The ITO 2 (1), v. Shri Rajesh Sublok,

ITA 484/IND/2008 | 2005-2006
Pronouncement Date: 15-04-2010 | Result: Dismissed

Appeal Details

RSA Number 48422714 RSA 2008
Assessee PAN AAEPU4912P
Bench Indore
Appeal Number ITA 484/IND/2008
Duration Of Justice 1 year(s) 4 month(s) 25 day(s)
Appellant The ITO 2 (1),
Respondent Shri Rajesh Sublok,
Appeal Type Income Tax Appeal
Pronouncement Date 15-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 15-04-2010
Date Of Final Hearing 15-04-2010
Next Hearing Date 15-04-2010
Assessment Year 2005-2006
Appeal Filed On 20-11-2008
Judgment Text
PAGE 1 OF 7 - I.T.A.NO. 484/IND/2008 RAJESH SABLOK UJJAIN IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : AAEPU4912P I.T.A.NO. 484/IND/2008 A.Y. : 2005-06 INCOME-TAX OFFICER SHRI RAJESH SABLOK 2(1) VS 111 SNEH NAGAR UJJAIN UJJAIN APPELLANT RESPONDENT APPELLANT BY : SMT.APARNA KARAN SR.DR RESPONDENT BY : SHRI S.S.DESHPANDE AND SHRI A.K. MANTRI CAS. DATE OF HEARING : 15.04.2010 O R D E R PER V.K. GUPTA A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A) UJJAIN DATED 26.09.2008 FOR THE ASSESSME NT YEAR 2005-06. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NO.1 RAISED BY THE REVENUE READS AS UNDER : - WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) IS RIGHT IN CONFIRMING THE ADDITION OF RS. 15 00 000/- ONLY AGAINST THE ADDITIONS MADE OF RS. PAGE 2 OF 7 - I.T.A.NO. 484/IND/2008 RAJESH SABLOK UJJAIN 60 25 291/-FOR CREDITORS NOT PROVED ADDITIONS OF R S. 13 71 034/- FOR INFLATION OF PURCHASES AND ADDITION S OF RS. 7050/- FOR UNEXPLAINED CASH PAYMENT SPECIALLY WHEN THE ASSESSEE HAS NOT PROVED THE PURCHASES CLAIMED FROM M/S. DEV SALES M/S. MOHANDAS PRITAMDAS M/S. PREM MACHI NERY AND M/S. SUHAG ELECTRICALS AND HAS NOT FURNISHED TH E DETAILS OF PURCHASES AND MODE OF PAYMENTS AGAINST PURCHASES FROM UNORGANIZED SUPPLIERS EVEN BEFORE THE LD. CIT(A). 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A CON TRACTOR AND ALSO ENGAGED IN SUPPLY TO UJJAIN MUNICIPAL CORPORATION. THE ASSESSEE SHOWED A NET PROFIT RATE OF RS. 3 50 280/- 2 2.7 %. THE A. O. IN THE COURSE OF ASSESSMENT PROCEEDINGS ISSUED LETTERS U/S 133(6) TO VARIOUS TRADE CREDITORS WHICH REMAINED UNREPLIED AND UNSERVED. T HE A.O. THEREAFTER REQUIRED THE ASSESSEE TO PROVE THE GENUINENESS OF S UCH LIABILITIES. THE ASSESSEE DUE TO PRECARIOUS BUSINESS/FINANCIAL SITU ATION AS WELL AS PERSONAL DIFFICULTY THE ASSESSEE SURRENDERED THE SUM OF RS. 15 LAKHS OUT OF TOTAL SUNDRY CREDITORS WHICH HE COULD NOT PROVE. THE A.O . HOWEVER EXAMINED THE BALANCE SHEET IN TOTO AND FORMED AN OP INION THAT SUNDRY CREDITORS WERE ALSO NOT GENUINE AS THE ASSESSEE DID NOT PRODUCE THE BILLS AND IN SOME OF THE CASES IT HAD BEEN FOUND BY THE DEPARTMENT THAT SUCH OF THE PARTIES DID NOT EXIST AND IN SOME CASES IT THE TRANSACTION SHOWN BY PAGE 3 OF 7 - I.T.A.NO. 484/IND/2008 RAJESH SABLOK UJJAIN THE ASSESSEE IN ITS BOOKS OF ACCOUNT WERE NOT MENTI ONED IN THE ACCOUNT OF THE ASSESSEE IN THE BOOKS OF SUCH PARTY. ACCORDINGL Y HE ADDED THE SUNDRY CREDITORS TO THE TUNE OF RS. 60 25 291/- AND ALSO M ADE AN ADDITION OF RS. 13 71 034/- ON ACCOUNT OF INFLATION OF PURCHASES. T HE A.O. ALSO MADE ADDITION OF RS. 7050/- ON ACCOUNT OF DIFFERENCE IN THE CASH TRANSACTION IN THE ACCOUNT OF M/S. SINGHVI RADIO. AGGRIEVED BY THI S THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A ) WHEREIN THE ASSESSEE SUBMITTED THAT TRADING RESULT OF THE YEAR UNDER CON SIDERATION WERE BETTER COMPARED TO THE TRADING RESULT OF EARLIER YEARS. TH E ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE WAS SUPPLYING THE MATER IAL TO THE GOVERNMENT AND THE SALES WERE NOT DOUBTED. THE ASSESSEE ALSO P LEADED THAT AT THE END OF THE YEAR THERE WERE NATURALLY CERTAIN TRADE CRE DITORS. HOWEVER THOSE WERE NOT SO ABNORMALLY HIGH SO AS TO ASSUME THAT TH EY WERE FICTITIOUS OR ASSESSEE WAS INDULGED IN ANY ACTIVITY OF INFLATING ITS EXPENDITURE. THE ASSESSEE ALSO EXPLAINED THAT SUCH CREDITORS GOT ACC UMULATED DUE TO WORKING CAPITAL CYCLE INVOLVED IN HIS LINE OF BUSIN ESS. THE ASSESSEE ALSO SUBMITTED THAT AT THE TIME OF ASSESSMENT PROCEEDING S THE ACCOUNTANT OF THE ASSESSEE WAS NOT AVAILABLE AND BOOKS WERE WITH HIM. HENCE THE SAME COULD NOT BE PRODUCED. HOWEVER THE SAME WERE PRODU CED BEFORE THE AUDITOR AND THE AUDITORS HAD VERIFIED THOUGH AND FA IRNESS OF THE ACCOUNTS. THE ASSESSEE ALSO SUBMITTED THAT IF THE TRADE CREDI TORS WERE ADDED THEN PAGE 4 OF 7 - I.T.A.NO. 484/IND/2008 RAJESH SABLOK UJJAIN THERE WOULD BE AN EXCEPTIONAL ABNORMAL NET PROFIT O F AROUND 57 % OF THE TOTAL TURNOVER. IT WAS ALSO PLEADED THAT THE ASSESS EE SURRENDERED A SUM OF RS. 15 LAKHS DUE TO NON-COOPERATIVE ATTITUDE OF THE CREDITORS AND WHICH SHOULD NOT HAVE BEEN RESULTED INTO A PRESUMPTION OF ALL THE CREDITORS BEING BOGUS. IT WAS ALSO PLEADED THAT THERE WAS A TIME GA P BETWEEN THE TRANSACTION AND THE ENQUIRIES CONDUCTED BY THE ASSE SSEE AND IF THE CREDITORS HAD NOT RECORDED THE TRANSACTIONS IN THEI R BOOKS THE ASSESSEE COULD NOT BE BURDENED WITH SUCH DISALLOWANCES FOR T HEIR SUCH ACTION. THE LD. CIT(A) AGREEING WITH THE SUBMISSIONS OF THE ASS ESSEE HELD THAT AFTER TAKING INTO CONSIDERATION THE SURRENDER OF RS. 15 LAKHS THE NET PROFIT AMOUNTED 14 % WHICH WAS QUITE REASONABLE HENCE N O OTHER ADDITION WAS WARRANTED. THE FINDINGS OF THE LD. CIT(A) ARE A S UNDER :- 7. ON CAREFULLY CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCES OF THE CASE IT IS FOUND THAT THE FIN DINGS OF A.O. ARE BASED ON ASSUMPTION THAT WHAT THE THIRD PA RTIES ARE TELLING IS CORRECT. BUT THE SAME MAY NOT BEEN TRUE ALWAYS BECAUSE THEY MAY HAVE THEIR OWN CONSTRAINTS. SECOND LY WE CANNOT ALTOGETHER IGNORE THE PRINCIPLES OF NATURAL JUSTICE AND JUDICIOUS DECISION MAKING. IN THIS CASE THE APPELL ANT IS HANDICAPPED IN DEFENDING HIMSELF BY PRODUCING THE B OOKS OF ACCOUNT BILLS AND VOUCHERS BECAUSE THE SAME ARE NO T IN HIS PAGE 5 OF 7 - I.T.A.NO. 484/IND/2008 RAJESH SABLOK UJJAIN POSSESSION. SHRI DINESH SHAH ACCOUNTANT WHO WAS HA VING THE BOOKS OF ACCOUNT IS ABSCONDING. THIS FACT IS UNDERSTANDABLE AND VERIFIABLE FROM THE ARREST WARRA NT ISSUED BY POLICE STILL WAITING FOR HIM. IN SUCH CIRCUMSTAN CES IN MY VIEW THIS CASE CAN BE TREATED AS PARALLEL TO NO AC COUNT CASE AND APPLYING A REASONABLE NET PROFIT RATE ON THE TO TAL RECEIPTS OF THE APPELLANT IS PROPER COURSE OF ACTION. THE RECEIPTS ARE VERIFIABLE FROM TDS CERTIFICATES ISSUED BY UJJAIN MUNICIPAL CORPORATION . THE APPELLANT HAS SHOWN NET PROFIT OF RS. 3 40 882/ -. FURTHER A SUM OF RS. 15 00 000/- WAS SURRENDERED AT THE TIME OF SCRUTINY ASSESSMENT. TAKEN THIS INTO CONSIDERATION THE INCOME OFFERED FOR TAX BECOMES R S. 18 40 882/- WHICH IS MORE THAN 14% OF RECEIPTS. IN CASE OF CONTRACT BUSINESS NET PROFIT OF 14 % IS QUI TE REASONABLE. AN ADDITION MADE BY THE ASSESSING OFFICER AMOUNTING TO RS. 7 050/- U/S 69C IS ALSO UNWARRANTED IN VIEW OF ADDITION OF RS. 15 LAKHS ALREADY MADE FOR ALL SUCH DISCREPANCIES AND DEFICIENCIES. IN THE RESULT ADDITION TO THE EXTENT OF RS. 15 00 000/- IS CONFIRMED. PAGE 6 OF 7 - I.T.A.NO. 484/IND/2008 RAJESH SABLOK UJJAIN 5. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BE FORE US. 6. THE LD. DR NARRATED THE FACTS AND PLACED RELIANCE O N THE ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE ON THE OT HER HAND PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 8. IT IS NOTED THAT THE ASSESSEE IS A CONTRACTOR AND T HE SUPPLIES MADE BY THE ASSESSEE TO THE VARIOUS DEPARTMENTS HAV E NOT BEEN DOUBTED. THE CLIENTS OF THE ASSESSEE ARE GOVERNMENT DEPARTME NTS WHERE THE ASSESSEE CANNOT BE IN A POSITION TO EARN SUCH A HUG E PROFIT IF THE DISALLOWANCES MADE BY THE ASSESSING OFFICER ARE CON FIRMED. EVEN OTHERWISE HAVING REGARD TO PAST RESULTS THE NET PR OFIT OF 14% AFTER TAKING INTO CONSIDERATION THE SURRENDER OF RS. 15 LAKHS M ADE BY THE ASSESSEE IS QUITE REASONABLE. ACCORDINGLY WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF LD. CIT(A). THUS BOTH THE GROUNDS OF THE REVENU E ARE DISMISSED. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. PAGE 7 OF 7 - I.T.A.NO. 484/IND/2008 RAJESH SABLOK UJJAIN THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 15 TH APRIL 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH APRIL 2010. CPU* 16194