Income Tax Appellate Tribunal - Chandigarh
Sh. Kamalpreet Singh, Patiala vs Ito, Patiala on 23 February, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'B', CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER &
Ms. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No. 703/Chd/2017
Assessment Year: 2011-12
Sh. Kamalpreet Singh, Vs. The ITO, Ward-1,
Prop M/s Saran Enterprises, Patiala
986/3, Dhobi Ghat,
Patiala
PAN No. ACBPS1831N
(Appellant) (Respondent)
Appellant By : Sh. Rajiv Saldi
Respondent By : Sh. Manjit Singh, Sr DR
Date of hearing : 07.12.2017
Date of Pronouncement : 23.02.2018
ORDER
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order of the Commissioner of Income Tax (Appeals), [hereinafter referred to as CIT(A)], Patiala dated 01.03.2017.
2. The assessee has taken following grounds of appeal:-
1. That the Ld. Assessing officer framed the assessment u/s 144 and rejected the books and made the additions on the basis of same books of account.2
2. That the Ld. CIT(A) Patiala wrongly confirmed the GP at 6% as against declared GP 3.14% which is against the facts of the case and is also highly excessive.
3. That the Ld. CIT(A) Patiala erred in ignoring the proven fact that the business of the assessee in current year was different as compared to earlier assessment year as the items traded were totally different in current year. The trading account wherein it was shown that there was no purchase of Chilka only residue was sold and also shown that main business during the year was only of empty bottles. The complete record duly audited was on record.
4. That Ld. CIT(A) Patiala erred in confirming the addition of VAT although no VAT is charged and no V A T w a s c l a i m e d i n t h e P &L A c c o u n t .
3. The brief facts of the case are that an ex-parte assessment was completed by the Assessing officer u/s 144 of the Income-tax Act, 1961 (in short 'the Act') determining the assessable income of the assessee at 35,16,001/-. Thereafter, a rectification order u/s 154 of the Act was passed reducing the addition from Rs. 18,82,944/- to Rs. 9,21,253/-. The addition so made by the Assessing officer have been confirmed by the CIT(A).
4. Before us, Ld. Counsel for the assessee has submitted that in this case, the Assessing officer found that the assessee had not filed any return of income. On being asked to explain, the assessee explained that due to change in the server of Income tax Department, some problem was being faced for almost a month and, hence, the assessee cannot upload the return of income electronically as the website of the Department was not accepting digital signatures of the 3 assessee. The assessee, however, enclosed copy of the return alongwith the proof of payment of self-assessed tax, copy of audit report and copy of computation of income. The Assessing officer thereafter issued a questionnaire which was duly replied. The Assessing officer, however, observed that the assessee did not answer the questionnaire. The Assessing officer, therefore, completed the assessment ex-parte u/s 144 of the Act determining the income of the assessee by estimating the GP rate from the business.
5. Ld. Counsel for the assessee, before us, has submitted that the a s s e s s e e d u r i n g t h e ye a r h a d c h a n g e d i t s b u s i n e s s a c t i v i t y. E a r l i e r , the assessee was involved in the business of 'Nakoo' (rice component) but the said business was closed. The main business of t h e a s s e s s e e d u r i n g t h e ye a r i n q u e s t i o n w a s o f s e l l i n g o f e m p t y u s e d b o t t l e s t o C h a n d i g a r h B o t t l i n g P l a n t f o r r e c yc l i n g . L d . C o u n s e l f o r the assessee has further submitted that the assessee had participated in the proceedings and that no other questionnaire was ever received by the assessee as has been mentioned by the Assessing officer in the assessment order. That only one questionnaire was issued to the assessee which was duly replied. The Ld. counsel has further submitted that even otherwise, the Assessing officer has made the disallowance by estimating the GP rate on the basis of earlier b u s i n e s s a c t i v i t y e a r l i e r a s s e s s m e n t ye a r s w h e n t h e a s s e s s e e w a s n o t in the same business, hence, the GP rate on the basis of earlier business activity cannot be made basis for estimation of the income o f t h e a s s e s s e e f o r t h i s ye a r . T h e L d . C o u n s e l s u b m i t t e d t h a t a s s e s s e e is ready to participate in the assessment proceeding and to produce 4 the relevant documents for proper assessment of the income of the assessee under consideration.
6. The Ld. DR, on the other hand, has relied upon the findings of the lower authorities.
7. We have considered t h e r i v a l s u b m i s s i o n s . A d m i t t e d l y, t h e assessment framed is an ex-parte assessment u/s 144 of the Act. The income has been assessed on the basis of estimation of GP rate. The Ld. Counsel has explained that assessee has changed its business activity for the year under consideration and the basis of GP rate of earlier business activity cannot be taken for estimating income for t h e ye a r u n d e r c o n s i d e r a t i o n . T h e a s s e s s e e i s r e a d y t o p a r t i c i p a t e i n the assessment proceedings and furnish the necessary details. Considering the overall facts and circumstances of the case, the impugned order of the lower authorities is hereby set aside and the matter is remanded back to the file of the Assessing officer for de novo assessment. Needless to say that the assessee will participate in t h e a s s e s s m e n t p r o c e e d i n g s a n d w i l l n o t c o n t r i b u t e i n d e l a yi n g t h e disposal of the case.
7. In the result, the appeal of the assessee is treated allowed for statistical purposes.
Order pronounced in the Open Court on 23.02.2018 Sd/- Sd/-
(ANNAPURNA GUPTA) (SANJAY GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 23 .02.2018
Rkk
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Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR