Late Sh. Sohan Lal Aggarwal, Gurgaon V. ACIT, New Delhi

ITA 986/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9019 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 21-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Keywords: Bonafide belief; TDS
• Section: 143(3); 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G: DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA.NO.986/DEL./2017 ASSESSMENT YEAR 2013-14 LATE SH. SOHAN LAL AGGARWAL, HOUSE NO. 368, SECTOR-15, PART-1, GURGAON. PAN NO. AACPL1555H [ VS. ACIT CIRCLE 62(1), E-2 BLOCK, PRATYAKASH KAR BHAWAN, CIVIC CENTRE, NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SH. RAJESH MAHNA, ADV. FOR REVENUE : SH. PRAKASH DUBEY, SR.DR DATE OF HEARING : 09.08.2021 DATE OF PRONOUNCEMENT : 11.08.2021 ORDER PER MADHUMITA ROY, J.M . THE INSTANT APPEAL IS DIRECTED AGAINST THE ORDER DA TED 29.12.2016 PASSED BY THE LD. CIT(APPEALS)-20, NEW D ELHI ARISING OUT OF THE ORDER DATED 18.02.2016 PASSED BY THE LD. ACIT, CIRCLE -62(1), NEW DELHI U/S 143(3) OF THE IN COME TAX 2 ITA.NO.986/DEL./2017 LATE SH. SOHAN LAL AGGARWAL. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FO R AY 2013- 14. 2. THE ASSESSEE A PROPRIETORSHIP FIRM RUNNING THE BUSINESS OF CIVIL CONTRACTOR FILED ITS RETURN OF IN COME ON 28.10.2013 DECLARING INCOME AT RS. 22,02,250/- WHIC H WAS PROCESSED U/S 143(1) OF THE ACT. NOTICE U/S 143(2) DATED 22.09.2014 WAS SERVED UPON THE ASSESSEE AND THE SAI D ASSESSMENT WAS FINALIZED WITH CERTAIN ADDITIONS INC LUDING ADDITION OF RS. 49,71,570/- AS UNDISCLOSED INCOME W HICH WAS IN TURN RESTRICTED TO RS. 48,36,917/- BY THE LD . CIT(A). HENCE, THE INSTANT APPEAL BEFORE US. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND BY THE LD. ASSESSING OFFICER THAT AS PER THE ITS DETAILS THE GROSS RECEIPTS OF THE ASSESSEE IS RS. 12,43,51,107/-, WHEREAS AS PER THE PROFIT AND LOSS ACCOUNT THE SAME IS RS. 11,93,79,537/-. THE ASSESSEE WAS A SKED TO RECONCILE THE DIFFERENCE IN RECEIPTS AMOUNTING TO R S. 49,71,570/-. SINCE, NO PLAUSIBLE EXPLANATION IN TH IS REGARD WAS PROVIDED BY THE ASSESSEE, THE SAID AMOUNT OF RS . 49,71,570/- HAS BEEN DETERMINED AS THE UNDISCLOSED 3 ITA.NO.986/DEL./2017 LATE SH. SOHAN LAL AGGARWAL. INCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOM E OF THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE RESPECTIVE PARTIES AND WE HAVE ALSO PERUSED THE REL EVANT MATERIALS AVAILABLE ON RECORD. 4.1 THE FACTS CULLED OUT FROM THE ORDER PASSED BY T HE LD. ASSESSING OFFICER IS THIS THAT THE ASSESSING OFFICE R ULTIMATELY ADDED RS. 49,71,570/- TO THE GROSS RECEI PTS FILED BY THE ASSESSEE AS PER PROFIT AND LOSS ACCOUNT ON A CCOUNT OF MISMATCH OF ITS DETAILS AS PER 26AS WHICH SHOWED GR OSS RECEIPTS AT RS. 12,43,51,107/- INCLUDING FDR INTERE ST OF RS. 1,34,653/-. THIS PARTICULAR INTEREST WAS SEPARATEL Y SHOWN IN ITR UNDER THE HEAD INCOME FROM OTHER SOURCES. APART FROM THAT THE DIFFERENCE IN ASSESSEES PROFIT AND LO SS ACCOUNTS AND ITS DETAILS OF RS. 48,36,917/- IS DUE TO THE FACT THAT AT THE TIME OF FILING OF ITR TDS OF RS. 4 8,36,917/- WHICH IS ONE PERCENT OF GROSS RECEIPTS WAS NOT REFL ECTING IN 26AS AND NEITHER MUNICIPAL COUNCIL WHO HAS DEDUCTED TDS ON THE SAID RECEIPTS HAD ISSUED THE ASSESSEE ANY TD S CERTIFICATE AS THE CASE MADE OUT BY THE ASSESSEE BE FORE US 4 ITA.NO.986/DEL./2017 LATE SH. SOHAN LAL AGGARWAL. AND BEFORE THE FIRST APPELLATE AUTHORITY AS WELL. AT THE TIME OF SCRUTINY THE ASSESSEE WAS IN BONAFIDE BELIEF THAT THESE RECEIPTS AND TDS DOES NOT BELONG TO HIM AND THUS, I T HAD NOT CLAIMED THESE TDS IN ITS ITR. HOWEVER, THE COP Y OF ORIGINAL 26AS AVAILABLE WITH THE ASSESSEE REFLECTIN G THE GROSS RECEIPT OF RS. 11,93,79,537/- HAS ALREADY BEEN SUBM ITTED BY THE ASSESSEE TO THE LD. ASSESSING OFFICER. ACCORDI NG TO THE ASSESSEE THE REVENUE WAS NOT JUSTIFIED TO TREAT RS. 48,36,917/- AS THE INCOME OF THE ASSESSEE WITHOUT APPRECIATING THAT THE RATE OF PROFIT AT THE MOST WH ICH COULD BE BROUGHT TO TAX INSTEAD OF THE ENTIRE DIFFERENCE IN THE CONTRACT RECEIPTS. THE ASSESSING OFFICER SHOULD HA VE ADDED BACK NOT THE TOTAL RECEIPTS TREATING AS INCOME BUT ONLY THE PROFIT RATIO @ 1.73% AS WAS IN THE LAST THREE YEARS AS ALSO THE PRAYER MADE BEFORE THE FIRST APPELLATE AUTHORIT Y. IT IS ALSO A FACT AS APPEARING FROM THE ORDER PASSED BY T HE FIRST APPELLATE AUTHORITY THAT DURING THE FILING OF ITR T HE APPELLANT WAS SERIOUSLY ILL AND ULTIMATELY EXPIRED ON 21.07.2014. DURING THAT PERIOD HE WAS TOTALLY DEPE NDENT ON THE EMPLOYEES AND LABOUR FOR ALL HIS WORK. ULTI MATELY THE 5 ITA.NO.986/DEL./2017 LATE SH. SOHAN LAL AGGARWAL. LD. COUNSEL APPEARING FOR THE ASSESSEE AGREED TO TH E ADDITION @ 5% OF THE NET PROFIT WHEN THE MATTER WAS HEARD BY US. HOWEVER, THE COUNSEL FOR THE REVENUE SUPPOR TED THE ORDER PASSED BY THE AUTHORITIES BELOW. 5. IT IS A SETTLED PROPOSITION OF LAW THAT IN CASE OF DIFFERENCE BETWEEN THE ASSESSEES BOOKS OF ACCOUNT A ND AS PER THE TDS CERTIFICATE, THEN ON THE SAID DIFFERENC E, THE ONLY EMBEDDED PORTION OF THE PROFITS IS TO BE TAKEN INTO CONSIDERATION AND ADDITION IS TO BE MADE THEREON. THERE ARE NUMBER OF JUDICIAL PRONOUNCEMENTS BY WHICH THE PRIN CIPLE TO THIS EFFECT HAS BEEN LAID DOWN THAT THE TOTAL SA LE CANNOT REPRESENT AS THE PROFIT OF THE ASSESSEE. THE NET P ROFIT RATE HAS TO BE ADOPTED AND ONCE THE NET PROFIT IS ADOPTE D IT CANNOT BE SAID THAT THERE IS PERVERSITY OF APPROACH . THUS, TAKING INTO CONSIDERATION THE ENTIRE ASPECT OF THE MATTER, WE DO NOT FIND ANY JUSTIFICATION IN MAKING THE ADDITIO N OF THE ENTIRE TURNOVER TO THE INCOME OF THE ASSESSEE. HAV ING REGARD TO THE PECULIAR FACTS AND CIRCUMSTANCES OF T HE CASE, WE FIND IT JUSTIFIED TO RESTRICT THE ADDITION AT 5% OF THE NET PROFIT ON THE GROSS RECEIPT OF RS. 11,93,79,537/-. THE LD. 6 ITA.NO.986/DEL./2017 LATE SH. SOHAN LAL AGGARWAL. ASSESSING OFFICER IS DIRECTED TO GRANT RELIEF TO TH E ASSESSEE AS ON THE ABOVE TERMS. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (N.K. BILLAIYA) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 11.08.2021 *KAVITA ARORA, SR. PS COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC-2 BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR, ITAT DELHI BENCH ES : DELHI.