Rajesh Bhargava , Jaipur vs Department Of Income Tax
- CitationITA No. 585/JP/2011
Ratio decidendi
The rule this decision rests on
Where an assessee has not produced complete books of account before the Assessing Officer, the Assessing Officer is left without choice but to proceed under section 144 and estimate income, so the estimation itself is not faulted on that account. Where the first appellate authority considers the assessee's fresh submissions and material without remanding them to the Assessing Officer for comment before deciding the appeal, the appellate order is vitiated by violation of the principles of natural justice. An estimate of income sustained by the appellate authority without any evidentiary basis cannot stand, and the appellate order on that ground is set aside and the matter restored to the Assessing Officer for fresh determination after the assessee produces its complete books of account and the submissions made before the first appellate authority.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM
vk;dj vihy la-@ITA No. 585/JP/2011 fu/kZkj.k o"kZ@Assessment Year : 2005-06
Income Tax Officer, cuke Rajesh Bhargava, B-85, Ward 6(2), Jaipur. Vs. Ganesh Marg, Bapu Nagar, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABFPB 2369 F vihykFkhZ@Appellant izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Mrs. Neena Jeph (JCIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (C.A.)
lquokbZ dh rkjh[k@ Date of Hearing : 23/03/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 10/04/2015
vkns'k@ ORDER
PER: T.R. MEENA, A.M.
This is an appeal filed by the revenue against the order dated
30/03/2011 passed by the learned CIT(A)-II, Jaipur for A.Y. 2005-06.
The sole ground of appeal is as under:-
"On the facts and in the circumstances of the case and in law the Ld. CIT (Appeals) has erred in restricting the trading addition of Rs. 18,00,300/- made by the A.O. to Rs. 50,000/- only without appreciating the fact that the
2 ITA 585/JP/2011_ ITO Vs. Rajesh Bhargava
assessee did not produce books of accounts before A.O. either during the course of assessment proceedings or during the course of sending remand report by the A.O."
2. The sole ground of appeal is against deleting the trading addition
made by the Assessing Officer from Rs. 18,00,300/- to Rs. 50,000/-.
The Ld. Assessing Officer observed that the assessee is an optician and
engaged in trading of optics, frames, lenses etc. The assessee filed its
return of income on 31/10/2006 declaring income of Rs. 1,58,950/-.
The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in
short the Act). The Ld. Assessing Officer had provided number of
opportunities to produce the books of account viz ledger and other
detailed information on various dates but which has not been complied
by the assessee. The assessee's attitude was found not-cooperative
with the department. Therefore, he decided the assessee's case U/s 144
of the Act. During the previous year against the gross turnover of Rs.
97,48,503/-, the assessee has declared gross profit of Rs. 19,49,700/-,
which gives G.P. rate @ 20%. The ld Assessing Officer gave show cause
notice vide letter dated 15/11/2007 to produce the books of account,
day to day stock register, sale and purchase bill and other records in
order to verify the result declared by him, which were not produced by
him. Therefore, he proposed to sell as well as gross profit should not be 3 ITA 585/JP/2011_ ITO Vs. Rajesh Bhargava
estimated U/s 144 of the Act. The assessee's expenses in absence of
non-production of complete books had not verified by the Assessing
Officer. The assessee has shown unsecured loan during the year at Rs.
16,53,000/- for which no confirmation was filed by him. The Ld
Assessing Officer estimated the turnover at Rs. 1,25,00,000/- as against
the sale business at Rs. 97,48,503/- and applied G.P. rate of 30%. Thus
he made the addition in trading result at Rs.18,00,300/-. The other
disallowances from the expenses as well as all the loan creditors were
added in the income of the assessee.
3. Being aggrieved by the order of the Assessing Officer, the
assessee challenged the additions under three head before the learned
CIT(A), who had held justified that the ld Assessing Officer rightly
applied Section 145(3) of the Act in absence of non-production of
complete books of account but he accepted the assessee's turnover as
declared by him. Finally, he confirmed the addition of Rs. 50,000/- as
against the addition made by the Assessing Officer at Rs. 18,00,300/-.
He also relied upon the various case laws mentioned on page 5 of the
its order.
4 ITA 585/JP/2011_ ITO Vs. Rajesh Bhargava
4. Now the Revenue is in appeal before us. The learned D.R. argued
that the assessee had not produced the complete books of account
before the Assessing Officer and submissions made by the AR before
the ld CIT(A) vide letter dated 15/12/2008 and other various
submissions had been accepted without taking any remand report from
the Assessing Officer. The Ld. CIT(A) also accepted the returned sales
figures without any basis. Therefore, matter may be sent back to the
Assessing Officer to verify the facts of the case.
5. At the outset, the learned A.R. for the assessee reiterated the
arguments made before the Ld. CIT(A) and argued that he has given
reasoned order after considering the legal position on estimation of
income. Therefore, the same may be confirmed.
6. We have heard the rival contentions of both the parties and
perused the material on record. The assessee has not produced the
complete books of account before the Assessing Officer, therefore,
there was no choice before him to pass the order U/s 144 of the Act
and estimation of income. The Ld. CIT(A) had considered the assessee's
submissions which has not been remanded to the Assessing Officer for
his comment before deciding the case. Therefore, it is complete 5 ITA 585/JP/2011_ ITO Vs. Rajesh Bhargava
violation of principles of natural justice. The finding given by the ld
CIT(A) for confirmation of Rs. 50,000/- is without any basis, therefore
we set aside the order to the Assessing Officer and the assessee is
directed to produce all the complete books of account before the
Assessing Officer and copy of submissions made before the ld CIT(A).
Accordingly, we set aside the order of the ld CIT(A) on this ground to
the Assessing Officer.
7. In the result, the revenue's appeal is allowed for statistical purposes only.
Order pronounced in the open court on 10/05/2015.
Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur fnukad@Dated 10th April, 2015
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the Order forwarded to:
1. vihykFkhZ@The Appellant- The ITO, Ward 6(2), Jaipur.
2. izR;FkhZ@ The Respondent- Shri Rajesh Bhargava, Jaipur.
3. vk;dj vk;qDr@ CIT 6 ITA 585/JP/2011_ ITO Vs. Rajesh Bhargava
4. vk;dj vk;qDr@ vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 585/JP/2011).
vkns'kkuqlkj@ By order,
lgk;d iathdkj@Asst. Registrar
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