JANTA CONSTRUCTION CO., Jaipur v. ADD. CIT, Jaipur

ITA 1084/JPR/2011 | 2008-2009
Pronouncement Date: 02-02-2012 | Result: Partly Allowed

Appeal Details

RSA Number 108423114 RSA 2011
Bench Jaipur
Appeal Number ITA 1084/JPR/2011
Duration Of Justice 1 month(s) 24 day(s)
Appellant JANTA CONSTRUCTION CO., Jaipur
Respondent ADD. CIT, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 02-02-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 02-02-2012
Assessment Year 2008-2009
Appeal Filed On 09-12-2011
Judgment Text
1 ITA 1084-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1084/JP/2011 ASSTT. YEAR : 2008-09. JANTA CONSTRUCTION CO. VS. THE ADDL. CIT-4 E-47 ROAD NO. 2B JAIPUR. VKI AREA JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MUKESH KHANDELWAL RESPONDENT BY : SHRI VINOD JOHARI DATE OF HEARING : 31.01.2012. DATE OF PRONOUNCEMENT : 02.02.2012. ORDER DATE OF ORDER : 02/02/2012. PER R.K. GUPTA J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2008-09. 2. GROUND NO. 1 IS AGAINST DECIDING THE GROUND WHIC H WAS NOT PRESSED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS. 3. IN FACT THE ASSESSEE TOOK GROUND AGAINST INVOKI NG PROVISIONS OF SECTION 145(3) BY THE AO BEFORE LD. CIT (A). IN VIEW OF THE PAST HIS TORY AND THE DECISION OF TRIBUNAL BY WHICH APPLICABILITY OF PROVISIONS OF SECTION 145(3) WERE UPHELD THIS GROUND WAS NOT PRESSED BEFORE LD. CIT (A) FOR THE YEAR UNDER CONSI DERATION. HOWEVER LD. CIT (A) AFTER DISCUSSING THE ISSUE IN DETAIL HELD THAT PROVISIONS OF SECTION 145(3) ARE NOT APPLICABLE. 2 THOUGH THE LD. CIT (A) HAS DECIDED THE ISSUE IN FAV OUR OF THE ASSESSEE HOWEVER WE ARE OF THE VIEW THAT SINCE THE GROUND WAS NOT PRESSED B EFORE HIM THEREFORE LD. CIT (A) SHOULD NOT HAVE DECIDED THE SAME. 4. SECOND AND THIRD GROUND RELATE TO SUSTAINING DIS ALLOWANCE OF RS. 9 81 399/- OUT OF LABOUR EXPENSES AND SUSTAINING THE DISALLOWANCE OF RS. 16 96 408/- OUT OF MATERIAL EXPENSES CLAIMED BY ASSESSEE. 5. BRIEF FACTS IN THIS REGARD ARE THAT AFTER REJECT ING THE BOOKS OF ACCOUNT THE AO DISALLOWED 10% OF LABOUR EXPENSES BY OBSERVING THAT DUE TO NON PRODUCTION OF LABOUR RECORDS NO PROPER VERIFICATION COULD HAVE BEEN MADE AND HE MADE ADDITION OF RS. 9 81 399/- TO THE RETURNED INCOME. THE AO FURTHER MADE ADHOC DISALLOWANCE @ 5% OF TOTAL EXPENDITURE ON MATERIAL OF RS. 3 39 28 167/- WHICH RESULTED IN AN ADDITION OF RS. 16 96 408/-. THIS ADDITION WAS MADE BY OBSERVING TH AT PURCHASE BILLS ARE NOT AVAILABLE AND HE DOUBTED THE PAYMENTS BELOW RS. 20 000/- ON V ARIOUS DATES TO EACH SUPPLIER. IT WAS ARGUED BEFORE LD. CIT (A) THAT TRADING RESULT D ECLARED BY ASSESSEE IS BETTER. IT WAS FURTHER ARGUED THAT AS COMPARED TO EARLIER YEAR THE LABOUR EXPENSES AND OTHER EXPENDITURES ARE IN ORDER. IT WAS ALSO SUBMITTED T HAT FOR A.Y. 2005-06 06-07 AND 07-08 THE TRIBUNAL HAS APPLIED A GP RATE OF 8% ON RECEIPT S SUBJECT TO SALARY AND INTEREST TO PARTNERS AND DEPRECIATION. THE COPY OF ORDER OF TR IBUNAL WAS ALSO FILED BEFORE LD. CIT (A). IT WAS FURTHER SUBMITTED THAT FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION THE NP RATE DECLARED BY ASSESSEE IS BETTER I.E. 8.5% SUBJECT TO INTEREST SALARY TO PARTNERS AND DEPRECIATION. IT WAS FURTHER SUBMITTED THAT THERE IS NO DIFFERENCE IN FACTS AS ON SIMILAR DIFFERENCE IN PAST THE BOOKS OF ACCOUNT OF THE ASSE SSEE WERE REJECTED AND ADDITIONS WERE MADE. HOWEVER ON SECOND APPEAL BEFORE THE TRIBUNA L THE TRIBUNAL DIRECTED TO APPLY NP 3 RATE OF 8% SUBJECT TO SALARY INTEREST TO PARTNERS AND DEPRECIATION. HOWEVER THE LD. CIT (A) WAS NOT SATISFIED WITH THE EXPLANATION. HE NOT ED THAT CONTRACT RECEIPTS HAVE BEEN INCREASED FROM 24.92% IN A.Y. 2007-08 TO 38.52% IN THE CURRENT YEAR. THE INCREASE IS ALMOST 14% AND HE FOUND THAT THERE ARE SO MANY DEFE CTS IN MAINTENANCE OF BOOKS OF ACCOUNT AND ACCORDINGLY HE REJECTED THE CONTENTION OF THE ASSESSEE AND ALSO OF THE VIEW THAT PAST HISTORY CANNOT BE CONSIDERED IN THE PRESE NT CASE AS FACTS ARE DIFFERENT. THEREFORE ADDITIONS MADE BY AO WERE CONFIRMED BY L D. CIT (A). THE CONTENTIONS RAISED BEFORE LD. CIT (A) WERE REITERATED HERE BEFORE THE TRIBUNAL BY LD. A/R. 6. ON THE OTHER HAND THE LD. D/R PLACED RELIANCE O N THE ORDERS OF AO AND LD. CIT (A). IT WAS FURTHER SUBMITTED THAT STOCK REGISTER WAS NOT MAINTAINED AND THEREFORE STOCK INVENTORY WAS NOT SUBJECT TO VERIFICATION. VARIOUS PAYMENTS MADE IN EXPENDITURE ACCOUNT WERE MADE ON SELF MADE VOUCHERS WHICH WERE ALSO SUB JECT TO VERIFICATION. IT WAS FURTHER SUBMITTED THAT IN ONE OF THE YEAR THE TRIBUNAL HAS CONFIRMED HIGHER NP RATE. THEREFORE IF NP RATE IS TO BE DIRECTED THEN IT SHOULD BE DIRECTE D IN LIGHT OF DECISION OF TRIBUNAL WHERE NP RATE OF 9% HAS BEEN DETERMINED IN ONE OF THE YEA R. 7. IN REPLY THE LD. COUNSEL OF THE ASSESSEE STATED THAT THE NP RATE OF 9% WAS DIRECTED TO APPLY WHERE NP RATE SHOWN BY ASSESSEE IS LOWER A S COMPARED TO EARLIER YEAR. HOWEVER IN THE PRESENT CASE NP RATE DECLARED BY ASSESSEE IS BETTER AS COMPARED TO EARLIER YEAR. ATTENTION OF THE BENCH WAS DRAWN ON COPY OF ORDER O F TRIBUNAL FOR A.Y.; 2007-08 WHICH IS PLACED IN THE COMPILATION AT PAGE 10. ACCORDING LY IT WAS SUBMITTED THAT SINCE NP RATE SHOWN BY ASSESSEE IS BETTER AND NP RATE OF 8% HAS B EEN APPLIED BY TRIBUNAL FOR A.Y. 2007-08 THEREFORE NO ADDITION IS WARRANTED. 4 8. AFTER CONSIDERING THE SUBMISSIONS AND PERUSAL OF MATERIAL ON RECORD WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THESE GROUNDS. THE FACTS OF THE CASE ARE MATERIALLY SAME AS COMPARED TO EARLIER YEAR. IN EARLIER YEAR THE P ROVISIONS OF SECTION 145(3) WERE ATTRACTED AND CERTAIN ADDITIONS WERE MADE. FOR A.Y . 2007-08 THE NP RATE SHOWN BY ASSESSEE IS 8.41% AND IN THE IMMEDIATELY PRECEDING YEAR NP RATE OF 8.06% WERE SHOWN BY THE ASSESSEE. THE ADDITION MADE FOR A.Y. 2007-0 8 WAS DELETED BY LD. CIT (A) BY OBSERVING THAT TRADING RESULTS ARE BETTER. WHILE D ELETING THE ADDITION THE LD. CIT (A) FOLLOWED THE DECISION OF HONBLE JURISDICTIONAL HIG H COURT IN CASE OF JAIN CONSTRUCTIONS 245 ITR 527. IT WAS ARGUED BEFORE TRIBUNAL BY DEPA RTMENT THAT AO APPLIED 10% NP RATE AND TRIBUNAL IN ONE OF THE YEAR HAS UPHELD 9% NP RA TE. THEREFORE THERE IS NO DEFECT IN THE ORDER OF AO. HOWEVER AFTER CONSIDERING THE OR DER OF TRIBUNAL FOR EARLIER YEARS I.E. 2001-02 TO 06-07 THE TRIBUNAL CONFIRMED THE ORDER OF LD. CIT (A). FINDINGS OF TRIBUNAL IN ITA NO. 1220/JP/2010 FOR A.Y. 2007-08 ARE RECORD ED IN PARAS 7 & 8 AT PAGE 3 WHICH ARE AS UNDER :- 7. AFTER CONSIDERING THE SUBMISSIONS AND PERUSI NG THE MATERIAL ON RECORD WE FIND NO INFIRMITY IN THE FIN DING OF LD. CIT (A) WHO HAS ALLOWED THE APPEAL OF THE ASSESSEE FOLL OWING THE ORDER OF TRIBUNAL FOR EARLIER YEARS I.E. ASSESSMENT YEARS 2001-02 TO 06- 07. THE TRADING RESULT SHOWN BY ASSESSEE IS BETTER AS COMPARED TO TRADING RESULT SHOWN IN EARLIER YEAR. THE DEPARTME NTS CONTENTION THAT AFTER DEPRECIATION INTEREST AND REMUNERATION TO PARTNERS N.P. RATE SHOWN BY ASSESSEE IS LOWER DOES NOT HAVE MUCH WEIGHT FOR THE REASON THAT IF BY ANY REASON REMUNERATION TO PARTNE RS INTEREST TO PARTNERS AND DEPRECIATION ARE MORE AND FOR THIS REA SON THE N.P. COMES DOWN DOES NOT ALTER THE SITUATION. THE N.P. R ATE HAS TO BE SEEN BEFORE DEPRECIATION INTEREST AND REMUNERATION TO PARTNERS. IF 5 THIS ASPECT IS TAKEN INTO CONSIDERATION THE N.P. R ATE DECLARED BY ASSESSEE IS BETTER AS COMPARED TO EARLIER YEAR. WE FURTHER NOTED THAT IN IMMEDIATELY PRECEDING YEAR ALSO THE LUMP SU M ADDITION OF RS. 20 00 000/- WAS MADE BY AO WHICH WAS DELETED BY LD. CIT (A) AND THE TRIBUNAL IN ITA NO. 1261/JP/2010 DATED 11.2 .2011 CONFIRMED THE ORDER OF LD. CIT (A). FINDINGS OF TR IBUNAL ARE RECORDED IN PARA 7 OF ITS ORDER ARE AS UNDER :- 7. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING MATERIAL ON RECORD WE FIND NO INFIRMITY IN THE FIN DING OF LD. CIT (A). WE NOTED THAT SIMILAR ADDITIONS WERE MADE FOR EARLIER YEARS. MATTER REACHED TO THE STAGE OF TRIBU NAL AND THE TRIBUNAL HAS DELETED THE ADDITIONS MADE BY THE AO THOUGH THE REJECTION OF BOOKS OF ACCOUNT HAS BEEN U PHELD. FACTS IN THIS CASE ARE SIMILAR TO THE FACTS OF EARL IER YEARS THEREFORE IN VIEW OF THE DECISION OF THE TRIBUNAL ON WHICH BASIS THE LD. CIT (A) HAS DELETED THE DISALLOWANCE WE CONFIRM THE ORDER OF LD. CIT (A) FOR THIS YEAR ALSO . 8. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AN D IN VIEW OF THE DECISION OF TRIBUNAL AND ALSO THE FINDING OF LD. CIT (A) WHICH REMAINED UNCONTROVERTED WE CONFIRM THE ORDER OF LD. CIT (A). SINCE FACTS ARE SIMILAR IN THE YEAR UNDER CONSIDERA TION THEREFORE WE ARE OF THE VIEW THAT AO AND LD. CIT (A) WERE NOT JUSTIFIED IN NOT FOLLOW ING THE ORDER OF TRIBUNAL FOR EARLIER YEAR. THE DECISIONS OF TRIBUNAL ARE BINDING IN NAT URE ON THE LOWER AUTHORITIES. THE TRADING RESULT SHOWN BY ASSESSEE IS BETTER AS COMPA RED TO EARLIER YEAR AS IN THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN NP RATE OF 8.5 % AGAINST 8.41% SHOWN IN EARLIER YEAR. THEREFORE THERE WAS NO QUESTION OF MAKING A NY ADDITION. ACCORDINGLY WE DELETE 6 BOTH THE ADDITIONS MADE ON ACCOUNT OF LABOUR EXPENS ES AND OUT OF MATERIAL EXPENSES. THESE GROUNDS OF ASSESSEE ARE ALLOWED. 9. REMAINING GROUND IS IN RESPECT TO SUSTAINING THE DISALLOWANCE OF RS. 4 87 000/- RELATING TO BITUMEN PURCHASED UNDER SECTION 40(A)(I A) OF THE IT ACT. 10. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTIC ED THAT ASSESSEE HAS DEBITED A SUM OF RS.4 87 000/- TO THE PROFIT & LOSS ACCOUNT U NDER THE HEAD BITUMEN PURCHASE. ON VERIFICATION OF VOUCHERS IT WAS FOUND THAT ASSE SSEE HAS DEBITED THIS AMOUNT TO BITUMEN PURCHASE ON ACCOUNT OF TRANSPORTATION OF BI TUMEN PURCHASE TO M/S. JAGDAMBA ROADLINES. IT WAS FOUND THAT ASSESSEE FAILED TO DE DUCT TDS UNDER SECTION 194C THOUGH IT WAS A CONTRACT PAYMENT. ACCORDINGLY THE ASSESSEE WAS PROVIDED AN OPPORTUNITY TO EXPLAIN THE CASE. IT WAS SUBMITTED THAT IN FACT T HE ASSESSEE HAS NOT PAID ANY AMOUNT TO M/S. JAGDAMBA ROADLINES BUT HAS PURCHASED BITUMEN. HOWEVER NO PURCHASE BILL COULD BE PRODUCED BEFORE THE AO. THEREFORE THE AO TREATE D THE AMOUNT OF RS. 4 87 000/- PAID TO M/S. JAGDAMBA ROADLINES ON ACCOUNT OF TRANSPORTA TION OF BITUMEN AND HELD THAT TDS WAS DEDUCTIBLE ON THIS AMOUNT. SINCE NO TDS UNDER SECTION 194C HAS BEEN DEDUCTED THEREFORE IN VIEW OF PROVISIONS OF SECTION 40(A)(I A) THE AO MADE ADDITION OF THIS AMOUNT. THE LD. CIT (A) ALSO CONFIRMED THE ACTION OF THE AO. 11. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE S IDES WE FIND THAT THIS MATTER SHOULD GO BACK TO THE FILE OF AO AS WE FIND SOME WE IGHT IN THE CONTENTION OF THE ASSESSEE THAT SUCH HUGE AMOUNT OF RS. 4 87 000/- CANNOT BE O N ACCOUNT OF TRANSPORTATION. HOWEVER THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE AMOUNT OF RS. 4 87 000/- WAS PAID ON ACCOUNT OF PURCHASE OF BITUMEN. THEREFORE WE F EEL THAT ONE MORE OPPORTUNITY SHOULD BE GRANTED TO THE ASSESSEE FOR LEADING THE EVIDENC E AND ACCORDINGLY WE SET ASIDE THIS 7 ISSUE TO THE FILE OF AO TO PASS A FRESH ORDER AFTER AFFORDING OPPORTUNITY TO THE ASSESSEE FOR FILING EVIDENCE AND OTHER DETAILS IN THIS RESPECT. WE ORDER ACCORDINGLY. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND PARTLY FOR STATISTICAL PURPOSES. 13. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 02 .02.2012. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR D/- COPY FORWARDED TO :- M/S. JANTA CONSTRUCTION CO. JAIPUR. THE ADDL. CIT-4 JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1084/JP/2011) BY ORDER AR ITAT JAIPUR.