Sh. Rajinder Prasad Garg, New Delhi V. ACIT, New Delhi

ITA 988/DEL/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4082 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 22-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 19-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: D M SINHA
• Keywords: Set aside
• Section: 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F: NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P.KANT, ACCOUNTANT MEMBER ITA NO.988/DEL/2014 (ASSESSMENT YEAR-2009-10) RAJINDER PRASAD GARG 621/9, VISHWAS NAGAR (CHOWK 18 QRT) SHAHDARA, DELHI-110032 PAN ACVPG 7658P VS. ACIT, CIRCLE-38(1) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. D.M.SINHA , CA RESPONDENT BY SH. UMESH TAKYAR, SR. DR DATE OF HEARING 27 .0 2 .20 20 DATE OF PRONOUNCEMENT 28.02.2020 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER: THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD. CIT (APPEALS)-XXVIII, NEW DELHI {CIT(A)} DATED 04.1 0.2013 FOR ASSESSMENT YEAR: 2009-10. 2. EARLIER THIS APPEAL WAS DISMISSED FOR DEFAULT . THE MISCELLANEOUS APPLICATION OF ASSESSEE WAS ALLOWED AND APPEAL OF A SSESSEE WAS RESTORED. ITA NO.988/DEL/2014 (ASST. YEAR: 2009-10) PAGE | 2 3. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 4. ON GROUND NO.1, ASSESSEE CHALLENGED THE AD DITION BY APPLYING PROFIT RATE OF 8%. THE ASSESSEE IS AN INDIVIDUAL AND ENGA GED IN BUSINESS OF UNDERGROUND CABLE LAYING AND HIRING OF VEHICLES IN THE NAME & STYLE OF M/S R.L. CONSTRUCTION CO. AND M/S GAURAV ENTERPRISE S RESPECTIVELY. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS SHOWN NET PROFIT OF RS.27,88,717/- ON GROSS RECEIPTS OF RS.4.70 CRORE T HEREBY SHOWING NET PROFIT RATE OF 5.92%. THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT BEFORE THE AO BECAUSE THE EXPLANATION OF ASSESSEE W AS THAT THE SAME HAD BEEN LOST AND COPY OF THE FIR WAS PRODUCED. THE AO , HOWEVER, IN ABSENCE OF BOOKS OF ACCOUNT AND VERIFICATION OF THE DETAILS REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE I.T. ACT. THE AO APPLIED NET PROFIT RATE OF 8% ON GROSS RECEIPTS AND ESTIMATED THE PROFIT AT RS.37,64 ,707/-. THE PROFIT RATE DECLARED BY ASSESSEE WAS REDUCED AND ADDITION WAS M ADE OF RS.9,75,990/-. 5. THE ASSESSEE CHALLENGED THE ADDITION BEFOR E THE LD. CIT(A) AND IT WAS SUBMITTED THAT BOOKS OF ACCOUNT OF THE ASSESSEE WERE AUDITED AND ADDITION IS MADE MERELY ON THE GROUND FOR NON-MAINT ENANCE OF THE STOCK ITA NO.988/DEL/2014 (ASST. YEAR: 2009-10) PAGE | 3 REGISTER. THE ASSESSEE SUBMITTED THAT STOCK REGISTE R IS NOT REQUIRED AS THE ASSESSEE HAS BUSINESS OF LAYING UNDERGROUND CABLE A ND THE CABLE IS SUPPLIED BY BSNL, THEREFORE, ADDITION IS UNJUSTIFIE D. 5.1 THE LD. CIT(A) NOTED THAT SINCE THE ASSES SEE FAILED TO PRODUCE BOOKS OF ACCOUNT AND OTHER DOCUMENTS, THEREFORE, PR OFIT RATE OF 8% APPLIED FOR MAKING ADDITION IS JUSTIFIED, THIS GROUND WAS D ISMISSED. 6. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE ADDITION IS ON EXCESSIVE SIDE. IT IS A FACT THAT A SSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT AND RELATED DOCUMENTS BEFORE T HE AO, THEREFORE, REJECTION OF THE BOOKS OF ACCOUNT IS JUSTIFIED. HOW EVER, THE EXPLANATION OF ASSESSEE IS ACCEPTABLE THAT MERE NON-MAINTENANCE OF STOCK REGISTER MAY NOT BE A GROUND FOR MAKING ADDITION BECAUSE THE ASS ESSEE WAS NOT REQUIRED TO MAINTAIN STOCK REGISTER BECAUSE HE WAS IN THE BUSINESS OF LAYING UNDERGROUND CABLES WHICH ARE SUPPLIED BY BSN L. THE COUNSEL FOR ASSESSEE HAS FILED CHART OF NET PROFIT RATE FOR PRE CEDING ASSESSMENT YEARS 2007-08 & 2008-09 IN WHICH N.P. RATE OF 4.75% AND 6 .45% HAVE BEEN DECLARED BY ASSESSEE. THEREFORE, CONSIDERING THE HI STORY OF THE ASSESSEE, WE DIRECT THE AUTHORITIES BELOW TO APPLY PROFIT RAT E OF 7% AS AGAINST THE 8% FOR COMPUTING THE NET PROFIT OF THE ASSESSEE. THE O RDERS OF THE AUTHORITIES ITA NO.988/DEL/2014 (ASST. YEAR: 2009-10) PAGE | 4 BELOW TO THAT EXTENT ARE MODIFIED. AO DIRECTED TO A PPLY NET PROFIT RATE 7% AGAINST THE 8% AND MADE THE ADDITION. GROUND NO.1 OF APPEAL OF THE ASSESSEE IS ALLOWED PARTLY. 7. GROUND NO.2, ASSESSEE CHALLENGED THE ADDIT ION OF RS.23,65,000/- U/S 68 OF THE I.T. ACT. THE AO NOTED FROM THE BALAN CE SHEET AS ON 31 ST MARCH, 2009 THAT ASSESSEE HAS SHOWN UNSECURED LOANS TO THE TUNE OF RS.23,65,000/-. THE ASSESSEE IN RESPONSE TO THE NOT ICE SUBMITTED BEFORE THE AO, THEIR NO FRESH LOAN DURING THE YEAR EXCEPT FOR RS. 4,00,000/- FROM THE FAMILY MEMBERS HAVE BEEN TAKEN. CONFIRMATION OF MISS DOLLY GARG OF LOAN WAS FILED. THE AO NOTED THAT ASSESSEE HAS FURN ISHED ONE CONFIRMATION FROM MISS DOLLY GARG (DAUGHTER OF THE ASSESSEE) WHI CH DID NOT CONTAIN ANY PAN AND NO OTHER SUPPORTING DOCUMENTS HAVE BEEN FIL ED. IT IS ALSO NOTED THAT BANK STATEMENT SHOWING THE PAYMENT BUT DID NOT PROVE OTHER CONTENTS I.E. GENUINENESS AND CREDITWORTHINESS OF T HE LOAN. IN ABSENCE OF SATISFACTORY EXPLANATION AO MADE ADDITION OF RS.23, 65,000/- U/S 68 OF THE I.T. ACT, 1961. 8. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND IT WAS SUBMITTED THAT IN THE ASSESSMENT YEAR UNDER APP EAL ASSESSEE HAS TAKEN LOAN OF RS.4,00,000/- FROM HIS DAUGHTER THROU GH CHEQUE. ITA NO.988/DEL/2014 (ASST. YEAR: 2009-10) PAGE | 5 CONFIRMATION AND BANK STATEMENT WERE PROVIDED. SHE HAS ASSESSED TO TAX AND PAN WAS FILED. IT WAS FURTHER SUBMITTED THAT OT HER LOAN OF RS.19,65,000/- WERE NOT TAKEN IN ASSESSMENT YEAR UN DER APPEAL AND THE SAME WERE DULY ASSESSED IN PREVIOUS YEAR, THEREFORE , NO ADDITION COULD BE MADE. THE LD. CIT(A) NOTED THAT ASSESSEE FAILED TO SUBMIT THE EVIDENCE WITH REGARD TO THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE BALANCE SHEET ALONG WITH ANNEXURE WERE FILED FO R ASSESSMENT YEAR UNDER APPEAL AND PRECEDING ASSESSMENT YEAR SHOWS TH AT THE AMOUNT OF RS.19,65,000/- WAS OUTSTANDING. HOWEVER, THE NAME O F THE PERSONS WERE NOT ENCLOSED AS PER ANNEXURE IN BOTH THE YEARS. THU S, IT COULD NOT BE ASCERTAINED WHETHER THE SAME PERSONS BALANCES WERE OUTSTANDING IN ASSESSMENT YEAR UNDER APPEAL. BOOKS OF ACCOUNT WERE ALSO NOT PRODUCED FOR VERIFICATION. THE ASSESSEE HAS BEEN PRODUCED A LIST OF UNSECURED LOANS FOR BOTH THE YEARS WHICH WERE ALLEGEDLY STAMPED AND SIGNED BY THE AUDITOR. THERE IS A DIFFERENCE IN THE SIZE AND SHAP E OF THE STAMP OF THE AUDITOR. IN ABSENCE OF RELEVANT EVIDENCES ON RECORD , ADDITION WAS CONFIRMED. 9. LEARNED COUNSEL FOR ASSESSEE REITERATED THE SAME SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO DOCUME NTS FILED IN THE PAPER ITA NO.988/DEL/2014 (ASST. YEAR: 2009-10) PAGE | 6 BOOK. COUNSEL FOR ASSESSEE HAS ALSO SUBMITTED THAT THE ASSESSEE IS WILLING TO PRODUCE BOOKS OF ACCOUNT FOR PRECEDING ASSESSMEN T YEAR 2008-09 TO PROVE THAT LOANS OF RS.19,65,000/- WERE OUTSTANDING AS ON 31 ST MARCH, 2008 WHICH CONTAINED THE NAMES OF THE CREDITORS. 10. ON THE OTHER HAND, LD. DR RELIED UPON THE OR DERS OF THE AUTHORIZES BELOW AND SUBMITTED THAT EXPLANATION OF ASSESSEE CA ST DOUBT, THEREFORE, ADDITION MAY BE MAINTAINED. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AN D PERUSED THE MATERIAL ON RECORD. THE ASSESSEE SUBMITTED BEFORE THE AUTHOR ITIES BELOW THAT IN ASSESSMENT YEAR UNDER APPEAL LOAN OF RS.4,00,000/- WAS TAKEN FROM MISS DOLLY GARG, DAUGHTER OF THE ASSESSEE AND REST OF TH E AMOUNT WAS BALANCE COMING UP FROM THE EARLIER YEAR AND NO FRESH LOAN H AVE BEEN TAKEN IN ASSESSMENT YEAR UNDER APPEAL. THE LD. CIT(A) HAS NO TED IN HIS IMPUGNED ORDER THAT BALANCE SHEET OF PRECEDING YEAR 2008-09 AND BALANCE SHEET OF ASSESSMENT YEAR UNDER APPEAL I.E. 2009-10 HAVE BEEN FILED. PERUSAL OF THE BALANCE SHEET ENDING ON 31 ST MARCH, 2008 SHOWS OUTSTANDING UNSECURED LOANS OF RS.19,65,000/- BUT THE ANNEXURE DID NOT CO NTAIN NAMES OF THE CREDITORS. THERE WAS A DIFFERENCE IN THE STAMP OF T HE AUDITOR. LEARNED COUNSEL FOR ASSESSEE REFERRED TO AUDITED BALANCE SH EET FOR PRECEDING YEAR ITA NO.988/DEL/2014 (ASST. YEAR: 2009-10) PAGE | 7 2008-09 IN THE PAPER BOOK AND SUBMITTED THAT THE UN SECURED LOANS HAVE BEEN SHOWN OF RS.19,65,000/- ENDING ON 31 ST MARCH, 2008 (PB-13). HOWEVER, ACCORDING TO LD. CIT(A) NO DETAILS OF THE UNSECURED LOANS HAVE BEEN SHOWN. THIS FACT COULD BE VERIFIED FROM THE BO OKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR PRECEDING ASSESSMENT YEAR 2008-09 AS WELL AS FROM THE BALANCE SHEET FILED ON RECORD ALONG WIT H RETURN FILED FOR ASSESSMENT YEAR 2008-09. SINCE, ASSESSEE HAS BEEN T AKING THIS PLEA CONSISTENTLY, THEREFORE, WE ARE OF THE VIEW THAT TH IS FACT REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. IN THIS VIE W OF THE MATER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW QUA THE A DDITION OF RS.19,65,000/- ONLY AND RESTORE THIS ISSUE TO THE F ILE OF THE AO WITH DIRECTION TO RE-DECIDE THE ISSUE BY VERIFYING THE F ACTUAL FACTS FROM THE RECORD. THE ASSESSEE IS DIRECTED TO PRODUCE THE BOO KS OF ACCOUNT FOR ASSESSMENT YEAR 2008-09 BEFORE THE AO ALONG WITH CO MPLETE AND RELIABLE DETAILS IN SUPPORT OF THE EXPLANATION THAT THE AMOU NT OF UNSECURED LOANS OF RS.19,65,000/- PERTAIN TO ASSESSMENT YEAR 2008-0 9. AO MAY ALSO VERIFY THIS FACT FROM THE BALANCE SHEET FILED WITH THE RET URN OF INCOME FOR ASSESSMENT YEAR 2008-09. THE AO BEFORE VERIFYING TH IS FACT SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. ITA NO.988/DEL/2014 (ASST. YEAR: 2009-10) PAGE | 8 11.1 HOWEVER, AS REGARDS ADDITION OF RS.4,00,00 0/- ON ACCOUNT OF UNEXPLAINED LOAN RECEIVED BY ASSESSEE FROM HIS DAUG HTER MISS DOLLY GARG IS CONCERNED, THE ASSESSEE FILED CONFIRMATION OF TH E CREDITOR IN WHICH PAN OF CREDITOR IS GIVEN. COPY OF THE BANK STATEMENT IS FILED WHICH SHOWS THAT JUST PRIOR TO GIVING THE LOAN TO THE ASSESSEE, THER E WERE DEPOSIT OF RS.2000/- IN CASH AND PRIOR TO, THE BALANCE AMOUNT SHOWN AS ZERO IN THE ACCOUNT OF THE CREDITOR. THEREAFTER, RS.4,00,000/- HAVE BEEN TAKEN BY THE CREDITOR AND THE SAME HAVE BEEN ADVANCED TO THE ASS ESSEE. NO OTHER DOCUMENTARY EVIDENCE HAVE BEEN PRODUCED ON RECORD T O PROVE THE CREDITWORTHINESS OF THE CREDITOR. THE BANK STATEMEN T OF THE CREDITOR CLEARLY SHOWS THAT CREDITOR WAS HAVING NO MEANS TO GIVE LOA N OF RS.4,00,000/- TO THE ASSESSEE. NO OTHER EVIDENCE HAVE BEEN PRODUCED ON RECORD TO PROVE HER SOURCE OF INCOME OR HER WORTH TO ADVANCE LOAN O F RS.4,00,000/- TO THE ASSESSEE. MERELY BECAUSE LOAN IS GIVEN THROUGH CHEU QE IS NOT SACROSANCT TO PROVE GENUINE LOAN IN THE MATTER. CONSIDERING TH E TOTALITY OF THE FACTS AND CIRCUMSTANCES, IT IS CLEAR THAT ASSESSEE MAY BE ABLE TO PROVE THE IDENTITY OF THE CREDITOR, BUT, HER CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS HAVE NOT BEEN PROVED BY THE ASSESSEE. WE THEREFORE, MAINTAIN ADDITION OF RS.4,00,000/-. PART OF THIS GROUND OF A PPEAL IS DISMISSED. ITA NO.988/DEL/2014 (ASST. YEAR: 2009-10) PAGE | 9 GROUND NO.2 OF APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES AS NOTED ABOVE. 12. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/02/2020 . SD/- SD/- (O.P.KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:28/02/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI