PARMOD KUMAR GARG,FARIDABAD vs. ITO, WARD-11(1), FARIDABAD

Facts of the case, in brief, are that the assessee is an individual and is engaged in the business of purchase and sale of scrap. He filed his return of income on 30th September, 2013 declaring the total income at Rs2,56,750/-. The Assessing Officer issued statutory notices u/s 142(1) to the address given by the assessee in the return of income and the ld. counsel for the assessee filed the copy of ITR, balance sheet, computation of income and audit report. Subsequently, the case was adjourned and since none appeared on behalf of the assessee, the Assessing Officer issued fresh notice u/s 142(1) fixing the case for hearing on 15th February, 2016. The said notice was received back undelivered with the postal remark ‘refused.’ However, the counsel of the assessee who appeared before the Assessing Officer was directed to furnish certain information and produce the books of account. Since there was no compliance and the summons issued by the Assessing Officer u/s 131 of the IT Act was also received back undelivered with the Postal remark ‘refused’, the Assessing Officer proceeded to complete the assessment u/s 144 of the IT Act. From the various details furnished by the assessee, the Assessing Officer noted that the assessee has shown purchase at Rs.10,39,06,759/- and sales at Rs.10,40,55,635/-. Similarly, the sundry creditors was shown at Rs.1,16,07,101/- and sundry debtors at Rs.99,58,250/-. The assessee has shown net profit of Rs.0.24% which, according to the Assessing Officer, was quite low in the line of business. During the course of assessment proceedings, the Assessing Officer asked the assessee to explain as to why net profit rate of 4% should not be applied. In absence of proper compliance from the side of the assessee, the Assessing Officer adopted net profit rate of 4% on the turnover of Rs.10,40,55,635/- and made an addition of Rs.39,05,470/-. In appeal, the ld.CIT(A) confirmed the addition made by the Assessing Officer 2

Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal.

I have considered the rival arguments made by both the sides and perused the relevant material on record. I have also considered the various decisions cited by the ld. counsel for the assessee including the decision of the Tribunal in the case of Vishnu Aggarwal, vide order dated 26th April, 2019, wherein under somewhat identical circumstances, the net profit rate of 0.77% was accepted. It is an admitted fact that the assessee, in the instant case, has not produced the books of account and filed the requisite details as asked for by the Assessing Officer. Therefore, the decision in the case of Vishnu Aggarwal (supra) cited by the ld. counsel for the assessee is not applicable to the facts of the present case. Since the ld. counsel submitted that the assessee was maintaining proper books of account and given an opportunity the assessee is in a position to substantiate his case to the satisfaction of the Assessing Officer regarding the profit declared by the assessee, therefore, considering the totality of the facts of the case and in the interest of justice, I deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case. The assessee is hereby directed to produce the books of account and necessary details as called for by the Assessing Officer and substantiate his case to his satisfaction, failing which the Assessing Officer is at liberty to pass appropriate order as per law. Needless to say, the Assessing Officer shall given the assessee an opportunity of being heard and shall decide the issue as per fact and law. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes only. The decision was pronounced in the open court on 08.05.2019.