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Income Tax Appellate Tribunal, DELHI BENCE ‘E’, NEW DELHI
Before: SHRI R.K.PANDA & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
The appellant, Assistant Commissioner of Income Tax, New Delhi (hereinafter referred to as 'the revenue') by filing the aforesaid appeal, sought to set aside the impugned order dated 31/03/2016 passed by Ld. Commissioner of Income Tax(Appeals)-20, New Delhi qua the Assessment Year 2011-12 on the grounds inter alia that :
“1In the facts and circumstances, the Ld. CIT(A) has erred in deleting the addition of Rs. 16,00,349/- on account of rejection of books of account. 2. In the facts and circumstances, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 84,60,000/- u/s 68 of the I.T.Act, 1961. 3. That the appellant, craves, leave to add, amend or modify the grounds of appeal at any time.”
2. Briefly stated that facts necessary for adjudication of the controversy at hand are : Assessee is engaged in the business of Civil Contractors with four partners and has shown net profit of Rs. 21,51,578/- on gross receipt of 7,50,38,533/- with net profit rate of 2.86%. AO after rejecting the books of accounts made an addition of Rs. 16,00,349/- in the trading results by applying the profit rate at 5% of the contract receipts. AO further made addition of Rs. 84,60,000/- on account of cash deposits in the Saving Bank Accounts and thereby assessed the total income of assessee at Rs. 1,25,67,460/-.
3. Assessee carried the matter before the Ld. CIT(A) by way of filing the appeal who has deleted the addition in question by partly allowing the appeal. Feeling aggrieved the revenue has come up before the Tribunal by way of filing the present appeal.
(Mana Ram Ganpat Ram & Co.) 4. The Ld. DR for the revenue challenging the impugned order passed by Ld. CIT(A) contended inter alia that the Ld. CIT(A) has erred in deleting the addition despite the fact that he has accepted the GP rate at 5% adopted by the AO; that the books of accounts has never been produced rather Ld. CIT(A) has assumed the fact that assessee’s account are audited one ; that when books of accounts have not been produced how the Ld. CIT(A) has accepted the explanation of the assessee qua cash deposit of Rs. 84.60 lakhs.
Ld. DR for the revenue also filed written submissions which are made part of the record and also relied upon decision rendered by Hon’ble High Court cited as 1. Kavita Chandra Vs. CIT [2017] 81 taxmann.com 317 (Punjab & Haryana) / [2017] 248 Taxman 358 (Punjab & Haryana) / [2017] 398 ITR 641 (Punjab & Haryana) 2. Dinesh Kumar Jain vs. PCIT [2018] 97 taxmann.com 113 (Delhi).
However, on the other hand to repel the argument addressed by Ld. DR, the Ld. AR for the assessee contended that by accepting the application moved by assessee for leading additional evidence and was allowed and consequently all the cash books, bank statement etc. have been produced before the (Mana Ram Ganpat Ram & Co.) Ld. CIT(A), which order has not been challenged by the revenue ; that assessee had made a request to the AO to produce the book of accounts which was declined.
Ground no. 1 7. Undisputedly as per audited financials for the year under assessment available at page 1 to 7 of the paper book the ratio of net profit / sales is 11.92% ( Rs. 7,33,25,983/- / Rs. 87,42,856/-).
It is also not in dispute that when interest of income Rs. 41,09,735/- is removed the NP / sales ratio comes to 6.31%, which is within the range of 5% to 8% as determined by the AO.
When we examine the contentions raised by Ld. DR for the revenue that when book of accounts have not been produced by the AO, how the Ld. CIT(A) has assumed the fact that accounts of the assessee are audited one, in the light of finding returned by Ld. CIT(A) at page 15 and 16 of the impugned order it is categorically proved that the assessee had moved an application for additional evidence on which remand report was called and thereafter additional evidence in the form of book of accounts, bank statement, cash books etc. were produced and entertained, the contention raised by Ld. DR is not misconceived, hence not sustainable.
(Mana Ram Ganpat Ram & Co.) 9. No doubt, Ld. CIT(A) has returned self-contradictory findings as has been recorded in para 5.3 regarding production of book of accounts by the assessee but result of the issue raised before him is correct on the basis of facts and law.
From the audited financial when it is not in dispute that the assessee has declared gross profit as per P & L Account for the year under assessment at 11.92% on the work receipt of 7,33,25,983/- and even if interest income of Rs. 41,09,735/- is excluded from the profit even then the net profit comes to 6.31%, the Ld. CIT(A) has rightly deleted the addition on the ground that when net profit already declared by the assessee is more than the net profit estimated by the AO, the Addition is liable to be deleted. So, ground no. 1 is determined against the revenue.
Ground no. 2 11. When the assessee by producing additional evidences before Ld. CIT(A) has produced the cash book, bank statement etc. to explain the cash deposit of Rs. 84,60,000/- and from the cash book on which remand report of AO was called but he has not submitted the same, the Ld. CIT(A) has reached the conclusion that when adequate cash balance in the book of accounts on the days when cash in question was deposited in the (Mana Ram Ganpat Ram & Co.) bank was there no addition can be made and as such has rightly deleted the same. So the entire deletion has been made by the Ld. CIT(A) by duly examining the cash books audited accounts and related evidences on which AO has not made any comment during remand proceedings rather prepared the remand report ex parte. So, we affirm the findings returned by Ld. CIT(A) hence, ground no. 2 is determined against the assessee. The case law relied upon by Ld. DR is not applicable to the facts and circumstances of the case.
In view of what has been discussed above appeal filed by the revenue is hereby dismissed. Order pronounced in open court on this 18th Day of April, 2019.