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Income Tax Appellate Tribunal, DELHI BENCH “SMC” NEW DELHI
Before: SHRI B.P. JAIN
PER B.P. JAIN, ACCOUNTANT MEMBER:
This appeal of the assessee arises from the order of the ld. CIT(A)- XXVIII, New Delhi vide order dated 16.10.2014 for the A.Y. 2010-11. The assessee has raised the following grounds of appeal:-
“1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the finding of the Assessing officer in rejecting the books of Accounts of the assessee u/s Page 1 of 6 145(3) of the Income Tax Act, 1961 .
2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has } erred in applying the net profit of the preceding year to the gross receipts of the current year.
3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition to Income for Rs. 912363 On the basis of difference in turnover as reflected in Profit and Loss a/c vis a vis the amount shown in 26 AS which includes VAT as well.
4. That the Ld. CIT(A) has failed to appreciate that the turnover depicted in P&L is the net amount of turnover without including the amount of vat even though accepting at the same time that the action of AO is this regard was unjustified.
5. That the Ld. CIT(A) has erred in confirming the addition of Rs.880610 and 912363 incorrectly and unjustifiably made by the Assessing Officer.
The facts in the present case with regard to the ground no. 1 and 2 are that the assessee did not produce the various details and documents and it was noted by the Assessing Officer that there was no significant compliance in respect of queries raised. Accordingly, the Assessing Officer rejected books of accounts in invoking provisions of section 145 of the Act and estimated the income on the basis of the preceding year @ 3.83% of gross receipts and made an addition of Rs. 8,80,610/-.
As regards the remaining grounds the Assessing Officer noted the difference between turn over in the profit and loss account and as per form no. 26AS. The difference found was Rs. 9,12,363/- and the explanation was not found satisfactory and therefore the addition was made. Before the ld. CIT (A) the assessee produced the copy of purchase bills for the whole year with respect to purchases as well as transportation charges. It was observed by the ld. CIT(A) that the bills did not show any entry in the ledger and the mode of payment and accordingly he confirmed the action of the Assessing Officer with regard to the trading addition and also he confirmed the difference of VAT since the assessee failed to produce any evidence of the difference.
I have heard the rival contentions and perused the facts of the case. At the outset it was brought to our notice by the ld. DR that there is a delay in filing the appeal for 65 days. As a matter of fact the assessee has filed the condonation petition from which I find a sufficient cause for late filing of the appeal before the Tribunal. Accordingly the delay is condoned.
As regards the trading addition it was pointed out by the ld. counsel for the assessee that the order u/s 144 is dated 19.202013 whereas at page 2 of the assessment order the assessee was required by the Assessing Officer to produce the details on 25.2.2013. This shows that the assessment order has been completed in advance and there was a mere formality of asking the details from the assessee. The ld. DR could not controvert the above facts on record. In such circumstances there is a complete non application of mind by the Assessing Officer while completing the assessment and therefore the assessment so made is bad in law and is directed to be quashed. Accordingly the Assessing Officer is not justified in rejecting books of accounts and make any addition and accordingly additions so made are directed to be deleted.
On merit the ld. CIT (A) asked for the purchase of bills and transportation bills which was submitted by the assessee and the allegation that those bills does not show the ledger account number and mode of payment is an exercise which speaks of non application of mind, which in fact is not at all required and therefore this addition is not called Page 4 of 6 for. As regards the addition on account of difference of VAT, the bills were before the ld. CIT(A) where the VAT amount could be calculated and the Assessing Officer or the ld. CIT(A) could make further enquiries but nothing has been done. Therefore no addition on this account is called for. Therefore on both the counts the addition made is bad in law and is directed to be deleted.
In the result, the appeal of the assessee is partly allowed.
Pronounced in the open court on 09.03.2017.