ITO, NEW DELHI vs. SMT. MEENAKSHI AGGARWAL, NEW DELHI

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ITA 687/DEL/2014Status: DisposedITAT Delhi30 October 2017AY 2009-105 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that both the AO and CIT(A) made estimations and deletions without proper verification or calling for remand reports. Therefore, the matter needs to be remitted back to the AO for fresh adjudication.

What were the facts?

The Assessing Officer (AO) rejected the assessee's books of account and estimated net profit at 2% of turnover, also adding back unsecured loans and sundry creditors. The CIT(A) partly allowed the appeal, reducing the net profit to 1% and deleting the addition on loans/creditors.

What were the issues?

Whether the AO and CIT(A) erred in their estimations and deletions without proper verification of unsecured loans and net profit, and whether separate additions can be made after rejecting books of account.

Which sections of the Income-tax Act were involved?

Section 144,Section 145(3),Section 41(1),Section 80C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI

Before: SHRI R.K. PANDA & SHRI KULDIP SINGH

For Respondent: Shri A.K. Yadav, Senior DR
Hearing: 26.10.2017

ASSESSEE BY : None REVENUE BY : Shri A.K. Yadav, Senior DR Date of Hearing : 26.10.2017 Date of Order : 30.10.2017

O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : The appellant, Income-tax Officer, Ward 36 (3), New Delhi (hereinafter referred to as ‘the Revenue’), by filing the present appeal, sought to set aside the impugned order dated 29.11.2013 passed by the Commissioner of Income-tax (Appeals)-XXVII, New Delhi qua the assessment year 2009-10 on the grounds inter alia that :-

“1. "On the facts and in the circumstances of the case, the order of the Ld. CIT(A) is bad in law and not in consonance with facts of the case.

2. "On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in reducing the net profit from 2% to 1% of the turnover by estimating the net profit at 1% i.e. Rs.20,75,183/- instead of 2% i.e. Rs.41,50,365/- of the turnover of Rs.20,75,18,242/- as was made by the A.O.

3. "On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in deleting the addition of Rs.1,52,67,037-,the A.O. on account of unsecured loans and sundry creditors u/s 41 (1) of the Act."

2.

Briefly stated the facts necessary for adjudication of the controversy at hand are : during scrutiny proceedings on account of failure of the assessee to attend assessment proceedings, Assessing Officer completed the assessment under section 144 of the Income- tax Act, 1961 (for short ‘the Act’) after rejecting the books of account u/s 145 (3) of the Ac by estimating the net profit at 2% of the turnover i.e. Rs.47,63,383/-. AO has also added back unsecured loans and sundry creditors of Rs.1,52,67,037/- u/s 41 (1) of the Act by disallowing the deduction claimed u/s 80C of the Act.

3.

Assessee carried the matter by way of filing appeal before the ld. CIT (A) who has deleted the addition made by the AO by partly allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of challenging the impugned order passed by ld. CIT (A).

4.

Assessee has not preferred to put in appearance despite issuance of the notice and consequently, we proceeded to decide the present appeal with the assistance of the ld. DR as well as on the basis of documents available on the file.

5.

We have heard the ld. Departmental Representative for the revenue to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.

GROUND NO.1 6. Ground No.1 is general in nature and does not require any adjudication.

GROUND NO.2 7. Undisputedly, the assessee has not preferred to appear before the ld. AO as well as ld. CIT (A) during assessment as well as appellate proceedings. AO rejected the books of account without perusing the same as the same have never been produced before him during the assessment proceedings and proceeded to estimate the net profit at 2% on the basis of guesswork. Likewise, ld. CIT (A) also reduced the net profit from 2% to 1% without preferring to call any remand report from the AO. So, in these circumstances, we are of the considered view that to decide the controversy once for all, the matter is required to be remitted back to the AO to decide afresh after providing an opportunity of being heard.

Consequently, ground no.2 is determined in favour of the Revenue for statistical purposes.

GROUND NO.3 8. AO made addition of Rs.1,52,67,037/- u/s 41(1) of the Act by doubting the genuineness of the unsecured loans and sundry creditors despite the fact that no material has come on record before the AO to doubt the genuineness of the unsecured loans and sundry creditors. Moreover when books of account have been rejected u/s 145 of the Act, separate addition on account of unsecured loan and sundry creditors cannot be made. However again, ld. CIT (A) has deleted the addition on the basis of whim and fancies without getting the genuineness of the unsecured loan and creditworthiness of the creditors by calling a remand report from the AO. So, we are of the considered view that this ground is also required to be remitted back to the AO to decide afresh after providing an opportunity of being heard to the assessee. Ground no.3 is allowed for statistical purposes.

9.

Resultantly, the appeal of the Revenue is allowed for statistical purposes.

Order pronounced in open court on this 30TH day of October, 2017.

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