VINAY GROVER,NEW DELHI vs. ITO WARD 36(1), NEW DELHI

ORDER PER BRAJESH KUMAR SINGH, AM,

This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi, dated 17.09.2023 pertaining to Assessment Year 2021-22.

“1. That Learned Commissioner of Appeal, National Faceless Appeal Centre [CIT(A)] has erred in law and on facts and circumstances of the case in dismissing the appeal on the ground of belated filing and assuming that there does not exist sufficient and reasonable cause which prevented the appellant in filing of the appeal within due date.

2. That Ld. CIT(A) has erred in law and on facts and circumstances of the case in dismissing the appeal on the ground of belated filing of appeal, despite the fact that several notices were issued to file written submissions which indicates that delay in filing of appeal had already been condoned.

3. That Ld. CIT(A) has erred in law and on facts and circumstances of the case in dismissing the appeal on the ground of belated filing of appeal once the written submissions in support of merits of the case were considered by, him while deciding the appeal. 4. That Ld. CIT(A) has erred in law and on facts and circumstances of the case in dismissing the appeal on the ground of belated filing of appeal which is against the principle of natural justice and denies substantial justice. 5. That Assessment Unit, Income Tax Department has erred on facts and circumstances of the case in assessing the income of the appellant at Rs.7,61,23,452/- as against returned income of Rs.7,73,380/- 6. That Assessment Unit, Income Tax Department has erred on facts and circumstances of the case in considering the turnover of the assessee at Rs.64,03,77,564/- as against actual turnover of Rs.52,36,04,752/-. 7. That Assessment Unit, Income Tax Department has erred in law and on facts and circumstances of the case in considering the entire purchase of the assessee as bogus purchase. 8. That Assessment Unit, Income Tax Department has erred in law and on facts and circumstances of the case in rejecting the audited books of account of the assessee: 8.1 Without recording his satisfaction as required under section 145(3) 8.2 without pointing out any defect or discrepancy in books of accounts 8.3 without brining on record any cogent material but on the basis of surmises and conjecture only 8.4 on the basis of general observation that "assessee might have purchased the goods from grey/ dark market earning him a higher profit than that has been declared"

8.5 on the basis of non-response or unfavourable response of the suppliers to the notices issued under section 133(6) 9. That Assessment Unit, Income Tax Department has erred in law and on facts and circumstances of the case in estimating the gross profit @ 12.50% 9.1 without considering the past trend the business of the appellant and industry comparable 9.2 which is not only exorbitant but also unreasonable to earn and 9.3 purely on the basis of guess work, surmises and conjecture 10. That Assessment Unit, Income Tax Department has erred in law and on facts and circumstances of the case in estimating the gross profit @ 12.50% on entire sales instead of the excess profit embedded in the alleged, without agreeing to and admitting, bogus purchase of Rs 30,00,300/- from Mr. Ketan Yadav who has declined to have made any business transaction with the appellant.

"Assessee has made substantial purchases from such suppliers who are either Non-Filers) or have filed non-business ITR or reflected a substantially lower turnover in ITR as compared to turnover shown in GSTR 1 return. There is a possibility that assessee has booked bogus expenses in order to reduce its profit/taxable income. Therefore, the genuineness/correctness of expenses related with these entities may be verified." 3.1. The AO noted that on verifying the GST information available on record, it was seen that during the year the assessee had made purchases from parties, who are either non-filer or have filed non-business ITR. The AO issued notice u/s 142(1) dated 09.11.2022 to the assessee inter alia to furnish the following details/documents:-

I. Note on business II. Trade creditor details III. Details of the person from whom purchase made during the year including name, pan, amount of purchase and mode of payment. IV. Reconciliation statement with GSTR returns V. Bank statement etc.

3.2. The assessee did not respond to the said notice and other notices as discussed in the assessment order on page-4, were not responded by the assessee. Therefore, the AO issued notices u/s 133(6) to the suppliers mentioned in the table as reproduced in the assessment order (on pages 2 to 4). The AO noted the fact that one supplier namely Ketan Yadav denied the transactions and in respect of other two persons Shri Santosh Das and Shri Yash Tandon, the notices came back unserved. The AO, in view of the discussion held that as the assessee has not filed reconciliation of total sales of Rs.64,03,77,564/- declared in GSTR-1 as against the sales of Rs.52,36,04,752/- declared in his ITR, after rejecting the book result adopted the sales amounting to Rs.64,03,77,564/-as its turnover. The AO proposed that the gross profit will be @12.5% of the total turnover and issued as show-cause notice dated 09.12.2022 but again the assessee did not furnish any reply. In view of these facts, the AO determined 12.5% as estimated GP of the total turnover amounting to Rs.64,03,77,564/- at Rs.8,00,47,195/- and after reducing the GP declared amounting to Rs.1,26,97,126/- made an addition of Rs.6,73,50,069/-.

3.3. Further, the AO also on the basis of information (from Sub- Registrar VI-A, Pitampura, Delhi) on a sale of plot of Rs.80 lakhs, added an amount of Rs.80 lakhs as Short Term Capital Gains in absence of any explanation furnished by the assessee. The AO also noted that in the proceedings u/s 143(1), an amount of Rs.86,51,307/- was disallowed u/s 40(ia) of the Act. The AO noted that since the books results have been rejected and therefore net addition/disallowance on account of GP addition is restricted to Rs.5,86,98,762/- (Rs.6,73,50,069 - 86,51,307).

5.1. In view of these facts, the AR submitted that since the appeal was not heard on merits by the learned CIT(A) and also due to communication gap the matter was not attended by the assessee during the assessment proceedings and ,therefore, requested that the matter may either be set- aside to the file of the CIT(A) or to the AO for de novo assessment.

Order pronounced in the open court on 08th May, 2024.