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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’, NEW DELHI
Before: SH. H.S. SIDHU
The Assessee has filed the Appeal against the Order dated 05.12.2017 of the Ld. CIT(A), Meerut pertaining to assessment year 2013-14 on the following grounds:-
That the assessee has shown net profit as gross turnover of Rs. 9,65,000/- and computed net profit @20% of Rs. 1,93,500/- which is in the same manner as shown in earlier year in which, turnover was Rs. 8,40,000/- and net profit @20% was Rs. 1,68,000/- but doe to clerical mistake it appears as Rs. 96,50,000/-. Therefore, AO has taken net profit rate on Rs. 96,50,000/- which was not justified, nor it correct in view of above fact. Therefore, the AO has committed
error and CIT(A) the error is against the facts and law. 2. That the assessee has right to add, modify or delete any ground during the appeal proceedings.
The brief facts of the case are that assessee filed return of income on 24.7.2014 at Rs. 1,93,500/- Later the case of the assessee was picked up for scrutiny through CASS and notice u/s. 143(2) of the Income Tax Act, 1961 (in short “Act”) was issued on 28.8.2015. Subsequently, a detailed questionnaire alongwith notice u/s. 14291) of the Act was issued on 6.10.2015. In response to the notice u/s. 142(1) and 143(2) of the Act the AR for the assessee attended the proceedings from time to time and furnished the required details and information. The assessee has declared income from business at Rs. 1,93,500/- in the return. A perusal of scheduled of return it was observed by the AO that assessee had declared gross turnover / gross receipt at Rs. 96,50,000/- from business and profit was declared u/s. 44AD at Rs. 1,93,500/-. Assessee had declared presumptive income less than 8% of gross receipt declared in the return of income. AO vide order sheet entry dated 6.1.2016, asked the assessee to explain as to why presumptive income declared u/s. 44AD be not assessed at Rs.7,72,000/- (8% of turnover/gross receipt) and also required to produce the documentary evidence to substantiate the turnover / gross receipt. In response to the query assessee explained that turnover has been wrongly overstated by the counsel in the income tax return and also asserted that he is not engaged with any kind of business activity. It has been stated by the assessee that he has only agriculture income and there is no other source of income except agriculture income.
Affidavit to this effect was also filed. Assessee’s statement u/s. 131 was also recorded. Assessee deposed in the statement that he had approx.
1.2790 hectare agriculture land. He is engaged in agricultural activities and produced cash crops viz. sugar cane, vegetables etc. Receipt from agricultural produce are deposited in his bank account. Copy of bank account statement was also filed. AO on perusing the bank account observed that there are total credit of Rs. 3,44,710/- and assessee explained that these deposits are related to sale of agricultural produce.
During the course of scrutiny proceedings, assessee was categorically asked to produce the counsel who has filed wrong particulars of income in ITR for verification. Assessee stated that he was not in a position to produce the said counsel as he was no residing at the address known to him. Accordingly, AO observed that assessee had declared income of Rs. 1,93,500/- out of total gross receipts of Rs. 96,50,000/- u/s. 44AD which is not acceptable in view of provision u/s. 44AD of the Act. Hence, he assessed the income at Rs. 7,72,000/- @8% of gross receipt of Rs. 96,50,000/- and made the addition of Rs. 5,78,500/- vide his order dated 18.3.2016 passed u/s. 143(3) of the Act. Against the said assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 27.4.2018 has dismissed the appeal of the assessee.
Aggrieved with the impugned order, assessee is in appeal before the Tribunal.
During the hearing, Ld. counsel for the assessee has stated that the assessee has shown net profit as gross turnover of Rs. 9,65,000/- and computed net profit @20% of Rs. 1,93,500/- which is in the same manner as shown in earlier year in which, turnover was Rs. 8,40,000/- and net profit @20% was Rs. 1,68,000/- but due to clerical mistake it appears as Rs. 96,50,000/-. Therefore, AO has taken net profit rate on Rs. 96,50,000/- which was not justified, nor it correct in view of above fact. Therefore, the AO has committed error and Ld. CIT(A)’s error is against the facts and law. Hence, he requested to delete the addition confirmed by the Ld. CIT(A) and allow the appeal of the assessee.
On the other hand, Ld. DR relied upon the order of the Ld. CIT(A) and stated that he has passed a well reasoned order, which does not need any interference.
I have heard both the parties and perused the records especially the impugned order. It is noted that assessee has appointed a new AR in First Appeal and no effort has been made to either produce the AR who filed the return nor any affidavit or even a confirmation of the previous AR has been filed to corroborate the error that was apparently committed by him.
However, before the Ld. CIT(A) a technical ground was raised that the proceedings u/s. 143(3) of the Act is void since the return was declared defective. In this connection, it is observed, that no such plea was taken during the assessment proceedings in which the assessee not only participated but even his statement was recorded. It is also to be noted that the case was selected for scrutiny by CASS which is computer based selection and not manual selection of the cases for scrutiny. So, the plea of the AR that the return was defective does not have any basis. In the absence of any third party evidence in the form of confirmation or admission by the original counsel who filed the return with regard to the error attributed to him, the affidavit of the assessee filed at the time of assessment whose unsigned and unverified extract has been filed before the Ld. CIT(A), has very little evidentiary value as it does not corroborate the version of the assessee. In view of this, the Ld. CIT(A) has rightly held that no sufficient evidence was brought on record to interfere the findings of the AO in the assessment order, which does not need any interference on my part, hence, I uphold the action of the Ld. CIT(A) on the issue of dispute and reject the ground raised by the assessee.
In the result, the Appeal of the Assessee is dismissed.