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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ : NEW DELHI
Before: SHRI H.S. SIDHU
The Assessee has filed the Appeal against the Order dated 28.6.2018 of the Ld. CIT(A)-I, New Delhi pertaining to assessment year 2009-10 on the following grounds:-
1. That the assessment order passed on 16.12.2016 u/s 143(3) of the Income Tax Act, 1961 by the Assessing Officer as upheld by the Ld. CIT(A) vide his order dated 28.06.2018, is perverse to the law and to the facts of the case, because of lump sum estimating the profit assessed @ 35% of the gross receipts of Rs. 14,12,520/-, though the appellant has declared GP @ 16.9% u/s 44AL of the I.T. Act, 1961.
2. That appellate order passed by the Ld. CIT(A) u/s 250 of the I.T. Act on 28.06.2018 was wrong against the and to the facts of the case because of not affording any opportunity to the appellant prior to dismiss the appeal of the appellant for want of prosecution only.
3. That the appellate order passed by the Ld. CIT(A) u/s 250 of the Act on 28.06.2018 was further incorrect because of not adjudicating the appeal on merits. 4. That the appellate order passed by the Ld. C1T(A) u/s 250 was further not justified on law and to the facts of the case, because of not affording opportunity to the appellant to represent his case as the appellant has filed the request letter on 26.06.2018 against the first hearing fixed, which was not considered and summarily rejected in a casual manner. 5. That the order passed is further unconstitutional, as against the law and to the facts of the case, because of lump sum estimating the profit @ 35% of the gross receipts of Rs. 14,12,520/- thereby arriving the net profit of Rs. 4,94,382/-, without the support of any material either collected or ever placed upon records having nexus to the lump sum arriving the GP @ 35%. 6. That the order passed is further illegal as bad in law because of not accepting the GP declared @ 16.9%, though minimum profit required to be declared u/s 44AL comes to 5% of the gross receipts in the absent of any books of accounts required to be maintained.
That the order passed is further laconic and ironic in nature as there was no any requirement u/s 44AF of the Income Tax Act, 1961 to flic any Audit Report as alleged to be u/s 44A13 of the Income Tax Act, 1961.
That no reasonable and proper opportunity of being heard if any has ever been afforded by the Assessing Officer prior to conclude lump sum estimate of profit @ 35% of the gross receipts without the support of any material, arbitrarily, capriciously and due to his guess work only. 9. That charging of interest under Section 234B and initiating penalty proceedings u/s 271(1)(c) are further wrong as against the law and to the facts of the case as such the same my please be deleted because of being consequential to the illegal addition made and relief claimed there from. 10. That the appellant assails his right to amend, alter, change any grounds of appeal
or take any further ground at any time even during the course of hearing of this instant appeal. PRAYER:
1. That the illegal and impugned orders passed under section 143(3) of the Income Tax Act as upheld by the Ld. CIT(A), may please be quashed or alternatively the illegal and impugned additions made and confirmed by the Ld. CIT(A), may please be deleted.
2. That charging of interest u/s 234B and initiating penalty proceedings u/s 271 (1)(c) are further wrong as against the law and to the facts of the case, as such the same my please be deleted because of being consequential to the illegal and impugned additions made and relief claimed there from. 3. Any other relief which this Hon’ble Court may please be deemed fit and proper on the facts and in the circumstances of the case.
The brief facts of the case are that in this AIR information of cash deposits of Rs. 10,14,600/- in the saving bank account no. 07112010019700 maintained in the Oriental Bank of Commerce, Bhangel, Noida Gautambudhnagar by the assessee during the Financial Year 2008-09 relevant for the AY 2009-10 was received.
The case of the assessee was reopened u/s. 147 of the Income Tax Act, 1961 (In short “Act”) by issuing the notice u/s. 148 of the Act on 23.3.2016. Thereafter notice u/s. 142(1) of the Act dated 27.6.2016 alongwith questionnaire and notice u/s. 142(1) of the Act dated 10.9.2016, 26.10.2016 were issued. The Assessee submitted vide letter dated 1.12.2016 that earlier return filed on 22.4.2009 declared taxable income of Rs. 1,49,994/- may be treated as return filed in response to notice under section 148 of the Act. The AO on perusal of return, noticed that the assessee has declared the gross professional receipt of Rs. 14,12,520/- and declared the net profit of Rs. 2,38,810/- under section 44AF. The assessee was specifically asked to furnish the justification of applying the provision of u/s. 44AF of the Act, which is not applicable in the case of consultancy income and furnish the Audit Report u/s. 44AB of the Act as the professional receipts are above Rs. 10 lacs and date was fixed for compliance on 16.12.2016. In compliance the AR of the assessee submitted the written reply but could not furnish any justification of declaring the profit as per provision u/s. 44AF on professional receipts. Further the assessee could not submit any audit report u/s. 44AB of the Act and therefore, AO compute the professional income on estimation basis and made the addition of Rs. 2,55,572/- in the hands of the assessee by completing the assessment at Rs. 4,05,570/- u/s. 143(3) of the Act vide order dated 16.12.2016.
Aggrieved with the assessment order, the assessee appealed before the Ld. CIT(A), who vide his exparte impugned order dated 28.6.2018 has confirmed the assessment order passed by the AO.
Against the impugned order, assessee is in appeal before the Tribunal.
At the time of hearing, Ld. Counsel for the assessee has stated that the assessment order passed on 16.12.2016 u/s 143(3) of the Income Tax Act, 1961 by the Assessing Officer as upheld by the Ld. CIT(A) vide his order dated 28.06.2018, is perverse to the law and to the facts of the case, because of lump sum estimating the profit assessed @ 35% of the gross receipts of Rs. 14,12,520/-, though the appellant has declared GP @ 16.9% u/s 44AF of the I.T. Act, 1961.
It was further submitted that Ld. CIT(A) has not granted any opportunity to the prior to dismiss the appeal for want of prosecution only. It was further submitted that Ld. CIT(A) did not adjudicate the appeal on merits and not afforded opportunity to the appellant to represent his case as the appellant has filed the request letter on 26.06.2018 against the first hearing fixed, which was not considered and summarily rejected in a casual manner. It was further submitted that Ld. CIT(A) is against the law and to the facts of the case, because of lump sum estimating the profit @ 35% of the gross receipts of Rs. 14,12,520/- thereby arriving the net profit of Rs. 4,94,382/-, without the support of any material either collected or ever placed upon records having nexus to the lump sum arriving the GP @ 35%. It was further submitted that Ld. CIT(A) has passed an illegal order by not accepting the GP declared @ 16.9%, though minimum profit required to be declared u/s 44AF comes to 5% of the gross receipts in the absent of any books of accounts required to be maintained. It was further submitted that there was any requirement u/s. 44AF of the Act to file any Audit Report as alleged to be u/s. 44AB of the Act. He further submitted that proper opportunity of being heard by the AO was not afforded prior to conclude lump sum estimate of profit @ 35% of the gross receipts without the support of any material, arbitrarily, capriciously and due to his guess work only.
In view of above, he requested to quash the Ld. CIT(A) order and additions in dispute may be deleted. In support of his contention, he relied upon the various following case laws by which the issue in dispute is squarely covered:-
- ITAT, F Bench, New Delhi decision dated 6.8.2018 in the case of Pioneer Town Planners Pvt. Ltd. vs. DCIT in ITA No. 132/Del/2018 (AY 2009-10) - ITAT, SMC Bench, New Delhi decision dated 5.11.2018 in the case of Prashanti Investment (P) Ltd. vs. ITO in ITA No. 391/Del/2018 (AY 2009-10). - ITAT, SMC Bench New Delhi decision dated 14.12.2017 passed in the case of Mohd. Raees vs. ITO in (AY 2008-09). - ITAT, Delhi decision in the case of Maverick Electronics (P) Ltd. vs. ITO order dated 21.3.2017 in (AY 2003-04). - ITAT F Bench, New Delhi decision dated 7.2.2019 passed in the case of Pushp Steels & Mining (P) Ltd. vs. ITO in ITA No. 6094/Del/2018 (AY 2008-09).
- ITAT, Delhi Bench decision dated 24.5.2018 in the case of Sunil Agarwal, Haridwar vs.
ITO in (AY 2008-09). - ITAT, SMC Bench, New Delhi decision dated 29.11.2018 passed in the case of Radiance Stock Traders Pvt. Ltd. vs. ITO in ITA No. 4542/Del/2018 (AY 2010-11).
- Hon’ble Delhi High Court decision in the case of Pr. CIT vs. NC Cables Ltd. decided in ITA
335/2015 dated 11.1.2017.
- Hon’ble Madhya Pradesh High Court decision dated 15.10.2014 in the case of CIT vs. S.
Goyanke Lime and Chemical in of 2012 & Ors.
On the other hand, Ld. DR relied upon the orders of the AO.
However, he submitted that Ld. CIT(A) has passed a non-speaking order in this case, therefore, the issues in dispute may be set aside to the file of the Ld. CIT(A) to decide the same afresh and to pass a speaking order.
I have heard both the parties and perused the records. After perusing the relevant records available with us alongwith the orders of the revenue authorities, I find that Ld. CIT(A) has passed the exparte non-speaking order. For the sake of convenience, I am reproducing herewith the order of the Ld. CIT(A) as under:-
“1. The present appeal has been filed by the appellant against an assessment order dated 16.12.2016 passed by the Ld. AO u/s. 143(3) of I.T. Act, 1961 determining the total income of the appellant at Rs. 4,05,570/-. The same has been impugned in the present appeal and is being contested by the appellant on the grounds of jurisdiction as well as merit.
2. In response to the notice issued the appellant filed a letter claiming that the required information / document could not be collected from the concerned authorities as such the same could not be handed over to the counsel of the appellant for preparing the submission thereof and therefore, the matter should be adjourned.
3. The appellant was asked to file the copy of the assessment order, demand notice and the challan for fee u/s. 249(1) of the I.T. Act, 1961 which has to be available with the appellant as these documents are either the documents of the appellant like the copy of the challan or the documents based upon which the appeal has been filed. Therefore, there is no merit in the contention of the appellant that the documents could not be collected from the concerned authorities. The appellant is unnecessary avoiding appearing before this office and therefore, the appeal of the appellant is dismissed for want of prosecution on the part of the appellant. The impugned assessment order stands confirmed.”
5.1 After perusing the aforesaid finding of the Ld. CIT(A), I am of the considered view that Ld. CIT(A) has not only passed the exparte order on account of non-prosecution, but also passed a non- speaking order by upholding the order of the AO and did not deal the merit of the case, which is not sustainable in the eyes of law. Therefore, in the interest of justice, I am setting aside the issues in dispute to the file of the Ld. CIT(A) to decide the same afresh, after giving adequate opportunity of being heard to the assessee and pass a speaking order.