ITO, Gurgaon V. Shri Abhishek Agarwal, Gurgaon

ITA 937/DEL/2015

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9913 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Income from undisclosed sources; Non-deduction of tax
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 922/DEL/2015 AY: 20 09-10 ABHISHEK AGARWAL, VS INCOME TAX OFFICER, C/O ATLANTIS RESEARCH, WARD-1(1), 515, RING ROAD MALL, GURGAON. 21, MANGALAM PLACE, SECTOR 3, ROHINI, DELHI-110085 (PAN: AJVPA0158P) (APPELLANT) (RESPON DENT) ITA NO. 937/DEL/2015 AY: 2009-10 INCOME TAX OFFICER, VS ABHISHE K AGARWAL, WARD -1(1), GURGAON PROP. ATLANTIS RESEARCH, GROUND FLOOR, K-4/5, DLF PHASE-2, GURGAON. DEPARTMENT BY : MS ASHIMA NEB, SR. DR ASSESSEE BY : MS SANGEETA SINGH CA MS KANISHKA AGARWAL, CA DATE OF HEARING: 25.06.2018 DATE OF PRONOUNCEMENT: 24.09.2018 ORDER PER BENCH ITA NO.922/DEL/2015 IS THE ASSESSEES APPEAL PREFE RRED AGAINST ORDER DATED 4.12.2014 PASSED BY THE LD. CIT (APPEALS)-I, GURGAON FOR ASSESSMENT YEAR 2009-10 WHEREAS ITA NO. ITA NO. 922/D/2015 937/DEL/2015 ASSESSMENT YEAR 2009-10 2 937/DEL/2015 IS THE DEPARTMENTS CROSS APPEAL FOR T HE SAME YEAR. 2. BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF I NCOME WAS FILED DECLARING TOTAL INCOME OF RS. 8,96,290/- AND THE SC RUTINY ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') AT A TO TAL INCOME OF RS. 95,44,420/- AFTER ASSESSING THE NET PROFIT @10% OF THE GROSS RECEIPTS. APART FROM THIS, THE ASSESSING OFFICER AL SO DISALLOWED/ADDED RS.60,87,105/- SHOWN AS ADVANCES F ROM CUSTOMERS BY TREATING THE SAME AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES. AN ADDITION OF RS. 1,15,000/- WAS ALSO MADE FOR FAILURE TO DEDUCT TAX AT SOURCE ON PAYMENT S MADE TOWARDS COMMISSION. THE ASSESSEES CHALLENGE TO TH E ASSESSMENT ORDER BEFORE THE LD. CIT (A) WAS PARTLY ACCEPTED WI TH THE LD. CIT (A) DIRECTING THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT @ 6.5% INSTEAD OF 10% AND THIS IS THE SOLE ISSUE IN D ISPUTE BEFORE US WITH THE ASSESSEE CHALLENGING THE SUSTENANCE OF ESTIMATED NET PROFIT ADDITION BY THE LD. CIT (A) TO THE TUNE OF 6 .5% WHEREAS THE DEPARTMENT IS CHALLENGING THE ACTION OF THE LD. CIT (A) IN ALLOWING RELIEF TO THE ASSESSEE BY CURTAILING THE NET PROFIT ESTIMATION AT 6.5% AS COMPARED TO 10% ESTIMATED BY THE ASSESSING OFFICER. ITA NO. 922/D/2015 937/DEL/2015 ASSESSMENT YEAR 2009-10 3 3.0 THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE BOOK RESULTS OF THE ASSE SSEE WITHOUT ASSIGNING ANY VALID REASONS AND WITHOUT POINTING OU T ANY SPECIFIC DEFECTS IN THE MAINTENANCE OF THE BOOKS OF ACCOUNTS . IT WAS ALSO SUBMITTED THAT THE BOOKS OF ACCOUNTS WERE DULY AUDIT ED AND THE AUDIT REPORT WAS BEFORE THE LOWER AUTHORITIES AND, THEREFORE, THE SAME COULD NOT HAVE BEEN DISREGARDED AND THERE WAS NO CASE OF ESTIMATING THE NET PROFIT ON THE GROUND THAT SOME B ILLS WERE NOT AVAILABLE/COULD NOT BE PRODUCED BEFORE THE ASSESSIN G OFFICER. IT WAS ALSO SUBMITTED THAT WHILE ESTIMATING THE NET PR OFIT RATE @10%, THE ASSESSING OFFICER DID NOT BRING ON RECORD ANY COMPARABLE CASES IN WHICH A SIMILAR NET PROFIT RATE OF 10% WAS DISCLOSED AND FURTHER THE LD. CIT (A) ALSO DID NOT BRING ON RECORD ANY COMPARABLE CASES WHERE THE NET PROFIT RATE IN I DENTICALLY SITUATED BUSINESS WAS 6.5% OF THE GROSS RECEIPTS. THE LD. AR FURTHER SUBMITTED THAT IF THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE JUSTIFICATION OF A PARTICULAR ITEM OF EXPE NDITURE, HE COULD HAVE DISALLOWED THAT PARTICULAR EXPENDITURE BUT THE SAME COULD NOT HAVE BEEN THE BASIS FOR REJECTING THE BOOKS RES ULTS. IT WAS ALSO SUBMITTED THAT A SIMILAR DISALLOWANCE IN ASSES SMENT YEAR 2010-11 WAS DELETED BY THE LD. CIT (A) AND OUR ATTE NTION WAS ITA NO. 922/D/2015 937/DEL/2015 ASSESSMENT YEAR 2009-10 4 DRAWN TO A COPY OF THE FIRST APPELLATE AUTHORITY OR DER FOR ASSESSMENT YEAR 2010-11 IN THIS REGARD. THE LD. AR VEHEMENTLY ARGUED THAT MERE NON-PRODUCTION OF SUPPORTING BILLS DID NOT GIVE POWER TO THE ASSESSING OFFICER TO REJECT THE BOOKS RESULTS AND OTHER FACTORS SHOULD ALSO HAVE BEEN CONSIDERED. TH E LD. AR SUBMITTED THAT THE REJECTION OF BOOK RESULTS SHOULD NOT BE RESORTED TO UNLESS THERE WERE STRONG AND SUFFICIENT REASONS TO INDICATE THAT THE BOOKS OF ACCOUNTS WERE UNRELIABLE AND INCORRECT WHICH WAS NOT SO IN THE CASE OF THE ASSESSEE. 4.0 IN RESPONSE, THE LD. SR. DR VEHEMENTLY ARGUED T HAT THE ASSESSEE WAS A HABITUAL DEFAULTER AND DID NOT COOPE RATE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND, THEREFORE , THE ASSESSING OFFICER HAD NO OPTION BUT TO REJECT THE B OOKS RESULTS OF THE ASSESSEE FOR WANT OF PROPER DETAILS. SHE SUBMI TTED THAT 10% WAS A REASONABLE RATE OF NET PROFIT FOR A PERSON EN JOYING GROSS RECEIPTS OF RS. 3,32,35,803/-. THE LD. SR. DR ASSA ILED THE ACTION OF THE LD. CIT (A) IN RESTRICTING THE ESTIMATION OF NET PROFIT TO 6.5% WITHOUT ASSIGNING ANY SPECIFIC REASON FOR DOIN G SO. THE LD. SR. DR SUBMITTED THAT THE ORDER OF THE LD. CIT (A) NEEDED TO BE SET ASIDE AND THE ASSESSING OFFICERS ORDER REQUIRE D TO BE RESTORED. ITA NO. 922/D/2015 937/DEL/2015 ASSESSMENT YEAR 2009-10 5 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE AS SESSMENT ORDER SHOWS THAT A QUESTIONNAIRE WAS ISSUED TO THE ASSESS EE ON 30.09.2011 WHEREIN BESIDES REQUIRING THE ASSESSEE T O SUBMIT INFORMATION AND DOCUMENTS, THE ASSESSEE WAS ASKED T O PRODUCE COMPLETE BOOKS OF ACCOUNTS BUT THE ASSESSEE DID NOT PRODUCE THE SAME. IT IS FURTHER MENTIONED IN THE ASSESSMENT OR DER THAT VIDE ORDER SHEET ENTRY DATED 19.10.2011, THE ASSESSEE WA S SPECIFICALLY ASKED TO PRODUCE COMPLETE BOOKS OF ACCOUNTS. IT WA S ALSO MENTIONED THAT IN CASE OF FAILURE TO COMPLY WITH TH E REQUIREMENT OF PRODUCING THE BOOKS OF ACCOUNTS, THE BOOKS WILL BE REJECTED IN VIEW OF SECTION 145(3) OF THE ACT AND NET PROFIT @1 0% WILL BE ASSESSED ON THE GROSS RECEIPTS. IT HAS BEEN FURTHE R NOTED IN THE ASSESSMENT ORDER THAT ON THE APPOINTED DATE ALSO, N ONE ATTENDED NOR WERE THE BOOKS OF ACCOUNTS PRODUCED AND, THEREF ORE, THE ASSESSING OFFICER PROCEEDED TO REJECT THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AND ESTIMATED THE NET PROFIT @10% OF GROSS RECEIPTS AS AGAINST 3% AS DECLARED BY THE ASSESSEE. HOWEVER, WE NOTE THAT WHILE DOING SO, THE ASSESSING OFFICER DID NOT GIVE ANY BASIS FOR ESTIMATING THE NET PROFIT @10% BY QUOTING ANY COMPARABLE CASES IN THIS REGARD. SIMILARLY, DURING THE COURSE OF ITA NO. 922/D/2015 937/DEL/2015 ASSESSMENT YEAR 2009-10 6 APPELLATE PROCEEDINGS, THE LD. CIT (A) REACHED THE CONCLUSION THAT THE ASSESSING OFFICER HAD ERRED IN ESTIMATING NET P ROFIT RATE @10% OF GROSS RECEIPTS SINCE THE ASSESSEE COULD PRO DUCE CERTAIN PERCENTAGE OF BILLS, VOUCHERS, ETC. IN SUPPORT OF E XPENSES CLAIMED BY IT AND, THEREFORE, IT WOULD BE PRUDENT TO ASSESS THE NET PROFIT OF THE ASSESSEE BETWEEN THE NET PROFIT OF 3% SHOWN BY THE ASSESSEE AND 10% ESTIMATED BY THE ASSESSING OFFICER LEADING TO ESTIMATION OF INCOME OF THE ASSESSEE @6.5% OF THE G ROSS RECEIPTS OF THE ASSESSEE. THUS, IT IS VERY MUCH EVIDENT THA T THE LD. CIT (A) HAS ALSO NOT ASSIGNED ANY BASIS FOR ESTIMATING NET PROFIT RATE OF 6.5%. ALTHOUGH IT IS APPARENT FROM THE ORDERS OF B OTH THE LOWER AUTHORITIES THAT THE ASSESSEE HAS BEEN EXTREMELY NE GLIGENT AND CARELESS IN HIS APPROACH AND EVEN AFTER BEING GIVEN NUMEROUS OPPORTUNITIES, HE FAILED TO PRODUCE THE BOOKS OF AC COUNTS. ALL THE SAME, THE ACTION OF BOTH THE LOWER AUTHORITIES IN E STIMATING THE NET PROFIT RATE WITHOUT ANY BASIS CAN ALSO NOT BE A PPROVED. THEREFORE, ON THE FACTS OF THE CASE AND IN THE INTE REST OF JUSTICE, WE DEEM IT EXPEDIENT TO RESTORE THE ISSUE TO THE FI LE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE DE NOVO AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE AND WE ALSO DIRECT THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS BEFOR E THE ITA NO. 922/D/2015 937/DEL/2015 ASSESSMENT YEAR 2009-10 7 ASSESSING OFFICER, FAILING WHICH THE ASSESSING OFFI CER SHALL BE AT LIBERTY TO ESTIMATE THE NET PROFIT RATE AS PER LAW. 6.0 IN THE FINAL RESULT, BOTH THE APPEALS STAND ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2018. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 24 TH SEPTEMBER, 2018 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR ITA NO. 922/D/2015 937/DEL/2015 ASSESSMENT YEAR 2009-10 8 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE 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