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Income Tax Appellate Tribunal, BENCH “J”, MUMBAI
Before: SHRI B.R.BASKARAN & SHRI PAWAN SINGH
Order under section 254(1) of Income Tax Act. PER PAWAN SINGH, JM: 1. This appeal u/s 253 of the Income-tax Act (‘Act’) is directed by assessee against the order of Ld. Commissioner of Income-tax (Appeals) [for short ‘the CIT(A)] -34 Mumbai dated 10.12.2014 for Assessment Year (AY) 2004-05. Though, the assessee has raised as many as five grounds of appeal
, however, as per our considered opinion the only substantial ground of appeal is “Whether the AO erred in confirming the addition of Rs. 25,28,841/- to the total income on the basis of Net Profit @ 8% on total sale of Rs. 3,74,87,174/-”.
2. Brief facts of the case are that the assessee is a Firm deriving income from business activity of Builder & Developer. The assessee filed return of income for relevant AY on 01.11.04 declaring total income at Rs. 5,37,240/-. The assessee has shown the Net Profit @ 1.25%. To verify the correctness of income, the assessee was asked to produce the books of accounts and details of expenses. The assessee failed to produce the books of accounts and details of expenses. The Net Profit from business activity @ 1.25% was not accepted by the Assessing Officer (AO) and the 2 M/s R.A. Development Services AO accordingly estimated 8% of sale declared by the assessee as Net Profit. Accordingly, difference of Rs. 25,28,841/- was added to the income of assessee in the order passed u/s 143(3) dated 16.12.2006. On appeal before the First Appellate Authority (FAA), the addition was confirmed. Thus, further aggrieved by the order of CIT, the present appeal is filed before us.
3. None appeared on behalf of assessee despite waiting for sufficient time. From perusal of record, it was noticed that on 11.07.2016, the assessee sought adjournment and the case was adjourned for 10.08. 2016. On 10.08. 2016 none appeared and the case was adjourned for 25.08.2016. On 25.08.2016 this case from the category of SMC was transferred to this bench and was listed on 17.10.2016, again none appeared on behalf of assessee. On 17.10.2016, fresh notice was ordered to be served by notice through RPAD. The notice was duly served on the assessee on 20.10.2016 as AD is available on record. Neither the authorized person nor any representative on behalf of assessee appeared nor any application for adjournment was filed. Hence, we have no option except to proceed further and to hear the ld. DR for Revenue.
4. We have noticed that the appeal is filed beyond the prescribed period of time of limitation. The assessee along with appeal filed an application for condonation of delay in the form of affidavit of Mr. Arshad Mohd. Zaheer, partner of the assessee- firm. In the affidavit, the assessee contended that order of CIT(A) was served on assessee on 07.01.2015. The time for filing the appeal before the Tribunal was till 08.03.2015 and there is 10 days delay in filing of the appeal. The contents of affidavit further disclosed that the delay occurred due to the non-availability of Accountant of the assessee-firm and the partner could not prepared the compilation of document for filing appeal before the ITAT. We have seen that in column 9 of appeal Form the assessee has categorically disclosed the date of communication as 15.01.2015. The appeal form is duly signed by the person who has filed affidavit. The appeal form is also signed by Chartered Accountant Shri Vishwanath N. Shetty. From the comparison of the appeal form and the contents of affidavit, it is clear that the partner of assessee has made the wrong statement either in memo of appeal or in affidavit filed in support of condonation of delay. We have noticed that certainly there is contradiction in column 9 of Form-36 (Appeal Form) and in the affidavit 3 M/s R.A. Development Services filed in support of condonation of delay. Such practice adopted by ld. AR of the assessee is certainly not appreciable. We have further noticed that there is only 10 days delay in filing of the appeal. The Revenue would not suffer any prejudice, if the appeal is decided on merit. Hence, keeping in view the principal of natural justice, the appeal in filing, delay is condoned.
We have heard ld. Departmental Representative (DR) for Revenue on merit of the case. The Ld. DR for the Revenue fully supported the order of authorities below. It was further argued by ld. DR for Revenue that the assessee failed to produce the books of accounts and the details of expenses before the AO and the AO correctly estimated the NP which is quite reasonable in the business of Builder & Developer. It was further argued by the ld. DR for the Revenue that during the appellate proceeding, the ld. CIT(A) sought the remand report from AO. The AO furnished the remand report on 08.10.2014. The remand report of AO was furnished to the assessee’s representative. The assessee’s representative instead of filing proper reply and attending the proceeding before the ld. CIT(A) filed their reply in the Tapal in the office of ld. CIT(A). The assessee failed to substantiate the grounds of appeal
raised before the FAA, thus the addition on account of GP rate was sustained.
6. We have considered the contention of ld. DR for Revenue and further perused the order of authorities below. The assessee is engaged in the business of Builder & Developer. The assessee in the return of income claimed NP of 1.25% on declared sale of Rs. 3,74,87,175/-. The assessee was asked to produce the books of accounts and the details of expenses. The assessee failed to file books of accounts and various details of expenses incurred. The AO on the basis of considering the nature of business estimated the NP @ 8% and added an amount of Rs. 25,28,841/- in the income of assessee. During the first appellate proceeding, the ld. CIT(A) called the remand report from the AO on the contention of assessee that no sufficient opportunity to produce the books of account was given to them. On the contention of the assessee the ld. CIT(A) called the remand report from AO. The AO furnished his remand report dated 08.10.2014. The assessee was provided the copy of remand report furnished by AO. The assessee filed his reply to the remand report on 20.11.2014 in tapal. The assessee again the assessee failed to substantiate his contention. Even before us, the assessee has not filed any documentary evidence to 4 M/s R.A. Development Services substantiate his contention nor their representative come forward to explain the fact and to substantiate their claim. In these circumstances we find the NP rate estimated by AO and confirmed by ld CIT(A) is quite reasonable. Thus, we do not find any illegality or infirmity in the order passed by lower authorities.