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Income Tax Appellate Tribunal, DELHI BENCHES “SMC”: DELHI
Before: SHRI BHAVNESH SAINI
This appeal by assessee has been directed against the order of the Ld. CIT(A)-1, Gurgaon, Dated 29th June 2018, for the assessment year 2010-11
Briefly the facts of the case are that on the basis of the information available with the Department that assessee has received contractual payments amounting to Rs.1,00,02,953/- during the assessment year under appeal and on perusal of the ITD database, it was found that 2 ITA.No.5778/Del./2018 Shri Pal Yadav, Gurgaon.
assessee has not filed the return of income for assessment year under appeal. Notice was issued to assessee, but, no reply was filed in response to the NMS notice. The assessing officer, therefore, reopened the assessment on the ground that the ‘Income from contractual payments chargeable to tax has escaped assessment’. During the year under consideration, the assessee is engaged in the business of running stage carriages as a proprietor under the name and style of “Sagar Tour and Travel”. During the course of assessment proceedings, assessee has submitted that he has not received any amount from M/s. Ruptech Education India and M/s. SRF Foundation. The assessee has shown total receipts of Rs.58,43,303/-. The assessee was asked to furnish ledger of all the expenses debited under profit and loss account and to explain as to why the penalty should not be levied for non- audit as required under section 44AB of the Income Tax Act, 1961. The assessee was asked to furnish copies of all the ledger of expenses and bills/vouchers. It was also clarified that in case of non- furnishing of books of account with bills / vouchers,
3 ITA.No.5778/Del./2018 Shri Pal Yadav, Gurgaon. assessment will be framed at 12% of the total receipts declared by the assessee. In the absence of production of the books of account, bills/vouchers, the assessing officer assessed the income by applying 12% of Rs.58,43,303/- and computed income of Rs.7,01,196/-. The assessing officer also initiated the penalty proceedings for non-audit of the books of account of assessee.
The assessee challenged the addition before the Ld. CIT(A). The written submissions of the assessee are reproduced in the appellate order in which the assessee explained that the assessing officer has very hastily passed the assessment order without affording proper opportunity of being heard to the assessee. The assessee has brought with him all the ledger accounts of expenses, bills / vouchers, but, at that time assessing officer was not present in the Office. It was submitted that application of 12% is very high. Ld. CIT(A), however, noted that assessee failed to produce the books of account, bills and vouchers before the assessing officer and that contention of assessee that he had gone to the assessing officer’s office with books of 4 ITA.No.5778/Del./2018 Shri Pal Yadav, Gurgaon.
account and bills/vouchers, but, the assessing officer was not present in the Office is factually incorrect because the case was discussed with the assessing officer on that date.
The Ld. CIT(A) in the absence of production of the books of account, bills and vouchers, confirmed the addition and dismissed the appeal of assessee.
Learned Counsel for the Assessee reiterated the submissions made before the authorities below. He has referred to PB-71 which is order sheet of assessing officer and submitted that assessing officer has not given sufficient time to produce the books of account and other details. He has submitted that assessee produced all the bills and vouchers before assessing officer which have not been examined. The assessee in the replies before assessing officer, has furnished copies of the bills of expenses etc., He has submitted that Ld. CIT(A) never called for the books of account, therefore, same were not produced before him. He has submitted that addition is excessive in nature.
5 ITA.No.5778/Del./2018 Shri Pal Yadav, Gurgaon.
On the other hand, Learned Departmental Representative relied upon the orders of the authorities below.
I have considered the rival submissions. The Ld. CIT(A) has specifically noted in his findings that assessee has failed to produce books of account, bills and vouchers before assessing officer. Learned Counsel for the Assessee referred to the order sheet of the assessing officer which also supports the findings of the authorities below. The assessing officer in the order sheet has specifically noted that in case books of account will not be produced, income will be assessed by applying 12% against receipts declared.
Learned Counsel for the Assessee referred to the replies filed before authorities below, but, it no where proves that assessee produced books of account before Ld. A.O. or CIT(A). Since it is specifically mentioned in the order sheet that incase assessee would not produce books of account, profit rate of 12% would be applied, Even if contention of assessee may be accepted that no proper opportunity has been given to the assessee to produce books of account
6 ITA.No.5778/Del./2018 Shri Pal Yadav, Gurgaon. before assessing officer, the assessee could have produce the same before the Ld. CIT(A) who has co-terminus powers to that of the assessing officer. However, the Learned Counsel for the Assessee could not satisfy if books of account were produced before the Ld. CIT(A). He has merely contended that Ld. CIT(A) never asked for production of the books of account which would not absolve the assessee from producing books of account before the Ld. CIT(A). Further, during the course of arguments, Learned Counsel for the Assessee did not produce books of account to the satisfaction of the Tribunal. It, therefore, stands proved that assessee failed to produce books of account before any of the authorities below and whatever claim was made, has not been substantiated through any evidence or material on record. Therefore, authorities below were justified in estimating the income of assessee by applying higher profit rate. However, considering the smallness of the total turnover of the assessee and nature of business of assessee, it would be reasonable and proper if the income be assessed by applying profit rate of 8% as against 12% applied by the 7 ITA.No.5778/Del./2018 Shri Pal Yadav, Gurgaon. authorities below. In view of the above discussion, I confirm the finding of fact recorded by the authorities below to estimate income. However, I direct the assessing officer to modify the application of profit rate by applying profit rate of 8% against total receipts of Rs.58,43,303/- and compute income of assessee accordingly instead of 12%.
In the result, appeal of the Assessee partly allowed.
Order pronounced in the open Court.