Income Tax Appellate Tribunal - Chandigarh
Sh. Zora Singh, Jind vs Assessee on 9 May, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH "A" CHANDIGARH
BEFORE SHRI H.L. KARWA, V.P. AND SHRI T.R. SOOD, AM
ITA No. 1200/Chd/2010
Assessment Year: 2003-04
ITO , Ward 1 V Shri Zora Singh
Jind C/o M/s Zora Singh & Co
Village Dumerkhan Kalan
Tehsil Narwana
Jind
PAN: ARBPS 1198 M
Cross-objections No. 45/Chd/2010
Arising out of ITA No. 1200/Chd/2010
Assessment Year: 2003-04
Zora Singh V. I.T.O. Ward 1, Jind
Village Dumerkhan Kalan
Narwana
ITA No. 1201/Chd/2010
Assessment Year: 2004-05
ITO , Ward I, Jind V. Zora Singh
Village Dumerkhan Kalan
Narwana
Cross-objections No. 46/Chd/2010
Arising out of ITA No. 1201/Chd/2010
Assessment Year: 2004-05
Zora Singh V. I.T.O. Ward 1, Jind
Village Dumerkhan Kalan
Narwana
(Appellant) (Respondent)
Department by: Shri N.K. Saini
Assessee by: Shri Ashok Goyal
Date of hearing: 09.05.2012
Date of Pronouncement: 17.5 .2012
ORDER
PER T.R. SOOD, A.M
ITA Nos. 1200 and 1201/Chd/2010 - Revenue's appeals - In both these appeals the revenue has raised the identical grounds which are as under:
"1. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in directing to delete the additions made by estimating profit @ 6.5% of total receipts by ignoring the fact that in the assessee's case for the Assessment Year 2001-02 the NP Rate of 6.5% has been upheld as a result of order of Hon'ble Punjab & Haryana High Court dated 13.2.2007.2
2. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in holding the action of the Assessing Officer in rejecting the books of accounts and estimating the profits as not in order without appreciating that in the remand report dated 28.6.2010, the Assessing Officer has highlighted that the books of account and vouchers produced appeared to be bogus, fabricated and are not reliable."
2. After hearing both the parties we find that the original assessment was completed u/s 144 and the matter traveled to the Tribunal which was remanded back to the file of Assessing Officer for re-examination after providing adequate opportunity and after examining the books of account. During assessment proceedings the Assessing Officer raised the following queries:
"(a) Details of salary and wages payable shown at Rs. 2,66,400/-
when the claim of salary is only of Rs. 2,02,600/-. Also to adduce evidence as to the date of discharge of the amount payable with evidence of payment.
(b) Justification for household expenses shown in the light of the information called for in the questionnaire already issued by the then Assessing Officer.
(c) Basis and evidence for expenses claimed against gross receipts and expenses debited to the profit and loss account.
(d) Show-cause why a rate as applied in the Assessment Year 2001- 02 in his case, which was also upheld by the ld ITAT should not be applied in the year under consideration.
(e) To produce complete account books and complete vouchers foro expenses."
In response the assessee gave reply. The Assessing Officer observed that the assessee has not produced the books of account and the vouchers and in the earlier Assessment Year 2001-02 the Hon'ble Punjab & Haryana High Court has estimated the profit of the assessee at 6.5% and accordingly in both the years profit rate of 6.5% was estimated.
3. Before the ld. CIT(A) it was submitted that the assessee had produced the books of account which have been rejected on flimsy grounds. It was pointed out that during Assessment Year 2001-02 the facts were different because in that year the books were lost and the assessee filed an FIR, therefore, the books could not be produced. In view of the submissions, the ld. CIT(A) asked for the remand report. In response to which the Assessing Officer vide his remand report letter dated 28.6.10 reported as under: 3
"(i) The assessee could not produce the 'hard disc' of the computerized books for evidence of original books of account on the ground that it has been destroyed.
(ii) The assessee could not produce the original vouchers bearing Sr. No. on the ground that the vouchers are not serially machine numbered as there are works of different mandies and different types of work.
(iii) The assessee could not produce the Accountant who prepared the books of account on the ground that the Accountant left the service and further due to not having good relations with him."
4. The ld. CIT(A) found force in the submissions of the assessee and decided the issue in favour of the assessee vide para 9 which is as under:
"I have considered the submissions, perused the order of the Assessing Officer as well as the material referred to by the A.R before me and proceed to dispose off the issue on the following lines. The books of account were audited u/s 44AB for both the years. The argument of the Assessing Officer for rejecting the books of account, as mentioned in the remand report, is not tenable as insisting on production of heard disc and the accountant who prepared the books of account after more than 6 years, as a test of genuineness is not acceptable. The Assessing Officer has not pointed out any specific discrepancy or defect in the books of account produced by the assessee. It is also not the finding of the Assessing Officer that the accounts of the assessee were not complete. As regards the outstanding wages for the Assessment Year 2003-04, the assessee furnished 13 affidavits in support of his claim. The Assessing Officer was at liberty to summon any or all of them in case he wanted to verify the genuineness of the affidavits. No such course of action was, however, adopted by him. It appears that the Assessing Officer instead of appreciating the books of account and evidence produced by the assessee, has misdirected himself in rejecting the books of account and estimating the profit. It appears that the order of the Hon'ble High Court in the case of the assessee for the Assessment Year 2001-02 whose facts are different (books were not available and therefore, not produced, as mentioned above) had an over bearing influence on Assessing Officer in rejecting the books and estimating the income for the Assessment Year 2003-04 and 2004-05."
5. Before us, the ld. DR for the revenue submitted that the assessee could not produce the original vouchers bearing Sl Nos. The assessee could also not produce the hard disk, therefore, the books were rightly rejected. In any case in assessee's own case the Hon'ble Punjab & Haryana High Court in the earlier years had estimated the profit at 6.5%, therefore, the present estimate of 6.5% was correct.
6. On the other hand, the ld. counsel of the assessee submitted that assessee got the accounts prepared from outside agency and the agency has destroyed its hard disc after a gap of 4-5 years. Even the Accountant after long 4 gap had left and that is why the hard disc and Accountant could not obe produced. The assessee was engaged in supplying labour in the local Mandies and was not making any purchase and labour expenses were in the form of payment to the labourers and other over heads. When the proceedings were set aside by the Tribunal, the assessee had field 13 affidavits of various persons to whom the salaries have been paid. However, the Assessing Officer instead of examining of these persons simply rejected the books without pointing out any defect and simply rejected the books of account on flimsy grounds and estimated the profit at 6.5% as was estimated by the Hon'ble High Court in Assessment Year 2001-02. He pointed out that in case of Assessment Year 2001-02 the facts are totally different because in that year the assessee had lost the books and could not produce the same whereas in this year the assessee had the books of account which were produced before the Assessing Officer which could not be simply rejected by stating that hard disc is not produced and the Accountant is not produced. In this background the impugned order was totally justified.
7. We have heard the rival submissions carefully and find force in the submissions of the ld. counsel of the assessee. Despite of the matter being set aside by the Tribunal, the Assessing Officer has not examined the books of account and has not pointed out any defect in the books of account. Even the persons to whom salary has been paid and whose affidavits were field before him, have not been examined by him. The books have been rejected merely because the hard disc was not produced, the Accountant was not produced and there is no serial number in the vouchers. We fail to understand how these issues could be made the basis to reject the books of account without showing any defect in the books. Since this is the second round of proceedings no further opportunity can be given to the Revenue. The case for Assessment Year 2001-02 can not be followed because in that year the assessee did not have the books of account and only course left was to estimate the profits. 5 Therefore, in our opinion, the ld. CIT(A) has correctly adjudicated the issue and his order does not call for any interference.
8. In the result, both the appeals of the Revenue are dismissed. Cross-objections No. 45 and 46/Chd/2010: Assessee's cross-objections
9. The Cross-objections are in support of the appellate order which has been confirmed by us in the above noted paras and accordingly the Cross- objections are also allowed.
10. In the result, the Cross-objections filed by the assessee are allowed.
Order pronounced on 17 .05.2012
Sd/- Sd/-
(H.L. KARWA) (T.R. SOOD)
VICE PRESIDENT ACCOUNTANT MEMBER
Dated: 17 .05.2012
SURESH
Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/ The DR 6