The Commissioner Of Income Tax,Faridabad v. Brij Pal Sharma

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No. 868 of 2008 (O&M)Date of decision: 29.7.2009 The Commissioner of Income Tax,Faridabad. ......Appellant Vs. Brij Pal Sharma, Prop M/s B.P.Sharma & Co,Faridabad. ...Respondent CORAM:-HON'BLE MR.JUSTICE ADARSH KUMAR GOELHON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT:Mr.Rajesh Katoch, Advocate, for the appellant.Mr.S.K.Mukhi, Advocate, for the respondent.**** ADARSH KUMAR GOEL, J. (Oral) 1.The Revenue has preferred this appeal under Section 260A ofthe Income Tax Act, 1961 ( for short, “the Act”) against the order dated23.11.2007 passed by the Income Tax Appellate Tribunal, Delhi Bench “I”New Delhi in ITA No. 1310/DEL/2005 for the assessment year 2000-2001,proposing to raise the following substantial questions of law: i) “ Whether on the facts and circumstances of thecase, the order of the Tribunal is perverse by notdealing with the findings of the assessing authorityin respect of computation of net profit of 8%,which is fair and judicious keeping in view theprovisions of Section 44AD of the Income TaxAct,1961, especially when the assessee failed toproduce the account books as well as the requisiteinformation in spite of repeated opportunities?” I.T.A. No. 868 of 2008 -2- ii) “ Whether on the facts and circumstances of thecase, the Hon'ble Tribunal is right in law inaffirming the decision of the learned CIT(A) indeleting the addition of Rs.7,15,625/- made by the Assessing Officer on account of interest income,loading charges and loading commission ascredited in the Profit & Loss account on theground that the same were not related to thecontract business of the assessee?” 2. Notice was issued to consider the question referred to in theorder dated 17.2.2009, which is as follows: “ Learned counsel for the appellant has invited theattention of this Court to Section 44AD of theIncome Tax Act, 1961, and inter alia, contended,firstly, that the respondent-assessee did notproduce his books of accounts before theAssessing Officer inspite of repeatedly havingbeen required to do so, and secondly, therespondent -assessee's income during the previousassessment year in respect of the same work, wasmuch much higher than the present assessmentyear. Notice of motion for 5.5.2009.” The assessee is a contractor. Assessing Officer called for I.T.A. No. 868 of 2008 -3- information for finalizing the assessment, which the assessee failed tofurnish. The Assessing Officer made assessment by treating 8% for grossreceipts as income. On appeal, the assessee produced fresh evidence insupport of its claim. The CIT(A) held that there was no justification forassessing income by estimating the profit to be 8% of the gross receipts.The assessee had audited accounts and there was nothing in the order of theAssessing Officer that sales had not been recorded or properly declared.The Commissioner also relied upon the appellate order of the previousassessment in which it was held that no case was made out by the AssessingOfficer for making addition. The Tribunal affirmed the finding of the CIT(A). 4.We have heard learned counsel for the parties.5.No doubt, the assesses failed to produce books of accounts andin such a situation, it may have been permissible for the Assessing Officerto draw an inference and proceed on the basis of material available or evenon the basis of best judgment. The Assessing Officer did so. However, theCIT(A) considered the fresh evidence led by the assessee and foundestimate of the A.O. to be not sustainable. The finding so recorded wasupheld by the Tribunal as follows: 4.We have heard learned counsel for the parties.5.No doubt, the assesses failed to produce books of accounts andin such a situation, it may have been permissible for the Assessing Officerto draw an inference and proceed on the basis of material available or evenon the basis of best judgment. The Assessing Officer did so. However, theCIT(A) considered the fresh evidence led by the assessee and foundestimate of the A.O. to be not sustainable. The finding so recorded wasupheld by the Tribunal as follows: “In this case, the assesses was successful insatisfying the CIT)(A) that the freshevidence in the shape of the books ofaccount, details of expenses etc. deserved tobe admitted as per Rules. The CIT(A)enjoys plenary powers which are co- I.T.A. No. 868 of 2008 -4- terminus with that of the AO. The action ofthe CIT(A) in admitting the fresh evidencehas not been specifically challenged by therevenue before us as the ground of appeal astaken in the memo of appeal does notexpressly bring it out. Be that as it may dehors the aforesaid , we have examined thematter and find that the CIT(A) hasadmitted the fresh evidence led by theassesses for justifiable reasons. Now, the aspect to be considered is as to whether the AO was provided with anadequate opportunity to examine theevidence led by the assessee. In this regard,it is notable from the remand report of theAO that the assessee duly appeared beforethe AO and furnished the requisite details.So, however, it is also clear from theremand report that the AO was not satisfiedon various counts. Such objections havebeen detailed by the CIT(A) in para 5 of hisorder. We have perused the same and alsothe conclusion of the CIT(A) in this regardcontained in para 5.3 of his order. After aperusal of the same, we find no infirmity in I.T.A. No. 868 of 2008 -5- the approach of the CIT(A). The CIT(A)after appraising the factual positionmanifested by the books of account andother details led by the assessee wassatisfied that the profit as declared by theassessee in the books of account was fairand proper. Apart from the aforesaid, wefind that in the remand report, there is nospecific infirmity or defect brought out bythe AO to justify any of the disallowances.Mere general observations have been made,which in our view, has been rightly negatedby the CIT(A).” 6.In view of the above, the questions proposed cannot be held tobe substantial questions of law. The assessee having satisfied the appellateauthority by leading evidence that the income declared by the assessee wasthe correct income, we do not find any ground to interfere. 7.The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE July 29, 2009raghav (DAYA CHAUDHARY) JUDGE Note: Whether this case is to be referred to the Reporter? ........Yes/No I.T.A. No. 868 of 2008 -6- I.T.A. No. 868 of 2008 -7-