SHIVAJI ANANDRAO POWAR,,KOLHAPUR vs. INCOME-TAX OFFICER,, ICHALKRANJ

These four appeals preferred by the assessee emanates from the common order of the Ld. CIT(Appeals)-2, Kolhapur dated 30.10.2015 for the assessment years 2008-09 to 2011-12 as per the grounds of appeal on record.

At the time of hearing, none appeared for and on behalf of the assessee. Though notice was duly served and as recorded that even in the earlier occasions also, there were non-compliance from the assessee on the given dates of hearing.

The brief facts of the case are that a survey operation u/s.133A of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) was conducted in business premises of the assessee on 31/08/2012. It was found that assessee did not maintain regular books of account and did not get his accounts audited. The assessee is a sub-contractor executing civil works. He kept only self-made vouchers for expenses and few files showing bills raised and payments received. These files, documents and vouchers were inventorized and impounded u/s.133A of the Act. The Assessing Officer noted that as per section 44AD of the Act, income of the assessee should be 8% of the turnover. However, in none of these four years assessee has returned income at 8% or more. Therefore, cases were taken under scrutiny by issue of notices u/s.148 of the Act. Assessee did not reply to various notices issued by Assessing Officer whereupon the Assessing Officer had resorted to estimate assessee's income u/s.144 of the Act through best judgment assessment. He has found that in reply to Question No.18 in the statement recorded under section 133A of the Act, the assessee has offered income @10% on the receipts and had stated that taxes would be paid on this amount. The Assessing Officer also noted that books of account were not maintained and audited. Therefore, Assessing Officer has adopted a rate of 10% in all these years and assessed the income accordingly.

That in the Appellate Proceedings before the Ld. CIT(Appeals), it was contended by the assessee that the Assessing Officer has not pointed out any discrepancies in the seized material on the basis of which he rejected assessee‟s business result. The Assessing Officer also did not provide any reason for estimating income @10% besides what the assessee has stated in his statement. The Assessing Officer has asked the assessee to explain certain queries regarding computation of his income; however, the seized materials were in the possession of Department. Under such circumstances, the assessee could not prepare the required details. That further, the assessee submitted before the Ld. CIT(Appeals) that the Assessing Officer has also not provided copy of statement of the assessee. The assessee had contended that during the survey, he was made to sign the statement without providing a copy of the same. From these facts, it was opined by the Ld. CIT(Appeals) that if the assessee was not provided with copy of seized material and statement, much reliance cannot be placed on the figure of 10% adopted by the Assessing Officer.

That before us, in all these appeals only ground taken by the assessee is the estimation of the assessee‟s income at the rate of 8% by the Ld. CIT(Appeals). We have perused the case records, analyzed the facts and circumstances in these cases and recorded the submissions of the Ld. DR. We have also perused the materials available on records. It is very much evident starting from the stage of assessment that several opportunities were provided to the assessee by the Assessing Officer in order to represent his case on merits. However, the assessee has evaded the entire assessment proceedings. Therefore, there was no alternative left before the Assessing Officer but to resort to best judgment assessment u/s.144 of the Act considering the materials available on record. The Assessing Officer has estimated assessed income of the assessee at the rate of 10%. The Ld. CIT(Appeals) in his findings has very judiciously analyzed the entire facts and circumstances of the case considering practicalities of line of business in which the assessee was involved and had, thereafter, held the assessee‟s income estimating at the rate of 8% as per Section 44AD of the Act.

The Ld. CIT(Appeals) had observed that the Assessing Officer has not pointed out any discrepancies in the seized material while rejecting the assessee‟s business result. The Assessing Officer has also not given any specific reason for estimating income at the rate of 10%. That further, the assessee was also not given copy of the statement recorded in the course of survey and neither, the copy of seized materials was provided to the assessee. That similarly, the Ld. CIT(Appeals) has also observed that the figures of income returned by the assessee were also not sacrosanct as his books of accounts were not audited. That as per Section 44AD of the Act, the prescribed rate as a thumb rule in assessee‟s line of business is 8% of turnover. In case an assessee claims that his profits are below 8%, he must maintain books of account and get them audited. These exercises were not done by the assessee.

Therefore, in the interest of justice, the Ld. CIT(Appeals) had applied the rate of 8% as per Section 44AD of the Act to the income of the assessee considering his area of business. Thus, we are of the considered view that the findings of the Ld. CIT(Appeals) are absolutely reasonable and as per law. Therefore, the same does not call for any interference. Hence, the findings of the Ld. CIT(Appeals) are upheld.

In the result, all the four appeals of the assessee are dismissed.