2017 (11) TMI 518 - HC - Income Tax

Revision u/s 264 in favor assessee - CIT rejected the application - non furnishing books of account and other relevant material - GP determination - Held that - On a perusal of the assessment order and the order passed by the (CIT) under Section 264 of the Act, we find that more than sufficient opportunity was provided to the assessee to explain his case of furnishing books of account and other relevant material. The assessee failed to avail the opportunity provided by the Assessing Officer on several occasions. Even during those instances where authorized representative of the assessee appeared, complete details were not filed. Accordingly, the profit rate of 12% to the gross receipts of the assessee was held to be quite reasonable on the basis of the material available before the Assessing Officer. Thus, the CIT finding no error in the order passed by the Assessing Officer, rightly concurred with the view taken by the Assessing Officer and rejected the petition filed by the petitioner under Section 264 of the Act. Even before this Court assessee had filed the certificate of gross profit rate and net profit rate for the Assessment years 2010-11 to 2014-2015 and there had been lot of variation in the profit rate of the assessee during these years and therefore, in the absence of production of books of account by the assessee, no benefit can be derived by him by claiming profit rate as applicable then. Moreover, the order passed by the (CIT) is dated 30.03.2015. The present petition has been filed after one year and eight months. Learned counsel for the petitioner has not been able to produce any material on record to substantiate his claim made in the petition. Consequently, finding no merit in the petition, the same is hereby dismissed.

Issues:
1. Quashing of the impugned order under Section 264 of the Income Tax Act, 1961.
2. Reconsideration of the petition filed by the petitioner.
3. Assessment order dated 15.03.2013 under Section 145(3) of the Act.
4. Imposition of penalties under Sections 271A and 271B of the Act.
5. Rejection of the petition under Section 264 of the Act by the Commissioner of Income Tax.
6. Reasonableness of the profit rate adopted by the Assessing Officer.
7. Variation in profit rate over the years.
8. Delay in filing the petition before the High Court.

1. Quashing of the Impugned Order:
The petitioner sought to quash the order dated 30.03.2015 passed by the Commissioner of Income Tax, Rohtak, under Section 264 of the Income Tax Act, 1961. The petitioner contended that the assessment order was passed due to extraneous considerations and requested reconsideration of the petition. However, the Commissioner rejected the petition, leading to the filing of the instant petition before the High Court under Article 226 of the Constitution of India.

2. Assessment Order and Penalties:
The petitioner, a Civil Contractor, filed income tax returns for the assessment year 2010-11, initially declaring income at ?1,74,500, later revised to ?4,84,627. The Assessing Officer rejected the audited balance sheet and ledgers, applying a net profit rate of 12% resulting in an assessment of ?62,07,890. Penalties under Sections 271A and 271B were imposed for incomplete books of account and non-filing of audited accounts. The petitioner filed a petition under Section 264 of the Act, alleging lack of due diligence due to personal circumstances.

3. Rejection of Petition by Commissioner:
The Commissioner of Income Tax rejected the petitioner's Section 264 petition, prompting the petitioner to approach the High Court. The Court noted that the petitioner failed to provide complete details and relevant material despite multiple opportunities during the assessment proceedings. The profit rate of 12% applied by the Assessing Officer was deemed reasonable based on available evidence. The Commissioner's decision was upheld as no error was found in the assessment order.

4. Reasonableness of Profit Rate:
The petitioner attempted to challenge the 12% profit rate adopted by the Assessing Officer as excessive. However, the petitioner's submission of gross profit rate certificates for multiple assessment years did not support his claim. The significant variation in profit rates over the years and the absence of produced account books weakened the petitioner's argument regarding the reasonableness of the profit rate.

5. Delay in Filing Petition:
The High Court highlighted the delay in filing the petition, which was lodged one year and eight months after the order by the Commissioner. The petitioner failed to provide evidence to substantiate the claims made in the petition. Consequently, the Court dismissed the petition, finding no merit in the petitioner's arguments.

This detailed analysis of the judgment addresses the issues raised in the case, covering the legal aspects and factual circumstances leading to the final decision by the High Court.

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