# Jugender Singh Yadav, Agra v. Principal Commissioner of Income Tax ,Agra &Anr

- **Citation:** (2019) 1 ILRA 499
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019
- **Case number:** INCOME TAX APPEAL No.281 of 2017
- **Bench:** Bharati Sapru, Piyush Agrawal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/jugender-singh-yadav-agra-v-principal-commissioner-of-income-tax-agra-anr-44502
- **Pages:** 5

## Headnote

A. Income Tax Act, 1961: Sections
40(a)(ia), 40A(3), 44AD, 44AB, 143, 144,
260A, 271(1)(c). Books of account -not
maintained.
Rejection
of
books
of
accounts and enhancement in net profit
justified.

Substantial amount has been spent by making
payment in cash against vouchers that too,
with vouchers having been self-made and not
verifiable. Assessee had not maintained the
stock register and quantitative tally. The
rejection of the books of account and
enhancement in net profit was justified. No
substantial question of law arises.
(Para 12, 13, 14)

Appeal against order dated 28.04.2017
passed by ITAT for AY 2011-12 (E-4)

## Text

1 All. Jugender Singh Yadav, Agra Vs. Principal Commissioner of Income Tax, Agra & Anr. 499
Officer
in
having
reached
to
its
conclusion and in the absence of which
proceedings under Section 263 of the Act
is not warranted.

12. In the case of Belal Nisa
[1988] 171 ITR 643 the Patna High Court has
held that where the Income-tax Officer had
not carried out the necessary enquiry enjoined
by
section
143(1)
of
the
Act
the
Commissioner is within his power in taking
action in terms of Section 263(1) of the Act.
Similar view has been taken in by the Patna
High Court in the case of Smt. Kaushalya
Devi [1988] 171 ITR 686.

14. As held by this Court in the case
of Goyal Private Family Specific Trust [1988]
171 ITR 698, we are of the considered opinion
that merely because the Income- tax Officer
had not written lengthy order it would not
establish that the assessment order passed
under Section 143(3)/148 of the Act is
erroneous and prejudicial to the interests of the
Revenue without bringing on record specific
instances, which in the present case, the
Commissioner of Income Tax has failed to do."

21. It is clear that after the notice
was issued by the Assessing Officer
raising 28 queries from the assessee,
which was also replied by him along with
the documentary evidence in regard to
each of the query, thus the assessment
order passed under Section 143(3) of the
Act would not render the same as
erroneous and prejudicial to the interest of
Revenue,
unless
the
Commissioner
exercising power under Section 263
brings on record to show that the order of
the Assessing Officer is erroneous, as the
same was passed without application of
mind or the Assessing Officer had made
an incorrect assessment of fact or
incorrect application of law, but the same
not being the case, and the CIT relying
upon the reply and the documentary
evidence submitted by the assessee
granted partial relief, as such the order
dated 09.02.2012 passed under Section
263 relegating back the matter to the
Assessing Officer as regards unsecured
loans and creditors is unsustainable.

22. Having examined the matter at
length on facts as well as on the law, we
are of the considered opinion that in the
present case, it is abundantly clear that the
order passed by the Assessing Officer was
neither erroneous nor prejudicial to the
interest of the Revenue.

23. In view of the above, the order dated
02.04.2013 passed by the Income Tax
Appellate Tribunal, Delhi Bench "E" New
Delhi and revisional order dated 09.02.2012
passed by Commissioner Income Tax, Meerut
under Section 263 are set aside.

24 . The question of law is therefore
answered in favour of the assessee and
against the Revenue. The appeal stands
allowed.

25. However no order as to costs.
----------

APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.08.2019

BEFORE
THE HON'BLE BHARATI SAPRU, J.
THE HON'BLE PIYUSH AGRAWAL, J.

INCOME TAX APPEAL No.281 of 2017

Jugender Singh Yadav, Agra ... Appellant
Versus
Principal Commissioner of Income Tax
,Agra &Anr. ...Respondents

Counsel for the Appellant:
Sri Suyash Agarwal.
500 INDIAN LAW REPORTS ALLAHABAD SERIES
Counsel for the Respondents:
C.S.C., I.T., Sri Krishna Agarwal.

A. Income Tax Act, 1961: Sections
40(a)(ia), 40A(3), 44AD, 44AB, 143, 144,
260A, 271(1)(c). Books of account -not
maintained.
Rejection
of
books
of
accounts and enhancement in net profit
justified.

Substantial amount has been spent by making
payment in cash against vouchers that too,
with vouchers having been self-made and not
verifiable. Assessee had not maintained the
stock register and quantitative tally. The
rejection of the books of account and
enhancement in net profit was justified. No
substantial question of law arises.
(Para 12, 13, 14)

Appeal against order dated 28.04.2017
passed by ITAT for AY 2011-12 (E-4)

(Delivered by Hon'ble Piyush Agrawal J.)

1. We have heard Shri Suyash
Agarwal, learned counsel for the assessee
- appellant and Shri Krishna Agarwal,
learned
standing
counsel
for
the
respondents - Department and perused the
materials brought on record.

2. The present appeal has been filed
against the judgement & order dated
28.04.2017 passed by the Income Tax
Appellate Tribunal, Agra Bench, Agra for
the Assessment Year 2011-12.

3. The said appeal was admitted on
21.09.2017 by this Court on the following
questions of law formulated in the memo
of appeal:-

"(i)
Whether
the
Appellate
Tribunal was legally justified in applying
net profit rate at 8% u/s 44AD when the
gross turnover of the Appellant exceeded
1 crore and books of accounts were
maintained as per section 44AB of the IT
Act?

(ii)
Whether
the
Appellate
Tribunal
was
justified
in
framing
assessment by applying net profit rate at
8% on the basis of statement of assessee
contrary
to
standard
procedure
of
assessments provided under section 143
and 144 of IT Act?

(iii)
Whether the Appellate
Tribunal is legally justified in treating
interest income from FDR and rental
income from JCB as income other than
business income for the assessment year
in question?"

4. The facts of the case, in brief, are
that the appellant is a civil contractor
engaged in execution of works contract
with Agra Development Authority, Agra.
The
present
appeal
relates
to
the
Assessment Year 2011-12. The assessee
filed its returns showing net profit of Rs.
42,62,972/-, which gives net profit @
5.09%
on
gross
receipt
of
Rs.
8,37,12,896/-. The appellant has earned
interest on FDR and JCB machines
amounting to Rs. 3,46,883/-, the total
income being Rs. 46,09,455/-.

5. The appellant filed its return on
10.09.2012 showing total income of Rs.
44,95,900/-. The return was processed under
section 143 (1) of the Income Tax Act and the
case was selected for scrutiny. Consequently,
on 13.09.2012, notice under section 143(2) of
the Income Tax Act was issued, which was
properly served upon him on 14.09.2012. A
notice dated 14.06.2013 under section 142(1)
of the Income Tax Act, along with
questionnaire, was issued. In response to the
said notice, the reply was submitted along
with required documents were also attached.
Thereafter, on 17.01.2014, another notice was
1 All. Jugender Singh Yadav, Agra Vs. Principal Commissioner of Income Tax, Agra & Anr. 501
issued directing the appellant to produce
complete books of account. On verifying the
books of account, bill, vouchers, etc., it was
found that most of the expenses were paid in
cash and vouchers were self-made, which was
not verifiable.

6. The assessee admitted, during the
course of assessment proceedings, that the
maintenance
of
stock
register
and
quantitative tally is not possible. The
Assessing Authority, while framing the
assessment order dated 22.01.2014, has
enhanced the net profit @ 8% and has
observed as under:_

"During the period assessee's
contractual
gross
receipt
is
Rs.
8,37,12,897/-. Net profit taken @ 8% on
gross receipt comes to Rs. 66,97,032/-,
assessee has also shown interest from
FDRs Rs. 1,93,893/- & from rent of JCB
Rs. 1,52,590/-, total net profit comes to
Rs. 70,43,515/- in which assessee has
already shown net profit in his P&L
Account of Rs. 46,09,455/-. Therefore,
difference
of
Rs.
24,34,060/-
(Rs.
70,43,515 - 46,09,455/-) disallowed out of
expenses and added back in his total
income. This disallowance also includes
Rs. 4,88,222/- u/s 40(a)(ia) on non
deduction of tax payment of M/s Agra
Development Authority as interest and
any other possible disallowance u/s
40(a)(ia) or 40A(3). Assessee is agree for
the same vide order sheet entry dated
22.01.2014. Penalty notice u/s 271(1)(c)
of the IT Act is being issued separately for
concealment & furnishing of inaccurate
particulars in income."

7. Feeling aggrieved by the
aforesaid assessment order, the appellant
preferred
an
appeal
before
the
Commissioner of Income Tax (Appeals),
Agra, who vide order dated 31.07.2015,
dismissed the appeal and confirmed the
assessment order. The Commissioner of
Income Tax (Appeals), in its order, has
observed as under:-

" ... Here it is a matter of legal
principles that once an assessing officer
detects any defects in the books of
accounts, any conditional offer by the
assessee for offering any income as not
supported by the bills and vouchers as
also a request that he is accepting such
income to avoid litigation and to purchase
peace of mind has no legal validity. ......

Since in this case, assessing
officer while verifying the books of
accounts of the assessee has detected that
the assessee is not maintaining stock
register of the raw materials, making
various payments of labour wages and
some small material purchase in cash and
instead of maintaining proper bills and
vouchers towards various expense is only
maintaining some self-made vouchers
which were not verifiable, therefore, the
rejection of books of accounts by the
assessing officer is justified."

8. Still feeling aggrieved by the
order of the Commissioner of Income Tax
(Appeals), Agra, the assessee - appellant
preferred an appeal before the Tribunal,
who
by
the
impugned
order,
has
dismissed the appeal of the appellant
observing as follows:-

"14. We find the order of the ld.
CIT (A) is reasonable and justified in
respect of estimation of income at the NP
rate admitted by the assessee himself, in the
course of assessment proceedings. We also
find that the ld. CIT (A) has not applied the
provisions of section of section 44AD of the
Act, rather he had justified the assessee's
502 INDIAN LAW REPORTS ALLAHABAD SERIES
admission of 8% NP rate before the A.O.
With the support of judicial pronouncements,
wherein net profit rate ranges from 8% to
13% in the cases of civil contractOrs. Thus,
the ld. CIT (A) considered the facts and
circumstances of the case that the assessee
has admitted NP of 8% in compliance to
show cause issued by the A.O. during the
course of assessment proceedings and that
subsequently,
retraction
in
appeal
is
irrelevant
on
account
of
conditional
admission, because the penalty proceedings
under section 271(1)(c) of the Act, does not
change the basic fact that assessee was not
maintaining stock register and expenditure
vouchers of the assessee were not verifiable.
However, the assessee's admission of an
estimated income at the NP rate of 8% which
has been treated as if detected by the A.O. in
compliance to show cause notice, during the
course of assessment proceedings has not
been
supported
with
corroborative
documentary evidences to prove to the
contrary, that it was not the offer of the
assessee to show his bonafides that he is
offering such income to avoid litigation, or to
buy peace of mind. Thus, the fact as regards
to the conditional admission of NP rate of
8% by the assessee either of his own or in
compliance to the show cause notice during
the course of assessment proceedings, has
not been established.

15. In view of the above, it is
proved that the assessee has made an
admission of 8% net profit rate before the
A.O.
vide
order
sheet
entry
dated
22.01.2014. The ld. CIT (A) action in
confirming the net profit rate at 8% as
admitted by the assessee before the A.O. vide
order sheet entry dated 22.01.2014 as above,
is justified, with the support of judicial
precedent relevant and the law applicable in
the case of assessee. We also notice that the
allegation raised by the assessee, in respect
of the lower authorities, are baseless and
without documentary evidence as regards the
estimation of his income, in any arbitrary or
capricious manner."

9. Feeling aggrieved by the
aforesaid order of the Tribunal, the
assessee has preferred the present appeal.

10. It has been argued by the counsel
for the appellant that at the time of assessment
proceedings, the assessee has given consent
for acceptance of 8% of gross net profit only
with a condition that no penal action shall be
taken against him and therefore, when the
penalty proceedings were initiated, he
retracted with his consent. He further submits
that the appellant has produced all books of
account before the authorities below, but the
same have wrongly been rejected. It is further
submitted that since the nature of the business
of the assessee is of the works contractor and
in many cases, the payment has to be made in
cash, for which relevant bills cannot be
produced, therefore, it is not a case for
rejection of books of account on that count. It
is further submitted that the net profit has to be
commensurate with the previous years, in
which the net profit of 6.7% has been
accepted and therefore, in the disputed year,
the net profit of 8% is not justified.

11. Learned counsel for the
Department has supported the orders
passed by the lower authorities and has
argued that all the authorities below have
decided the issue against the appellant and
it is concluded by findings of fact and no
substantial question of law arises in the
present appeal.

12. From the perusal of the record, it
reveals that the books of account of the
assessee has been rejected and the authorities
have rightly made the assessment enhancing
the net profit @ 8%. Once, on finding of fact,
1 All. Principal Commissioner of Income Tax (Central), Kanpur Vs. Sri Dinesh Chandra Jain 503
it has been found that substantial amount has
been spent by making payment in cash and
that too, with vouchers having been selfmade and not verifiable, admittedly, the
appellant has not maintained the stock
register and quantitative tally is not being
made. Further, the assessee has also not
shown the interest derived from FDR to the
tune of Rs. 1,93,893/- as well as the lease
rent of Rs. 1,52,590/- so received from
leasing out of JCB machines.

13. Once it has been found that the
assessee has not voluntarily maintained its
books of account, as required under the
Act, the books of account have rightly
been rejected and the net profit, which has
been fixed at 8%, is quite reasonable.
Moreover, all the authorities below have
rejected the contention of the appellant.
At this stage, no substantial question of
law arises in the present appeal.

14. The appeal is, accordingly,
dismissed. The substantial questions of
law are answered accordingly against the
Assessee and in favour of the Revenue.
-------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 26.08.2019

BEFORE
THE HON'BLE BHARATI SAPRU, J.
THE HON'BLE ROHIT RANJAN AGARWAL, J.

INCOME TAX APPEAL No.276 of 2015
connected with
INCOME TAX APPEAL No. 277 of 2015
INCOME TAX APPEAL DEFECTIVE No. 197 of
2015
INCOME TAX APPEAL DEFECTIVE No. 198 of
2015
INCOME TAX APPEAL DEFECTIVE No. 199 of
2015
AND
INCOME TAX APPEAL DEFECTIVE No. 200 of
2015

Principal Commissioner of Income
Tax (Central) ,Kanpur ...Appellant
Versus
Sri Dinesh Chandra Jain ...Respondent

Counsel for the Appellant:
S.S.C.I.T., Sri Praveen Kumar.

Counsel for the Respondent:
Sri Abhinav Mehrotra.

A. Income Tax Act, 1961: Sections 68,
132, 153A, 260A, 271(1)(c)-Burden of
proof varies in penalty proceedings from
that
in
assessment
proceedingsassessment
finding
cannot
be
automatically adopted.

Tribunal upheld the order of the assessing
authority, making an addition to the income by
treating exempted gifts received by his minor son
as assessee's income. No further challenge w.r.t.
quantum. First Appellate Authority partly allowed
penalty proceedings initiated. Tribunal while
deciding appeals of both the parties, dismissed
Revenue's appeal and allowed assessee's.
Revenue's appeal dismissed.

B.
"Concealment
of
income"
and
"furnishing of inaccurate particulars" are
different events. Both refer to deliberate
act on the part of assessee. A mere
omission
or
negligence
would
not
constitute a deliberate act of supressio
veri or suggestio falsi. (Para 21)

C.
Burden
of
proof.
In
penalty
proceedings the burden of proof varies
from
assessment
proceedings.
Any
finding
in
assessment
proceedings,
though constitutes good evidence for
penalty
proceedings,
cannot
automatically be adopted in a penalty
proceedings. The authorities are required
to consider the matter afresh from a
different
angle,
and
have
to
independently
arrive
at
a
finding