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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by the assessee is against the order of CIT(A)-12, Pune, dated 03.11.2015 relating to assessment year 2008-09 against order passed under section 144 of the Income-tax Act, 1961 (in short ‘the Act’).
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) was not justified in confirming the addition of Rs.10,73,059/- made by the A.O. which he arrived at on the basis of F.26A though not specifically stated by the A.O., but it was considered as difference between the actual receipts disclosed by assessee of Rs.59,23,622/-
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and the figure arrived at by A.O. of Rs.69,96,681/- as per TDS (Form 26A) figures. The total turnover be accepted as disclosed. 2) On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the estimation of net income @ 67.78% on receipts of Rs.10,73,059/- which got reduced by 2.22% as against 70% estimated by A.O. In fact and law the figure of Rs.10,73,059/- is not a part of turnover to be taxed under the law. The turnover estimated also be reduced by Rs.10,73,059/-. It be held accordingly. 3) On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the estimation of net income @ 67.78% as against total receipts of Rs.69,69,681/-. Such percentage of income was never earned by the assessee. It is an arbitrary figure to penalize the assessee as assessment was completed exparte u/s 144 by the A.O. In view of this the returned income be directed to be accepted. 4) On the facts and circumstances of the case and in law the Ld. CIT(A) ought to have considered the legal issue that the exparte assessment was made without serving show-cause notice as mandated by the provisions of S.144(1) of the Act. The entire assessment u/s 144 is vitiated in law. It be annulled. 5) On the facts and circumstances of the case and in law the levy of interest u/s 234A, 234B and 234C is not justified.
Notice of hearing was sent to the assessee, which has been returned by postal authorities with the remark ‘left’. The assessee has failed to file any application for adjournment, though the appeal of assessee was fixed for hearing. In view thereof, it is proceeded to decide the present appeal after hearing the learned Departmental Representative for the Revenue.
Briefly, in the facts of the case, the assessee was engaged in the business of civil construction and consultancy in property matters. The assessee was linked to Shri Neelesh Satish Kanade, wherein search under section 132 of the Act was initiated on 21.02.2008. The assessee had received remuneration and commission from Neelesh Satish Kanade. Notice under section 153A of the Act was issued to the assessee. The assessee failed to file return of income in response to the said notice. Thereafter, another letter was issued to the assessee to file his return of income latest by 22.12.2009. The assessee only filed TDS certificate in respect of tax deducted at source by
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Neelesh Satish Kanade. The learned Authorized Representative for the assessee contended before the Assessing Officer that the assessee was away and the return of income along with requisite audit report chould only be filed upon his return. The Assessing Officer thereof, had no option but to complete assessment under section 144 of the Act. The Assessing Officer estimated the income @ 70% of gross receipts based on the income shown by the assessee for assessment year 2007-08. The Assessing Officer noted from the assessment order for assessment year 2007-08 that the total professional receipts as per TDS certificate were ₹ 69,96,681/-, whereas the assessee had shown receipts amounting to ₹ 59,23,622/- in the Profit and Loss Account. The assessee in the said year explained that it was following cash system of accounting and hence, had accounted for lesser receipts. The Assessing Officer thus, noted that the assessee had not offered receipts to the tune of ₹ 10,73,059/-. The total receipts as per TDS certificate for assessment year 2008-09 were ₹ 57,55,043/-. The Assessing Officer added last year’s receipts which were not taxed in the preceding year totaling ₹ 10,73,059/-.
The assessee in appeal before the CIT(A) first raised the issue of jurisdiction of Assessing Officer to assess the income under section 153A of the Act, which was decided by the CIT(A) against assessee.
In the appeal filed before the Tribunal, the assessee has not raised any such issue though the issue has been raised against ex-parte order made by Assessing Officer. The CIT(A) thereafter, took note of the fact that the assessee had not declared receipts totaling ₹ 10,73,059/- in assessment year 2007-08 on the ground that he was following cash system of accounting. However, the said amount should be added in the succeeding year, which was
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dismissed by the CIT(A). The next issue raised by the assessee before the CIT(A) was that estimation of net profit at 70% of total receipts was wrong. The CIT(A) noted that the assessee had not furnished any return of income, hence the estimation of income had to be made in the hands of assessee. He further noted that the Assessing Officer had based the estimation on last year’s income and hence, he directed the Assessing Officer to restrict estimation to 67.78% as in earlier year.
The assessee is in appeal against aforesaid findings of CIT(A).
Despite service of notice, none appeared on behalf of assessee. Earlier, the appeal was being attended by learned Authorized Representative for the assessee Mr. M.K. Kulkarni, who withdrew his Vakalatnama as no information was being sent by the assessee. Thereafter, notice of hearing was sent to the assessee and the said notice has been returned back by the postal authorities with remark ‘left’ and there is no alternative but to decide the present appeal ex- parte the assessee.
The first issue which is raised in the present appeal is against the addition to the receipts of assessee on the basis of form No.26AS of assessment year 2007-08. Both the authorities below have noted that the assessee for assessment year 2007-08 had filed the return of income, in which the receipts were shown to the extent of ₹ 59,23,622/- as against receipts declared in TDS certificate at ₹ 69,96,681/-. The assessee pleaded that it was following cash system of accounting, hence sum of ₹ 10,73,059/- was not declared in assessment year 2007-08. For assessment year 2008-09, the assessee was issued notice under section 153A of the Act. However, the
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assessee failed to file any return of income. The Assessing Officer picked up the total receipts as per TDS certificate at ₹ 57,55,053/- for assessment year 2008-09 and also included the receipts not offered in the preceding year at ₹ 10,73,059/-. On total receipts of ₹ 68,28,102/-, since the assessee had failed to furnish return of income and file the details, the income was estimated by Assessing Officer by applying net profit rate as in the preceding year. The Assessing Officer had applied net profit rate of 70%, whereas the CIT(A) restricted the same to 67.78% i.e. rate which was applied by the assessee in the Profit and Loss Account. The assessee has raised first issue before the Tribunal against inclusion of receipts of ₹ 10,73,059/-. It may be pointed out herein that the assessee had not furnished any return of income. The assessee admittedly, was following cash system of accounting. In the absence of any details being filed by the assessee, the receipts as per TDS certificate filed for the year under consideration and the receipts not offered to tax in the preceding year on the ground of following cash system of accounting, need to be considered in the hands of assessee, for computing income in the hands of assessee. Accordingly, there is no merit in the objections of assessee in this regard. I am in conformity with the orders of authorities below in calculating the receipts for the year under consideration, first on the basis of TDS certificate for the year and also in including the receipts which were not offered to tax in the preceding year. Hence, the orders of authorities below in computing total receipts at ₹ 68,28,102/- for the year under consideration, are upheld. The CIT(A) has directed the Assessing Officer to apply the rate adopted by the assessee in preceding year at 67.78% in order to estimate the income in the hands of assessee. In the absence of any further details being filed by the assessee, there is no merit in the grounds of appeal raised by the assessee that the said rate be not applied. There is also no merit in the issue raised by
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the assessee that the figure of ₹ 10,73,059/- was not part of the turnover to be taxed under law. Dismissing the same, grounds of appeal No.1 to 3 raised by the assessee are rejected.
With regard to the issue raised vide ground of appeal No.4 against ex- parte assessment made by the Assessing Officer, where the assessee has failed to comply with various notices and had even failed to furnish the return of income in response to notice issued under section 153A of the Act, the same is dismissed.
In the result, appeal of assessee is dismissed.
Order pronounced on this 20th day of April, 2018.
Sd/- (SUSHMA CHOWLA) न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 20th April, 2018. GCVSR आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to : 1. अऩीऱाथी / The Appellant; 2. प्रत्यथी / The Respondent; 3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-12, Pune; 4. The Pr.CIT (Central), Pune; ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे, एक-सदस्य 5. मामऱा / DR ‘SMC’, ITAT, Pune; गार्ड पाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune