IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA No.741/Del/2015 A.Y. : 2011-12 SH. IMRAN ITO, WARD 1(3), SA-38, NEW SABJI MANDI, VS. NEW DELHI SAHIBABAD, GHAZIABAD (PAN: AASPI9611B) (APPELLANT) (RESPONDENT) Department by : Dr. Sh. Rakesh Gupta, Adv. & Sh. Somil Agarwal, Adv. Assessee by : Sh. FR Meena, SR. DR Date of Hearing : 24-08-2016 Date of Order : 16-09-2016 ORDER PER H.S. SIDHU : JM Assessee has filed present appeal against impugned order dated 11/12/2014 passed by Ld. Commissioner of Income Tax (Appeals), Ghaziabad on following grounds:- 1. That having regard to facts and circumstances of case, Ld. CIT(A) has erred in law and on facts in not deleting addition of Rs.30,73,334/- fully as made by Ld. AO on basis of alleged turnover and has further erred in sustaining addition to extent of Rs.24,61,867/- in this regard, more so when turnover of Rs.3,07,73,348/- does not pertains to assessee in any manner and impugned addition has been made by recording incorrect facts and findings and without bringing any adverse material on and without considering/appreciating submissions of assessee. 2. That having regard to facts and circumstances of case, Ld. CIT(A) has erred in law and on facts in not considering fact that assessee is carrying business of retail trade as well as Kachacha Arhartiya of fruit and vegetable on commission basis and has further erred in not allowing expenses of Rs.7,69,334/- paid to Mandi Samiti Shulka and Vikas Cess and Rs.92,320/- paid for Miscellaneous expenses and that too without considering facts and 2 circumstances of case and without considering/appreciating submissions of assessee. 3. That in any case and any view of matter, action of Ld. CIT(A) in confirming action of Ld. AO in making impugned addition on basis of alleged turnover and framing impugned assessment order is contrary to law and facts, void ab initio, beyond jurisdiction, and without giving adequate opportunity of hearing, by recording incorrect facts and findings and same is not sustainable on various legal and factual grounds. 4. That having regards to facts and circumstances of case, Ld. CIT(A) has erred in law and on facts in not reversing action of Ld. AO in charging interest u/s 234A, 234 Band 234C of Income Tax Act, 1961. 5. That appellant craves to leave to add, modify, amend or delete any of grounds of appeal at time of hearing and all above' grounds are without prejudice to each other. 3 2. facts in brief are that assessee had filed return of income on 30.7.2011 declaring income of Rs. 198830/-. case was selected for scrutiny through CASS. In this case notices u/s. 143(2) and 142(1) were issued on 24.9.2012 and 4.12.2012 respectively. assessee is dealing in retail trading of Tomato etc. under name and style of M/s Imran Tomato Company. During assessment assessee had shown gross receipts of Rs. 2475290/- and declared NP rate @8% under presumptive income u/s. 44AD as compared to FY 2009-10 @4.70%. AO observed that assessee had made sale of Rs. 3,07,73,348/- during FY 2010-11, therefore, assessee was asked to show cause why NP @10% of total sales of Rs. 3,07,73,348/- might not be applied and he was also asked to furnish all books of accounts maintained by assessee alongwith vouchers for expenses. In response, assessee had submitted revised sales on basis of certificate issued by Krishi Utpadan Mandi Samiti, Ghaziabad and basis of turnover on own account trading account. assessee had also produced photocopy of day today sale and purchase accounts maintained by Krishi Utpadan Mandi Samiti. Besides, Krishi Utpadan Mandi 4 Samiti vide its letter dated 13.2.2014 had furnished details and purchases of produces made by assessee. But there was no mention in letter that assessee had made sales of products on commission basis. Thereafter AO held turnover of Rs. 3,07,73,348/- of assessee of year under consideration and applied NP rate of 10% and accordingly made addition of Rs. 30,73,334/- by completing assessment at Rs. 32,72,164/- u/s. 143(3) of I.T. Act, 1961 vide his order dated 28.2.2014. 3. Being aggrieved with aforesaid order, assessee appealed before Ld. CIT(A), who vide impugned order dated 28.2.2014 has partly allowed appeal for statistical purposes and applied NP rate @8% instead of 10%. 4. Now Assessee is aggrieved against impugned order and filed present appeal before Tribunal. 5. Ld. Counsel of Assessee has stated that Ld. CIT(A) has reduced NP rate from 10% to 8% on estimation basis, which is not sustainable in eyes of law. He further stated that said applied rate of 8% is still at higher side which may be reduced to reasonable rate. 5 6. On other hand, Ld. DR relied upon order of Ld. CIT(A) and stated that Ld. CIT(A) has passed well reasoned order which may please be upheld. 7. I have heard both parties and perused and considered relevant records available with us especially impugned order passed by Ld. CIT(A). I find that Ld. First Appellate Authority has adjudicated issue in dispute vide para no. 5 to 6 at pages 9 to 10 in his impugned order. said relevant paras of impugned order are reproduced as under:- 5. Having considered facts of case, submission of appellant and assessment order of AO, appeal is decided as under: 5.1 It is seen that assesse had cleared gross receipt of Rs. 2475290/- and declared NP @8%. However, on inquiries it was found that turnover of Rs. 30773348/- had not been disclosed by assessee. AO confronted this fact to assessee and asked him to show cause why NP of 10% should not estimated on undisclosed sales of Rs. 30773348/- and why addition of Rs. 30,77,334/- be not made in income of assessee. On being so confronted assessee came with story that he was doing business as trader as well as on 6 commission basis. However, he did not submit any details of his sales / purchases of trading turnover or commission turnover. assessee submitted that he earned his commission income of Rs. 61546/- @3% after deducting various expenses. In view of these facts, AO estimated NP of 10% on turnover of Rs. 3,07,73,348/- and addition fo Rs. 30,73,334/-. 5.2 During appellate proceedings, appellant had tried at length to explain what commission income is. However, fact remains that he had not disclosed these transactions in return of income and neither at assessment nor at appeal stage did he submit any cogent evidence that these transactions relate to commission income. These arguments therefore lack merit. However, I find no justification for applying NP rate of 10% as against declared NP rate of 8%. In my considered view NP rate of 8% instead of 10% would be justified at this is NP Rate of disclosed turnover. Thus, applying NP rate of 8%, addition is sustained to extent of Rs. 24,61,867/- and appellant gets relief of Rs. 6,11,467/-. main issue having been decided thus, grounds of appeal are not adjudicated separately. 6. In result, appeal is partly allowed for statistical purposes. 7 7.1 After going through aforesaid order passed by Ld. CIT(A) on issue in dispute, I find that assesse had cleared gross receipt of Rs. 2475290/- and declared NP @8%. However, on inquiries AO found that turnover of Rs. 30773348/- had not been disclosed by assessee. AO confronted this fact to assessee and asked him to show cause why NP of 10% should not estimated on undisclosed sales of Rs. 30773348/- and why addition of Rs. 30,77,334/- be not made in income of assessee. On being so confronted assessee stated that he was doing business as trader as well as on commission basis. However, he did not submit any details of his sales / purchases of trading turnover or commission turnover before AO. assessee submitted that he earned his commission income of Rs. 61,546/- @3% after deducting various expenses. Therefore, AO estimated NP of 10% on turnover of Rs. 3,07,73,348/- and made addition of Rs. 30,73,334/-. I further find that assessee had not disclosed these transactions in return of income and neither at assessment nor at appellate stage did he submit any cogent evidence that these transactions relate to commission income. Therefore, Ld. CIT(A) applied NP rate of 8 8% instead of 10%, which is quite reasonable and justifiable and rightly sustained addition to extent of Rs. 24,61,867/- and accordingly, assessee gets relief of Rs. 6,11,467/-, which does not need any interference on my part, hence, I uphold order of Ld. CIT(A) on issue in dispute and accordingly, appeal of Assessee is dismissed. 8. In result, appeal of Assessee is dismissed. Order pronounced in Open Court on 16/09/2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER Date 16/09/2016 SRBHATNAGAR Copy forwarded to: - 1. Appellant - 2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order, Assistant Registrar, ITAT, Delhi Benches 9 Imran v. ITO, Ward-1(3), New Delhi