The ACIT, Circle 3, JAMNAGAR v. M/s Lotus Construction, JAMNAGAR

ITA 1197/RJT/2010 | 2005-2006
Pronouncement Date: 30-09-2011 | Result: Dismissed

Appeal Details

RSA Number 119724914 RSA 2010
Assessee PAN AAAFL7111P
Bench Rajkot
Appeal Number ITA 1197/RJT/2010
Duration Of Justice 1 year(s) 1 day(s)
Appellant The ACIT, Circle 3, JAMNAGAR
Respondent M/s Lotus Construction, JAMNAGAR
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 30-09-2011
Date Of Final Hearing 30-09-2011
Next Hearing Date 30-09-2011
Assessment Year 2005-2006
Appeal Filed On 29-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI D.K. TYAGI (JUDICIAL MEMBER) AND SHRI A .L. GEHLOT (AM) I.T.A. NO.1197/RJT/2010 (ASSESSMENT YEAR 2005-06) ACIT CIR.3 VS M/S LOTUS CONSTRUCTION JAMNAGAR ASHIRVAD PARK COLONY JAMNAGAR PAN : AAAFL7111P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MK SINGH RESPONDENT BY: SHRI DM RINDANI DATE OF HEARING : 30-09-2011 DATE OF PRONOUNCEMENT : 30-09-2011 O R D E R PER BENCH THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A) JAMNAGAR DATED 21-07-2010 AND PERTAINS TO ASSESSMENT YEAR 20 05-06. 2. THE SOLE EFFECTIVE GROUND RAISED IN THE APPEAL I S THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4 73 08 8 MADE ON ACCOUNT OF ESTIMATING GROSS CONTRACTUAL RECEIPT @8% AFTER REJECTING THE BOOKS A S PER THE PROVISIONS OF SECTION 145(3) OF THE ACT. 3. THE ASSESSEE IS A RECOGNIZED CONTRACTOR FOR MES AND WAS AWARDED CONTRACTS FOR CARRYING OUT CERTAIN WORKS AT BHUJ. THE ASSESSEE S UB-CONTRACTED PART OF THE WORK TO ANOTHER CONTRACTOR M/S KAPOOR BUILDERS IN THE EARLI ER YEAR. THE SAID CONTRACTS BEING INCOMPLETE WERE CARRIED OUT IN THE CURRENT YEAR IN WHICH PAYMENT OF RS.30 78 710 WAS MADE. THE ASSESSING OFFICER OBTAINED INFORMATION F ROM MES DEPARTMENT WHICH ASSERTED THAT THE SAID CONTRACTS WERE EXECUTED BY THE ASSESS EE ONLY. THE ASSESSING OFFICER ITA NO.1197/RJT/2010 2 THEREFORE CALLED UPON THE ASSESSEE TO EXPLAIN WHY BOOK RESULTS SHOULD NOT BE REJECTED AND INCOME ESTIMATED. THE ASSESSEE REPLIED WITH FO LLOWING DOCUMENTARY EVIDENCE: 1. COPY OF SUB CONTRACT AGREEMENT BETWEEN LOTUS CON STRUCTION AND KAPOOR BUILDERS. 2. COPIES OF BANK STATEMENTS SHOWING PAYMENTS MADE TO KAPOOR BUILDERS AFTER DEDUCTING THE TDS. 3. COPY OF TDS RETURN IN FORM NO.26 SHOWING THE TA X DEDUCTED FROM THE PAYMENTS MADE TO KAPOOR BUILDERS. 4. COPY OF PAYMENT VOUCHERS DULY ACKNOWLEDGED BY KA POOR BUILDERS. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATIO N FILED BY THE ASSESSEE AND REJECTED THE BOOK RESULTS AND CONSEQUENTLY ESTIMATED THE NET PROFIT @8% OF THE ENTIRE CONTRACT RECEIPTS. 4. ON APPEAL THE CIT(A) FOUND THAT THE ONLY DEFECT MENTIONED BY THE AO IS IN RESPECT OF WORK WHICH WAS SUB CONTRACTED AND PAYMEN T IN RELATION TO THAT WAS ONLY RS.30 78 710. THUS ON THE BASIS IT WAS NOT PROPER TO APPLY NET PROFIT RATE EVEN IN RESPECT OF OTHER WORKS. THE CIT(A) ALSO FROM THAT THIS SUB CONTRACT WAS AWARDED TO M/S KAPOOR BUILDINGS DURING AY 2004-05 AND ONLY THE INC OMPLETE WORK WAS CONTINUED DURING THE YEAR. IN ASSESSMENT YEAR 2004-05 THE ASSESSING OFFICER REJECTED THE BOOK RESULTS AND APPLIED NET PROFIT RATE OF 8% AND THAT THE MATT ER REACHED ITAT. THE CIT(A) THUS FOLLOWING THE ORDER OF ITAT FOR ASSESSMENT YEAR 200 4-05 IN ITA NO.849/RJT/2009 ORDER DATED 10-06-2010 DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. UPON HEARING THE PARTIES AND ON PERUSAL OF RECOR D WE FIND THAT FOR THE ASSESSMENT YEAR 2004-05 THE REVENUE WAS IN APPEAL A GAINST IDENTICAL ADDITION DELETED BY THE TRIBUNAL. IN FACT AS HAS BEEN FOUND BY THE CIT(A) THE SUB-CONTRACT WITH M/S ITA NO.1197/RJT/2010 3 KAPOOR BUILDERS WAS ENTERED INTO IN THE ASSESSMENT YEAR 2004-05 AND THE ADDITION FOR THE ASSESSMENT YEAR UNDER CONSIDERATION SPRINGS FRO M THAT CONTRACT AND THEREFORE HAS A DIRECT BEARING ON THE ADDITION RESORTED TO BY THE A SSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION. DURING THE YEAR UNDER CONSIDERATION M/S KAPOOR BUILDERS HAS ONLY CARRIED OUT THE REMAINING WORK THAT WAS SUB CONTRAC TED TO THEM IN THE ASSESSMENT YEAR 2004-05. THEREFORE THE REASONS APPENDED BY THE RA JKOT BENCH OF THE TRIBUNAL WHILE DISPOSING OF THE APPEAL FILED BY THE ASSESSEE AGAIN ST THE ADDITION CONFIRMED BY THE CIT(A) FOR THE ASSESSMENT YEAR 2004-05 HAS A DIRECT BEARING TO THE ISSUE RAISED IN THE APPEAL FOR THE ASSESSMENT YEAR 2005-06. WE FIND TH AT THE TRIBUNAL WHILE REVERSING THE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 2004-05 HAS FOUND AS FOLLOWS: WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. WE FIND THAT AND I T IS NOT ANYBODYS CASE THAT M/S KAPUR BUILDERS THE SUB-CONTRACTOR IS NOT A GENUINE CONCERN. ON THE CONTRARY IT IS APPARENT THAT IT IS A TAX PAYER ITS ACCOUNTS ARE AUDITED AND IT HAS ASSESSED TO TAX AND HAS TAKEN CREDIT OF TDS MADE BY THE ASSESSEE. INA THE RA BILL ISSUED BY MILITARY DEPT KAPUR BUILDERS HAVE SIGNED IT. THE ASSESSEE HAS MADE ALL PAYMENTS BY C HEQUES RIGHT FROM THE BEGINNING OF THE YEAR AS PER COPY OF ACCOUNT ON RECORD AND ON WHICH TDS HAS BEEN MADE. IT IS NOT THAT ENTIRE SUB-CONTR ACTING EXPENDITURE IS ACCOUNTED AT THE END OF THE YEAR AS PER COPY OF ACC OUNT ON RECORD AND ON WHICH TDS HAS BEEN MADE. IT IS NOT THAT ENTIRE SUB-CONTRACTING EXPENDITURE IS ACCOUNTED AT THE END OF THE YEAR. W E ALSO FIND THAT THE FACTS OF PRESENT CASE ARE QUITE DIFFERENT FROM THOS E OF THE CASE RELIED UPON BY THE C.I.T.(APPEALS). IN THE CITED CASE IT WAS FOUND BY THE BENCH THAT THERE WERE INSERTIONS IN THE BOOKS OF ACCOUNTS MADE BETWEEN TWO LINES BECAUSE OF LACK OF ROOM AND WHEN IT CONSIDERED WITH THE OTHER FACTS IT WAS HELD BY US THAT THE AGREEMENT WAS BACK DATED WHICH PROVED THAT IT WAS AN AFTER THOUGHT AND WAS DONE TO SUPPRESS THE PROFI T EARNED BY THAT ASSESSEE. THEREFORE WE HOLD THAT THE RELIANCE BY T HE CIT(APPEALS) UPON THE CITED CASE DOES NOT ADVANCE HIS ORDER. IN THE PRESENT CASE WE ALSO FIND THAT PAYMENTS TO THE SUBCONTRACT ARE MADE EVER Y MONTH AND TDS HAS BEEN MADE RIGHT FROM THE TIME OF THE FIRST PAYM ENT ON 09-05-2003 UPTO 31-03-2004. HENCE CANNOT HE SAID THAT THE CL AIM FOR EXPENDITURE WAS AN AFTER THOUGHT. ON DUE CONSIDERATION OF THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD WE HOLD THAT THE SUB-CONTRA CTING EXPENSES OF RS.1 16 79 241/- IN RESPECT OF THE PAYEE M/S KAPUR BUILDERS CANNOT BE DISALLOWED AND ALSO WE DO NOT UPHOLD REJECTION OF B OOKS OF ACCOUNTS. AS A RESULT THE ESTIMATION OF PROFITS AT 8% IS HELD T O BE UNJUSTIFIED. THE ITA NO.1197/RJT/2010 4 FINDINGS OF THE C.I.T.(APPEALS) ARE REVERSED AND AL L FOUR GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 6. THE LD.DR APPEARING BEFORE US COULD NOT THROW A NY LIGHT AS TO WHY THE ABOVE DECISION OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 20 04-05 WOULD NOT BE APPLICABLE TO THE ISSUE BEFORE US FOR THE ASSESSMENT YEAR UNDER CONSI DERATION. IN THE CIRCUMSTANCES WE HAVE TO NECESSARILY UPHOLD THE ORDER OF CIT(A). WE ACCORDINGLY CONFIRM THE ORDER OF CIT(A). 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-09-2011. SD/- SD/- (A.L. GEHLOT) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 30 TH SEPTEMBER 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A) JAMNAGAR 4. THE CIT JAMNAGAR 5. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT