Shri Yogendra Ratilal Sheth, Bhavnagar v. The Addl.CIT.,Bhavnagar Range-2,, Bhavnagar

ITA 1460/AHD/2009 | 2006-2007
Pronouncement Date: 21-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 146020514 RSA 2009
Bench Ahmedabad
Appeal Number ITA 1460/AHD/2009
Duration Of Justice 1 year(s) 8 month(s) 14 day(s)
Appellant Shri Yogendra Ratilal Sheth, Bhavnagar
Respondent The Addl.CIT.,Bhavnagar Range-2,, Bhavnagar
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 21-01-2011
Date Of Final Hearing 13-01-2011
Next Hearing Date 13-01-2011
Assessment Year 2006-2007
Appeal Filed On 07-05-2009
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI JM AND D.C.AGRAWAL A M YOGENDRA RATILAL SHETH PROP. SHAH CONSTRUCTION CO. VORA BAZAR BHAVNAGAR. VS. ADDL. CIT BHAVNAGAR RANGE-2 BHAVNAGAR. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI TUSHAR P. HEMANI AR RESPONDENT BY:- SHRI K. MADHUSUDAN SR. DR O R D E R PER D.C. AGRAWAL ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS :- THE HONBLE CIT(A) HAS ERRED IN (1) CONFIRMING THE REJECTION OF BOOKS OF ACCOUNT; (2) CONFIRMING THE ESTIMATION OF THE BUSINESS INCOME @ RS.32 06 126/- BEING 5% OF THE GROSS TOTAL RECEIPTS AND REPLACING THE SAME FOR THE RETURNED BUSINESS INCOME OF RS.24 74 627/- THUS RESULTING IN AN ADDITION OF RS .7 31 499/-. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS REGARD ING CONFIRMATION OF ADDITION OF RS.7 31 499/-. ITA NO.1460/AHD/2009 ASST. YEAR 2006-07 ITA NO.1460/AHD/2009 ASST. YEAR 2006-07 2 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAG ED IN THE BUSINESS OF CIVIL CONSTRUCTION AND JOB WORK. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT ASSESSEE HAS SHOWN A TURNOVER OF RS.6 41 22 529/- AND NET PROFIT OF RS.24 74 627/- W HICH COMES TO 3.86% AS AGAINST PRECEDING YEARS NET PROFIT OF RS.3 02 3 91/- ON A TURNOVER OF RS.80 10 832/- WHICH COMES TO RS.3.77%. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT ASSESSEE U SED TO MAKE PAYMENTS TO THE LABOURERS THROUGH CHEQUES AS WELL A S IN CASH. THE CASH PAYMENT WAS MADE THROUGH SELF MADE VOUCHERS WITHOUT THERE BEING VOUCHER NUMBER AND SITE NUMBER AND FURTHER THAT LUM P SUM PAYMENT OF RS.3 000/- TO RS.20 000/- WERE MADE WHICH REMAINED UNVERIFIABLE. THE ALSO AO POINTED OUT IN HIS ORDER THE DETAILS OF PAY MENT IN CASH AND LABOUR CHARGES IN RESPECT OF SEVERAL WORKERS. 4. AFTER CONSIDERING THE REPLY OF THE ASSESSEE AO A PPLIED THE NET PROFIT OF 5% ON GROSS RECEIPT WHICH RESULTED IN BUS INESS PROFIT OF RS.32 06 126/- AS AGAINST RS.24 74 627/- DECLARED B Y THE ASSESSEE. WHILE DOING SO THE AO FOLLOWED THE CASE OF SHRI SURESH RA TILAL SHETH PROP. OF M.S SHETH CONSTRUCTION CO. BHAVNAGAR WHICH IS SIS TER CONCERN. 5. THE LD. CIT(A) CONSIDERING THE DEFECTS IN THE BO OKS OF ACCOUNTS CONFIRMED THE BUSINESS PROFIT OF RS.32 06 126/- AS UNDER :- 3.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF TH E AO IN THE ASSESSMENT ORDER AND THE CONTENTIONS OF THE LD. COU NSEL FOR THE APPELLANT PAPER BOOK FILED AND THE CITATIONS RELIED UPON BY H IM. THE APPELLANT DURING THE YEAR UNDER CONSIDERATION WAS ENGAGED IN THE CIVIL ITA NO.1460/AHD/2009 ASST. YEAR 2006-07 3 CONSTRUCTION AND JOB WORK. IT IS CLEARLY ESTABLISHE D IN THIS CASE THAT VARIOUS DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCO UNT ARE THERE AND A TRUE PICTURE OF PROFIT CANNOT BE DEDUCED ON THE BAS IS OF BOOKS OF ACCOUNT. THE LD. AR ALTHOUGH HAS SUBMITTED REGARDING VARIOUS DEFECTS POINTED OUT BY THE AO BUT HE COULD NOT BE ABLE TO CLEARLY ESTAB LISH THAT THE DEFECTS POINTED OUT BY THE AO ARE NOT THERE AND WHILE CLARI FYING THE POSITION HE HAS WRITTEN THAT EITHER BY VOUCHERS OR BY ACCOMPANY ING DOCUMENTS THE DETAILS HAVE BEEN COVERED BUT IN SPECIFIC TERMS TH E DEFECTS TO BE GLARING IN NATURE AS POINTED OUT BY THE AO COULD NOT BE C LARIFIED BY HIM. THE AO AFTER SCRUTINY OF THE BOOKS OF THE APPELLANT IDENT IFIED THAT FOR THE AU 2005-06 IN THE CASE OF APPELLANTS BROTHER VIS. SUR ESH RATILAL SHETH WHO WAS ALSO ENGAGED IN THE SAME LINE OF BUSINESS THE SAME TYPES OF DEFECTS WERE POINTED OUT IN HIS CASE ALSO AND THE AO AFTER POINTING OUT THE DEFECTS IN THE CASE OF HIS BROTHER REJECTED THE BOOKS AND ESTIMATED THE NET PROFIT AT 5% OF THE GROSS RECEIPTS. THE FINDINGS OF THE AO IN ESTIMATING THE NET PROFIT HAVE BEEN CONFIRMED BY ME VIDE MY ORDER NO.C IT(A)-XX/117/07-08 DATED 25.7.2008 FOR ASST. YEAR 2005-06 IN THE CASE OF HIS BROTHER. IN THE APPELLANTS CASE THIS YEAR THE FACTS GROUND OF AP PEAL AND THE SUBMISSIONS OF THE APPELLANT BEING IDENTICAL TO THO SE IN HIS BROTHERS CASE FOR ASST. YEAR 2005-06. I HOLD THAT THE AO WAS JUST IFIED IN REJECTING THE BOOKS OF ACCOUNT ESTIMATING THE NET PROFIT AND THE REBY MAKING THE ADDITION OF RS.32 06 126/- WHICH IS HEREBY CONFIRME D. 6. THE LD. AR SUBMITTED THAT HE DOES NOT PRESS GROU ND RELATING TO REJECTION OF BOOKS OF ACCOUNTS. ONCE IT IS SO THEN ONE HAS TO ONLY COMPARE PROFIT OF THE CURRENT YEAR WITH THE PROFITS OF EARL IER YEARS AND IF IT IS BETTER AS COMPARED TO EARLIER YEAR THEN NO ADDITION IS CAL LED FOR. HE REFERRED TO THE DECISION OF THE TRIBUNAL IN THE CASE OF HIS BRO THER SHRI SURESH RATILAL SHETH IN ITA NO.3246/AHD/2008 FOR ASST. YEAR 2005-0 6 WHERE IN THE TRIBUNAL HAD OBSERVED AS UNDER :- 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT AUTHORITIES BELOW WERE JUSTIFIED IN NOT RELYING ON THE BOOK RES ULTS AND RESORTING TO ESTIMATION OF PROFITS. EVEN WHERE CASH PAYMENT IS MADE AND CLAIME D TO THE SAME PARTIES IT WAS NECESSARY TO SHOW THAT CASH PAYMENT HAS ACTUALLY GO NE TO THEM BY SUBMITTING ACKNOWLEDGMENT FROM THESE PARTIES. CHEQUE PAYMENT N ECESSARILY CONFIRMS THAT IT HAS GONE TO THIRD PARTIES BUT NOT THE CASH PAYMENT UNL ESS THERE IS DIRECT ACKNOWLEDGMENT FROM THEM. FURTHER IF PAYMENT BY CHEQUE CAN GO TO T HOSE PARTIES THEN THERE IS NO REASON WHY FURTHER PAYMENT BY CHEQUE SHOULD NOT GO TO THEM AND WHY MAJOR PORTION OF PAYMENT IS MADE BY CASH. ACCORDINGLY WE DECLINE TO INTERFERE IN REJECTING THE ITA NO.1460/AHD/2009 ASST. YEAR 2006-07 4 BOOKS BY THE AUTHORITIES AND IN ESTIMATING THE INCO ME. HOWEVER ESTIMATE MADE BY THE AUTHORITIES BELOW IS NOT SOUND. IF PROFIT IN THE EA RLIER YEAR WAS 3.76% THEN THERE IS NO REASON TO SAY THAT PROFIT THIS YEAR SHOULD BE HIGHE R. NO COMPARATIVE WORK FOR THE TWO YEARS IS DONE BY THE AO SO AS TO SHOW THAT CASH OUT FLOW THIS YEAR IS MUCH HIGHER AS COMPARED TO EARLIER YEAR AND THEREFORE THERE IS H IGHER PILFERAGE THIS YEAR. ONCE CONDITION OF BUSINESS REMAINS THE SAME THEN RATE OF PROFIT TO BE ADOPTED SHOULD NOT VARY DRASTICALLY AS COMPARED TO PREVIOUS YEAR. ACC ORDINGLY WE DIRECT TO APPLY NET PROFIT RATE OF 3.76% AS AGAINST 5% CONFIRMED BY THE LD. CIT(A). THE AO WILL ACCORDINGLY CALCULATE THE ADDITION. THE ASSESSEE T HEREFORE GETS PART RELIEF. RELYING ON THAT ORDER THE LD. AR PLEADED THAT BOOK S RESULTS SHOWN BY THE ASSESSEE SHOULD BE ACCEPTED. 7. THE LD. DR ON THE OTHER SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN THE CASE OF SHRI SURESH RATILAL SHETH IN ASST. YEAR 2005-06 THE ASSESSEE HAD DECLARED A NET PROFIT RATE OF 2.92 % WHEREAS THE TRIBUNAL HAS APPLIED NET PROFIT RATE OF 3.76%. CONSIDERING T HE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE WE DIRECT THE AO TO APPL Y A NET PROFIT RATE OF 4% THIS YEAR AS AGAINST 5% MADE BY THE AO. AS A RES ULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 21.1.11. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEM BER AHMEDABAD DATED : 21.1.11. MAHATA/- ITA NO.1460/AHD/2009 ASST. YEAR 2006-07 5 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 13/1/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 17/1/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..