Punjab & Haryana H.C : Whether on the facts and circumstances of the case, the order of the Tribunal is perverse by not dealing with the findings of the assessing authority in respect of computation of net profit of 8 per cent, which is fair and judicious keeping in view the provisions of s. 44AD of the IT Act,1961, especially when the assessee failed to produce the account books as well as the requisite information in spite of repeated opportunities ?

High Court Of Punjab & Haryana

CIT vs. Brij Pal Sharma

Section 145, 260A

Asst. Year 2000-01

Adarsh Kumar Goel & Mrs. Daya Chaudhary, JJ.

IT Appeal No. 868 of 2008

29th July, 2009

Counsel Appeared : Rajesh Katoch, for the Appellant : S.K. Mukhi, for the Respondent

JUDGMENT

ADARSH KUMAR GOEL, J. :

The Revenue has preferred this appeal under s. 260A of the IT Act, 1961 (for short, “the Act”) against the order dt. 23rd Nov., 2007 passed by the Tribunal, Delhi Bench “I” New Delhi in ITA No. 1310/Del/2005 for the asst. yr. 2000-01, proposing to raise the following substantial questions of law :

“(i) Whether on the facts and circumstances of the case, the order of the Tribunal is perverse by not dealing with the findings of the assessing authority in respect of computation of net profit of 8 per cent, which is fair and judicious keeping in view the provisions of s. 44AD of the IT Act,1961, especially when the assessee failed to produce the account books as well as the requisite information in spite of repeated opportunities ?

(ii) Whether on the facts and circumstances of the case, the Hon’ble Tribunal is right in law in affirming the decision of the learned CIT(A) in deleting the addition of Rs. 7,15,625 made by the AO on account of interest income, loading charges and loading commission as credited in the P&L a/c on the ground that the same were not related to the contract business of the assessee ?”

2. Notice was issued to consider the question referred to in the order dt. 17th Feb., 2009, which is as follows : “Learned counsel for the appellant has invited the attention of this Court to s. 44AD of the IT Act, 1961, and inter alia, contended, firstly, that the respondent-assessee did not produce his books of accounts before the AO in spite of repeatedly having been required to do so, and secondly, the respondent-assessee’s income during the previous assessment year in respect of the same work, was much much higher than the present assessment year. Notice of motion for 5th May, 2009.” The assessee is a contractor. AO called for information for finalizing the assessment, which the assessee failed to furnish. The AO made assessment by treating 8 per cent of gross receipts as income. On appeal, the assessee produced fresh evidence in support of its claim. The CIT(A) held that there was no justification for assessing income by estimating the profit to be 8 per cent of the gross receipts. The assessee had audited accounts and there was nothing in the order of the AO that sales had not been recorded or properly declared. The CIT(A) also relied upon the appellate order of the previous assessment in which it was held that no case was made out by the AO for making addition. The Tribunal affirmed the finding of the CIT(A). We have heard learned counsel for the parties. No doubt, the assessee failed to produce books of accounts and in such a situation, it may have been permissible for the AO to draw an inference and proceed on the basis of material available or even on the basis of best judgment. The AO did so. However, the CIT(A) considered the fresh evidence led by the assessee and found estimate of the AO to be not sustainable. The finding so recorded was upheld by the Tribunal as follows :

In this case, the assessee was successful in satisfying the CIT(A) that the fresh evidence in the shape of the books of account, details of expenses etc. deserved to be admitted as per rules. The CIT(A) enjoys plenary powers which are co-terminus with that of the AO. The action of the CIT(A) in admitting the fresh evidence has not been specifically challenged by the Revenue before us as the ground of appeal as taken in the memo of appeal does not expressly bring it out. Be that as it may de hors the aforesaid, we have examined the matter and find that the CIT(A) has admitted the fresh evidence led by the assessee for justifiable reasons. Now, the aspect to be considered is as to whether the AO was provided with an adequate opportunity to examine the evidence led by the assessee. In this regard, it is notable from the remand report of the AO that the assessee duly appeared before the AO and furnished the requisite details. So, however, it is also clear from the remand report that the AO was not satisfied on various counts. Such objections have been detailed by the CIT(A) in para 5 of his order. We have perused the same and also the conclusion of the CIT(A) in this regard contained in para 5.3 of his order. After a perusal of the same, we find no infirmity in the approach of the CIT(A). The CIT(A) after appraising the factual position manifested by the books of account and other details led by the assessee was satisfied that the profit as declared by the assessee in the books of account was fair and proper. Apart from the aforesaid, we find that in the remand report, there is no specific infirmity or defect brought out by the AO to justify any of the disallowances. Mere general observations have been made, which in our view, has been rightly negated by the CIT(A).”

In view of the above, the questions proposed cannot be held to be substantial questions of law. The assessee having satisfied the appellate authority by leading evidence that the income declared by the assessee was the correct income, we do not find any ground to interfere. The appeal is dismissed.

[Citation : 323 ITR 677]

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