Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘S.M.C’, NEW DELHI
Before: MS. SUSHMA CHOWLA
आदेश / ORDER PER SUSHMA CHOWLA, VP This appeal filed by the assessee is against the order of the CIT(A)-20, New Delhi, dated 10/09/2018, relating to assessment year 2010-11 against the order passed under section 143(3) of the Income Tax Act, 1961 (in short “the Act”).
The assessee has filed following grounds of appeal:-
1. On the facts and circumstances of the case, the order passed by the Id. CIT(A) is bad both in the eyes of law and on the facts.
2. On the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating the factual matrix of reconciliation of receipts/ turnover in 26AS with receipts/turnover in Profit and Loss A/C. 3. On the facts and circumstances of the case, Ld. CIT(A) erred in upholding the observation of Assessment Officer
a) That the "Financial result of the Appellant are not reliable "Even when books of account have been accepted and have not invoking the provision of 145(3) of The Income Tax Act. b) That "inform no. 3CB this fact has not mentioned by the auditor that two Profit and Loss Account and Balance Sheet was prepared" When the complete financial statement filed with the Tax Audit report. c) That " The Disallowance made by the Assessing officer of Rs 41,89,681 is restricted to Rs 13,16,171" after holding that " The assessing officer is also not correct in making the addition of the entire gross receipt of Rs 41,89,680 shown in 26AS as income of the Appellant" .
4. On the facts and circumstances of the case, the Id. CIT(A) erred in law in enhancing the income of Appellant being 10% of turnover without giving the opportunity as per section 251(2) of the Income Tax Act after deleting the addition of Rs. 41,89,681 made by the Ld. AO.
5. On the facts and circumstances of the case, the Ld. CIT(A) erred in estimating the Appellant business income to Rs 13,16,171 being 10% of turnover against the incurred business loss of Rs .1,90,371. 6. Without prejudice to above grounds of appeal
, on the facts and circumstances of the Ld CIT(A) erred in upholding the addition of Rs 13,16,171.
7. The above grounds are independent and without prejudice to each other.”
The ground of appeal Nos.1 and 7 being general in nature are not pressed by the assessee, hence the same are dismissed as not pressed.
The Ground of appeal No.2 is also not pressed by the assessee, hence the same is dismissed as not pressed.
The issue raised vide grounds of appeal nos.3 to 6 is against the estimation of income in the hands of the assessee by applying GP rate of 10%.
Briefly in the facts of the case, the assessee for the year under consideration had not furnished any return of income. The case of the assessee was reopened under section 147/148 of the Act. The assessee was engaged in the business of electrical contractor. In response to the notice issued under section 148 of the Act, the assessee filed return of income declaring loss of Rs.76,692/-. During the course of assessment proceedings, the assessee produced the books of accounts and certain discrepancies were noted in the said books of accounts. The assessee also could not produce the bills and vouchers of expenses claimed in the Profit & Loss Account. The Assessing Officer also noted variance in the tax deduction at source. The Assessing Officer thus treated the total receipt as per Form No.26AS amounting to Rs.41,89,681/- as income of the assessee.
Before the CIT(A), the assessee pointed out that there were two Profit & Loss Accounts, one for the period of 01.04.2009 to 06.09.2009 and other for the period of 07.09.2009 to 31.03.2010, on account of death of the partner Late Shri Sant Singh. The assessee also pointed out that the total turnover was Rs.1,30,75,916/- instead of Rs.74,49,613/- as observed by the Assessing Officer in the assessment order. During the course of appellate proceedings, the assessee furnished fresh evidences in the form of reconstituted partnership deed, death certificate of the partner and summary of P & L account from 01.04.2009 to 06.09.2009 and from 07.09.2009 to 31.03.2010.
The additional evidence was confronted to the Assessing Officer who in-turn filed remand report which is reproduced at page 8 and 9 of the appellate order. The assessee filed rejoinder to the same which is also reproduced by the CIT(A) vide para 6.5 at page 14. The CIT(A) noted that 26AS in this case is not reliable as this show only the figure of Rs.41,03,883/- whereas the appellant has shown the total gross receipt of Rs.1,31,61,714/-. In the remand report also the Assessing Officer has not given any comment on these issues during the course of assessment proceeding whether the gross receipt of Rs.74,49,613/- shown by the assessee in the ‘Return of income’ is correct or Rs.1,31,61,714/- admitted by the assessee subsequently. The CIT(A) concluded that the auditor has audited the accounts of the assessee of the two periods, where the gross receipts of the assessee had been shown at Rs.1,31,61,714/- and not Rs.41,89,681/- of 26AS. The Assessing Officer was held to be not correct in not considering the gross receipt at Rs.1,31,61,714/- without any basis. The Assessing Officer was also not correct in making the addition of the entire gross receipt of Rs.41,89,681/- shown in 26AS as income of the appellant. The CIT(A) held as under:-
“As the appellant is dealing in trading of electrical goods and electrical contracts and as the turnover shown in both the P & L account is of Rs.1,31,61,714/-, total income of Rs.13,16,171/- which is 10% of the gross receipt is reasonable to be confirmed.” 8. The assessee is in appeal against the order of the CIT(A).
The Ld. AR for the assessee referred to the written submissions filed on record and stressed that in the totality of facts, application of rate of 10% on total turnover was excessive.
The Ld. DR for the Revenue placed reliance on the order of the CIT(A).
On the perusal of the record and after hearing both the authorized representatives, the limited issue which arises in the present appeal is the application of net profit rate to compute the income in the hands of the assessee. The total turnover/receipts of the assessee were to the tune of Rs.1,31,61,714/-. The assessee was electrical contractor; in such circumstances, it is deem fit that rate of 8% be applied to total turnover to determine the income in the hands of the assessee. Accordingly, the Assessing Officer is directed to re-compute the income in the hands of the assessee.
Ground of appeal nos. 3 to 6 are pressed by the assessee and are thus partly allowed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 21st February, 2020.