER SHARMA. DATE OF DICTATION 10/8/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20/8/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 20/8/2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 20 /8/2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 04 /9/2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER