The Prl Commissioner of Income Tax [Central] vs. G Sanjay Chowdhary

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-247-2015 (O&M) Date of decision:- 03.08.2016 Pr. Commissioner of Income Tax, Faridabad. ...Appellant Versus M/s Patram Lease Holder ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE DEEPAK SIBAL Present:- Mr. Tajender K. Joshi, Advocate, for the appellant. Mr. Avneesh Jhingan, Advocate, for the respondent. * * * * S.J. VAZIFDAR, A.C.J. (ORAL) This is an appeal against the order of the Tribunal affirming the order of the CIT (Appeals). The CIT (Appeals) estimated the respondent-assessee’s income by taking GP rate of 11.22%, whereas the Assessing Officer had added 50% of the expenses claimed in the trading and profit & loss account. The matter pertains to the assessment year 1997-1998. 2. The proceedings were initiated under Section 263 of the Income Tax Act, 1961 (in short the Act). It is not necessary to consider the validity of the proceedings under Section 263 of the Act as they have not been challenged and this is the revenue’s appeal. 3. The appellant contends that the following substantial questions of law arise:- “1. Whether the Hon’ble Member of ITAT erred in law in agreeing with the observations of CIT(A) in restricting the disallowance at Rs. 10,99,631/- against the addition of Rs. 2,15,78,511/- made on account of disallowance of expenses claimed in Amodh Sharma 2016.08.09 16:51 I attest to the accuracy and authenticity of this document chandigarh

ITA-247-2015 (O&M) 2 trading account and Rs. 20,96,430/- in P&L a/c by the AO, inspite of the fact that the ld. CIT(A) has himself accepted the decision of AO in rejecting the books of accounts of the assessee in terms of provisions of section 145(3) of the Act, 1961. 2. Whether the Hon’ble Member of ITAT erred in law in deleting the AO to reduce the disallowance when the assesee could not produce supporting bills/vouchers/books of accounts and other supporting evidences for examination and verification before the AO as well as before the Ld. CIT(A) so as to enable them to verify the genuineness and authenticity of expenses claimed in Trading & Profit and Loss account and substantiate the taxable income computed therefrom.” 4. In our opinion, the appeal does not raise any substantial question of law. It only involves an assessment of the facts and the exercise of discretion in computing the income. The Assessing Officer made an addition of about ` 2.16 crores on account of disallowance of 50% of the expenses claimed in the trading account and made further addition of an aggregate amount of about ` 21 lacs on account of 50% of the disallowance out of the expenses claimed in the profit and loss account. The Assessing Officer did so after rejecting the assessee’s books of account. The rejection of the books of account has not been challenged. 5. The CIT (Appeals) and the Tribunal, however, disagreed with these additions. The appellate authorities noted that in the preceding assessment year i.e. 1996-1997, the appellant had declared a net profit of ` 24,85,527/- on the turnover of ` 2,21,51,608/- resulting into a GP rate of 11.22%. The proceedings in respect of that assessment year, 1996-1997 have attained finality. The decision, therefore, to proceed on Amodh Sharma 2016.08.09 16:51 I attest to the accuracy and authenticity of this document chandigarh

ITA-247-2015 (O&M) 3 the basis of the turnover and the declared profit for that assessment year cannot be said to be unreasonable. 6. In addition thereto, the department had not sought any comparable case for estimation of income. The department had not brought any material on record indicating that 50% of the expenses were not supported by vouchers or were supported by bogus vouchers. The decision, therefore, to assess the income after adopting a GP rate is neither perverse nor illogical. The exercise of discretion in this regard cannot be faulted. 7. No substantial question of law arises in this appeal. 8. The appeal is, therefore, dismissed. (S.J. VAZIFDAR) ACTING CHIEF JUSTICE (DEEPAK SIBAL) JUDGE 03.08.2016 Amodh Whether speaking/reasoned Yes/No Whether reportable Yes/No Amodh Sharma 2016.08.09 16:51 I attest to the accuracy and authenticity of this document chandigarh