ACIT CIR 22(1), NAVI MUMBAI v. NAVSHAKTI SECURITY FORCE, MUMBAI

ITA 6537/MUM/2014 | 2011-2012
Pronouncement Date: 26-10-2016 | Result: Dismissed

Appeal Details

RSA Number 653719914 RSA 2014
Assessee PAN AAGFN1657C
Bench Mumbai
Appeal Number ITA 6537/MUM/2014
Duration Of Justice 1 year(s) 11 month(s) 27 day(s)
Appellant ACIT CIR 22(1), NAVI MUMBAI
Respondent NAVSHAKTI SECURITY FORCE, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 26-10-2016
Assessment Year 2011-2012
Appeal Filed On 29-10-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH JM AND SHRI RAJESH KUMAR AM ./ I .T.A. NO. 6537 /MUM/201 4 ( / ASSESSMENT YEAR : 20 11 - 12 ) THE ASSTT. COMMISSIONER OF INCOME TAX - 22(1) ROOM NO. 411 4 TH FLOOR TOWER NO.6 VASHI STATION COMPLEX NAVI MUMVAI - 400703 / VS. M/S NAVSHAKTI SECURITY FORCE 312 DAMJI SHAMJI INDL. COMPLKEX NEAR GOLDEN PALACE HOTEL 9 LBS MARG KURLA WEST MUMBAI. ./ PAN : A AGFN1657C / REVENUE BY SHRI G N MAKWANA / ASSESSEE BY NONE / DATE OF HEARING : 24 .5.2016 / DATE OF PRONOUNCEMENT : 26. 10.2016 / O R D E R PER RAJESH KUMAR A M THIS IS AN APPEAL FILED BY THE REVENUE CHALLENGING THE ORDER OF LD.CIT(A) - 8 MUMBAI DATED 26.8.2014 FOR THE ASSESSMENT YEAR 20 11 - 12 . 2. DESPITE SERVICE OF NOTICE TH ROUGH RPAD NONE APPEARED ON BEHALF OF THE ASSESSEE . WE THEREFORE PROCEE D TO DECIDE THE APPEAL EX - PARTE ON MERIT AFTER HEARING THE LD. DR . 2 ITA NO. 6537 / MUM/ 201 4 3. FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D E - RETURN ON 30.9.2011 DECLARING A TOTAL INCOME OF RS.85 69 66 0/ - WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT 1961. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS A PARTNER SHIP FIRM AND ENGAGED IN THE BUSINESS OF PROVIDING SECURITY GUARDS VEHICLE ESCORT DETECTIVE FIRE PROTECTION AND OTHER RELATED PERSONALIZED SECURITY GUARD PERSONNEL ESCORTS/BODY GUARDS TRAINING OF PERSONNEL ARRANGING TRAINING PROGRAMME SECURITY GUARD S CONSULTANTS ON CONTRACT OR ON EMPLOYMENT BASIS ALL OVER THE INDIA AND PROVIDI NG SECURITY GUARDS FOR CORPORATE PREMISES FACTORIES SOCIETIES BANKS ETC . DURING THE YEAR THE ASSESSEE HAS SHOWN NET PROFIT OF RS.1.30 CRORE ON TO T AL TURNOVER OF RS.19.6 CR ORES WHICH WORKED OUT TO 6.66% INCLUDING THE INCOME FROM OTHER SOURCES OF RS.6 46 043/ - UNIFORM RS.29 52 259/ - DIVIDEND OF RS.15 000/ - AND OTHER DEDUCTION OF RS.5 56 346/ - WHICH TOTALLED AT RS.41 78 648/ - . THE NET PROFIT AFTER EXCLUDING THE INDI RECT INCOMES WAS CALCULATED AT RS.4.47%. THE ASSESSEE HAS MAJOR EXPENSES UNDER THE HEAD SALARY/WAGES WHICH CONSTITUTES AT 83.3% OF THE TOTAL TURNOVER. THE AO ON COMPARISON OF THE CURRENT YEAR RESULT WITH THE AY 2009 - 10 FOUND THAT THE ASSESSEE HAS SHOW N A NET PROFIT 4.91% ON THE TURNOVER OF RS.6.75 CRORES AND ACCORDINGLY ESTIMATED THE NET PROFIT AT 7% AND THUS NET PROFIT OF RS.66 77 791/ - AS AGAINST RS.33 20 078/ - WHICH WAS NOT APPEALED BY THE ASSESSEE AND THUS 3 ITA NO. 6537 / MUM/ 201 4 ATTAINED FINALITY. SIMILARLY IN THE CURRENT YEAR THE AO ESTIMATED THE NET PROFIT AT THE RATE OF 7% AFTER REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT WHICH WORKED OUT TO RS.1 37 54 316/ - . THE NET PROFIT AFTER REDUCING THE VARIOUS CREDITS IN THE PROFIT AND LOSS ACCOUNT AND THE AM OUNT OF PROFIT SHOWN BY THE ASSESSEE WORKED OUT AT RS.48 45 555/ - WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE IN THE ASSESSMENT FRAMED BY THE AO VIDE ORDER DATED 4.2.2014 PASSED UNDER SECTION 143(3) OF THE ACT ASSESSING THE INCOME AT RS.1 34 19 950/ - . AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND DISCUSSING THE MATTER IN THE LIGHT OF VARIOUS CASE LAWS AS REFERRED BY THE LD.CIT(A) IN T HE APPELLATE ORDER ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER : 4.10 FOLLOWING PRINCIPLES EMERGE FROM THESE JUDICIAL RULINGS: - I ) A CLEAR FINDING IS NECESSARY BEFORE INVOKING THE SECTION 145(3) OF THE ACT. IT IS ALSO THE DUTY OF THE ASSESSIN G OFFICER TO BRING ON RECORD MATERIAL ON THE BASIS OF WHICH HE HAS ARRIVED AT THE CONCLUSION WITH REGARD TO CORRECTNESS OR COMPLETENESS OF WE ACCOUNTS OF THE ASSESSEE OR THE METHOD OF ACCOUNTING EMPLOYED BY IT. II) REJECTION OF BOOKS OF ACCOUNTS CANNOT B E SUSTAINED MERELY ON THE FACT THAT THE GROSS PROFIT OF THE ASSESSEE IS LOW DURING THE RELEVANT PERIOD AS COMPARED TO BOOK RESULTS OF OTHER YEARS. SIMILARLY THE SYSTEM OF ACCOUNTING ADOPTED BY THE ASSESSEE CANNOT BE REJECTED MERELY ON THE GROUND THAT THE GROSS PROFITS DISCLOSED BY HIS BOOKS WERE LOW AS COMPARED UNFAVOURABLY WITH THOSE OF OTHERS IN SAME LINE OF BUSINESS. IT IS A WELL SETTLE D POSITION OF LAW THAT WHILE MAKING THE ASSESSMENT THE ACCOUNT BOOKS FOR THAT YEAR HAVE ALONE TO BE CONSIDERED AS EAC H ASSESSMENT YEAR IS INDEPENDENT. 4 ITA NO. 6537 / MUM/ 201 4 III) THE RATE OF GROSS PROFIT IN PARTICULAR YEAR DEPENDS ON MANY FACTORS NAMELY T H E GENERAL MARKET CONDITIONS BASED ON DEMAND AND SUPPLY POSITION THE RISE OR FALL IN MARKET RATES ESPECIALLY ABRUPT ONES THE CAPITAL POS ITION VIZ - A - VIZ THE TURNOVER ACHIEVED AND MANY OTHERS . IT IS FOR THE ASSESSEE TO EXPLAIN THE FALL IF SO .HAPPENS AND TO SUBSTANTIATE THE REASONS. EVEN IF THEREAFTER THE ASSESSING OFFICER CONSIDERS THE MATERIAL PLACED BEFORE HIM BY THE ASSESSEE TO BE UN RELIABLE KEEPING IN VIEW THE COMPARATIVE STATEMENT OF ACCOUNTS OF THE EARLIER YEARS HE CANNOT PROCEED TO MAKE AN ARBITRARY ADDITION AND BASE HIS CONCLUSION PURELY ON GUESS WORK. HE CAN DO SO ONLY IF HE RELATES TO SOME EVIDENCE OR MATERIAL ON THE RECORD. 4. WE HAVE HEARD THE CONTENTIONS OF THE LD.DR AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT WHILE PASSING THE ASSESSMENT ORDER THE AO HAS NOT POINTED OUT ANY SPECIFIC DEFECT OR ANY DISCREPANCY JUSTI FYING THE REJECTION OF BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT. IN OUR OPINION THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE COULD BE REJECTED ONLY IF THE AO IS NOT IN A POSITION TO CALCULATE THE INCOME OF THE ASSESSEE ON THE BASIS OF BOO KS OF ACCOUNT MAINTAINED BY THE ASSESSEE QUA THE BUSINESS CARRIED OUT BY IT. THE AO HAS SIMPLY RELIED ON THE BASIS OF ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2009 - 10 WHERE THE AO ESTIMATED THE NET PROFIT OF THE ASSESSEE AT 7% AND THE MATTER WAS NOT APPE ALED AGAINST AND THUS ATTAINED FINALITY . FROM THE FACTS BEFORE US WE ALSO NOTE THAT THERE ARE VERY HUGE DIFFERENCE BETWEEN THE FIGURES OF INCOME AND EXPENSES OF THE CURRENT YEAR VIS A VIS PRECEDING YEAR . WE ALSO FIND THAT THE LD. CIT(A) HAS CONSIDERED THE ISSUE IN DEPTHS ON MERIT AND RECORDED THE FINDING OF FACTS THAT REJECTION OF BOOKS 5 ITA NO. 6537 / MUM/ 201 4 OF ACCOUNT AND ESTIMATION OF NET PROFIT WAS NOT PROPER AND REVERSE D THE SAME BY PASSING THE DETAILED AND REASONED ORDER WHICH IN OUR OPINION DOES NOT SUFFER FROM ANY IN FIRMITY IN THE EYES OF LAW AND DESERVED TO BE UPHELD. ACCORDINGLY WE UPHOLD THE ORDER OF THE LD. CIT(A) BY DISMISS ING THE APPEAL OF THE REVENUE. 5 . IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN T HE OPEN COURT ON 26. 10.2016 . SD SD ( MAHAVIR SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 26 . 10 .2016 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. / DR ITAT MUMBAI 6. / GUARD F ILE / BY ORDER TRUE COPY / (DY./ASSTT. REGISTRAR) / IT AT MUMBAI