M/S Sanjay Traders, Auraiya V. I.T.O., Ward-1(4), Auraiya

ITA 91/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0731 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 1 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-06-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: K C AGARWAL
• Keywords: Business income; Revision of order; Depreciation; Agreed addition
• Section: 44AD; 143(3); 40(b)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 91/AGRA/2013 ASSTT. YEAR : 2009-10 SANJAY TRADERS, VS. INCOME-TAX OFFICER, PHAPHOOND ROAD, DIVIYAPUR, WARD 1(4) AURAIYA. AURAIYA. (PAN : ABAFS 7010 F) ITA NO. 90/AGRA/2013 ASSTT. YEAR : 2009-10 INCOME-TAX OFFICER, VS. SANJAY TRADERS, WARD 1(4) AURAIYA. PHAPHOOND ROAD, DIVIYAPUR, AURAIYA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.C. AGARWAL, ADVOCATE REVENUE BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 25.06.2013 DATE OF PRONOUNCEMENT OF ORDER : 28.06.2013 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE OR DER OF THE LD. CIT(A)-I, AGRA DATED 05.10.2012 FOR THE ASSESSMENT YEAR 2009- 10. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES AND CONSIDERED THE MATE RIAL ON RECORD. ITA NOS. 91 & 90/AGRA/2013 2 3. THE ASSESSEE IN ALL THE THREE GROUNDS OF APPEAL CHALLENGED THE ORDERS OF THE AUTHORITIES BELOW IN REJECTING THE BOOKS OF ACCOUNT S AND APPLYING NET PROFIT RATE OF 2% OF THE TOTAL TURNOVER. IT IS FURTHER CLAIMED THA T THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ALLOWING DEPRECIATION, INTEREST AND SALARY TO THE PARTNERS AFTER ESTIMATING THE NET INCOME. ALTERNATIVELY, IT WAS ALSO CLAIMED THAT PROFIT RATE OF 2% APPLIED IS HIGHLY EXCESSIVE AND UNJUSTIFIED. 4. THE REVENUE ON GROUND NO. 1, CHALLENGED THE ORDE R OF THE LD. CIT(A) IN COMPUTING THE INCOME FROM CONTRACT BUSINESS BY APPL YING PROFIT RATE OF 2% AS AGAINST 3.5% APPLIED BY THE AO. ON THE ABOVE ISSUE, THE AO PASSED THE ASSESSMENT ORDER U/S. 143(3) ON DATED 23.12.2011 DETERMINING T HE ASSESSED INCOME AT RS.27,89,490/- AS AGAINST RETURNED INCOME OF RS.26, 690/-. THE ASSESSEE IS A CONTRACTOR ENGAGED IN SUPPLYING OF GRITS FOR CONSTR UCTION OF ROAD. THE AO FOUND THAT NET PROFIT DECLARED BY THE ASSESSEE WAS VERY M UCH AT LOWER SIDE SHOWING ONLY 0.036% OF THE TURNOVER AND DURING THE COURSE OF EXA MINATION OF THE BOOKS OF ACCOUNT, HE HAS FOUND THAT ENTRIES OF PURCHASES IN THE BOOKS OF ACCOUNT WERE NOT SUPPORTED WITH PROPER BILLS AND VOUCHERS. HENCE, TH E AO REJECTED THE BOOKS OF ACCOUNT AS PER PROVISIONS OF SECTION 145(3) OF THE IT ACT AND ESTIMATED THE TAXABLE PROFIT OF THE ASSESSEE BY APPLYING THE NET PROFIT R ATE OF 3.5% ON TOTAL TURNOVER OF RS.3,35,85,884/- AND COMPUTED THE INCOME AT RS.25,7 5,506/- FROM SUCH CONTRACT ITA NOS. 91 & 90/AGRA/2013 3 WORK. THE ADDITION OF RS.25,48,816/- WAS DISPUTED B EFORE THE LD. CIT(A). WRITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN APPELLA TE ORDER CLAIMING THAT IN THE ASSESSMENT YEAR UNDER APPEAL, THE GRIT WAS SUPPLIED TO TWO CONTRACTORS ONLY AND IN PRECEDING ASSESSMENT YEARS 2007-08 AND 2008-09, NET PROFIT RATE OF 0.4% AND 0.18% HAVE BEEN SHOWN. THEREFORE, THE PROFIT RATE A PPLIED BY THE AO IS VERY EXCESSIVE. IT WAS ALSO CLAIMED THAT THE INCOME-TAX, FBT AND INTEREST AND SALARY PAID TO THE PARTNERS WERE DEBITED TO THE PROFIT AND LOSS ACCOUNT, OUT OF WHICH THE INCOME-TAX AND FBT ARE NOT ALLOWABLE EXPENDITURE, B UT INTEREST TO PARTNERS AND SALARY PAID TO THEM ARE THE APPROPRIATION OF PROFIT IS, THEREFORE, ALLOWABLE EXPENDITURE U/S. 40(B) OF THE IT ACT. THUS CORRECT PROFIT OF THE ASSESSEE IS WORKED OUT TO RS.6,69,613/- WHICH GIVES PROFIT MARGIN OF 0 .9%, WHICH IS FAIR AND REASONABLE, WHICH IS ALSO USUALLY SHOWN BY THE SUB- CONTRACTORS SUPPLYING GRITS TO THE CONTRACTORS. IT WAS SUBMITTED THAT IN CASE DEPR ECIATION, INTEREST AND SALARY ARE CONSIDERED, THE PROFIT RATE WOULD BE COMPUTED AT 2. 64%, WHICH IS VERY EXCESSIVE. CERTAIN DECISIONS IN SUPPORT OF THE CONTENTION WERE ALSO RELIED UPON. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NET PROFIT RATE OF 3.5% IS EXCESSIVE AND ALSO SPECIFICALLY RELIED UPON THE ORDER OF THE ITAT, AGR A BENCH IN THE CASE OF M/S. A.R. ENTERPRISES, WHICH IS IN A CONTRACT BUSINESS OF TRA NSPORT AND GRIT SUPPLY AND IN THIS CASE THE NET PROFIT RATE OF 2% HAS BEEN APPLIED BY THE TRIBUNAL TO ESTIMATE ITS TAXABLE INCOME. APART FROM APPLYING THE NET PROFIT RATE OF 2%, A PLEA HAS ALSO BEEN MADE FOR PROVIDING DEDUCTION AS PER SECTION 40(B) O F THE IT ACT AND DEDUCTION FOR ITA NOS. 91 & 90/AGRA/2013 4 DEPRECIATION. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO AND ALSO REJOINDER FROM THE ASSESSEE AND THE LD. CIT(A) APPL IED THE ORDER OF THE TRIBUNAL IN CASE OF A.R. ENTERPRISES AS HAVE BEEN AGREED BY THE COUNSEL FOR THE ASSESSEE BEFORE HIM TO APPLY THIS DECISION FOR THE PURPOSE OF DETER MINATION OF BUSINESS INCOME OF THE ASSESSEE. THE LD. CIT(A) ON THE AGREEMENT BY LD . COUNSEL FOR THE ASSESSEE, APPLYING THE DECISION IN THE CASE OF M/S. A.R. ENTE RPRISES (SUPRA), DIRECTED TO APPLY THE PROFIT RATE OF 2% AND COMPUTED THE INCOME OF AS SESSEE AT RS.14,71,717/- WITHOUT GIVING FURTHER DEDUCTION OF SALARY, INTERES T AND DEPRECIATION. THE FINDINGS OF THE LD. CIT(A) IN PARA 5.6 AND 5.7 OF THE APPELL ATE ORDER ARE REPRODUCED AS UNDER : 5.6. I HAVE CONSIDERED ALL THE FACTS OF THE CASE UNDER APPEAL AS DISCUSSED IN THE ASSESSMENT ORDER AS WELL AS PRE SENTED BEFORE ME BY THE LD. AR IN THE WRITTEN SUBMISSION AND THE REJ OINDER. THERE IS NO DISPUTE OVER THE BOOKS OF ACCOUNT NOT BEING MAINTAI NED BY THE ASSESSEE(APPELLANT) IN PROPER MANNER SUPPORTED WITH PROPER BILLS AND VOUCHERS AND HENCE, REJECTION OF BOOKS OF ACCOUNT B Y THE AO AS PER THE PROVISIONS OF SECTION 145(3) OF THE ACT HAS NOT BEEN CHALLENGED BEFORE ME. THEREFORE, INCOME OF THE ASSESSEE FROM T HE CONTRACT BUSINESS NEEDS TO BE ESTIMATED BY APPLYING A REASON ABLE RATE OF PROFIT. THE AO HAS APPLIED A RATE OF PROFIT OF 3.5% RELYING ON AN ORDER PASSED BY THE LD. CIT-I, AGRA U/S.263 BUT DETAILS O F NATURE OF CONTRACT BUSINESS OF THIS CASE HAS NOT BEEN GIVEN BY THE AO EXPLAINING THE NATURE OF CONTRACT BUSINESS OF THE CASE RELIED UPON BY HIM AND DRAWING SIMILARITY BETWEEN THE CASE RELIED UPON BY HIM AND THE CASE UNDER APPEAL. IN THE ORDER PASSED U/S 263, IT IS ON LY MENTIONED THAT THE ASSESSEE IS IN A CONTRACT BUSINESS BUT NATURE O F CONTRACT WORK HAS NOT BEEN EXPLAINED. AS AGAINST THE CASE RELIED UPON BY THE AO, THE LD. AR HAS DRAWN MY ATTENTION TO THE CASE OF M/S. A R. ENTERPRISES WHICH IS ALSO FOUND TO BE ENGAGED IN SUPPLY OF GRIT FOR M AKING OF ROAD. IN THIS CASE, THE HON'BLE ITAT, AGRA HAS PASSED AN APP EAL ORDER FOR AY. 2004-05 (ITA NO. 466/AGR/2007 DATED 05.08.2009) IN WHICH, THE NET ITA NOS. 91 & 90/AGRA/2013 5 PROFIT RATE OF 2% HAS BEEN FOUND TO BE REASONABLE. THE RELEVANT PORTION OF THE DECISION OF HON'BLE ITAT, AGRA IN CA SE OF M/S. A R. ENTERPRISES IS REPRODUCED AS UNDER: 'WE ARE OF THE VIEW THAT APPLYING A FLAT RATE OF 2% FOR BOTH THE CONTRACT FOR THIS YEAR ALSO WOULD MEET THE INTEREST OF JUSTICE. HOWEVER, NO FURTHER DEDUCTION IN THE FORM OF SALARIES & INTE REST TO PARTNER OF DEPRECIATION WOULD BE AVAILABLE TO THE ASSESSEE AS THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED AND THE ESTIMATE OF NET PROFIT RATE OF 2% SHALL BE DEEMED TO TAKE INTO CONSIDERATION ALL ALLO WABLE DEDUCTIONS AVAILABLE TO THE ASSESSEE IN THE FORM OF DEPRECIATI ON INTEREST AND REMUNERATION TO THE PARTNERS AND ALL OTHER EXPENDIT URES CLAIMED IN THE P & L ACCOUNT.' 5.7 ON GOING THROUGH THE ABOVE DECISION, IT HAS BEE N FOUND THAT THE HON'BLE TRIBUNAL HAS ALLOWED 2% OF FLAT RATE TO BE APPLIED BUT FURTHER DEDUCTION IN FORM OF SALARY AND INTEREST TO PARTNER S AND DEPRECIATION HAS NOT BEEN ALLOWED. THOUGH THE LD. AR HAS PLEADED FOR FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE ITAT, AGRA FOR ESTIM ATING THE INCOME OF A CONTRACTOR ENGAGED IN SUPPLY OF GRIT, HE HAS F URTHER ARGUED FOR PROVIDING DEDUCTION U/S. 40(B) FOR PAYMENT OF SALAR Y AND INTEREST TO PARTNERS AND ALSO DEDUCTION FOR DEPRECIATION BY REL YING ON CERTAIN CASE LAWS INCLUDING A CASE LAW OF HON'BLE ALLAHABAD HIGH COURT. IN THIS REGARD, AFTER GOING THROUGH ALL THE CASE LAWS STATED BY THE LD. AR, I HAVE FOUND THAT IN THESE CASE LAWS, HIGHER RATE O F PROFIT HAS BEEN APPLIED BEFORE ALLOWING DEDUCTION FOR DEPRECIATION AND DEDUCTION U/S. 40 (B). IN CASE OF CIT VS. BISHAMBHAR DAYAL & CO. ( SUPRA), THE TRIBUNAL HAS FINALLY DECIDED TO APPLY THE RATE OF P ROFIT AT 9% WHICH WAS CONFIRMED BY THE HON'BLE ALLAHABAD HIGH COURT. IN THE CASE OF CIT VS. LUDHIANA VS. SUPREME BUILDER (SUPRA), THE R ATE OF PROFIT APPLIED WAS 12%. THEREFORE, I FIND THAT IN BOTH CAS ES CITED BY THE ID. AR, THE RATE OF PROFIT APPLIED WAS QUITE HIGH. AS F AR AS THE DECISION OF THE HON'BLE PATNA HIGH COURT IN CASE OF SHYAM BIHAR I VS. CIT(SUPRA) IS CONCERNED, THE PROFIT RATE OF 6% WAS SUSTAINED U P TO THE LEVEL OF THE ITAT BUT KEEPING IN VIEW THE PRINCIPLE OF COMPUTATI ON OF THE INCOME OF A CONTRACTOR AS PROVIDED IN SECTION 44AD, THE TR IBUNAL DID NOT ALLOW THE DEPRECIATION OUT OF THE ESTIMATED PROFIT. THE HON'BLE HIGH COURT HELD THAT IN CASE OF THAT ASSESSEE, THE PROVI SION OF 44AD WOULD NOT APPLY BECAUSE THE TURNOVER EXCEEDED RS. 40,00,0 00/AND HENCE, THE ASSESSMENT WAS RESTORED TO THE AO TO COMPUTE THE IN COME AFTER MAKING SUITABLE ESTIMATION AND THEN PROVIDE DEDUCTI ON FOR ITA NOS. 91 & 90/AGRA/2013 6 DEPRECIATION OUT OF THE ESTIMATED PROFIT. HOWEVER, APART FROM RELYING ON THE DECISION OF PATNA HIGH COURT IN CASE OF SHYA M BIHARI VS. CIT(SUPRA), THE LD. AR HAS ALSO RELIED ON THE CASE OF M/S. A.R. ENTERPRISES (SUPRA). IN THE CASE OF M/S. A. R. ENTERPRISES, THE RATE OF PROFIT APPLIED BY THE HON'BLE ITAT, AGR A IS TAKEN TO BE VERY LOW AT 2% ONLY AND THEREFORE, IN THEIR WISDOM, THE HON'BLE MEMBERS DECIDED NOT TO ALLOW ANY DEDUCTION IN FORM OF SALAR Y AND INTEREST TO PARTNERS AND ALSO DEDUCTION FOR ANY DEPRECIATION. A FTER CONSIDERING THE SUBMISSION OF THE ID. AR AND TAKING INTO ACCOUN T THE ENTIRE FACTS OF THE CASE IN TOTALITY, I HAVE TO DECIDE WHETHER THE ABOVE MENTIONED THREE CASE LAWS ARE TO BE APPLIED IN CASE OF THE AP PELLANT AS CITED BY THE LD. AR TO CLAIM DEDUCTION U/S. 40(B) AND DEDUCT ION FOR DEPRECIATION OR TO APPLY THE DECISION OF HON'BLE IT AT, AGRA IN CASE OF M/S. A. R. ENTERPRISES AS RELIED UPON BY THE LD. AR IN JUSTIFICATION FOR A SUITABLE PROFIT RATE TO BE APPLIED IN CASE OF THE ASSESSEE(APPELLANT). IF ANY DECISION OF THE HON'BLE COURT / TRIBUNAL IS TO BE APPLIED IN CASE OF A PARTICULAR ASSESSEE, IT HAS TO BE APPLIED IN FULL. THE APPELLANT CANNOT BE GIVEN BENEFIT OF PART DECISION OF ONE CASE LAW AND PART DECISION OF OTHER CASE LAW. IF THE LD. AR RELIES ON A PARTICULAR CASE LAW OF HON'BLE ITAT, AGRA FOR APPLY ING A NET PROFIT RATE IN CASE OF THE ASSESSEE(APPELLANT), THIS CASE LAW HAS TO BE APPLIED FULLY. WHILE DECIDING THE APPEAL IN CASE OF THE PRE SENT ASSESSEE (APPELLANT), SINCE THE LD. AR DURING THE DISCUSSION ON 03.10.201 HAS AGREED FOR APPLYING THE CASE LAW OF HON'BLE ITAT IN CASE OF M/S. A. R. ENTERPRISES, THE TAXABLE PROFIT / INCOME OF THE ASS ESSEE(APPELLANT) FROM CONTRACT BUSINESS IS TO BE CALCULATED AT A FLA T RATE OF 2% AFTER APPLYING THIS CASE LAW IN CASE OF THE PRESENT ASSES SEE(APPELLANT) AND FURTHER NO DEDUCTION U/S. 40(B) AND DEDUCTION FOR D EPRECIATION WOULD BE ALLOWABLE. THEREFORE, THE AO IS DIRECTED TO COMP UTE THE INCOME OF THE ASSESSEE (APPELLANT) FROM CONTRACT BUSINESS BY APPLYING 2% PROFIT RATE ON THE CONTRACT RECEIPT OF RS.7,35,85,884/- WH ICH COMES TO RS.14,71,717/- AND OUT OF THIS ESTIMATED NET INCOME , NO FURTHER DEDUCTION U/S. 40(B) AND DEDUCTION FOR DEPRECIATION WOULD BE ALLOWED FOLLOWING THE CASE LAW OF M/S. A.R. ENTERPRISES BY HONBLE ITAT, AGRA. THEREFORE, GROUND NO. 1 & 2 ARE PARTLY ALLOWE D AND GROUND NO. 3 IS DISMISSED. 5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). HE HAS AGREED THAT THE REJECTION OF BOO KS OF ACCOUNT WAS NOT ITA NOS. 91 & 90/AGRA/2013 7 CHALLENGED BEFORE THE LD. CIT(A). HE HAS, HOWEVER, SUBMITTED THAT PROFIT RATE OF 2% IS STILL ON EXCESSIVE SIDE AND THAT INTEREST AND SA LARY SHALL HAVE TO BE DEDUCTED SEPARATELY EVEN AFTER APPLYING THE PROFIT RATE OF 2 %. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE FINDINGS OF AUTHORITIES BELOW AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN APPLYING PROFIT RATE OF 2% FOR THE PU RPOSE OF COMPUTING THE BUSINESS INCOME OF THE ASSESSEE. IT IS NOT IN DISPUTE THAT T HE BOOKS OF ACCOUNT WERE NOT MAINTAINED BY THE ASSESSEE IN PROPER MANNER AND THE SAME WERE ALSO NOT SUPPORTED WITH PROPER BILLS AND VOUCHERS. AO HAS GIVEN SPECI FIC FINDING THAT IT IS NOT POSSIBLE FOR HIM TO ASCERTAIN ACTUAL PURCHASES AND SALES. TH E LD. CIT(A) ALSO GAVE SIMILAR FINDING IN THE APPELLATE ORDER AND ALSO NOTED THAT REJECTION OF BOOKS OF ACCOUNT HAVE NOT BEEN CHALLENGED BEFORE HIM. THE LD. COUNSE L FOR THE ASSESSEE HAS RELIED UPON THE ORDER OF ITAT, AGRA BENCH IN THE CASE OF M /S. A.R. ENTERPRISES (SUPRA) BEFORE THE LD. CIT(A), WHO WAS ALSO ENGAGED IN THE SUPPLY OF GRITS FOR MAKING ROADS. OPERATIVE PORTION OF THE ORDER OF TRIBUNAL I N THE CASE OF M/S. A.R. ENTERPRISES IS REPRODUCED IN THE FINDINGS OF LD. CI T(A) ABOVE. COUNSEL FOR THE ASSESSEE HAS ALSO AGREED WITH THE LD. CIT(A) TO APP LY THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. A.R. ENTERPRISES (SUPRA) IN THE CA SE OF ASSESSEE FOR THE PURPOSE OF DETERMINING INCOME OF THE ASSESSEE. SINCE THE ASSES SEE PLEADED BEFORE THE LD. ITA NOS. 91 & 90/AGRA/2013 8 CIT(A) THAT THE FACTS IN THE CASE OF ASSESSEE ARE I DENTICAL TO THAT OF M/S. A.R. ENTERPRISES AND ASSESSEES COUNSEL AGREED BEFORE T HE LD. CIT(A) TO APPLY THE DECISION IN THAT CAS3E IN THE CASE OF ASSESSEE FOR THE PURPOSE OF DETERMINATION OF INCOME OF THE ASSESSEE, THEREFORE, THE LD. CIT(A) W AS JUSTIFIED IN FOLLOWING THE SAID DECISION OF THE TRIBUNAL BEING BOUND TO FOLLOW THE DECISION OF JURISDICTIONAL TRIBUNAL, I.E., ITAT, AGRA BENCH. IT IS ALSO WELL S ETTLED LAW THAT NO APPEAL LIES IN CASE OF AGREED ADDITIONS. WE ARE FORTIFIED IN OUR V IEW BY THE FOLLOWING DECISIONS : THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JIVATL AL PURTAPSHI VS CIT, 65 ITR 261 HELD AS UNDER: HELD, THAT THE DEPARTMENT, HAVING AGREED TO DELETE THE AMOUNT FROM THE ASSESSMENT AND HAVING CONCEDED THE DELETION BEF ORE THE APPELLATE ASSISTANT COMMISSIONER CANNOT BE HELD TO BE AGGRIEV ED BY THIS PART OF THE ORDER TO ENABLE IT TO FILE AN APPEAL TO THE TRI BUNAL; THE APPEAL OF THE DEPARTMENT REGARDING THE DELETION OF THE AMOUNT WAS NEITHER COMPETENT NOR CAPABLE OF BEING ENTERTAINED BY THE T RIBUNAL. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CA SE OF BANTA SINGH KARTAR SINGH VS CIT, 125 ITR 239 OBSERVED: AN ORDER BASED ON AN AGREEMENT CANNOT GIVE RISE TO GRIEVANCES AND THE SAME CANNOT BE AGITATED IN APPEAL. IT WAS HELD: HELD, THAT IT WAS ON THE AGREEMENT OF THE ASSESSEE , WHICH AGREEMENT MENTIONED THE RATE AS WELL AS THE FIGURE, THAT PENA LTY HAD BEEN LEVIED. THE ASSESSEE HAD NO RIGHT TO AGITATE THIS QUESTION IN APPEAL. THE TRIBUNAL WAS RIGHT IN LAW IN NOT GOING INTO THE QUE STION WHETHER THE ITA NOS. 91 & 90/AGRA/2013 9 PENALTY WAS IN LAW THE MINIMUM PENALTY LEVIABLE UND ER S. 271(1) ( C ) OF THE I. T. ACT,1961. THE HONBLE KERALA HIGH COURT IN THE RECENT DECIS ION IN THE CASE OF CIT VS VAMADEVAN BHANU, 330 ITR 559 HELD AS UNDER: ASSESSMENT ASSESSMENT ON AGREED BASIS ASSESSEE CANNOT APPEAL AGAINST SUCH ORDER INCOME TAX ACT, 1961. SINCE IN THE CASE OF ASSESSEE, THE COUNSEL FOR THE ASSESSEE SPECIFICALLY PLEADED BEFORE THE LD. CIT(A) THAT THE DECISION OF JURISDIC TIONAL ITAT IN THE IDENTICAL CASE OF M/S. A.R. ENTERPRISES MAY BE APPLIED FOR THE PUR POSE OF COMPUTING BUSINESS INCOME OF THE ASSESSEE AND HAS AGREED TO APPLICATIO N OF PROFIT RATE, THEREFORE, WHEN THE LD. CIT(A) FOLLOWED THE SAID DECISION OF THE TR IBUNAL IN THE CASE OF ASSESSEE, THERE IS NOTHING TO CHALLENGE THE ORDER OF LD. CIT( A) ON MERITS. NO FAULT COULD BE FOUND WITH THE ORDER OF THE LD. CIT(A) IN FOLLOWING THE DECISION OF THE TRIBUNAL AS AGREED BY THE ASSESSEES COUNSEL. SINCE PART ADDITI ON IS MAINTAINED BY THE LD. CIT(A) ON THE BASIS OF AGREEMENT WITH THE ASSESSEE, THEREFORE, THE APPEAL OF THE ASSESSEE WOULD NOT BE MAINTAINABLE AND IS LIABLE TO BE DISMISSED. THE LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF ARGUMENT DID NOT DISPUTE THE ABOVE FINDINGS OF THE LD. CIT(A) IN MAINTAINING PART ADDITION ON A GREED BASIS. SIMILARLY, WHEN THE LD. CIT(A) FOLLOWED THE DECISION OF THE TRIBUNAL IN IDENTICAL CASE AND APPLIED REASONABLE PROFIT RATE TO COMPUTE THE INCOME OF ASS ESSEE, NO GRIEVANCE LEFT WITH THE REVENUE TO CHALLENGE THE ORDER OF THE LD. CIT(A). F URTHER CONSIDERING THE HISTORY ITA NOS. 91 & 90/AGRA/2013 10 OF THE ASSESSEE AND THE PROFIT RATE DECLARED IN THE EARLIER ASSESSMENT YEAR, WE FIND IT REASONABLE TO APPLY THE PROFIT RATE OF 2% AS AGAINS T 3.5% APPLIED BY THE AO. CONSIDERING THE ABOVE DISCUSSION, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD. CIT(A). THE APPEAL OF THE ASSESSEE AS SUCH IS D ISMISSED. GROUND NO. 1 OF THE DEPARTMENTAL APPEAL IS ALSO DISMISSED. 7. ON GROUND NO. 2 IN THE DEPARTMENTAL APPEAL, THE REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.1,84,730/- MADE BY THE A O AS BOGUS LIABILITY. THE AO ON PERUSAL OF THE BALANCE SHEET OF THE YEAR ENDING 31.03.2009 FOUND THAT THERE ARE 21 SUNDRY CREDITORS SHOWING THE OUTSTANDING LIABILI TIES OF RS.2,29,45,170/-. OUT OF THESE SUNDRY CREDITORS, MAXIMUM BALANCES ARE THE OL D BALANCES WHICH ARE BEING REFLECTED IN THE PAST BALANCE SHEETS. THE ASSESSEE WAS DIRECTED TO FILE COPY OF LEDGER ACCOUNT AND CONFIRMATION. THE ASSESSEE SUBMITTED TH E SAME FOR 17 PARTIES BUT IN RESPECT OF FOUR PARTIES IN THE CASES OF MAHESH AGNI HOTRI, RAVINDRA SINGH CHADWAL, SANTOSH MISHRA AND VIVEK NIGAM, THE ASSESSEE COULD NOT SUBMIT CONFIRMATION LETTERS. THEREFORE, LIABILITY WAS CONSIDERED BOGUS LIABILITY IN TOTAL SUM OF RS.1,84,730/- AND ADDITION WAS ACCORDINGLY MADE. AD DITION WAS CHALLENGED BEFORE THE LD. CIT(A) AND IT WAS SUBMITTED THAT ALL ARE OL D SUNDRY CREDITORS APPEARING IN THE BALANCE SHEET AS THEY HAVE SUPPLIED MATERIAL AN D LABOUR AND THE LIABILITY DOES NOT CEASE IN THE ASSESSMENT YEAR UNDER APPEAL. THER EFORE, THE ADDITION CANNOT BE MADE EVEN IF NO CONFIRMATION HAS BEEN FILED. THE LD . CIT(A) DELETED THE ADDITION ITA NOS. 91 & 90/AGRA/2013 11 BECAUSE THE AO WAS NOT ABLE TO PROVE THAT THE LIABI LITY DID NOT EXIST IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. 8. THE LD. DR RELIED UPON THE ORDER OF THE AO. ON T HE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO THE LEDGER ACCOUNT OF ALL THE ABOVE FOUR PARTIES, COPY OF WHICH ARE FILED AT PAGES 24 TO 26A OF THE PAPER BOO K TO SHOW THAT THE BALANCE APPEARING IN THEIR CASE (CREDITOR) ARE THE OPENING BALANCE COMING UP FROM THE EARLIER YEARS. 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITIO N. THE LIABILITY SHOWN IN THE BOOKS OF ACCOUNT ARE COMING UP FROM THE EARLIER YEA RS WHICH ARE OPENING BALANCE IN THE ASSESSMENT YEAR UNDER APPEAL. THUS, THE GENU INE LIABILITY EXISTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, EVEN IF NO C ONFIRMATION IS FILED IN THEIR CASES, THE OLD BALANCES COMING UP FROM EARLIER YEARS WOULD NOT HAVE BEEN ADDED IN THE CASE OF ASSESSEE. GROUND NO. 2 OF APPEAL OF THE REV ENUE IS ACCORDINGLY DISMISSED. 10. ON GROUND NO. 3, THE REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.29,252/- OUT OF VARIOUS EXPENSES. THE AO CONSIDE RING VARIOUS EXPENSES NOT INCURRED FOR THE BUSINESS PURPOSE AND THAT THE PERS ONAL USER OF THE EXPENSES HAVE ITA NOS. 91 & 90/AGRA/2013 12 NOT BEEN DENIED, MADE ADDITION OF RS.29,252/-. THE LD. CIT(A) DELETED THE ADDITION BECAUSE ONCE THE INCOME OF THE ASSESSEE HAS BEEN CO MPUTED BY APPLYING HIGHER PROFIT RATE, IT WOULD TAKE CARE OF THE ADDITIONS MA DE BY THE AO AND NO SEPARATE ADDITION IS CALLED FOR. ACCORDINGLY, THE LD. CIT(A) DELETED THE ADDITION. 11. ON CONSIDERATION OF THE RIVAL SUBMISSION, WE DO NOT FIND ANY MERIT IN THIS GROUND. ONCE THE INCOME OF THE ASSESSEE IS COMPUTED BY APPLYING PROFIT RATE ON REJECTION OF BOOKS OF ACCOUNT, NO FURTHER DISALLOWA NCE OF EXPENSES IS CALLED FOR AS THE SAME ARE PART OF THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. GROUND NO. 3 OF THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 12. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY