ACIT, NEW DELHI vs. SH. HANS RAJ DHANKAR, NEW DELHI

This appeal is filed by the Revenue against the order dated 26/02/2016 passed by CIT(A)-20, Delhi for assessment year 2012-13.

The grounds of appeal are as under:-

The assessee is a proprietor engaged in the business of Civil Construction Activities in the name and style of M/s H R Builders. Return of income was filed by the assessee for the Assessment Year 2012-13 on 30/09/2012 declaring a total income of Rs,3,43,41,837/- u/s 139 of the Income Tax Act, 1961. The Assessing Officer asked the assessee to produce comparative GP/NP Chart for last three assessment years. During the year under consideration, the assessee has shown net profit of Rs. 3,44,41,838/- on total turnover of Rs.59,87,31,901/- showing net profit rate of 5.75%which is slightly decreased from previous year net profit of Rs. 5,14,19,208/- on total turnover of Rs. 89,71,37,753/- showing net profit rate of 5.86% in comparison to previous year. The Assessing Officer made addition u/s 40(a)(ia) amounting to Rs.11,24,186/-, addition on account of bogus purchase amounting to Rs. 3,25,35,521/-, disallowance out of wages and salaries expenses amounting to Rs.2,00,000/-, disallowance out of telephone expenses amounting to Rs. 34,111/-, addition on account of interest allowed u/s 244A amounting to Rs.84,882/- and disallowance out of car, vehicle expenses amounting to Rs. 4,06,957/-.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

The Ld. DR relied upon the assessment order and further submitted that merely giving confirmations cannot be called as proper evidence. In-fact, in certain documents, the confirmations were not signed and the bills were not filed. Thus, the evidences are in doubt. Thus, the deletion of the addition was not proper and justified.

The Ld. AR submitted that return u/s 139 was filed on 30/09/2012 with total income of Rs. 3,43,41,837/-. During the assessment proceedings, the Assessing Officer admitted that assessee declared NP of 5.75% which broadly tallies with past history of the assessee and has accepted his scrutiny assessment. The Ld. AR placed chart of NP ratio from Ay 2006-07 to 2014-15 where all years are assessed u/s 143(3) and NP ratio from 2.04% to 6.02% is accepted and all orders u/s143(3) were placed before us deleting addition of purchases made by the Assessing officer by the Tribunal as well as CIT(A). In assessee’s won case. The Ld. AR further submitted that audited books of accounts were never doubted and never rejected u/s 145 of the Act. There is no trading (sale/purchase) outside the books detected by the Assessing Officer. All purchases of construction related material were used in civil construction activities/business of assessee to generate the Revenue/gross receipts which are verified by the CIT(A). The Assessing Officer without adequate show cause notice and in violation of principles of natural justice and made huge addition of Rs.3,25,35,521/- in three baskets of (1) Purchases from parties without full address; (2) Purchases from parties not relied u/s 133 (6) & (3) Purchases from parties not found alleged in Inspector Report which were never confronted to assessee during the assessment proceedings on account of alleged bogus purchases. Thus, making profit picture of assessee completely distorted which assessee could not earn in the business as per revenue’s own admission in Section 143(3) assessments.