ITO, Muzaffarnagar v. Shri Vikas Malik, Muzaffarnagar

ITA 5547/DEL/2010 | 2007-2008
Pronouncement Date: 16-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 554720114 RSA 2010
Bench Delhi
Appeal Number ITA 5547/DEL/2010
Duration Of Justice 9 month(s) 8 day(s)
Appellant ITO, Muzaffarnagar
Respondent Shri Vikas Malik, Muzaffarnagar
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted H
Tribunal Order Date 16-09-2011
Date Of Final Hearing 09-08-2011
Next Hearing Date 09-08-2011
Assessment Year 2007-2008
Appeal Filed On 08-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H NEW DELHI) BEFORE SMT DIVA SINGH JUDICIAL MEMBER AND SHRI B.K. HALDAR ACCOUNTANT MEMBER I.T.A. NO.5547/DEL/2010 ASSESSMENT YEAR : 2007-08 ITO SHRI VIKAS MALIK WARD-2 (1) S/O SHRI DILWAR SINGH MUZAFFARNAGAR. V. 385/65 GAUSHALA NADI ROAD MUZAFFARNAGAR. AND I.T.A. NO. 1098/DEL/2011 ASSESSMENT YEAR: 2007-08 SHRI VIKAS MALIK ITO 385/65 GAUSHALA NADI RD. WARD-2 (2) MUZAFFARNAGAR. V. MUZAFFARANAGAR. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.ACMPM ACMPM ACMPM ACMPM- -- -1034 1034 1034 1034- -- -G GG G APPELLANT BY : DR. B.R.R. KUMAR SR. DR. RESPONDENT BY : SHRI SANJAY MALIK ADVOCATE. ORDER PER B.K. HALDAR AM : THESE ARE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE R ESPECTIVELY AGAINST THE ORDER OF LD CIT(A) MUZAFFARNAGAR DATED 24 .9.2010 FOR ASSESSMENT ITA NO5547 & 1098./DEL/10 & 2011 2 YEAR 2007-08. BEING CROSS APPEALS THESE APPEALS ARE DISP OSED OFF BY THIS COMMON ORDER. I.T.A. NO. 5547/DEL/2010: I.T.A. NO. 5547/DEL/2010: I.T.A. NO. 5547/DEL/2010: I.T.A. NO. 5547/DEL/2010: 2. REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEALS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF `.3 23 366/- MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF NET PROFIT RESULTS WITHOUT APPRECIATING FUL L FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF `.10 25 000/- MADE BY THE AS SESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOM E TAX ACT 1961 WITHOUT APPRECIATING FULL FACTS OF THE CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF `.4 32 213/- MADE BY THE AS SESSING OFFICER ON ACCOUNT OF SUPPRESSION OF THE CONTRACTUAL RECEIPTS WITH OUT APPRECIATING FULL FACTS OF THE CASE. 4. THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. 3. ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEALS:- 1. THAT THE LD CIT(A) MUZAFFARNAGAR IS WRONG AND UNJUST IFIED TO APPLY 7% NET PROFIT RATE WHEREAS IN OTHER CASE PROFIT RATE IS TAKEN 5 T O 6%. 2. THAT THE LD CIT(A) MUZAFFARNAGAR HAS ERRED IN CONFIR MING THE UNSECURED LOANS TO THE EXTENT OF `.1 75 750/- WHEREAS THESE ARE THE T RADE CREDITS. ITA NO5547 & 1098./DEL/10 & 2011 3 4. IN THIS CASE ASSESSMENT WAS COMPLETED U/S 144 OF THE A CT AS THE ASSESSEE DID NOT COMPLY WITH THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 142(1) OF THE ACT DID NOT APPEAR BEFORE THE AO ON SOME DATES OF HEARING AND FAILED TO PRODUCE BOOKS OF ACCOUNTS AND SUPPORTING EVIDENCE BEFORE HIM. TH E ASSESSEE DISCLOSED CONTRACT RECEIPTS OF `.1 01 97 530/- ON WHICH IT DIS CLOSED NET PROFIT RATE OF 4.76%. AS THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT AND SU PPORTING EVIDENCE BEFORE THE ASSESSING OFFICER THE ASSESSING OFFICER APPLIED NET PR OFIT RATE OF 10% THEREBY MAKING AN ADDITION OF `.4 97 543/-. 5. ASSESSING OFFICER ALSO NOTED FROM PART-B OF FORM N O.3CD THAT DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE OBTAINED NEW UN-SECURED LO ANS AMOUNTING TO `.12 00 750/-. IN SPITE OF ISSUE OF NOTICE U/S 142(1) WHEREIN THE ASSESSEE WAS REQUIRED TO FURNISH COMPLETE NAMES AND ADDRESS OF THE PERSO NS FROM WHOM LOANS HAVE BEEN TAKEN ALONG WITH THEIR CONFIRMATION COPY OF I NCOME TAX RETURNS AND COPY OF PASS BOOK OF THE LENDERS THE ASSESSEE DID NOT FURNISH ANY SUCH DETAILS. THE ASSESSING OFFICER THEREFORE ADDED THE IMPUGNED AMOUNT O F `.12 00 750/- U/S 68 OF THE ACT. 6. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE CLAI MED TDS OF `.9701/- ON ACCOUNT OF PAYMENT OF `.4 32 213/- RECEIVED BY HIM F ROM M/S MODI SUGAR MILLS MODINAGAR. AS PER THE DETAILS AVAILABLE ON RECOR D THE ASSESSING OFFICER FOUND THAT THE SAID RECEIPTS OF `.4 32 213/- WAS NOT I NCLUDED BY THE ASSESSEE IN THE CONTRACTUAL RECEIPTS. HE THEREFORE ADDED THIS AMOUNT OF `.4 32 213/- TO THE INCOME OF THE ASSESSEE. AGGRIEVED THE ASSESSEE FILED APPEAL BEFO RE THE LD CIT(A). ITA NO5547 & 1098./DEL/10 & 2011 4 7. BEFORE THE LD CIT(A) IT WAS CONTENDED BY THE ASSESSEE TH AT IN SIMILAR CIRCUMSTANCES CIT(A) MUZAFFARNAGAR HAS ESTIMATED THE N ET PROFIT RATE BETWEEN 5 TO 6%. COPY OF ASSESSMENT ORDER PASSED BY THE ITO WARD-1(1 ) MUZAFFARNAGAR IN SIMILAR TYPE OF CASES WHEREIN NET PROFIT RATE OF 6% WAS H ELD REASONABLE BY THE ASSESSING OFFICER AND WAS ALSO ACCEPTED BY THE ASSESSEE WERE ALSO FURNISHED. RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE ITAT JODHPUR BENCH IN THE CASE OF PANNA LAL CONSTRUCTION CO. V. ITO 107 TTJ 114. CHART OF THREE YEARS NET PROFIT RATE WAS ALSO FURNISHED. CONSIDERING THE FACTS AND CIRCUMS TANCES OF THE CASE THE LD CIT(A) HELD THAT NET PROFIT RATE OF 7% WOULD BE JUSTIFI ED IN ASSESSEES CASE. 8. AS REGARDS ADDITION OF `.12 00 750/- U/S 68 OF TH E ACT IT WAS SUBMITTED BEFORE THE LD CIT(A) THAT THE AUDITORS WRONGLY MENTIONED THE PREVIOUS YEARS FIGURES AS NIL. AS SUCH UN-SECURED LOANS AMOUNTING TO `.10 25 000/- RELATED TO EARLIER ASSESSMENT YEAR. IT WAS STATED THAT ONLY AN AMOUNT OF `.1 75 750/- WAS TAKEN AS UN-SECURED LOANS DURING THE YEAR UNDER CONSIDERATION. IN SUPPORT OF ABOVE CLAIM BALANCE SHEET FOR ASSESSMENT YEAR 2006-07 WAS FURNISHED BEF ORE THE LD CIT(A). THE LD CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE THAT UN-SEC URED LOANS TAKEN BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR AMOUNTED TO `.1 75 750/-. AS THE ASSESSEE DID NOT FURNISH CONFIRMATION COPIES OF THE ACC OUNTS OF THE AFORESAID PARTIES EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD CIT(A) THE LD CIT(A) CONFIRMED AN ADDITION OF `.1 75 750/- GIVING A RELIEF OF `.10 25 000/- TO THE ASSESSEE. 9. AS REGARDS THE ADDITION OF `.4 32 213/- IT WAS CO NTENDED BY THE ASSESSEE THAT THE SAME WAS ACCOUNTED FOR BY HIM IN THE RECEIPTS AN D PAYMENT ACCOUNT FOR THE YEAR ENDING ON 31 ST MARCH 2007. THE IMPUGNED AMOUNT OF `.4 32 213/- WAS SHOWN UNDER THE HEAD TRUCK RECEIPTS. THE LD CIT(A) ACCEPTED THE ABOVE CONTENTION OF THE ASSESSEE AND DELETED THE ADDITION OF `.4 32 213/-. ITA NO5547 & 1098./DEL/10 & 2011 5 10. AGGRIEVED BOTH THE REVENUE AS WELL AS THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. 11. BEFORE US THE LD AR FOR THE ASSESSEE SUBMITTED THAT D BENCH OF THE ITAT NEW DELHI IN THE CASE OF M/S KUMAR CONTRACTOR HAS ACCEP TED NET PROFIT RATE OF 3.5%. IT WAS THEREFORE CONTENDED BY HIM THAT THE NET PR OFIT RATE DISCLOSED BY THE ASSESSEE SHOULD BE ACCEPTED. 12. AS REGARDS THE ADDITION U/S 68 OF THE ACT THE LD A R FOR THE ASSESSEE REFERRED TO ASSESSEES PAPER BOOK PAGES 6 TO 8 WHICH REFLECT THE BAL ANCE SHEET AND THE DETAILS OF UN-SECURED LOANS AS ON 31.3.2006. IT WAS CO NTENDED BY HIM THAT UN- SECURED LOANS DURING THE RELEVANT PREVIOUS YEAR WERE ONLY FR OM M/S RA MOTORS PVT. LTD. M/S SHIVBALI STEEL LTD M/S JAI LAKSHMI CEMENT DIST RIBUTORS AND M/S RIHINI BRICK SUPPLIER AND THE SAME WERE ON ACCOUNT OF BILLS RAI SED BY THESE PARTIES. IT WAS THEREFORE CONTENDED BY HIM THAT NO ADDITION ON THIS AC COUNT WAS CALLED FOR. 13. THE LD DR ON THE OTHER HAND CONTENDED THAT THE ASSES SEE DID NOT FURNISH BOOKS OF ACCOUNTS AND SUPPORTING DOCUMENTS BEFORE THE ASSESSING OFFICER. THE ASSESSEE ALSO DID NOT FURNISH ANY DETAILS WITH REFERENCE TO UN-SECURED LOANS. EVEN BEFORE THE LD CIT(A) NO COPIES OF CONFIRMATION OF THE P ARTIES WHO HAVE ADVANCED UN-SECURED LOANS WERE FURNISHED BY THE ASSESSEE. IT WAS THER EFORE CONTENDED BY HIM THAT THE LD CIT(A) WAS NOT JUSTIFIED IN GIVING REL IEF WITH REFERENCE TO THE ADDITION MADE ON ACCOUNT OF APPLICATION OF NET PROFIT RATE AND ADDITION MADE U/S 68 OF THE ACT. FOR THE ADDITION MADE ON ACCOUNT OF NON INCLUSIO N OF RECEIPTS AMOUNTING TO `.4 32 213/- HE RELIED ON THE ORDER OF THE ASSESSING OFF ICER. ITA NO5547 & 1098./DEL/10 & 2011 6 14. IN THE REJOINDER THE LD AR FOR THE ASSESSEE CONTENDED T HAT IF THE NET PROFIT RATE DISCLOSED BY THE ASSESSEE IS NOT ACCEPTED AT THE MOST NET PROFIT RATE OF 5% MAY BE APPLIED. 15. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. AS REGA RDS THE APPLICATION OF NET PROFIT RATE OF 7% BY THE LD CIT(A) WE FIND THE SAME TO BE QUITE REASONABLE FOR THE FOLLOWING REASONS:- 1) THE ASSESSMENT IN THE ASSESSEES CASE WAS FRAMED U/S 144 OF THE ACT. 2) THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS AND SUPPO RTING DOCUMENTS EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD CIT(A). 3) THE CASES ON WHICH RELIANCE HAS BEEN PLACED BY THE LD. AR F OR THE ASSESSEE ARE DISTINGUISHABLE ON FACT 4) THE REVENUE HAS ALSO NOT BROUGHT ON RECORD ANY MATERIAL T O JUSTIFY THE APPLICATION OF A HIGHER NET PROFIT RATE. WE THEREFORE CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND REJECT GROUND NO.-1 TAKEN BY THE REVENUE AS WELL AS THE ASSESSEE. 17. AS REGARDS THE OTHER TWO ADDITIONS NAMELY THE ADDIT ION OF `.12 00 750/- U/S 68 OF THE ACT AND `.4 32 213/- ON ACCOUNT OF NON DIS CLOSURE OF THE RECEIPTS WE FIND THAT THE ASSESSEE DID NOT FURNISH ANY EVIDENCE WITH REFERENC E TO THE SAME BEFORE THE ASSESSING OFFICER. WE ALSO FIND THAT THE ASSESSEE HAS NOT RECONCILED ITS TOTAL RECEIPTS SHOWING THEREIN INCLUSION OF THE RECEIPT OF `.4 32 213/ - FROM M/S MODI SUGAR MILLS. BEFORE THE LD CIT(A) CERTAIN DETAILS WERE FURNISHED FOR TH E FIRST TIME AND THE LD CIT(A) WITHOUT CALLING FOR ANY REMAND REPORT FROM THE ASSESSING OFFICER PROCEEDED TO DECIDE THE ISSUES. THE ASSESSEE HAS EVEN NOT FURNISHED IN T HE PAPER BOOK ALL THE DOCUMENTS SUBMITTED BEFORE THE LD CIT(A). IN THIS VIEW O F THE MATTER WE DEEM IT FIT ITA NO5547 & 1098./DEL/10 & 2011 7 TO SET ASIDE THE ORDER OF THE LD CIT(A) ON THESE ISSUES AND REMIT THE MATTER BACK TO HIS FILE WITH THE DIRECTION THAT A SPEAKING ORDER BE PAS SED AS PER LAW AFTER GIVING BOTH THE PARTIES ADEQUATE OPPORTUNITY OF BEING HEARD. TH US GROUND NO.2 & 3 TAKEN BY THE REVENUE AND GROUND NO.2 TAKEN BY THE ASSESSEE ARE ALLO WED FOR STATISTICAL PURPOSES. 18. IN THE RESULT THE APPEAL FILED BY THE REVENUE AND THE AS SESSEE ARE ALLOWED IN PART. 19. ORDER PRONOUNCED IN THE OPEN COURT ON THE 16TH DAY O F SEPTEMBER 2011. SD/- SD/- (DIVA SINGH) (B.K. HALDA R) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 16.9.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY. BY ORDER (ITAT NEW DELHI). DATE OF HEARING 17.8.2011 ITA NO5547 & 1098./DEL/10 & 2011 8 DATE OF DICTATION 09.09.2011 DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. .09.2011 DATE OF ORDER SENT TO THE CONCERNED BENCH .09.2011