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Facts
The assessee, Anil Tilakraj Mehra, filed appeals against the assessment orders for AY 2006-07 and 2007-08, which were dismissed by the CIT(A). The original assessment was made under Section 143(3) read with Section 147 of the Income Tax Act, 1961, after reopening the case based on information from AY 2009-10.
Held
The Tribunal restored the issue back to the Assessing Officer for both assessment years. The assessee is directed to produce the books of account and audit report to substantiate their book results, granting them another opportunity.
Key Issues
Whether the reopening of assessment under Section 147 was justified, and whether the estimation of income under Section 44AD was appropriate without considering the books of account and the turnover limit.
Sections Cited
143(3), 147, 148, 44AD, 44AB
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Income Tax Appellate Tribunal, “K (SMC
Before: SHRI PRASHANT MAHARISHI, AM & SHRI SUNIL KUMAR SINGH, JM
for A.Y. 2006-07 and for A.Y. 2007-08, is filed by Mr. Tilakraj Mehra (assessee / appellant) against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] dated 21st February, 2024, dismissing the
The assessee is aggrieved with the same and has preferred this appeal raising following grounds of appeal in for A.Y. 2006-07:-
“1) On the facts and in the circumstances of the case and in law, the learned A.Q. erred in not disposing off appeal except to 2 grounds relating to reopening and estimate of income u/s. 44AD. ii) On the facts and in the circumstances of the case and in law, the learned A.O. erred in reopening the assessment U/s. 147 of the Income Tax Act, 1961, and the learned CIT(A) erred in confirming the reopening of the assessment by the A.O. on the ground that the income for the Assessment Year 2006-2007 should have been estimated U/s. 44AD of the Income Tax Act, 1961, by relying on the assessment order for Assessment Year 2009-2010, iii) On the facts and in the circumstances of the case and in law, the learned CIT(A) did not appreciate the fact that no officer of the Department can travel beyond the provisions contained in the Income Tax Act, 1961, by ignoring section 44AD sub section 6 explanation (b)(ii) where eligible business is defined. The total turnover for the year under appeal is much iv) On the facts and in the circumstances of the case and in law, the mistake committed in any Assessment Year cannot become base for reopening of the assessment as each assessment year is an independent assessment year and, therefore, on this ground only the order passed by the learned A.O. should be quashed. On the ground that the assessment could not have been reopened on mère change of opinion. v) The learned A.O. and the learned C.I.T.(A) do not have power to travel beyond the provisions contained in the Income Tax Law in respect of section 44AD. Therefore, the assessment order passed by the learned A.O. requires to be quashed, on the ground that the learned AO's action in reopening the assessment is ultra virus of the Income Tax Law. vi) On the facts and in the circumstances of the case and in law, without considering the fact that the appellant has challenged the application of section 44AD, as applicant's turnover for the year under consideration was Rs.6,04,04,573/- which is 15 times higher than the limit of turnover prescribed u/s. 44AD. It is further submitted that the AO, ignored the Tax Audit Report in Form No. 3CD and 3CB duly vii) On the facts and in the circumstances of the case and in law, the issue of notice u/s. 143(2), of the Act is mandatory when the order is passed u/s. 143(3). This submission of the appellant has not been discussed or dealt with by the CIT(A) while discussing the appeal. viii) On the facts and in the circumstances of the case and in law, the learned A.O. did not issue the notice u/s. 143(2) of the I.T. Act 1961, during the course of assessment proceedings and the learned C.I.T.(A) had ignored this fact while passing the appellate order and, therefore, on this ground itself the assessment order requires to be quashed. ix) On the facts and in the circumstances of the case and in law, learned A.O. as well as the learned C.I.T.(A) ignored the submissions made during the course of assessment vide letters dated 25.02.2016, 17.12.2021 and 23.01.2024 submitted to the CIT(A). The appellate order is passed without considering the submission. x) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in relying the assessment order & appellate Order for the Assessment years 2001-2002 to 2003-2004 as the facts of these assessments years are totally different from the facts of the current assessment year. xii) The appellant craves leave to add, alter, amend or delete any ground(s) of appeal either before or during the course of hearing of the appeal.”
Brief facts of the case for AY 2006-07 shows that assessee is an individual who filed his return of income on 31st October, 2006, at a total income of ₹11,19,445/-. The return was processed under Section 143(1) of the Act. Subsequently, notice under Section 148 of the Act was issued on 15th March, 2013, for the reason that during the assessment proceedings for A.Y. 2009-10, that assessee has not maintained the books of account and assessment was completed under Section 44AD of the Act estimating the net profit of the assessee being 8% of gross receipt. Further, in earlier years also the assessment of the assessee has been made by estimating the income at the rate of 8% of the gross receipt. It was noted that for A.Y. 2009-10, the gross receipt of the assessee is ₹7,28,78,932/- and therefore, it has resulted into an underassessment of income. Assessee responded to notice under Section 148 of the Act by letter dated 7th May, 2013, stating that the return filed on 31st October, 2006, may be treated as return of income in compliance to the above notice. The assessee was supplied the reasons of reopening. The assessee raised objection on 18th February,
The assessee preferred the appeal before the learned Commissioner of Income-tax (Appeals). Assessee submitted that he is a proprietor of M/s Tirupati constructions. He submits that assessee has a turnover of ₹6,04,04,573/- and has also filed his tax audit report under Section 44AB of the Act and therefore, determination of the profit at the rate of 8% is incorrect.
The learned Authorized Representative submitted that in assessee’s own case, the identical issue is decided by the co-ordinate Bench in 2013, 2014 and 2015/Mum/2024, for four earlier different assessment years, wherein the issue is restored to the file of the learned Assessing Officer with a direction to the assessee for submission of the books of account before the learned Assessing Officer and therefore, identically if assessee is
The learned Departmental Representative stated that assessee has been given enough opportunities before the learned lower authorities but has not produce the books of account and therefore giving one more opportunity is incorrect.
We have carefully considered the rival contentions and perused the orders of the learned lower authorities. In assessee’s own case for A.Y. 2008-09 to A.Y. 2011-12, the co-ordinate Bench vide order dated 12th July, 2024, vide paragraph no.7 has given one more opportunity to the assessee for submitting the books of account before the learned Assessing Officer and no view on the merits of the case are expressed. As the A.Y. 2006-07, is on identical facts, for this year also we restore the issue back to the file of the learned Assessing Officer with a direction to the assessee to substantiate his book results by producing the books of accounts and audit report. for A.Y. 2007-08, is also on similar facts where the learned CIT (A) confirmed the action of the learned Assessing Officer of estimating the income of the assessee under Section 44AD of the Act. For the similar reasons given by us for A.Y. 2006-07, we also restore the appeal of the assessee for A.Y. 2007-08 to the file of the learned Assessing Officer with similar direction to the assessee.
Order pronounced in the open court on 24.07. 2024.