Shri Chunnilal Yadav, v. The ITO 2(1),

CO 1/IND/2008 | 2004-2005
Pronouncement Date: 09-04-2010 | Result: Dismissed

Appeal Details

RSA Number 122723 RSA 2008
Bench Indore
Appeal Number CO 1/IND/2008
Duration Of Justice 2 year(s) 2 month(s) 26 day(s)
Appellant Shri Chunnilal Yadav,
Respondent The ITO 2(1),
Appeal Type Cross Objection
Pronouncement Date 09-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 09-04-2010
Date Of Final Hearing 08-04-2010
Next Hearing Date 08-04-2010
Assessment Year 2004-2005
Appeal Filed On 14-01-2008
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER ITA NO.778/IND/07 A.YS. 2004-05 INCOME TAX OFFICER 2(1) UJJAIN APPELLANT VS SHRI CHUNNILAL YADAV UJJAIN PAN AAFPY-6545-L RESPONDENT C.O. NO. 01/IND/08 (ARISING OUT OF ITA NO. 778/IND/07) SHRI CHUNNILAL YADAV UJJAIN OBJECTOR VS INCOME TAX OFFICER 2(1) UJJAIN RESPONDENT APPELLANT BY : SMT. APARNA KARAN SR. DR RESPONDENT BY : SHRI H.P. VERMA & SHRI ASHISH G OYAL O R D E R PER BENCH 2 THE REVENUE HAS FILED THE PRESENT APPEAL WHEREAS TH E ASSESSEE HAS FILED THE CROSS OBJECTION AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 16 TH OCTOBER 2007. 2. WE HAVE HEARD SMT. APARNA KARANA SR. DR AND SH RI H.P. VERMA AND SHRI ASHISH GOYAL LD. COUNSELS FOR THE ASSESSE E. THE FIRST GROUND RAISED IS THAT THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) ERRED IN ADOPTING NET PROFIT RATE AT 6% ON CONTRACT RECEI PTS AS AGAINST 8% TAKEN BY THE ASSESSING OFFICER IN THE ABSENCE OF BOOKS OF ACCOUNTS. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT THE A SSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFI CER AND THE LD. FIRST APPELLATE AUTHORITY REDUCED THE NET PROFIT RATE FRO M 8% TO 6% THAT TOO WITHOUT ASSIGNING ANY REASON. THE ASSESSMENT ORDER WAS SUPPORTED. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSE E DEFENDED THE IMPUGNED ORDER. 3. ON CONSIDERATION OF RIVAL SUBMISSIONS AND ALSO O N PERUSAL OF RECORD IT IS SEEN THAT THE ASSESSING OFFICER ESTIM ATED THE NET PROFIT AT 8% ON CONTRACTUAL RECEIPTS OF RS.82 01 844/- ON THE GROUND THAT THE BOOKS OF ACCOUNTS VOUCHERS AND BILLS ETC. WERE NO T PRODUCED BY THE ASSESSEE. FROM THE ASSESSMENT STAGE ITSELF IT IS S EEN THAT THE ASSESSEE HAS BEEN TAKING A STAND THAT ONE SHRI MUKESH MITTAL ACCOUNTANT OF THE ASSESSEE TOOK THE BOOKS FOR FINALIZATION OF SALEST AX ASSESSMENT AND LATER ON ABSCONDED AND HIS WHEREABOUTS WERE NOT KNO WN. EVEN BEFORE 3 THE FIRST APPELLATE STAGE A PLEA WAS RAISED BY THE ASSESSEE THAT THE ASSESSEE ITSELF DISCLOSED VERY HIGH NET PROFIT RATE WHICH OTHERWISE AS PER BOOKS WAS 5.94%. IT WAS ALSO PLEADED THAT IN THE C ASE OF MANOHAR & COMPANY NET PROFIT RATE WAS ACCEPTED AT 4.5% WHER EIN IT WAS OBSERVED AS UNDER (REPRODUCED FROM THE IMPUGNED ORDER):- IT MAY BE OBSERVED THAT NET PROFIT RATE OF 8% CAN NOT BE APPLIED AS A THUMB RULE IN ALL CASES OF CONTRACTORS WHOSE TURNOVER EXCEEDS RS. 40 LACS THERE IS NOT LEGAL SA NCTION FOR APPLYING SAME PRESUMPTIVE RATE AS PRESCRIBED U/S 44 AD FOR ARRIVING AT NET PROFIT. HONBLE ITAT INDORE B ENCH INDORE HAS APPROVED APPLICATION OF 8% RATE OF NP WHERE NO BOOKS OF ACCOUNTS ARE MAINTAINED OR IF MAINTAINE D BUT FOUND TO BE INCOMPLETE OR UNRELIABLE IN CASES OF C IVIL CONTRACTORS ONLY WHERE TURNOVER IS BELOW RS. 40 LAC S OR MARGINALLY ABOVE RS. 40 LACS. IN OTHER CASES AS RI GHTLY POINTED OUT BY THE APPELLANT DEPENDING ON THE TURN OVER IN THE CASE OF CIVIL CONTRACTORS AND OTHER ATTENDANT F ACTS AND CIRCUMSTANCES NP AT THE RATE OF 6% 4.5% AND EVEN LOWER RATE OF NP HAS BEEN DIRECTED TO BE APPLIED IN APPEA L ORDER PASSED BY CIT(A) UJJAIN. 4. IF THE TOTALITY OF THE FACTS ARE ANALYSED IT IS AN ADMITTED FACT THAT THE TURNOVER OF THE ASSESSEE IS HAVING AN INCREASIN G TREND AND GONE UPTO RS. 82 01 844/- WHEREAS IT WAS LESS THAN RS. 4 0 LACS IN THE SUBSEQUENT ASSESSMENT YEARS BECAUSE OF EXTRA WORK G ENERATED BY THE ASSESSEE IN KUMBH MELA. ADMITTEDLY NET RESULT IS THAT IT IS LIKE NO BOOKS OF ACCOUNTS CASE THEREFORE THERE WAS NO OPTION BU T TO APPLY THE NET PROFIT RATE. THE ASSESSEE SHOWED NET PROFIT RATE AT 5.94% WHICH WAS IDENTICALLY ACCEPTED BY THE DEPARTMENT EVEN AT 4.5% HOWEVER THE LD. CIT(A) ADOPTED THE RATE AT 6% OF THE GROSS RECEIPTS . NEITHER ANY CONTRARY DECISION WAS CITED BY THE REVENUE NOR CONTROVERTED THE FINDING OF THE 4 LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AS TO HOW THE SAME WAS WRONG. IN VIEW OF THESE FACTS THERE IS NO INFIRMIT Y IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THERE FORE ON THIS ISSUE IT IS UPHELD. 5. THE NEXT GROUND PERTAINS TO DELETING THE AMOUNT OF RS. 13 94 493/- MADE ON ACCOUNT OF UNEXPLAINED CREDITOR S. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT NO CONFI RMATION WAS FILED BEFORE THE ASSESSING OFFICER NOR ANY EVIDENCE WAS F URNISHED. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE DEFEND ED THE IMPUGNED ORDER. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL S UBMISSIONS IT IS SEEN THAT THE ASSESSING OFFICER DISALLOWED THE ENTI RE CREDITS SHOWN AT RS.13 99 493/- FOR WANT OF EVIDENCE. BEFORE THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE RELIED UPON TH E DECISION OF THE CHANDIGARH BENCH IN THE CASE OF J.R. SOLVENT INDUST RIES (P) LIMITED V. ACIT (1999) 68 ITD 65 (CHD.) (T M) WHEREIN IT WAS H ELD THAT WHERE THE ASSESSEE COULD NOT PROVE IDENTITY OF THE PARTY FROM WHOM RAW MATERIAL WAS PURCHASED AND THE INCOME WAS ESTIMATED AND THE WORK WAS ACTUALLY DONE SUCH PURCHASES COULD NOT BE TREATED AS BOGUS. IN THE PRESENT APPEAL ALSO ADMITTEDLY THE AUDIT REPORT W AS FILED WITH THE RETURN OF INCOME WHICH INCLUDES PROFIT AND LOSS ACCOUNT AN D BALANCE SHEET. THESE ARE TRADE CREDITORS. THESE CANNOT BE TREATED AS BOGUS AND NO 5 SEPARATE ADDITION CAN BE MADE WHEN THE INCOME HAS B EEN ASSESSED AT NET PROFIT RATE. AS MENTIONED EARLIER THE ACCOUNTA NT OF THE ASSESSEE ABSCONDED WITH THE BOOKS OF ACCOUNTS CONSEQUENTLY THERE IS NO INFIRMITY IN THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IN THE RESULT THIS APPEAL OF THE REVENUE IS DISMIS SED. 6. IN ITS CROSS OBJECTION PRACTICALLY THE ASSESSEE HAS SUPPORTED THE IMPUGNED ORDER AND SINCE WE HAVE UPHELD THE SAME (S UPRA) THEREFORE THE CROSS OBJECTION RAISED BY THE ASSESSEE BECOMES INFRUCTUOUS. FINALLY THE APPEAL OF THE REVENUE AND CROSS OBJEC TION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 9 TH APRIL 2010. SD SD (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER APRIL 9 2010 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE *DBN/