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Income Tax Appellate Tribunal, DELHI BENCHES “D” : DELHI
Before: SHRI BHAVNESH SAINI & SHRI R.K. PANDA
For Assessee : Shri Ashwani Kumar, C.A.& Shri Rahul Chaurasia, C.A. For Revenue : Shri Naina Soin Kapil, Sr.DR Date of Hearing : 31.07.2019 Date of Pronouncement : 01.08.2019 ORDER PER BHAVNESH SAINI, J.M.
This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-22, New Delhi, Dated 21.08.2015, for the A.Y. 2010-2011 on the following grounds :
2 ITA.No.6032/Del./2015 M/s. United India Construction & Communication Pvt. Ltd., Delhi. 1. “That the Ld. Commissioner of Income-tax (Appeals)- 22, New Delhi was not justified to pass the order ex- parte.
2. That order dated 21-08-2015 passed u/s 250(6) of the Income-tax Act, 1961 by the Ld. Commissioner of Income Tax (Appeals)-22, New Delhi is against law and facts on the file in as much as he was not justified to uphold the addition of Rs.1,96,556/- on account of difference in turnover/receipts as per 26AS and the return filed.
That the Ld. CIT(Appeals) gravely erred in upholding an addition of Rs. 91,67,043/- by applying a net profit rate of 25% on the total receipts out of addition made at Rs. 1,41,90,746/- made by the Ld. Assessing Officer on account of increase in sundry creditors during the year.
4. That the Ld. CIT(A) was further justified to uphold an addition of Rs.3,06,230/- on account of alleged non- filing of details of other expenses.”
3 ITA.No.6032/Del./2015 M/s. United India Construction & Communication Pvt. Ltd., Delhi.
Briefly the facts of the case are that A.O. at the assessment stage issued statutory notices. However, the A.O. noted that the notices sent received back with the postal remarks and some notices sent were neither received back nor any compliance have been made. Later on, Director of the assessee company attended and thereafter, there were no compliance. The A.O, therefore, proceeded ex- parte. The A.O. noted that assessee is a Civil Contractor and assessee has shown sundry creditors of Rs.1,91,50,158/- as comparing to Rs.49,59,412/- in the immediately preceding year. Thus, there is an addition of Rs.1,41,90,746/- of sundry creditors which was added to the income of assessee. The A.O. also noted that there is a difference in the turnover as per 26AS, therefore, difference of Rs.1,96,557/- was added to the income of assessee. The A.O. further noted that assessee claimed other expenses amounting to Rs.3,06,230/- for which no details have been filed. A.O. made addition of Rs.3,06,230/-.
3. The assessee challenged the additions before the Ld. CIT(A). Further no notices have been complied with. The 4 ITA.No.6032/Del./2015 M/s. United India Construction & Communication Pvt. Ltd., Delhi. Ld. CIT(A) confirmed the addition of Rs.1,96,557/- and Rs.3,06,230/-. However, as regards addition of Rs.1,41,90,746/- on account of sundry creditors, the Ld. CIT(A) made the addition by applying N.P. rate of 25% and giving benefit of addition of Rs.3,06,230/- made the addition of Rs.91,67,043/-.
Learned Counsel for the Assessee submitted that the last notice have not been served upon assessee, therefore, order passed by the Ld. CIT(A) ex-parte is wholly unjustified. He has further submitted that there was no justification for the Ld. CIT(A) to restrict the addition of 25% against the sundry creditors.
On the other hand, Ld. D.R. relied upon the Orders of the authorities below.
We have considered the rival submissions and perused the findings of the authorities below. In this case, the major issue is with regard to estimation of addition of sundry creditors. The assessee is a Civil Contractor and in the case of the Contractor, the profit estimated by the A.O.
5 ITA.No.6032/Del./2015 M/s. United India Construction & Communication Pvt. Ltd., Delhi. by making the aforesaid additions would be wholly unjustified. It is a general practice that in the cases of Civil Contractors the profits generally comes to 8% to 10% only. No justification have been given by the authorities below as to how the profit rate could be applied while making the addition on account of sundry creditors. Learned Counsel for the Assessee, therefore, rightly contended that the authorities below have not examined this issue in proper perspective. Considering the above facts, we are of the view that the matter requires reconsideration at the level of A.O. because A.O. also passed the ex-parte order in the matter. In view of the above discussion, we set aside the Orders of the authorities below and restore the above three grounds of appeals to the file of A.O. with a direction to re-decide these grounds as per Law, by giving reasonable, sufficient opportunity of being heard to the assessee. The A.O. is directed to confine to the quantum of grounds of appeals raised in the present appeal as reproduced above in the set aside proceedings. Appeal of Assessee is allowed for statistical purposes.
6 ITA.No.6032/Del./2015 M/s. United India Construction & Communication Pvt. Ltd., Delhi. 7. In the result, appeal of Assessee allowed for statistical purposes.
Order pronounced in the open Court.