Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
« From the Courts »
Open DEMAT Account in 24 hrs
 Inordinate delay in income tax appeal hearings
 Income Tax leviable on Tuition Fee in the Year of Rendering of Services: ITAT
 Supreme Court invoked its power under Article 142 of Constitution to validate notices issued under section 148 as notices issued under section 148A. However the same shall be subject to amended provisions of section 149.
 ITAT refuses to stay tax demand on former owner of Raw Pressery brand
 Bombay HC sets aside rejection of refund claims by GST authorities
 [Income Tax Act] Faceless Assessment Scheme does not take away right to personal hearing: Delhi High Court
 Rajasthan High Court directs GST Authority to Unblock Input Tax Credit availed in Electronic Credit Ledger
 Sebi-taxman fight over service tax dues reaches Supreme Court
 Delhi High Court Seeks Status Report from Centre for Appointments of Chairperson & Members in Adjudicating Authority Under PMLA
 Delhi High Court allows Income Tax Exemption to Charitable Society running Printing Press and uses Profit so generated for Charitable Purposes
 ITAT accepts Lease Income as Business Income as Business Investments were mostly in nature of Properties

Dy.Commissioner of Income Tax, Circle-1, Ghaziabad. Vs Shri Manoj Kumar Agarwal, KM-140, Kavi Nagar, Ghaziabad.
January, 30th 2015
ITA No.5029/Del/2013
Asstt.Year: 2008-09

              IN THE INCOME TAX APPELLATE TRIBUNAL
                   DELHI BENCHES `E' NEW DELHI

       BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
                          AND
       SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER

                       ITA NO. 5029/DEL/2013
                       ASSTT. YEAR: 2008-09

Dy.Commissioner of Income Tax,    vs Shri Manoj Kumar Agarwal,
Circle-1, Ghaziabad.                   KM-140, Kavi Nagar,
                                       Ghaziabad.
(Appellant)                      (Respondent)
            Appellant by: Shri Harish Sachdeva, CA
        Respondent by: Shri Gunjan Prashad, CIT

                            O R D E R

PER CHANDRAMOHAN GARG, J.M.

       This appeal has been preferred by the revenue against the order of

the CIT(A) Ghaziabad dated 11.06.2013 in Appeal No. 1278/2011-12/GZB

for AY 2008-09.


2.     The main grounds raised by the revenue in this appeal read as

under:-


              "1. That in the facts and circumstances of the case, the
        Ld. CIT(A) has erred in law and on facts in deleting the
        addition of Rs.9,46,4511- on account of consumable stores.
        2. That in the facts and circumstances of the case, the Ld.
        CIT(A) has erred in law and on facts in deleting the addition


                                                                         1
ITA No.5029/Del/2013
Asstt.Year: 2008-09

        of Rs.3,07,680/- out of labour charges and Rs.60,OOO/- out
        of various expenses.
        3. That in the facts and circumstances of the case, the Ld.
        CIT(A) is not justified in restricting the income of the
        assessee @ 7.5% of net profit, therefore, the order of the
        CIT(A) may kindly be set-aside and order of AO may be
        restored."
3. Briefly stated, the facts giving rise to this appeal are that the assessee's case was picked up for scrutiny and accordingly notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 were issued to the assessee. The AO completed assessment proceedings by making three disallowances viz. disallowance out of consumables stores, disallowance out of labour charges etc. and disallowance of other expenses and finalised assessment at taxable income of Rs.23,10,890 as against the returned income of Rs.9,96,755. Being aggrieved by the above assessment order, the assessee preferred an appeal which was allowed by holding that the action of the AO rejecting books of accounts u/s 45(3) of the Act was justified and the first appellate authority following the provisions of section 44AD of the Act estimated the NP rate of the assessee at 7.5% and all the disallowances made out of various expenses separately were ordered to be deleted. Now, the aggrieved revenue is before this Tribunal with the grounds as reproduced hereinabove. 4. We have heard arguments of both the sides and carefully perused the relevant material placed on record, inter alia assessment order and 2 ITA No.5029/Del/2013 Asstt.Year: 2008-09 impugned order of the CIT(A). From careful reading of the operative part of the impugned order, we observe that the CIT(A) allowed the appeal of the assessee with following observations and conclusion:- "All the grounds of appeal can be taken together in this case since it is a case of disallowance out of consumable store, labor charges and other expenses; all on the ground of non verifiability of the entire extent of these expenses claimed /non maintenance of bills and vouchers, which has led the A.O. to conclude that "......what it means that the books of account of the assessee are not much reliable... .." I find that it is a case where book results cannot be wholly relied upon since some of the expenses are not fully verifiable. To that extent, in my view, this is an appropriate case for application of section 145(3) of the act, rejecting the book results partly to the extent that N.P. deserves to be enhanced on estimate basis. To that aspect I do find that the extent of disallowance made is on excessive side since if the disallowances are taken into account, the resultant N.P. goes up to 13.2% which is not reasonable considering the specific business of the assessee. Certainly the presumptive rate of 8% prescribed u/s 44AD can be a very good indicator or yardstick for estimating the N.P., even if, the gross receipt of the assessee is much more than the limit of Rs. 40 Lacs. On aspect of estimate, I find that assessee has been consistently showing book results at about 5% , while the recent maximum N.P. was shown at 5.50% in asstt. year 2005-06. I hold it would do justice if assessee is assessed at a rate between 7% to 8%. Since the books have been rejected, in any case; the profit has to be estimated on best judgment basis and in my view, assessing the appellant's income @ 7.5% would be appropriate and reasonable. The A.O. is directed to assess the income of the assessee at 7.5% N.P. Subject to this, the disallowances made out of various expenses separately, are deleted ." 3 ITA No.5029/Del/2013 Asstt.Year: 2008-09 5. Ld. DR submitted that the CIT(A) upheld the action of the AO rejecting books of accounts of the assessee u/s 145(3) of the Act as the book results could not be wholly relied upon since some of the major expenses were not wholly verifiable. Ld. DR further contended that presumptive NP rate prescribed u/s 44AD of the Act is 8% but the CIT(A) adopted NP rate of 7.5% to be appropriate and reasonable which is not a proper approach. However, the ld. DR fairly accepted that when the taxable income of the assessee is ordered to be estimated under presumptive NP rate prescribed u/s 44AD of the Act, then other disallowances do not survive. 6. On careful consideration of above submissions of both the sides and operative part of the impugned order as reproduced hereinabove, at the outset, we approve the conclusion of the CIT(A) that the AO was justified in application of section 145(3) of the Act rejecting the book results of the assessee. Further, we note that the CIT(A) has adopted presumptive NP rate by taking recourse to section 44AD of the Act and estimated the income of the assessee at 7.5% which is a reasonable and justified approach. We may also point out that when revenue authorities proceed to estimate taxable income of the assessee on presumptive basis u/s 44AD of the Act, then no further deduction u/s 32 to 38 of the Act is allowable under sub- section (2) of section 44AD of the Act. Therefore, we are inclined to hold that the CIT(A) was right in adopting presumptive NP rate of 7.5% and 4 ITA No.5029/Del/2013 Asstt.Year: 2008-09 consequently other disallowances and additions made thereunder do not survive and deserve to be deleted. Thus, we are unable to see any ambiguity, perversity or any other valid reason to interfere with the impugned order and we uphold the same. Accordingly, ground no. 1, 2 and 3 of the revenue are dismissed. 7. In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 27.1.2015. Sd/- Sd/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 27th January, 2015 `GS' Copy forwarded to:- 1. Appellant 2. Respondent 3. C.I.T.(A) 4. C.I.T. 5. DR By Order Asstt. Registrar 5
Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting