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Income Tax Appellate Tribunal, DELHI BENCH “SMC” BENCH: NEW DELHI
Before: SHRI KUL BHARAT
This appeal, by the assessee, is directed against the order of learned Commissioner of Income-tax (Appeals)-1, Gurgaon dated 20-3-2019 for assessment year 2011-12.The assessee has raised following grounds of appeal:
“(1) That the order of the Learned CIT(A) is not justified in upholding the assessment order mechanically on the ground that the order of Assessing authority is justified whereas as per the assessee there is none independent application of a judicial mind for arriving of a decision making. (2) That the order of the Learned Deputy Commissioner of income Tax is against law & Facts.
RajeshwarPrashadGoel Vs. DCIT (3) That on the facts & circumstances of the case of the appellant the order of the Learned CIT(A) has rejected the books of accounts and estimated the net profit at Rs. 9,91,162/- @ 5% against Rs. 1,27,038/- filed as per our income tax return which is undesirable and uncalled for. (4) That the appellant disputes the quantum of addition. (5) That the Appellant craves for permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal.
2. Briefly stated facts are that in this case return declaring income of Rs. 14,50,170/- was filed by the assessee on 20.9.2011. Thereafter the case was selected for scrutiny and the assessment was framed u/s 143(3) of the Income-tax Act, 1961, hereinafter referred to as the “Act”. The Assessing Officer while framing the assessment noticed that the assessee had declared profit of Rs. 15,31,500/- on the total turnover of Rs. 1,98,23,240/-, declaring gross profit ratio of 7.73% and net profit shown at Rs. 1,27,038/- only by giving net profit ratio at 0.64%. Therefore, the Assessing Officer, after examining the ledger, noticed that payment in cash of Rs. 20,000/- or below on different dates was made. Therefore, the Assessing Officer issued a show cause as to why the books of account should not be rejected. In response thereto the assessee filed reply. However, the reply filed by the assessee was not found acceptable by the Assessing Authority. He proceeded to reject the books of account and computed the net profit at 8% on the total turnover. Thereby, he assessed the income at Rs. 29,08,997/- against the income declared at Rs. 14,50,170/-.
RajeshwarPrashadGoel Vs. DCIT 3. Aggrieved against the order of Assessing Officer, assessee filed appeal before the CIT(Appeals), who, after considering the submissions, partly allowed the appeal. Thereby the learned CIT(Appeals) estimated the net profit @ 5%.
Aggrieved against the order of learned CIT(Appeals) the assessee has filed appeal before the Tribunal.
The only effective ground in this appeal is against the estimation of net profit @ 5% by the learned CIT(Appeals).
Learned counsel for the assessee submitted that the authorities below failed to appreciate the facts in right perspective. He submitted that the Assessing Officer rejected the books of account without pointing out any specific defect and the learned CIT(Appeals) mechanically affirmed his view of rejection of books of account. Learned counsel submitted that without pointing out any specific defect in the vouchers produced by the assessee, the authorities below, without making necessary inquiry, proceeded to make the estimation of profit. He submitted that the authorities below have not considered the past history of the assessee. He submitted that the gross profit ratio of last two previous years i.e. 2008-09 and 2009-10 was 3.10% and 5.05%. In respect of assessment year 2009-10 the gross profit ratio of 7% was accepted.
Learned Departmental Representative opposed the submissions and supported the orders of authorities below.
I have heard rival submissions, perused the material on record and gone through the orders of authorities below. I find that the Assessing Authority has not given any specific reason for rejection of books of account of the assessee. Merely because the assessee had made certain payment in cash would not ipso facto make
RajeshwarPrashadGoel Vs. DCIT the account submitted by the assessee as not reliable. The law is well settled. The Assessing Officer is required to point out specific defect for rejection of books of account. Therefore, considering the totality of facts and the material available on record, I hereby direct the Assessing Officer to adopt the net profit ratio @ 1.5%, considering the past history of the assessee. This ground of the assessee is partly allowed.