M/s Madhayam Construction (P) Ltd., New Delhi v. DCIT, New Delhi

ITA 5783/DEL/2010 | 2003-2004
Pronouncement Date: 11-03-2011 | Result: Allowed

Appeal Details

RSA Number 578320114 RSA 2010
Assessee PAN AADCM8688G
Bench Delhi
Appeal Number ITA 5783/DEL/2010
Duration Of Justice 2 month(s) 21 day(s)
Appellant M/s Madhayam Construction (P) Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 11-03-2011
Date Of Final Hearing 23-02-2011
Next Hearing Date 23-02-2011
Assessment Year 2003-2004
Appeal Filed On 20-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NOS. 5782 & 5783/DEL/10) ASSTT. YR: 2003-04 MADHAYAM CONSTRUCTION (P) LTD. VS. DCIT CIR. 6(1) C/0 M/S RRA TAXINDIA NEW DELHI. D-28 SOUTH EXTENSION PART-I NEW DELHI. PAN/ GIR NO. AADCM8688G ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : DR. RAKESH GUPTA ADV. RESPONDENT BY : SHRI PEEYUSH SONKAR SR. DR O R D E R PER R.P. TOLANI J.M: : THESE ARE TWO APPEALS BY THE ASSESSEE ONE AGAINST THE EXPARTE ASSESSMENT U/S 144 AND THE OTHER AGAINST PENALTY U /S 271(1)(B) OF THE I.T. ACT FOR A.Y. 2003-04. 2. IN ITA NO. 5783/DEL/10 FOLLOWING GROUNDS ARE RA ISED: 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN U PHOLDING THE ACTION OF LD. AO IN ESTIMATING THE INCOME OF THE AS SESSEE @ 8% OF GROSS RECEIPT WHICH IS CONTRARY TO LAW AND FA CTS AND IN ANY CASE VERY MUCH EXCESSIVE MORE SO WHEN THE INCO ME OF THE ASSESSEE HAS BEEN ESTIMATED @ 2.5% IN AY 2004-05 BY THE LD. AO HIMSELF AND MORE PARTICULARLY WHEN THE ESTIMATIO N DONE BY LD. AO IS TOO EXCESSIVE AND NOT IN CONSONANCE WITH THE PAST HISTORY AND SUBSEQUENT YEARS RESULTS AS DECLARED BY THEY ASSESSEE AND ACCEPTED BY THE ASSESSING OFFICER. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT REVERSING 2 THE ACTION OF LD. AO IN INVOKING THE PROVISIONS OF SECTION 44AD WHEREAS THESE PROVISIONS WERE NOT APPLICABLE I N THE PRESENT SET OF FACTS AND CIRCUMSTANCES OF THE ASSES SEE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT REVERSING THE ACTION OF LD. AO IN FRAMING THE IMPUGNED ASSESS MENT ORDER AS EX PARTE THAT TOO WITHOUT GIVING ADEQUATE OPPORT UNITY OF HEARING TO THE ASSESSEE AND WITHOUT CONSIDERING THE MATERIAL AVAILABLE ON RECORD. 4. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MA KING ADDITION OF RS. 1 28 26 208/- IS ILLEGAL CONTRARY TO THE FACTS ARBITRARY AND THE SAME DESERVES TO BE DELETED. 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER ORDER PASSED BY LD. CIT(A) AND LD. AO IS BAD IN LAW AND A GAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS BEEN PA SSED IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 6. THAT THE APPELLANT CRAVES THE LEAVE TO ADD MODI FY AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 3. BRIEF FACTS ARE: THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. FOR A.Y. 2003-04 IT FILED ITS R ETURN OF INCOME DISCLOSING INCOME OF RS. 5 43 668/- ON THE BASIS OF AUDITED ST ATEMENTS. NOTICE U/S 143(2) WAS ISSUED. ASSESSEE WAS CALLED ON TO FURNIS H VARIOUS DETAILS AND TO PRODUCE BOOKS OF ACCOUNT ON VARIOUS DATES. ASSESSEE S CA APPEARED ON 27- 3-2006 AND INTIMATED ABOUT IMPENDING DISPUTES BETWE EN THE DIRECTORS AND THE JUDICIAL CUSTODY OF ONE OF THE DIRECTORS. RELEV ANT OBSERVATIONS OF THE AO IN THIS BEHALF ARE AS UNDER: ON 27-3-2006 SH. M.K. BHATT CA ATTENDED AND INFOR MED THAT THERE IS A DISPUTE BETWEEN THE ASSESSEE COMPANY AND SOCIETIES 3 AND THEIR DIRECTORS. SH. U.D. KESARWANI THE PRESEN T DIRECTOR OF THE ASSESSEE COMPANY WHO WAS LOOKING AFTER THE AFF AIRS OF THE COMPANY HIMSELF IS AT PRESENT IN JUDICIAL CUSTODY AND IN THESE CIRCUMSTANCES IT IS NOT POSSIBLE TO FURNISH ANY BOO KS OF ACCOUNTS EITHER OF THE ASSESSEE OR THE SOCIETIES NO R CAN THE OFFICE BEARERS BE PRODUCED. THE COUNSEL WAS ASKED TO SHOW CAUSE AS TO WHY PROCEEDINGS SHOULD NOT BE CONCLUDED U/S 144 OF THE INCOME-TAX ACT. TO THIS THE COUNSEL REPLIED BY STAT ING THAT HE WAS NO PROBLEM AND THE PROCEEDINGS SHOULD BE CONCLU DED U/S 144. 3.1. SINCE THE ACCOUNT BOOKS WERE NOT PRODUCED AO FRAMED EX PARTE ASSESSMENT U/S 144 WHILE DOING SO HE IGNORED THE AUDITED STATEMENTS AND APPLIED NET PROFIT RATE OF 8% U/S 44AD ON GROSS REC EIPTS. AO THUS ESTIMATED THE TAXABLE INCOME FROM CONSTRUCTION ACTIVITY AT RS . 1 22 82 540/-. 3.2. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL BEF ORE THE CIT(A) WHERE IT WAS CONTENDED THAT THE RETURN OF INCOME WAS PREPAR ED IN ACCORDANCE WITH THE BALANCE SHEET AND TAX AUDIT REPORT AS ANNEXED WITH THE RETURN OF INCOME. IN THE ASSESSMENT ORDER NO INSTANCE HAS BEEN QUOTED TO SHOW ANY NON- COMPLIANCE OF THE ACT AT THE TIME OF FILING OF THE RETURN. THE BOOKS COULD NOT BE PRODUCED DUE TO DISPUTES AND POLICE CUSTODY OF C ONCERNED DIRECTOR MR. U.K. KESARWANI. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE HAD COOPERATED AND INTIMATED ITS DIFFICULTIES THIS CAN BE APPRECIATED FROM THE DETAILED REPLIES FILED BY ASSESSEE ON VARIOUS DATE S. DUE TO UNFORTUNATE INCIDENCE WHICH RESULTED IN DIRECTOR OF THE COMPANY SHRI U.D. KESARWANI GOING IN POLICE CUSTODY FROM MARCH 2006 TO JULY 200 6 THE ASSESSMENT WAS FRAMED EX PARTE. 3.3. IT WAS FURTHER PLEADED THAT RELEVANT STATEMENT S REGARDING THE TURN OVER P&L A/C AND BALANCE SHEET WERE BEFORE AO. THE INCOM E ESTIMATED U/S 144 WAS WITHOUT CONSIDERATION OF RELEVANT MATERIAL AVA ILABLE ON RECORD AND ON A 4 TOTALLY PRESUMPTIVE BASIS WHICH CAN BE INVOKED ONLY WHERE THE TURN OVER IS LESS THAN RS. 40 LACS WHEREAS THE ASSESSEE HAD MUC H HIGHER TURN OVER. CIT(A) HOWEVER HELD THAT THE ESTIMATE MADE BY AO W AS A BONA FIDE ESTIMATE ON A RATIONAL BASIS I.E. 44AD AND EVEN THO UGH THERE WAS NO GOOD PROOF IN RESPECT OF SAID ESTIMATE IT CANNOT BE IN TERFERED AS PRIMA FACIE THE AO WAS BEST JUDGE OF THE SITUATION. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CST VS. ESUFALI (H.M) ABDULALI (H.M) (1973) 90 ITR 271 (SC) THE ASSESSEES APPEAL WAS DISMISSED. AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. 4. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT D UE TO UNFORTUNATE CIRCUMSTANCES RESULTING IN DISPUTE BETWEEN DIRECTO RS AND POLICE CUSTODY OF ONE OF THE DIRECTORS WHO WAS DETAINED BY POLICE AN D REMAINED IN JUDICIAL CUSTODY THE NECESSARY PARTICULARS COULD NOT BE FUR NISHED BEFORE AO. DIFFICULTIES IN NON-PRODUCTION OF ACCOUNTS HAVE BEE N DULY INTIMATED TO AO AND CIT(A) WHICH BY ITSELF CANNOT RESULT IN IGNORIN G THE MATERIAL AVAILABLE ON RECORD AND APPLYING A HIGH PRESUMPTIVE NET PROFI T RATE OF 8%. THE ASSESSEE IS REGULARLY ASSESSED TO TAX EARLIER AND SUBSEQUENT ASSESSMENTS HAVE BEEN COMPLETED U/S 143(3)/ 143(1). THE RELEVA NT DETAILS ARE AS UNDER: ASSTT. YR. TURN OVER NET PROFIT OR LOSS % OF NET PROFIT RATE INCOME OR LOSS RETURNED INCOME (LOSS) ASSESSED ASSESSED UNDER SEC. ASSESSED NET PROFIT 2002-03 241.07 4.19 0.00 04.93 04.93 143(1) 2.045 2003-04 1603.28 11.54 0.72 10.37 128.26 144 7.999 2004-05 2708.82 27.01 1.00 21.90 67.71 143(3) 2.51% 2005-06 1672.85 21.80 1.30 22.51 22.51 143(1) 1.345 2006-07 582.18 17.04 2.93 15.39 15.83 143(3) 2.719 2007-08 235.89 05.15 2.18 05.23 05.23 143(1) 2.217 2008-09 309.59 05.24 1.69 7.36 07.36 143(1) 2.377 4.1. LEARNED COUNSEL CONTENDS THAT IN 143(3) ASSESS MENT FOR A.Y. 2004-05 ASSESSEES NET PROFIT RATE HAS BEEN WORKED OUT AT 2 .51%. SIMILARLY IN OTHER 5 YEARS IT HAS NEVER EXCEEDED 2.719%. IT CLEARLY IMPL IES THAT THE OPENING FIGURES AND THE RELEVANT OPENING FIGURES OF WORK I N PROGRESS ETC. HAVE BEEN ACCEPTED IN THESE ASSESSMENTS AND TURN OVER OF THE ASSESSEE HAS NOT BEEN DISTURBED IN OTHER YEARS. IF THERE WAS ANY QUESTION OF EXPENDITURE THE SAME COULD HAVE BEEN REASONABLY ESTIMATED BY COMPARING O THER YEARS WHICH WERE AVAILABLE BEFORE AO WHILE FRAMING THE ASSESSMENT U/ S 144. BEST JUDGMENT ASSESSMENT U/S 144 HAS TO STAND THE TEST OF REASONA BILITY AND FAIRNESS. . 4.2. LEARNED COUNSEL HAS NO OBJECTION ON EX PARTE A SSESSMENT U/S 144 OCCASIONED BY NON-PRODUCTION OF BOOKS AND OTHER RE LEVANT RECORDS DUE TO ABOVE UNFORESEEN CIRCUMSTANCES. HOWEVER IT IS VEHE MENTLY CONTENDED THAT SEC. 144 ALSO PRESUPPOSES APPLICATION OF MIND AND A REASONABLE AND FAIR ESTIMATE BASED ON MATERIAL. AO WHILE FRAMING ASSESS MENT U/S 144 HAS PREFERRED PRESUMPTIVE RATE OF 8% WHICH IS ONLY APPL ICABLE TO CONTRACTORS HAVING TURN OVER BELOW RS. 40 LACS AND IGNORING TH E VITAL FACTS AND RECORD OF THE ASSESSEE WHICH WAS THERE TRACK RECORD IS ON T HE FILES OF THE DEPARTMENT. LEARNED COUNSEL URGES THAT THE EX PARTE ASSESSMENT IS HARSH ARBITRARY AND IGNORING THE MATERIAL FACTS WHICH OUGHT TO HAVE BEE N CONSIDERED BY AO WHILE MAKING THE EX PARTE ASSESSMENT. THE UNFORTUNA TE CIRCUMSTANCES HAVING NOT BEEN DISPUTED NON CONSIDERATIONS OF MAT ERIAL AND RECOURSE TO SEC. 44AD IS UNWARRANTED AND THIS EXCESSIVE AND HARSH A SSESSMENT DESERVES TO BE CORRECTED. 4.3. IT IS FURTHER CONTENDED THAT SINCE THE DIRECTO R IS NO MORE IN CUSTODY AND THE ASSESSEE CAN PRODUCE THE RELEVANT ACCOUNTS AND RECORD BEFORE AO ALTERNATIVELY THE ASSESSMENT MAY BE SET ASIDE TO BE REFRAMED DE NOVO BY THE AO. 6 5. LEARNED DR ON THE OTHER HAND CONTENDS THAT SINCE THE ASSESSEE COULD NOT PRODUCE ANY BOOKS OF ACCOUNT AO WAS LEFT WITH NO CHOICE BUT TO ESTIMATE THE INCOME. AOS ESTIMATE CANNOT BE INTERF ERED UNLESS IT IS FOUND TO BE ARBITRARY AND CAPRICIOUS. RELIANCE ON ONE OF THE PROVISIONS I.E. 44AD APPLICABLE TO ONE OF THE CATEGORY SIMILAR TO ASSESS EE CANNOT BE CALLED AS ARBITRARY. ORDERS OF LOWER AUTHORITIES WERE RELIED ON. 6. WE HAVE HERD RIVAL CONTENTIONS. IT HAS NOT BEEN DISPUTED THAT ASSESSEE IS ASSESSED TO TAX. EXCEPT IMPUGNED ASSESSMENT YEAR I.E. A.Y. 2003-04 THERE HAS BEEN NO EX PARTE ASSESSMENT IN ASSESSEES CASE. RECORD CLEARLY IMPLIES THAT THE OPENING FIGURES AS ON 1-4-2002 AS WELL AS ITS CLOSING FIGURES WHICH WILL BECOME OPENING FIGURES ON 1-4-2003 REMAIN ACC EPTED. MAKING OF ASSESSMENT U/S 144 IS NOT IN CHALLENGE AND WHAT IS BEFORE US IS WHETHER THE ESTIMATE ARRIVED AT BY THE AO IS REASONABLE OR NOT ON THE BASIS OF REASONABLENESS AND FAIRNESS. IN OUR VIEW EVEN IN CA SES OF EX PARTE ASSESSMENTS THE AO IS EXPECTED TO ACT IN A REASON ABLE AND FAIR MANNER. THE AO HAS POWER TO ESTIMATE DOES NOT CONFER AN UNFE TTERED POWER ON AUTHORITY WHICH IS UNDER OBLIGATION TO ACT IN A JUD ICIOUS MANNER. IF THE PREVIOUS AND SUBSEQUENT RECORDS ARE AVAILABLE WITH AO BY THE TIME HE FRAMED THE ASSESSMENT IT SHOULD HAVE BEEN ENDEAVOU RED IF ASSESSEES INCOME CAN BE ASSESSED IN A REASONABLE AND FAIR MAN NER ON THE BASIS OF INFORMATION AVAILABLE ON RECORD. IN OUR VIEW INSTE AD OF LOOKING AT THESE RELEVANT FACTS AND FIGURES AVAILABLE ON RECORD AT THE TIME OF FRAMING OF ASSESSMENT AO HAS SUMMARILY ADOPTED PRESUMPTIVE RA TE OF TAXATION AS PRESCRIBED BY SECTION 44AD I.E. 8% OF NET PROFIT O N GROSS TURN OVER WHICH IS SPECIFICALLY APPLICABLE TO ASSESSEE HAVING TURN OVER BELOW RS. 40 LACS. WITH AVAILABILITY OF ALL THESE DETAILS MORE REASONA BLE APPROACH SHOULD HAVE 7 BEEN APPLIED EITHER TAKING THE HIGHEST NET PROFIT A SSESSED ON THE ASSESSEE OR TAKING AN AVERAGE OF ALL YEARS. 6.1. IN THESE FACTS AND CIRCUMSTANCES IN THE INTER EST OF SUBSTANTIAL JUSTICE WE SET ASIDE THE ASSESSMENT BACK TO THE FILE OF AO TO REFRAME THE SAME AFTER GIVING THE ASSESSEE AN OPPORTUNITY TO PRODUCE THE B OOKS OF ACCOUNTS IN ACCORDANCE WITH LAW. 6.2. IF DUE TO ANY CIRCUMSTANCES REGULAR ASSESSMENT CANNOT BE MADE THE AO SHALL FRAME A BEST JUDGMENT ASSESSMENT IN A FAIR AND REASONABLE MANNER CONSIDERING THE PRIOR AND SUBSEQUENT RECORD ALSO. 6.3. THE HIGHEST RATE OF ASSESSED NET PROFIT AS PER ABOVE CHART COMES TO AROUND 2.72% IF THE ASSESSEES BUSINESS ACTIVITY BY AND LARGE REMAINS SIMILAR AND ITS PREVIOUS AND SUBSEQUENT ASSESSMENT RECORD IS AVAILABLE WHILE FRAMING THE BEST JUDGMENT ASSESSMENT IF ANY ADO PTION OF HIGHEST RATE OF NET PROFIT IN A SPAN OF TWO EARLIER AND SUBSEQUENT YEARS CAN BE CALLED AS A FAIR AND REASONABLE ESTIMATE AS COMPARED TO PRESUM PTIVE RATE. ABOVE CHART OF COMPARATIVE NET PROFIT HAS BEEN FURNISHED BEFORE US FOR THE FIRST TIME AO WILL VERIFY THE SAME AND IN CASE OF BEST JUDGMENT A SSESSMENT THE HIGHEST RATE OF NET PROFIT ASSESSED ON THE ASSESSEE MAY BE ADOPT ED TO WORK OUT NET PROFIT TO THE TURN OVER OF THE ASSESSEE. WE ORDER ACCORDIN GLY. 7. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 8 ITA NO. 5782/DEL/10 [(PENALTY APPEAL U/S 271(1)(B) ] : 8. THE IMPUGNED PENALTY OF RS. 10 000/- WAS IMPOSED BY AO U/S 271(1)(B) FOR NON-PRODUCTION OF BOOKS AS ON 13-2-20 06. LEARNED COUNSEL CONTENDS THAT THE PENALTY HAS BEEN IMPOSED UNDER MI SCONCEPTION AS ON THIS DATE ASSESSEE ATTENDED THE PROCEEDINGS. RELEVANT PA RA OF AO IN PENALTY ORDER IS AS UNDER: DURING ASSESSMENT PROCEEDINGS SH. M.K. BHATT CA AP PEARED ON 16-02-2006 AND HE WAS GIVEN A COPY OF LETTER ISS UED TO HIM ON 16-01-2006 ASKING FOR CERTAIN DETAILS TO BE FILE D. AGAIN ON 27-03-2006 SH. M.K. BHATT CA APPEARED AND INFORMED THAT THERE IS A DISPUTE BETWEEN THE ASSESSEE COMPANY AND SOCIETY AND THEIR DIRECTORS IT HAS ALSO BEEN INFORMED BY SH . M.K. BHATT AR OF THE ASSESSEE THAT SH. U.D. KESARWANI THE THE N DIRECTOR OF THE ASSESSEE COMPANY WHO WAS LOOKING AFTER THE AFFA IRS OF THE COMPANY WAS IN JUDICIAL CUSTODY AND THOSE CIRCUMSTA NCES IT WAS NOT POSSIBLE TO FURNISH ANY BOOKS OF ACCOUNT EITHER BY THE ASSESSEE OR THE SOCIETIES NOR THE OFFICE BEARERS OF THE COMPANY COULD BE PRODUCED. 8.1. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CI T(A) WHO CONFIRMED THE ACTION OF THE AO BY FOLLOWING OBSERVATIONS: 6.0. AS PER THE WRITTEN SUBMISSION THE LD. AR HAS SUBMITTED THAT IN SPITE OF FULL COOPERATION AND REGULAR ATTEN DANCE THE LD. AO HAS INITIATED AND LEVIED PENALTY U/S 271(1)(B). IT HAS FURTHER BEEN SUBMITTED THAT THE AR OF THE APPELLANT HAD ATT ENDED ALL THE NOTICES AND PROVIDED DETAILS AS AND WHEN REQUIRED B Y THE AO AND THUS COMPLIED WITH THE STATUTORY NOTICES. I HAV E PERUSED THE ASSESSMENT RECORD AND IT IS SEEN THAT VIDE ORDER SH EET NOTING DATED 7-2-2006 THE AR ATTENDING THE ASSESSMENT PRO CEEDINGS WAS REQUIRED TO PRODUCED THE BOOKS OF ACCOUNTS ON T HE NEXT DATE OF HEARING I.E. 13-2-2006. ON THE SAID DATE ALTHOU GH THE LD. COUNSEL APPEARED BEFORE THE AO BUT HE DID NOT PRODU CE THE BOOKS OF ACCOUNTS. AS MENTIONED EARLIER ON 13-2-06 A COPY OF THE NOTICE DATED 16-1-2006 WAS ALSO HANDED OVER BY THE AO TO 9 THE LD. COUNSEL ON HIS REQUEST. A PERUSAL OF ORDER SHEET NOTING REVEALS THAT NEITHER THE SAID BOOKS OF ACCOUNT WERE PRODUCED BY THE APPELLANT BEFORE THE AO DURING THE ASSESSMENT P ROCEEDINGS NOR A COMPLIANCE TO THE NOTICE DATED 16-1-2006 WAS MADE. IN MY OPINION UNDER THE CIRCUMSTANCES THE AO WAS JUS TIFIED IN LEVYING A PENALTY OF RS. 10 000/- ON THE APPELLANT SINCE IT HAD FAILED TO COMPLY WITH THE REQUIREMENTS MADE BY THE FORMER. I THEREFORE CONFIRM THE PENALTY OF RS. 10 000/- LEVI ED U/S 271(1)(B). 9. LEARNED COUNSEL CONTENDS THAT A CAREFUL READING WILL SHOW THAT ON 13- 2-2006 SHRI BHATT ASSESSEES CA APPEARED AND WAS GIVEN A COPY OF LETTER ISSUED TO HIM ON 16-1-2006 AND THE CASE WAS ADJOURN ED TO 27-3-2006 ON WHICH DATE ALSO SHRI BHATT APPEARED AND INFORMED AB OUT THE DISPUTES. IT IS NOT THE CASE OF THE AO THAT ON 13-2-2006 NOBODY ATT ENDED RATHER RECORD IS VERY CLEAR THAT ON 13-2-2006 MR. BHATT ATTENDED AND HE WAS GIVEN A COPY OF LETTER DATED 16-1-2006 ASKING FOR CERTAIN DETAILS T O BE FILED. IT CLEARLY IMPLIES THAT THE ASSESSEES CA ATTENDED DISCUSSED THE MAT TER WITH AO AND HE WAS ASKED FURTHER REQUIREMENTS WERE TO BE FILED ON 27-3 -2006. THEREFORE THERE IS NO NON-COMPLIANCE OF PROCEEDINGS DATED 13-2-2006 QU A WHICH PENALTY IS LEVIED. ASSESSEE WAS NOT ABLE TO FURNISH BOOKS OF A CCOUNT FOR WHICH EX PARTE ASSESSMENT HAS ULTIMATELY BEEN MADE AND ACCEPTED BY THE ASSESSEE. THERE BEING NO NON-COMPLIANCE ON THE ALLEGED DATE OF 13-2 -2006 THE PENALTY IS NOT LEVIABLE THE SAME MAY BE DELETED. 10. LEARNED DR ON THE OTHER HAND SUPPORTED THE OR DER OF LOWER AUTHORITIES. 11. WE HAVE HEARD RIVAL SUBMISSIONS. FROM THE FACT S NARRATED ABOVE IT IS CLEAR THAT ON 13-2-2006 ASSESSEES CA ATTENDED ON WHICH DATE AO ASKED 10 HIM FOR FURTHER COMPLIANCE. IN OUR VIEW THE EVENT S MENTIONED ABOVE DO NOT SUGGEST ANY NON-COMPLIANCE ON 13-2-2006. BESIDES E VEN IF WE ASSUME NON- PRODUCTION OF BOOKS THE ASSESSEE WAS CLEARLY NOT I N A POSITION TO PRODUCE THE SAME AND ULTIMATE EX PARTE ASSESSMENT REMAINS ACCEP TED BY ASSESSEE. IN VIEW OF THESE FACTS THERE BEING NO NON-COMPLIANCE ON ALLEGED DATE I.E. 13-2- 2006WE SEE NO JUSTIFICATION FOR IMPOSITION OF THE P ENALTY. THE SAME IS DELETED AND THE ASSESSEES APPEAL IS ALLOWED. 12. IN THE RESULT ITA NO. 5782/DEL/10 IS ALLOWED A ND ITA NO. 5783/DEL/10 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 11-3-2011. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11-03-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR