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Income Tax Appellate Tribunal, DELHI BENCH ‘S.M.C’, NEW DELHI
Before: MS. SUSHMA CHOWLA
आदेश / ORDER आदेश आदेश आदेश SUSHMA CHOWLA, JM: The appeal filed by the assessee is against the order of CIT(A), Rohtak, dated 29/11/2016, relating to assessment year 2004-05, passed under Section 144 of the Income Tax Act, 1961(in short ‘the Act’).
The assessee has raised the following grounds of appeal.
That the order of the Ld. Commissioner of Income-tax (Appeals) Rohtak and the order passed u/sl44 of the Act that of Assessing Officer ACIT, Hisar is against law and facts of the case and the same are liable to be quashed being arbitrary, illegal without jurisdiction and any justification.
2. That the order of the than A.O, ACIT Hisar and that of the Ld. CIT (A) Rohtak are liable to be annulled being void abinito, since the assessment was made on the basis of the original return field u/s 139(1) of the Act. on 20-08-2004 vide acknowledgment no. 06948, without issue and service of any valid mandatory notice required to be issued and served u/s 143 (2) of the Act. as evident from the assessment order and record itself. The fact even was not gone through and appreciated properly by the CIT (A) Rohtak, as apparent on the face of record. 3. That having regard to the facts and circumstances of the case, the Ld. CIT (A) has grossly erred in law and on facts, in confirming partly the action of Assessing Officer ACIT, Hisar and in sustaining certain impugned, adhoc and estimated additions in his order passed u/s 144 of the Act specifically by not relying upon the survey record file and noting in the remand report dated 09-10-2014 vide F. no. JCIT/HSR/1063 of AO ITO Ward-4 Hisar in pursuance to the application moved and allowed under rule 46A of the Act. 4. That the A.O below ITO W- 4 Hisar was absolutely wrong in misstating the facts that the entries of professional receipts of Rs. 718400 were shown to the A.R. and he was satisfied, contrary to the facts that neither there were such entries of Rs.718400/- as professions receipt as per record and the question of confronting do not arise at all as such CIT (A) was wrong in not accepting the contentions of the A.R. as stated specifically. 5. That the action of the Ld. CIT (A) being bad in law, for not deleting the adhoc and balledly made estimated addition of Rs.718400/- on account of wrongly and notionally assumed fees received from the students, even without appreciating the facts and going through the survey record file and the remand report submitted by the AO ITO W-4 Hisar with specific mention that working of the professional receipts could not be found either in the survey file or in the assessment folder. 6. That on the facts and in the circumstances of the matter, if the contentions as prayed at Para-3 above are not acceptable to the Hon’ble Bench and impugned adhoc, estimated and balled additions, though not legally warranted being on account of gross receipts over and above as reflected, in the return originally filed are opted to be sustained, certainly, the proportionate expenses out of said receipt are liable to be determined and reduced from gross receipts in proportion as reflected in the Income & Expenditure Account viz-a-viz the original return, the ground on which none of the authorities below CIT(A), Hisar and Assessing Officer ACIT/ITO Ward-4, Hisar have applied their mind, remained silent a given any findings on the issue in their respective orders inspite being agitated in reply remand report furnished before CIT(A), Hisar. As such the relief is prayed to be granted.
7. That the Authorities below were wrong in not relying the fact that the professional premises 669, PLA, Green Park, Hisar remained sealed by the HUDA Authorities since 2005-06 to 2010 through public notice and various records, vouchers and invoices etc. got decayed and destroyed and whose whereabouts were not known, as such the appellant assessee being prevented by sufficient cause was unable to produce complete vouchers of day to day expenses, incurred under various heads like on, telephone, books and journals and under the head general expenses etc. disallowed partly @50% merely by rejecting the just and bonafide explanation adduced and without appreciating that all the expenses were incurred, day to day, expended wholly and exclusively for the professional purposes deserves to be allowed in full without any part disallowance being affected there from and as such the adhoc and estimated Additions agitated hereinbelow made without any justifications deserve to be deleted on all force. 7.1 Rs.3421/- @ 25% of total expenses of Rs.13685/- incurred on ' maintenance of telephone, maintained and used exclusively for professional purposes were disallowed wrongly on estimated basis and added to the income. 7.2 Rs.6600/- @ 50% of total expenses of Rs.11200/-incurred on reports/books/journals for professional purpose were wrongly disallowed and added to the income. 7.3 Rs.9707/- @ 50% of total expenses Rs.19415/- incurred under the head general expenses for professional purposes also disallowed wrongly and added to the income.
8. That the CIT (A) Rohtak was further wrong in not deleting Rs. 50000/- as estimated, adhoc and unwanted additions on account of household withdrawal keeping in view the facts and circumstances of the case.
9. That having regard to the facts and circumstances of the case, Lt. CIT(A) has erred in law and on facts in confirming the action of the AO in framing the impugned assessment in violation of principles of natural justice in as much as passing the impugned order by recording incorrect facts and findings and not on merits.
That having regards to the facts of the case and adhoc and estimated additions by the AO, the Ld. CIT (A) was also wrong in not reversing the action of the AO in charging interest u/s 234B of the Income Tax Act 1961.
11. That the Ld. CIT (A) was not justified in not adjudicating and in giving any findings on the ground no 12 of appeal as regards to the initiation of penalty proceedings u/s 271(1) (c) of the Act and that too without appreciating that the said ground stand specifically stand raised and agitated, for that reason also the order requires to be modified.
12. That the order of the Ld. CIT (A) and that of Assessing Officer below are also liable to be quashed being, based on surmises and conjectures and on mere change of opinion.
Grounds of appeal no.1 and 2 raised by the assessee are against the non-service of notice issued u/s 143(2) of the Act, which are not pressed; hence, the same are dismissed as not pressed. The grounds of appeal no.3, 9 and 12 raised by the assessee are general in nature and do not require any adjudication.
The issue raised vide grounds of appeal no. 4 to 6 is against the addition of Rs.7,18,400/-.
Briefly in the facts of the case relating to the issue raised vide grounds of appeal no.4 to 6 are that the assessee was running coaching centre under the name and style M/s Fame Institute at Hisar and Rohtak.
Survey action u/s 133A of the Act was carried out at both the premises on 11/11/2005. The assessee filed its return of income declaring total income of Rs.85,100/-. Thereafter, notice u/s 148 of the Act was issued to the assessee on 07/01/2008, after recording reasons for reopening the assessment. However the assessee did not comply with the said notice and no return of income was filed. The Assessing Officer issued various notices to the assessee and also issued show case notice as to why the assessment should not be completed u/s 144 of the Act by adding suppressed receipts of Rs.7,18,400/- to the income of the assessee. The Assessing Officer also noted the fact that the assessee was not maintaining proper books of accounts except for entries in the diaries which were found during the course of survey. In the absence of any reply received from the assessee, addition of Rs.7,18,400/- were made in the hands of the assessee.
The CIT(A) upheld the aforesaid addition against which the assessee is in appeal before us.
The Ld. AR for the assessee before us pointed out that the remand report was submitted by the Assessing Officer before the CIT(A), copy of which is placed at pages 40 to 42 of the paper book. It was pointed out that the Assessing Officer himself reports that though entries of fees receipts relating to financial year 2003-04 and 2004-05 were found, but the details of such receipts, documents wise/page wise details/working of these receipts, could not be found either in the survey file or in the assessment folder. The assessee thus points out that in the absence of details available with the Assessing Officer, ad-hoc addition made in the hands of the assessee, needs to be deleted.
The Ld. DR for the Revenue however placed reliance on the orders of the authorities below.
On perusal of the record and after hearing both the authorized representatives, the first issue which is raised for adjudication is against the addition made of Rs.7,18,400/-. The basis for making the aforesaid addition in the hands of the assessee was entries made in the diaries, found during the course of survey. However, during the appellate proceedings, the Assessing Officer was unable to produce the document wise/page wise details/working of the receipts before the CIT(A). It is confirmed by the Assessing Officer that such details were not available either in the survey file or in the assessment folder. Undoubtedly, certain documents were found which reflect the assessee not showing its proper receipts in the books of account. However, in fairness and following the principle of natural justice, it is deem fit to restrict the addition to 50% of Rs.7,18,400/-.
Accordingly, grounds of appeal no.4 to 6 are partly allowed.
10. Now coming to grounds of appeal no.7 and 8, which are against the ad-hoc disallowance made out of expenses debited by the assessee. An addition has been made in the hands of the assessee on account of unaccounted receipts then such receipts are available for making the expenditure out of books of accounts. Hence, there is no merit in making separate disallowance out of expenses being not verifiable. allowing the said expenditure to be allowed in the entirety, we allow the grounds of appeal no.7 and 8 raised by the assessee.
Ground of appeal no.10 raised by the assessee is consequential in nature and hence do not require any adjudication.
Ground of appeal no.11 raised by the assessee is premature and do not require any adjudication.
In the result, appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 30th day of December, 2019.