Sakil Babulal Belim, Vapi vs Assessee

आयकर अपील सं./I.T.A. No.2434/Ahd/2011 ( नधा रण वष / Assessment Year : 2006-07 ) Sakil Babulal Belim बनाम/ The Income Tax Officer Plot No.2, Imrannagar Vs. Vapi Silvassa Road Ward-3, Vapi Vapi थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AFMPB 1267 K (अपीलाथ% /Appellant) .. (&'यथ% / Respondent)

अपीलाथ% ओर से /Appellant by : Shri Rajesh Upadhyay, AR &'यथ% क) ओर से/Respondent by : Shri Nimesh Yadav, Sr.DR

ु वाई क) तार,ख / सन Date of Hearing 18/03/2015 घोषणा क) तार,ख /Date of Pronounce ment 27/03/2015

आदे श / O R D E R

PER SHRI KUL BHARAT, JUDICIAL MEMBER :

This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-Valsad ('CIT(A)' in short) dated 28/02/2011 pertaining to Assessment Year (AY) 2006-07. The assessee has raised the following grounds of appeal:-

(1) Income Tax Officer has erred in law and on facts to estimate Net Profit of Rs.8,34,181/- at the rate of 8% on receipts from civil construction business shown of Rs.1,04,27,274/- as against ITA No.2434/Ahd/2011 Sakil Babulal Belim vs. ITO Asst.Year - 2006-07 -2-

N.P.shown of Rs.4,62,708/-. Addition of Rs.3,71,473/- difference of estimated N.P. and N.P.shown is not justified when accounts are audited.

(2) Learned Income Tax Officer has erred in law and on facts to add on amount of Rs.2,20,872/- towards closing balances appearing in the names of the creditors outstanding to be paid and amounts Rs.84,134/- expenses payable. CIT(Appeals) has also erred in sustaining addition of Rs.2,20,892/- though this addition is made subject on verification by Income Tax Officer whether such credit balances are of earlier year or of current year. (3) Income Tax Officer when accepted purchases and expenses addition of credit balances of sundry creditors for purchases during the year and expenses unpaid to the creditors is wrongly added as income of the year under appeal.

(4) Learned Income Tax Officer has erred in law and on facts to charge interest u/s.234B, when all the receipts are exigible to TDS.

2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.144(1) r.w.section 143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 25/11/2008. While framing the assessment, the AO made addition by estimating the profit amounting to Rs.3,71,473/- and also made addition on account of unexplained sundry and outstanding expenses of Rs.13,01,026/-. Against this, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions of the assessee partly allowed the appeal. While partly allowing the appeal, the ld.CIT(A) sustained the addition of Rs.3,71,473/- and also sustained the addition made on account of sundry creditors of Rs.12,20,892/-.

ITA No.2434/Ahd/2011 Sakil Babulal Belim vs. ITO Asst.Year - 2006-07 -3-

3. At the outset, ld.counsel for the assessee submitted that the present appeal is barred by 146 days. He submitted that a petition for condonation of delay has been filed. In support of the condonation, an affidavit has been filed by the assessee. He submitted that there was a reasonable cause for not filing the appeal in time as the assessee was sick and was advised bed-rest by the doctor attending the assessee.

3.1. On the contrary, ld.Sr.DR opposed the condonation of delay. He submitted that even before the AO, the assessee did not remain present on the date of hearing fixed for the case.

4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The reason given by the assessee for not filing the present appeal in time is that the assessee was seriously sick. The assessee has filed an Affidavit to this effect. The objection of the ld.Sr.DR is that the assessee is negligent which is evident from the fact that even before the AO he chose not to appear. We have given our thoughtful consideration to the facts and circumstances of the case. It is notice that the first notice was issued by the AO on 10/04/2007 and, subsequently, notices dated 09/05/2008, 22/08/2008 and 14/10/2008. The ld.counsel for the assessee submitted that before the AO, the assessee could not remain present as the notices so issued were served at Vapi address, however, the assessee ITA No.2434/Ahd/2011 Sakil Babulal Belim vs. ITO Asst.Year - 2006-07 -4-

was busy in the contract work at other sites. He further submitted that keeping in view of the fact that the assessee being unaware of the provisions of the Income Tax Act, could not appear before the AO. He relied on the judgement of Hon'ble Apex Court rendered in the case of N.Balakrishnan Vs. M.Krishnamurthy reported at (1998) 7 SCC 123. We find that the Hon'ble Supreme Court in the case of N.Balakrishnan vs. M.Krishnamurthy (supra) has held as under:-

"It must be remembered that in every case of delay, there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the court should lean against acceptance of the explanation. While condoning the delay, the court should not forget the opposite party altogether. It must be borne in mind that he is a loser and he too would have incurred quite large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant, the court shall compensate the opposite party for his loss."

4.1. After considering the totality of the facts of the case and respectfully following the ratio laid down by the Hon'ble Apex Court in the case of N.Balakrishnan vs. M.Krishnamurthy(supra), we hereby condone the delay and the appeal is admitted for adjudication.

5. First ground of appeal is against the addition of Rs.3,71,473/-. The ld.counsel for the assessee submitted that the accounts of the ITA No.2434/Ahd/2011 Sakil Babulal Belim vs. ITO Asst.Year - 2006-07 -5-

assessee are duly audited and the NP declared by the assessee is accepted in the subsequent year at lower rate. The authorities below failed to appreciate the fact that in the subsequent year even lower NP was accepted by the Department. He further submitttd that the assessee being contractor and on the basis of presumptive rate of tax it should not have been adopted more than 5%.

6. On the contrary, ld.SR.DR supported the orders of the authorities below. We find that this issue is decided by the ld.CIT(A) in para-6.3 of his order which reads as under:-

"6.3. DECISION:- I have considered the observations of AO in the assessment order as well as the contentions raised by the AR of the appellant in the written submission carefully. The AO observed that the appellant has shown profit of only 4.45%. The AO offered many chances to the appellant to explain why the margin is so low as compared to other civil contractors. No explanation was offered by the appellant why such low profit earned by it. Therefore, the AO estimated the profit at 8% and the balance amount of what already shown was added to the income of the appellant. Before me the ld.AR did not put up a convincing argument against the finding of the AO. The only plea taken by him was the a/c. was duly audited and profits as per the a/c. be taken. I have considered the facts of the case. The appellant forfeited the chances given during the assessment proceeding as well as in the appellate proceeding to come out with a strong argument against the finding of the AO. I am constrained to upheld the action of the AO in this circumstances. Thus, this ground is dismissed."

ITA No.2434/Ahd/2011 Sakil Babulal Belim vs. ITO Asst.Year - 2006-07 -6-

6.1. We find that the ld.CIT(A) has not pointed out any defect into the books of accounts produced by the assessee. The ld.CIT(A) has not considered the material placed before him by the assessee. Therefore, we are of the considered view that the ld.CIT(A) was not justified in dismissing the appeal on the basis that the assessee forfeited the chances given during the course of assessment proceedings as well as in the appellate proceedings. Since the Revenue has accepted the lower profit in the subsequent year, therefore we feel that the assessee should be given another chance to explain before the AO in respect of the profit earned. Thus, this ground of appeal is allowed for statistical purposes.

7. Ground No.2 is against the confirmation of addition of Rs.12,20,892/-. The ld.counsel for the assessee submitted that all material evidences were placed from the ld.CIT(A) and ld.CIT(A) did not consider the same.

7.1. On the contrary, ld.Sr.DR submitted that the onus is on the assessee to prove the genuineness of the sundry and outstanding expenses.

8. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. After considering the totality of the facts and in view of the fact that the assessee was not given sufficient opportunities of hearing, therefore the ITA No.2434/Ahd/2011 Sakil Babulal Belim vs. ITO Asst.Year - 2006-07 -7-

orders of the authorities below on this issue are set aside and the same is restored back to the file of AO for decision afresh, after providing reasonable opportunity of being heard to the assessee. Thus this ground of assessee's appeal is also allowed for statistical purposes.

9. Ground Nos.3 & 4 are general in nature which require no independent adjudication.

10. In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the Court on Friday, the 27th day of March, 2015 at Ahmedabad.

Sd/- Sd/- (जी.डी.अ वाल) (कुल भारत) उपा य या यक सद य ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER Ahmedabad; Dated 27/ 03 /2015 ट,.सी.नायर, व. न.स./T.C. NAIR, Sr. PS

आदे श क" # त%ल&प अ'े&षत/Copy of the Order forwarded to :

1. अपीलाथ% / The Appellant

2. &'यथ% / The Respondent.

3. संबं6धत आयकर आयु8त / Concerned CIT

4. आयकर आयु8त(अपील) / The CIT(A)-Valsad

5. 9वभागीय & त न6ध, आयकर अपील,य अ6धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड< फाईल / Guard file.

आदे शानुसार/ BY ORDER,

स'या9पत & त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad