M/s. Parveen Kumar, Rohtak V. ITO, Rohtak

ITA 848/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65383 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 23-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 21-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S MINSHAS
• Section: 44AD; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH F FF F : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.848/DEL/2012 848/DEL/2012 848/DEL/2012 848/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2008 2008 2008 2008- -- -09 0909 09 M/S PARVEEN KUMAR, M/S PARVEEN KUMAR, M/S PARVEEN KUMAR, M/S PARVEEN KUMAR, 1199/24, JAGDISH COLONY, 1199/24, JAGDISH COLONY, 1199/24, JAGDISH COLONY, 1199/24, JAGDISH COLONY, ROHTAK, ROHTAK, ROHTAK, ROHTAK, HARYANA HARYANA HARYANA HARYANA, ,, , PIN PIN PIN PIN 124 001. 124 001. 124 001. 124 001. PAN : AAOFM2829B. PAN : AAOFM2829B. PAN : AAOFM2829B. PAN : AAOFM2829B. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -2, 2,2, 2, ROHTAK. ROHTAK. ROHTAK. ROHTAK. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GUPTA, ADVOCATE. RESPONDENT BY : SHRI J.S.MINSHAS, DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : IN THIS APPEAL BY THE ASSESSEE, FOLLOWING GROUNDS ARE RAISED:- 1. THAT THE ORDER OF LD.CIT(APPEALS) IS AGAINST LA W AND FACTS. 2. THAT THE LD.CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION OF 672671/- BY IGNORING THE AUDIT REPORT O F THE APPELLANT CERTIFIED BY A CHARTERED ACCOUNTANT AND B Y APPLYING NP RATE OF 12% ON GROSS RECEIPTS AFTER REJ ECTING THE BOOKS OF ACCOUNTS, ALTHOUGH MAJORITY OF THE DOCUMENTARY RECORDS WERE PRODUCED BEFORE THE LD.AO BUT HE GAVE WRONG FINDING IN HIS ASSESSMENT ORDER THAT NO RECORDS WERE PRODUCED BEFORE HIM. ITA-848/DEL/2012 2 3. THAT THE LD.CIT(A) AS WELL AS LD.AO ERRED IN MISINTERPRETING THE JUDGEMENT OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PRABHAT KUMAR, CONTRACTOR, WHICH IS NOT DECIDED ON MERITS AND IS DISTINGUISHABLE ON FACTS. 4. THAT THE LD.CIT(APPEALS) ERRED IN CONFIRMING THE NP RATE OF 12% APPLIED ON GROSS RECEIPTS BY THE LD.AO WHICH IS TOO HIGH & EXCESSIVE. EVEN IN A NO ACCOUNTS CASE, RATE OF 8% IS APPLICABLE U/S 44AD OF THE IT ACT. HENCE, WI THOUT CONCEDING ON MERITS, IN ANY CASE NP RATE SHOULD NOT EXCEED 8%. 5. THAT THE LD.CIT(APPEALS) AS WELL AS LD.AO ERRED IN NOT GIVING DEDUCTION OF INTEREST AND SALARY PAID TO PAR TNERS OF THE FIRM OUT OF NP RATE APPLIED. 2. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE ASSESSEE IS A CONTRACTOR WHOSE REC EIPT FOR THE YEAR UNDER CONSIDERATION WAS ` 56,77,359/-. THE ASSESSEE FILED THE RETURN DISCLOSING TOTAL INCOME OF ` 24,660/- AFTER PAYMENT OF INTEREST AND SALARY TO THE PARTNERS. THAT THE ASSESSING OFFICER REJECTED THE ASSESSEES BOOKS OF ACCOUNT AND APPLIED NET PROFIT RATE OF 12%. HE EVEN DID NOT ALLOW THE DEDUCTION FOR INTEREST AND S ALARY PAID TO THE PARTNERS. HE SUBMITTED THAT PART OF THE ASSESSEES BOOKS OF ACCOUNT WAS STOLEN FOR WHICH FIR WAS LODGED. THEREFORE, TH E ASSESSEE COULD NOT PRODUCE ALL THE BOOKS OF ACCOUNT. HOWEVER, HE PRODUCED WHATEVER REMAINING BOOKS OF ACCOUNT AND SUPPORTING DOCUMENTS AVAILABLE WITH THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING BOOKS OF ACCOUNT. HE ALSO REQUESTED THAT IN THE ALTERNATIVE, THE MATTER CAN BE SET ASIDE TO THE FILE OF THE ASSE SSING OFFICER FOR RE- ITA-848/DEL/2012 3 EXAMINATION. HE FURTHER SUBMITTED THAT IF BOTH THE ABOVE REQUESTS OF THE ASSESSEE ARE NOT ACCEPTED, THEN THE APPLICATION OF NET PROFIT RATE OF 12% IS TOO HIGH. THAT SECTION 44AD PROVIDES THE NE T PROFIT RATE OF 8% SUBJECT TO SALARY AND INTEREST PAID TO THE PARTNERS . THEREFORE, AS A LAST ALTERNATIVE, THE ASSESSING OFFICER MAY BE DIRECTED TO APPLY NET PROFIT RATE OF 8% AND HE SHOULD BE DIRECTED TO ALLOW PAYME NT OF SALARY AND INTEREST TO THE PARTNERS. 3. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. HE STATED THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT AND SUPPORTING BILLS AND VOUCHERS TO JUSTIFY THE EXPENSES INCURRED. THAT ON THE RECEIPT OF ` 56,77,359/-, THE NET PROFIT DISCLOSED BY THE ASSESSEE IS ONLY ` 24,660/- WHICH IS LESS THAN HALF PERCENT. WHEN THE ASSESSEE WAS ASKED TO PRODUCE TH E BOOKS OF ACCOUNT, HE DID NOT PRODUCE THE SAME ON THE GROUND THAT IT IS STOLEN. THAT IN THE ABSENCE OF ASSESSEES BOOKS OF ACCOUNT, THE TRADING RESULT DISCLOSED BY THE ASSESSEE WHICH IS TOO MEAGER CANNO T BE ACCEPTED. THEREFORE, THE ASSESSING OFFICER RIGHTLY REJECTED T HE BOOKS OF ACCOUNT. HE STATED THAT NO USEFUL PURPOSE WOULD BE SERVED IN SETTING ASIDE THE MATTER TO THE ASSESSING OFFICER BECAUSE WHEN THE AS SESSEES BOOKS OF ACCOUNT ARE STOLEN, HE WILL NOT BE IN A POSITION TO PRODUCE THE SAME IN THE SET ASIDE PROCEEDINGS ALSO. THEREFORE, THE ASS ESSEES REQUEST FOR SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSI NG OFFICER SHOULD BE REJECTED. HE ALSO STATED THAT APPLICATION OF NET P ROFIT RATE OF 12% IS QUITE FAIR AND REASONABLE BECAUSE SECTION 44AD IS N OT APPLICABLE IN THE CASE OF THE ASSESSEE WHOSE TURNOVER IS MORE THAN ` 40 LAKHS. HE, THEREFORE, SUBMITTED THAT THE ORDERS OF LOWER AUTHO RITIES SHOULD BE SUSTAINED. 4. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. IT IS N OT IN DISPUTE THAT THE ITA-848/DEL/2012 4 ASSESSEE IS A CONTRACTOR ENGAGED IN THE BUSINESS OF EXECUTION OF CIVIL CONTRACT WORK. WHEN THE ASSESSING OFFICER ASKED TH E ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT AND SUPPORTING DOCUMEN TS, THE ASSESSEE SUBMITTED THE FOLLOWING WRITTEN REPLY:- AS PER THE COPY OF FIR SUBMITTED WITH YOUR GOOD SE LF, BY WHICH BOOKS OF ACCOUNTS AND OTHER RECORDS OF THE FI RM WERE STOLEN. BUT STILL THE ASSESSEE HAS BEEN ABLE TO PR OVIDE MAJORITY OF RELEVANT RECORDS TO JUSTIFY THE EXPENSE S INCURRED LIKE, SALES TAX EXPENSES ARE MENTIONED IN THE TDS CERTIFICATE (FORM 16A) SUBMITTED WITH YOUR GOOD SEL F, BANK CHARGES ARE AS PER THE BANK STATEMENT ALREADY PRODU CED, MAJORITY OF THE COPIES OF PURCHASE BILLS ARE ALREAD Y SUBMITTED, SIMILARLY VOUCHERS IN SUPPORT OF STAFF S ALARIES AND LABOUR EXPENSES ARE ALREADY PRODUCED, SALARY AN D INTEREST PAID TO PARTNERS OF THE FIRM ARE REFLECTED IN THEIR PERSONAL INCOME TAX RETURNS ALREADY SUBMITTED. SO YOU ARE HUMBLY REQUESTED NOT MAKE BEST JUDGMENT ASSESSMENT AS DESCRIBED U/S 144 OF THE INCOME TAX A CT, 1961. 5. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE CLAIMED THAT ITS BOOKS OF ACCOUNT AND OTHER RECORDS WERE STOLEN. SO ME OF THE RELEVANT RECORD WHICH WAS NOT STOLEN WAS PRODUCED. THE ASSE SSING OFFICER DID NOT ACCEPT THE ASSESSEES EXPLANATION OF BOOKS BEIN G STOLEN ON THE GROUND THAT IN THE FIR, THERE IS NO MENTION ABOUT T HE BOOKS OF ACCOUNT, BILLS, VOUCHERS ETC. HOWEVER, WHETHER THE BOOKS WE RE STOLEN OR NOT, THE FACT REMAINS THAT THE ASSESSEE DID NOT PRODUCE THE SAME BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEED INGS. IN OUR OPINION, WHEN THE ASSESSEE DID NOT PRODUCE THE BOOK S OF ACCOUNT ITA-848/DEL/2012 5 BEFORE THE ASSESSING OFFICER, HE WAS FULLY JUSTIFIE D IN REJECTING THE BOOKS OF ACCOUNT AND IN ESTIMATING THE PROFIT. THE ASSESSEES COUNSEL HAS ALSO REQUESTED FOR SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. HOWEVER, CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT NO USEFUL PURPOSE WOULD BE SERV ED IN SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER BEC AUSE WHEN AS PER THE STAND OF THE ASSESSEE, ITS BOOKS ARE STOLEN, IT WIL L NOT BE IN A POSITION TO PRODUCE THE SAME EVEN IN THE SET ASIDE PROCEEDINGS. WE, THEREFORE, REJECT THE ASSESSEES REQUEST FOR SETTING ASIDE THE MATTER TO THE ASSESSING OFFICER. 6. NOW, THE QUESTION COMES WITH REGARD TO APPLICABI LITY OF NET PROFIT RATE. THOUGH SECTION 44AD AS IT STOOD IN AY 2008-0 9 WAS NOT APPLICABLE IN THE CASE OF AN ASSESSEE WHOSE TURNOVE R IS MORE THAN ` 40 LAKHS, HOWEVER, IN OUR OPINION, EVEN IN THE CASE WH ERE TURNOVER IS MORE THAN ` 40 LAKHS AND A NET PROFIT RATE IS TO BE ESTIMATED, THE PERCENTAGE PRESCRIBED IN SECTION 44AD IS A GOOD GUI DE FOR APPLICATION OF NET PROFIT RATE. IN VIEW OF THE ABOVE, WE DIREC T THE ASSESSING OFFICER TO COMPUTE THE INCOME OF THE ASSESSEE BY APPLYING T HE NET PROFIT RATE OF 8% AND SINCE THE ASSESSEE IS A FIRM, TO ALLOW DE DUCTION FOR SALARY AND INTEREST PAID TO THE PARTNERS IN ACCORDANCE WIT H LAW. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2012. SD/- SD/- ( (( (RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 31.08.2012 VK. ITA-848/DEL/2012 6 COPY FORWARDED TO: - 1. APPELLANT : M/S PARVEEN KUMAR, M/S PARVEEN KUMAR, M/S PARVEEN KUMAR, M/S PARVEEN KUMAR, 1199/24, JAGDISH COLONY, 1199/24, JAGDISH COLONY, 1199/24, JAGDISH COLONY, 1199/24, JAGDISH COLONY, ROHTAK, HARYANA, ROHTAK, HARYANA, ROHTAK, HARYANA, ROHTAK, HARYANA, PIN PIN PIN PIN 124 001. 124 001. 124 001. 124 001. 2. RESPONDENT : INCOME TAX OFF INCOME TAX OFF INCOME TAX OFF INCOME TAX OFFICER, ICER, ICER, ICER, WARD WARD WARD WARD- -- -2, ROHTAK. 2, ROHTAK. 2, ROHTAK. 2, ROHTAK. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR