ITA NO. 5673/Del/2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "A", NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI H.S. SIDHU, JUDICIAL MEMBER
I.T.A.No.5673/Del/2012
A.Y. : 2009-10
ASSTT. COMMISSIONER OF SH. BIRENDER SINGH
INCOME TAX, VS. PROP. BIRENDER
CIRCLE 38(1), CONSTRUCTION CO.
ROOM NO. 212, 2ND FLOOR, BF-149, SHALIMAR BAGH
CR BUILDING, NEW DELHI -1 PURVI, DELHI
(PAN: ABAPS6676B)
(APPELLANT) (RESPONDENT)
Department by : Sh. Vikram Sahai, DR
Assessee by : Sh. Gautam Jain, CA
Date of Hearing : 29-01-2015
Date of Order : 02-02-2015
ORDER
PER H.S. SIDHU : JM
The Revenue has filed the present appeal against the
impugned order dated 14/8/2013 passed by the Ld. Commissioner
of Income Tax (Appeals)-XXVIII, New Delhi on the following grounds:-
"On the facts and circumstances of the case and in
law, the Ld. CIT(A) has erred in:
(I) The Ld. CIT(A) has erred in deleting the
addition of Rs. 43,01,460/- made by the A.O.
by adopting net profit rate of 8% on gross
turnover, after rejection of books of accounts
of the asseessee.
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ITA NO. 5673/Del/2012
(II) The CIT(A) has failed to appreciate that
the books of accounts have been rejected
considering various discrepancies, such as
non-maintenance of stock re-register/purchase
register/complete books of accounts,
unverifiable purchases/ creditors, unverifiable
labour charges and other expenses, three
different cash books etc. The CIT(A) has also
failed to appreciate that sufficient opportunity
was provided to the Assessee during
assessment proceeding. As the assessee failed
to substantiate his claim, AO was justified in
rejection the books and applying net profit
@8% on gross turnover.
(iii) The Ld. CIT(A) has erred in deleting the
addition of Rs. 13,10,100/- on the ground that
there was preceding cash withdrawals of Rs.
13,10,100/- While doing so, the CIT(A) failed to
appreciate that the assessee had submitted
before the AO that the deposits in the said
bank account is against the withdrawal from
current account/getting pay orders against
earnest money. The Ld. CIT(A) also failed to
appreciate that neither such credit entries
were found in cash book nor the assessee
could substantiate the source of funds.
(iv) That the grounds of appeal are without
prejudice to each other.
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(v) The appellant craves leave to add, amend or
modify any/all the Grounds of appeal before or
during the course of the appeal."
2. The facts narrated by the revenue authorities are not disputed
by both parties, therefore, no need to repeat the same for the sake
of convenience. The AO completed the assessment u/s 143(3) r.w.s.
145(3) of the Income Tax Act, 1961 on 23.12.2011 and made the
various additions.
3. Against the order of the AO dated 23/12/2011 assessee filed an
appeal before the Id. First Appellate Authority who vide impugned
order dated 14/8/2012 partly allowed the appeal of the assessee.
4. Now the Revenue is aggrieved against the impugned order and
filed the present appeal before the Tribunal.
5. Ld. Counsel of the assessee has filed two Paper Books one is
containing pages 1 to 78 having the assessee's contention in brief and
copy of the correspondence made with the AO and some copy of
Tribunal's decisions. The second Paper Book containing pages 123 to 151
having the reply filed by the assessee to the AO, copy of acknw. Of return
of income and copy of sale deed.
6. At the time of hearing Ld. DR relied upon the order of the AO
and reiterated the contentions raised by the Revenue in the grounds
of appeal.
7. We have heard both the parties, perused and considered the
relevant record available with us specially the impugned orders
passed by the Revenue Authorities; Paper Books filed by the
assessee's counsel. We find that Ld. First Appellate Authority has
elaborately discussed the issues in dispute by considering the
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ITA NO. 5673/Del/2012
submissions of the Ld. Counsel of the assessee and adjudicated
the issues in Ground No. 1 vide Para No. 38 Page NO. 22 of the
impugned order which reads as under:-
"38. I have carefully perused the assessment order and
the detailed submissions of the appellant. The AO
has not considered the substantial improvement in
the contract receipts and the net profit shown by
the appellant for this year as compared with the
contract receipts and the net profit for each of the
preceding two years. The AO has not referred to
any comparable case. The application of adhoc net
profit rate of 8% applied by the AO is without any
valid basis. The addition of Rs. 43,01,460/- made
by the AO is without any proper basis. The
impugned addition made by the AO in the net profit
of Rs. 77,27,853/- shown by the appellant is not
sustainable. The same is therefore deleted.
Similarly, Ld. CIT(A) has also adjudicated the issue
in Ground No. 2 vide Para No. 43 Page 25 of the
impugned order which reads as under:-
43. I have considered the submission of the appellant
on this account. The same are supported by the
orders of the CIT(A), Income Tax Tribunal, High
Court and Supreme Court judgments. The
preceding Bank cash withdrawal of Rs. 13,10,000/-
have to be taken into account in the subsequent
bank cash deposits. Similarly, the addition of Rs.
1,97,710/- made for the assessment year 2008-09
has to be taken into account in respect of the said
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bank cash deposits. On doing this, the
unexplained cash deposits stands explained to the
extent of Rs. 15,07,710/- and the balance amount of
Rs. 11,97,790/- is unexplained. The appellant gets
relief of Rs. 15,07,710/- and the addition will be
sustained of Rs. 11,97,790/-."
8. After going through the above said relevant order on the
issues in dispute, we find that CIT(A) has decided the issues in
dispute in favor of the assessee after appreciating the evidence filed
by the assessee as well as decision rendered by the Hon'ble
Supreme Courts, Hon'ble High Courts and the Tribunal.
8.1 With regard to ground No. I & II is concerned, we find that Ld.
CIT(A) has observed that the method of accounting has been
accepted for several years on same set of facts and placed reliance
on 294 ITR 655 (Gauhati) MKB (Asia) P Ltd. Vs. Commissioner of
Income Tax. Ld. CIT(A) He further observed that non maintenance
of stock register cannot be a ground for rejection of account in every
case and it depends upon the nature of business. He relied upon
the decision of the Delhi High Court in the case of Commissioner of
Income Tax. Vs. Jas Jack Elegance Exports 324 ITR 95 (Delhi) and
Commissioner of Income Tax. Vs. Poonam Rani 192 Taxman 167
(Delhi). The onus was on the revenue to show that accounts were
incomplete or incorrect and true profits could not be deducted from
the books of accounts maintained and true profits could not be
deduced from the books of accounts maintained by the assessee
which were also duly audited and no adverse inference was drawn
by the Auditor. If expenses claimed, remained unexplained, the AO
could have disallowed the same without rejecting the books of
accounts. He relied upon the Hon'ble High Court of Delhi decision in
the case of CIT vs. Paradis Holidays 325 ITR 13 (Delhi). Ld. CIT(A)
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ITA NO. 5673/Del/2012
has further observed that the Revenue has not provided the details
of comparable cases relied upon 68 ITR 796 (Kerala) and 210 ITR
103 (Calcutta) CIT vs. Eastern Commercial Enterprisses (relied upon
125 ITR 713 SC) Kishinchand Chellaram vs. CIT, Bombay City-II. Ld.
CIT(A) further observed that the assessee should have been
provided with an opportunity to rebut before rejecting the books of
accounts and estimating the profits, he further relied upon the other
judgments viz. 64 ITR 175 (AP) S. Sarabhaiah Setty and Sons. Vs.
CIT, AP and 62 ITR 528 (AP) Yakub Versey Lalijee and Anr. Vs. CIT,
AP. Lastly Ld. CIT(A) and has observed that estimate should be
based on some evidence and material, he relied upon the Hon'ble
Supreme Court of India judgment in the case of Raghubar Mandal 8
STC 770 (SC) assessment to be made (estimation shall have a
rational nexus to the available materials and the circumstances of
the case) relied upon the Hon'ble Apex Court decision reported in
60 ITR 239 (SC) State of Kerala vs. C. Velukutty. We find that Ld.
CIT(A) in view of the has observed that the AO has not considered
the substantial improvement in the contract receipts and the net
profit shown by the assessee for this year as compared with the
contract receipts and the net profit for each of the preceding two
years. He further observed that the AO has not referred to any
comparable case. The application of adhoc net profit rate of 8%
applied by the AO is without any valid basis. The addition of Rs.
43,01,460/- made by the AO is without any proper basis. Therefore,
the Ld. CIT(A) has rightly concluded that the impugned addition
made by the AO in the net profit of Rs. 77,27,853/- shown by the
assessee is not sustainable and he deleted the same. In view of the
above, we are of the view that no interference is called for in the
well reasoned order passed by the Ld. CIT(A), hence, we uphold the
same.
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8.2 With regard to ground no. III is concerned, we find that Ld.
CIT(A) has considered the submission of the assessee on this
account. He observed that the same are supported by the orders of
the CIT(A), Income Tax Tribunal, High Court and Supreme Court
judgments. The preceding Bank cash withdrawal of Rs. 13,10,000/-
have to be taken into account in the subsequent bank cash deposits.
Ld. CIT(A) further observed that similarly, the addition of Rs.
1,97,710/- made for the assessment year 2008-09 has to be taken
into account in respect of the said bank cash deposits. On doing
this, the unexplained cash deposits stands explained to the extent of
Rs. 15,07,710/- and the balance amount of Rs. 11,97,790/- is
unexplained. In view of the above, we are of the view that no
interference is called for in the well reasoned order passed by the
Ld. CIT(A), hence, we uphold the same.
9. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 02/02/2015.
Sd/- Sd/-
[G.D. AGRAWAL] [H.S. SIDHU]
VICE PRESIDENT JUDICIAL MEMBER
Date 02/02/2015
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar, ITAT, Delhi Benches
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