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Deep Construction Co. Sonepat, 675/11, Jind Road, Behind Gurudwara, Rohtak-124001 VS. Joint Commissioner of Income Tax, Sonepat Range, Sonepat (Haryana)
September, 11th 2014
                                                           ITA NO. 5504/Del/2012

                        DELHI BENCH "B", NEW DELHI
                        H.S. SIDHU, JUDICIAL MEMBER
                           I.T.A. No. 5504/DEL/2012
                                  A.Y. : 2009-10
Deep      Construction             VS.                Joint Commissioner of
Co. Sonepat,                                          Income Tax,
675/11, Jind Road,                                    Sonepat Range,
Behind Gurudwara,                                     Sonepat
Rohtak-124001                                         (Haryana)

(APPELLANT)                                           (RESPONDENT)

            Assessee by                 :   Sh. RS Singhvi, CA
           Department by                :   Ms. Parwinder Kaur, Sr. D.R.

                         Date of Hearing : 02-09-2014
                         Date of Order :      10-09-
     This appeal by the Assessee is directed against the Order of

the Ld. Commissioner of Income Tax (Appeals), Rohtak                    dated

28.8.2012 pertaining to assessment year 2009-10.

2.   The grounds raised in the appeal read as under:-

     "1.    That the dismissal of the appeal by the Ld. Appellate

            Authority     and   the    assessment     done    by    the     Ld.

            Assessment Officer is against law and facts of the case.

                                                ITA NO. 5504/Del/2012

2.   That the Ld. Assessment Officer erred in disallowing a

     sum of Rs. 80,61,648/- u/s. 40A(3) of the        I.T. Act and

     adding it to he total income of the appellant.

3.   That the Ld. Assessment Officer erred in adding Rs.

     4200000/- on account of purchases made from M/s Paras

     Ram Basant Lal, although all the purchases are properly

     vouched and accounted for.

4.   That the Ld. Assessment       Officer erred in adding Rs.

     48,06,000/- to the total income of the appellant on

     account of cash deposits in the bank account        although

     all the cash deposits are from the cash available in the

     books of account of the appellant.

5.   That the Ld. Assessment Officer erred in rejecting the

     books of the appellant u/s. 145(3) of the I.T. Act, 1961.

6.   That the Assessment Officer erred in not computing the

     total income of the assessee by applying NP Rate @ 8%

     as provided u/s. 44a(d) of the IT Act, 1961 and the

     amount of Rs. 1,75,29,320/- as total income is wrong and

     the addition made u/s. 40A(3) are incorrect.

7.   That the assessee reserves its right to add or alter any

     ground of appeal."

                                                     ITA NO. 5504/Del/2012

3.     Briefly stated the facts are that the Assessee had filed its

return for A.Y. 2009-10 with a net profit of Rs. 4,61,670/- on a total

work     receipts   of   Rs.6,39,01,601/-   and   misc.   income       of

Rs. 58,650/- on which the Assessing Officer has assessed the total

income of Rs. 1,75,29,320/- u/s. 143(3) of the I.T. Act, 1961 vide

order dated 26.12.2011.

4.     Against the above order of the Assessing Officer passed u/s.

143(3) of the I.T. Act, 1961 dated 26.12.2011, assessee appealed

before the Ld. CIT(A), who vide his impugned order dated 28.8.2012

dismissed the appeal of the assessee.

5.     Aggrieved by the aforesaid Order of the Ld. CIT(A) dated

28.8.2012, assessee appealed before us.

6.     We have heard both the counsel and perused the records.

Ld. DR relied upon the orders of the authorities below and requested

the same may be upheld.

6.1    On the other hand, Ld. Counsel of the assessee has filed three
small Papers Books viz. the first Paper Book dated NIL containing
pages 1 to 20 having the details and records of the lowers
authorities below; second     one is   a Paper Book dated 10.10.13
containing pages 1 to 8 having the written arguments of the
assessee alongwith photocopy of judgement of Hon'ble Punjab and
Haryana High Court in ITA No. 293 of 2008 in the case of CIT vs. M/s
Prabhat Kumar Contractor, Sirsa and last one is a Paper Book dated
1.4.2014 having pages 1 to 26 containing Revised Form 36 and

                                                       ITA NO. 5504/Del/2012

copies of orders passed by the lower authorities.            During the
hearing Ld. Counsel of the assessee drew our attention towards the
First Paper Book Dated NIL vide Page No. 1 which shows a
Comparative Chart of Trading Results in respect of the assessee
showing the results of Net Profit Rate as determined by the AO as
well as relief given by the Ld. First Appellate Authority. He also
submitted that reasonable net profit may be adopted.           Lastly he
requested that assessee is in a position to produce all the
documentary evidence      for   substantiating its claim.        He also
requested that if this Tribunal is not agreed with the submissions of
the assessee advanced by him then the entire evidences filed by the
assessee in the shape of Paper Books as stated, the issues may be
set aside to the file of the AO to decide the same in accordance with
law, after giving adequate opportunity of being heard as well as
after considering all the materials on record.    As per Assessee, the
net profit adopted by the AO in the        earlier years and      also in
subsequent asstt. years are as under:-

                      2007-08    -       Trading results accepted.

                      2008-09    -       12%

                      2009-10    -       27.43%

                      2010-11    -       Trading Results accepted.

                      2011-12    -       8%

6.2   It was also the contention of the assessee that in respect of
the present assessment year i.e. 2009-10 the net profit rate was
adopted @ 27.43% of the gross receipts is not only illogical,

                                                       ITA NO. 5504/Del/2012

exaggerated and exorbitant but also out           of tune of general
practices of the trade in which the assessee was engaged and the
prevalent market conditions during the assessment. He also prayed
that total income as assessed by the AO vide         his   order dated
26.12.2011 at total Rs. 1,75,29,320/- may be set aside            as it is
arbitrary and perverse.     He further submitted that in paragraph 8
of the assessment order, the Assessing Officer rejected the books of
account of the assessee under Section 145(3). Once the books of
account are rejected, the proper course of action would be to apply
a reasonable net profit rate keeping in view the net profit disclosed
by the assessee and accepted by the Revenue in the preceding as
well as subsequent years.     He also submitted that the ITAT may
direct the application of suitable rate of net profit. He further stated
that once a net profit rate is applied, no other addition/disallowance
as made by the Assessing Officer is required.           Therefore, the
separate additions made by the Assessing Officer may be deleted.
The learned counsel alternatively submitted that if the Bench does
not agree with the above suggestion of the learned counsel, then
the matter may be set aside to the file of the Assessing Officer with
a direction to allow adequate opportunity of being heard to the
assessee and he gave the undertaking on behalf of the assessee to
produce all the relevant documents and evidences before the
Assessing Officer.

6.3   Learned DR, on the other hand, relied upon the orders of

authorities below and she stated that the Assessing Officer had

rejected the books of account but has not applied the net profit rate.

Since the net profit rate was not applied, the separate additions

                                                     ITA NO. 5504/Del/2012

made by him have to be considered on merits and cannot be

deleted merely because the Assessing Officer has rejected the books

of account. She, therefore, submitted that either the order of the

Assessing Officer should be sustained or the matter may be set

aside to the file of the Assessing Officer provided the assessee gives

an undertaking to produce all the relevant details before the

Assessing Officer.

6.4   In the rejoinder, the learned counsel reiterated his undertaking

on behalf of the assessee to produce all the relevant material before

the Assessing Officer.

7.    We have carefully considered the submissions of both the

sides and perused relevant material placed before us.            In our

opinion, it would meet the ends of justice if the orders of lower

authorities are set aside and the matter restored to the file of the

Assessing Officer. We order accordingly and the Assessing Officer

is directed to allow adequate opportunity of being heard to the

assessee. The assessee is also directed to produce all the details,

evidences and explanation before the Assessing Officer. Thereafter,

the Assessing Officer will pass the assessment order afresh in

accordance with law.

                                                  ITA NO. 5504/Del/2012

8.    In the result, the appeal of the assessee is deemed to be

allowed for statistical purposes.

      Order pronounced in the Open Court on 10/9/2014.

      Sd/-                                       Sd/-
[G.D. AGRAWAL]                                   SIDHU]
                                           [H.S. SIDHU]
VICE PRESIDENT                          JUDICIAL MEMBER
Date 10/9/2014
Copy forwarded to: -
1.    Appellant -

2.    Respondent -
3.    CIT
4.    CIT (A)
5.    DR, ITAT
                            TRUE COPY
                                               By Order,

                                              Assistant Registrar,
                                              ITAT, Delhi Benches

    ITA NO. 5504/Del/2012

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