Sukhvinder Singh v. The Commissioner Of Income Tax, Karnal

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : I. T. A. No. 17 of 2015 Reserved On : July 13, 2016 Pronounced On : July 21, 2016 Sukhvinder Singh ....Appellant vs. The Commissioner of Income Tax, Karnal ....Respondent CORAM :HON'BLE MR. JUSTICE S. J. VAZIFDAR, ACTING CHIEF JUSTICE.'HONBLE MR. JUSTICE DEEPAK SIBAL. * * * To be referred to Reporters or not ?Whether the judgment should be reported in the digest ? * * * Present :Ms. Prerna, Advocatefor the appellant. Mr. Yogesh Putney, Advocatefor the respondent. * * * DEEPAK SIBAL, J. : Through the instant appeal, invoking Section 260-A of theIncome Tax Act, 1961 (hereinafter referred to as – the Act), the assessee hasknocked the doors of this Court to challenge therein the order dated24.09.2012 (Annexure A-3) passed by the Income Tax Appellate Tribunal,Chandigarh Bench `A', Chandigarh (hereinafter referred to as – theTribunal). assessment year 2008-09 and through the same, the assessee seeks to raisethe following substantial questions of law :- “1.Whether the ITAT was justified inconfirming addition @ 6% on estimation basiswithout considering the past record and arbitraryaddition to declared income by the authoritiesbelow ? 2.Whether the order of the Tribunal isbased on extraneous considerations and perversedeserve to be set aside being against theprovisions of law ?” After hearing learned counsel for the parties and perusing therecord with their assistance, the relevant facts, which have emerged, are thatthe assessee, who is a Civil Contractor and is engaged in the business ofconstruction of roads, for the assessment year in question, filed his return,which was processed under Section 143 (1) of the Act. His case was pickedup for scrutiny and in the proceedings which ensued, the Assessing Officerfound that the assessee had not produced before him the complete originalvouchers and muster-rolls. It was further noted by the Assessing Officerthat the copy of attendance cards, pertaining to the labour engaged by theassessee, which had been produced before him, were without names andaddresses. In view of afore-noticed facts, after rejecting the books ofaccounts, the Assessing Officer assessed the assessee to tax after applyingNet Profit Rate @ 12%. refunds to the extent of Rs. 55,630/- for the assessment year 2007-08 andfinding the same to have been concealed, the same was also ordered to beadded as part of the taxable income of the assessee. refunds to the extent of Rs. 55,630/- for the assessment year 2007-08 andfinding the same to have been concealed, the same was also ordered to beadded as part of the taxable income of the assessee. The assessment order was challenged by the assessee beforethe Commissioner, Income Tax (Appeals), Karnal (hereinafter referred to as– the Commissioner), before whom the assessee submitted that he hadproduced on record original purchase vouchers, books of accounts,attendance cards with names of the labourers with their complete addresses,complete details of sundry creditors and the Net Profit Rate applied in thepreceding years. On such basis, it was prayed that Net Profit Rate @ 2.5%be applied in his case. However, the Commissioner dismissed the appeal,which gave a cause to the assessee to further take the matter in appealbefore the Tribunal. The assessee's case before the Tribunal was thatoriginal purchase vouchers, books of accounts, attendance cards of thelabourers with their complete addresses, complete list of sundry creditorsand the Net Profit Rate applied in the case of the assessee for the last severalpreceding assessment years had been produced by him but the same had notbeen considered and therefore, it was prayed that the matter be eitherremitted back to the Commissioner for fresh adjudication or that the appealof the assessee be allowed by the Tribunal itself by reducing the Net ProfitRate to 2.5%. The Tribunal, while acknowledging that 83-90% of thepurchase vouchers were available on record, chose not to remand the matterback for fresh adjudication on the ground that the remaining 10-17%MONIKAvouchers were self made and thus, not verifiable. It was further held that2016.07.22 12:00I attest to the accuracy andauthenticity of this document the labour attendance cards did not carry the addresses of the labourers.Still further, while relying on the Net Profit Rate of 6.5%, which wasapplied under an earlier order of the Tribunal, Net Profit Rate @ 6% wasordered to be applied for the assessment year in question. Aggrieved by theapplication of Net Profit Rate @ 6% and praying that the same be applied@ 2.5%, the assessee has filed the present appeal seeking to raise thereinthe substantial questions of law as reproduced earlier. The Assessing Officer had rejected the books of accounts ofthe assessee primarily on the ground that complete original vouchers,muster-rolls and copy of attendance cards containing the names andaddresses of the labourers had not been produced before him. Afterordering such rejection, Net Profit Rate of 12% was ordered to be applied. The record reveals that 83-90% of the purchase vouchers ofvarious materials were produced by the assessee. Through an applicationdated 10.12.2010 (Annexure A-4), the assessee claims to have placed on therecord of the authorities below the attendance cards with names andaddresses of the labourers, complete list of sundry creditors and applied NetProfit Rate for earlier assessment years. The Tribunal acknowledged the availability of purchasevouchers of various materials to the extent of 83-90% but failed to returnany finding on the claim of the assessee with regard to having placed on therecord the complete list of sundry creditors. So far as applying of NetProfit Rate is concerned, evidence was brought on record by the assesseeMONIKAthat for the assessment year 2003-04, the applied Net Profit Rate was 3%,2016.07.22 12:00I attest to the accuracy andauthenticity of this document for 2005-06 the same was 1.08% and for the preceding assessment year2007-08, the same was 2.29%. Without spelling out any reasons for thesame, the Tribunal ignored the above rates and chose to apply the Net ProfitRate of 6% by basing the same on the applied Net Profit Rate for only oneof the earlier assessment years. for 2005-06 the same was 1.08% and for the preceding assessment year2007-08, the same was 2.29%. Without spelling out any reasons for thesame, the Tribunal ignored the above rates and chose to apply the Net ProfitRate of 6% by basing the same on the applied Net Profit Rate for only oneof the earlier assessment years. In view of what has been noticed above, in our opinion, thematter required deeper scrutiny at the hands of the Tribunal, which is thefinal fact finding Authority under the Act but on a perusal of the order of theTribunal, the same is found lacking. Mr. Yogesh Putney, Advocate appearing on behalf of theRevenue submitted that against the order of the Tribunal impugned in the–present appeal, the Revenue, through I.T.A. No. 28 of 2013 TheCommissioner of Income Tax, Karnal vs. Sukhvinder Singh, had alsocome up in appeal before this Court. Through that appeal, the Revenue hadassailed the order of the Tribunal with regard to application of 6% NetProfit Rate as according to the Revenue, the same should have been 12% ashad been applied by the Assessing Officer. On 08.02.2016, the appeal wasordered to be dismissed as withdrawn through the following order :- “Learned counsel for the appellant- revenue states that since the tax effect involved is` 16,66,247/- he has instructions to withdraw thepresent appeal in view of the circular No.21/2015, dated 10.12.2015 issued by the C.B.D.T.,New Delhi. However, he prayed that liberty be granted to the revenue to file an application forrevival of the appeal in case something survivestherein. 2.Dismissed as withdrawn with libertyas prayed for. It is, however, clarified thatwithdrawal of the appeal by the revenue shall notbe taken to be affirmation of order of the Tribunalon merits. Further, the legal issue as claimed bythe revenue is being left open to be adjudicated inan appropriate case.” While referring to the afore-quoted order, learned counselsubmitted that since the Revenue's appeal seeking enhancement in the NetProfit Rate had been dismissed as withdrawn only in view of the circularissued by the C.B.D.T., New Delhi and there having been no decision onmerits, in case the matter is to be remanded back to the Tribunal, theRevenue should also be permitted to raise the issue for enhancement of theNet Profit Rate. Ms. Prerna, who appeared on behalf of the assessee, opposedthe grant of such prayer by urging that the appeal for enhancement havingbeen withdrawn by the Revenue, this issue could not be permitted to be re-agitated inter se between the same parties. of the Net Profit Rate, inter se the same parties, it cannot be allowed to re-agitate the issue. However, such observation on our part would notpreclude the Revenue from moving any application for revival of the afore-referred appeal since the liberty for the same was granted by this Courtwhile permitting the appeal to be withdrawn. In view of the above, while setting aside the order dated24.09.2012 (Annexure A-3), we remit the matter back to the Tribunal for afresh decision on merits, which would be after scrutiny of all materialplaced before it by the assessee in accordance with law. The appeal stands allowed in the above terms. No costs. ( S. J. VAZIFDAR ) ACTING CHIEF JUSTICE ( DEEPAK SIBAL )JUDGE July 21, 2016monika