M/s. Amber Construction Co.,, JUNAGADH v. The Income Tax Officer, Ward-1(2),, JUNAGADH

ITA 195/RJT/2015 | 2010-2011
Pronouncement Date: 21-10-2016 | Result: Allowed

Appeal Details

RSA Number 19524914 RSA 2015
Assessee PAN AAOFA3067F
Bench Rajkot
Appeal Number ITA 195/RJT/2015
Duration Of Justice 1 year(s) 5 month(s) 8 day(s)
Appellant M/s. Amber Construction Co.,, JUNAGADH
Respondent The Income Tax Officer, Ward-1(2),, JUNAGADH
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 21-10-2016
Assessment Year 2010-2011
Appeal Filed On 13-05-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE: SHRI S.S. GODARA JUDICIAL MEMBER AND S H RI AMARJIT SINGH ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] M/S. AMBER CONSTRUCTION CO STATION PLOT NR. RAILWAY STATION OPP. ROKADIYA HANUMAN JUNAGADH - 362001 PAN: AAOFA3067F (APPELLANT) VS THE ITO WARD - 1(2) JUNAGADH (RESPONDENT) REVENUE BY : S MT. USHA N. SHROTE SR. D . R. ASSESSEE BY: S H RI RANJIT LALCHANDANI A.R. DATE OF HEARING : 03 - 10 - 2 016 DATE OF PRONOUNCEMENT : 21 - 10 - 2 016 / ORDER P ER : AMARJIT SINGH ACCOUNTANT MEMBER : - THI S ASSESSEE S APPEAL FOR A.Y. 2010 - 11 AR ISES FROM ORDER OF THE CIT(A) - 3 RAJKOT DATED 02 - 03 - 2015 IN APPEAL NO. CIT(A) - 3 / RJT/0536/13 - 14 IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961; IN SHORT THE ACT . I T A NO . 195 / RJT /20 15 A SSESSMENT YEAR 2010 - 11 I .T.A NO. 195 /RJT /20 15 A.Y. 2010 - 11 PAGE NO M/S. AMBER CONSTRUCTION CO. VS. ITO 2 2. THE ASSSESSEE HAS RAISED FOLLOWING GROUND OF APPEAL: - 1) THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE REJECTION OF RESULT AND DISCLOSED BY DULY AUDITED AND REGULARLY MAINTAINED BOOKS OF ACCOUNTS. 2) WITHOUT PREJUDICE GROUND NO. 1 THE ADDI TION SUSTAINED AT RS. 2 37 646 I S UNWARRANTED AND UNJUSTIFIED. 3) WITHOUT PREJUDICE TO GROUND NO. 1 AND 2 THE ADDITION OF RS. 2 37 646/ - IS TOO HEAVY AND ARBITRARY AND UNWARRANTED BY FACTS OF CASE. 3. IN THIS CAS E THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS. 11 69 954/ - . THE ASSESSEE FIRM IS A CIVIL CONTRACTOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS NOT MAINTAINED RECORD OF QUALITY AND CON SUMPTION OF MATERIAL. HE FURTHER STATED THAT ASSESSEE HAS ALSO NOT MAINTAINED PROPER VOUCHERS TO DO VERIFICATION OF THE EXPENSES INCURRED BY THE ASSESSEE. IN VIEW OF THIS THE ASSESSING OFFICER ESTIMATED THE ADDITION OF NET PROFIT @ 8% WHICH COMES TO RS. 14 81 204/ - AFTER DEDUCTING RS. 9 74 444/ - OF NOT NET PROFIT ALREADY SHOWN BY THE ASSESSEE. HE MADE ADDITION OF DIFFERENT AMOUNT OF RS 5 06 760/ - IN THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE FILED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) AGAINST THE ORDER OF THE ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX(A) HAS RESTRICTED THE ADDITION TO RS. 2 37 464/ - AS AGAINST RS. 5 06 760/ - MADE BY THE ASSESSING OFFICER BY STATING AS UNDER: - 5.2 I AGREE WITH THE APPELLANT ON MOST OF THE C OUNTS. IT IS ALSO SEEN THAT THE A.O. HAS NOT EVEN AFTER MENTIONING THE DEFECTS IN THE BOOKS OF ACCOUNTS NOT REJECTED THE SAME U/S.145. THIS SHOULD HAVE BEEN DONE BY THE A.O. HOWEVER THE OBSERVATIONS OF THE A.O. CLEARLY POINT TO THE SAME AND HIS ESTIMATI ON OF THE I .T.A NO. 195 /RJT /20 15 A.Y. 2010 - 11 PAGE NO M/S. AMBER CONSTRUCTION CO. VS. ITO 3 PROFIT IS THEREFORE JUSTIFIED. THE QUESTION IS ABOUT THE QUANTUM. THE NP SHOWN BY THE APPELLANT IS 5.26% THIS YEAR WHICH IS BETTER THAN THE LAST TWO YEARS. THE A.O. HAS ALSO NOT GIVEN ANY COMPARABLE CASES TO SHOW THAT THE NET PROFIT IS 8%. HOWEVE R IT WOULD BE IN MY OPINION PROPER IF THE GP IS COMPARED FOR THIS PURPOSE. THE APPELLANT HAS SHOWN A GP OF 12.72% THIS YEAR AS AGAINST 14.65% AND 17.72% IN LAST TWO YEARS. THE APPELLANT HAS NOT GIVEN ANY EXPLANATION FOR THE SHARP DROP IN GP. BY THE APPE LLANT'S OWN ADMISSION IT IS HAVING MANY SITES AND SELF VOUCHERS ARE MADE. THE PROBABILITY OF MANIPULATION IN SUCH PRACTICE CANNOT BE RULED OUT. I ALSO DO NOT AGREE WITH THE APPELLANT THAT THE QUANTITY AND CONSUMPTION REGISTERS CANNOT BE MAINTAINED. CONSID ERING THIS IT WOULD SERVE THE INTEREST OF NATURAL JUSTICE IF THE GP IS TAKEN @ 14% ON THE DIRECT WORKS AS AGAINST 12.72% TAKEN BY THE APPELLANT. ON THE DIRECT CONTRACT WORK OF RS.1 85 15 501 THIS COMES TO RS.25 92 170/ - . THE APPELLANT HAS SHOWN THE GP A T RS.23 54 524/ - @ 12.72%. THE ADDITION IS THEREFORE RESTRICTED TO RS.2 37 646/ - AS AGAINST RS.5 06 760/ - MADE BY THE A.O. THE GRO UNDS OF APPEAL ARE PARTLY ALLOWED. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE US T HE LD. A .R. STATED THAT LD. COMMISSIONER OF INCOME TAX(A) HAS COMMITTED ERROR IN SUSTAINING THE ADDITION ON ESTIMATED BASIS WITHOUT ANY EVIDENCES WHICH IS UNWARRANTED. THE SUBMISSION OF THE ASSESSEE MADE BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - 1. THE ONLY GROUND IS AGAINST THE ESTIMATION OF THE NET PROFIT FROM THE BUSINESS @ 8% AND HENCE AN ADDITION OF RS. 506760/ - TO THE BOOK RESULT. 1.1 THE APPELLANT CARRIED THE BUSINESS OF ROAD CONSTRUCTION DURING THE YEAR. 1.2 THE APPELLANT RECEIVES INCOM E FROM THREE TYPES OF ACTIVITIES IN HIS BUSINESS [A] SERVICE CONTRACT: THIS IS 1% COMMISSION RECEIVED FROM SUB CONTRACTORS ON CONTRACTS TAKEN AN THEN SUB CONTRACTED TO OTHERS [B] SALE OF ASPHALT: THERE IS NO PROFIT EARNED ON THIS AS ASPHALT IS GIVEN TO SUB CONTRACTORS AT THE PURCHASE PRICE. [C] ROAD CONSTRUCTIONS DONE BY SELF. I .T.A NO. 195 /RJT /20 15 A.Y. 2010 - 11 PAGE NO M/S. AMBER CONSTRUCTION CO. VS. ITO 4 1.3 THE TURNOVER OF THE APPELLANT WAS RS 65560878 OUT OF WHICH RS 47045377 WAS ON ACCOUNT OF SUB CONTRACTS RS DIRECT CONTRACT WAS OFRS 18515501. 1.4 THE AO HAS GIVEN GENERAL REASONS AND HAS ESTIMATED THE NET PROFIT AT 8% AND HAS MADE AN ADDITION OF RS 506760 \ . 1.5 THE ACTION OF THE AO IS NOT JUSTIFIED AS [A] THE BOOKS OF ACCOUNTS ARE AUDITED AND THE AUDITOR HAS NOT FOUND ANY DEFECT IN THE MAINTEINENCE OF THE ACCOUNTS. A COPY OF THE AU DITED REPORT IS ENCLOSED. [B] WE HAVE FILED THE ENTIRE DETAILS OF THE EXPENSES AND THE AO HAS NOT FOUND ANY PARTICULAR DEFECT IN THE EXPENSES [C] WE DO NOT MAINTAIN A MEASUREMENT BOOK SINCE THE MEASUREMENT IS DONE BY THE GOVERNMENT AUTHORITIES AND THE PAYM ENT IS RECEIVED ON THAT BASIS. [D] IN THE VERY NATURE OF THE BUSINESS CARRIED ON BY THE APPELLANT IT IS NOT POSSIBLE TO MAINTAIN A DAY TO DAY STOCK REGISTER. [E] IN THE VERY NATURE OF THE BUSINESS CARRIED ON BY THE APPELLANT IT IS NOT POSSIBLE TO MAINTAIN A DAY TO DAY CONSUMPTION REGISTER. [F] THE EXPENSES NARRATED IN POINT [G] ARE INCURRED AT THE VARIOUSROAD SITES. IN THE VERY NATURE OF THE EXPENDITURE THE SAME HAVE TO BE MADE ON SELF VOUCHERS. HOWEVER VOUCHERS ARE AVAILABLE AND HAVE BEEN PRODUCED. [G] THE BILL AS PER THE MEASUREMENT OF THE DEPARTMENT SHOWS THE EXTENT OF WORK DONE. [H] WE DO NOT MADE ANY PROFIT FROM THE SALES OF ASPHALT TO OUR SUB CONTRACTORS AS AS PER OUR AGREEMENT WE SUPPLY THEM AT COST. 1.6 THE ASSESSMENTS FOR THE YEARS 2009 - 10 AND 2011 - 12 WERE ALSO SUBJECT TO SCRUTINY. IN THE SIMILAR FACTS AND CIRCUMSTANCES THE AO HAS ACCEPTED OUR RESULTS. ' 5. LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A). WE HA VE HEARD BOTH THE PARTIES AND PERUS ED THE MAT ERIAL AVAILABLE ON R ECORD. WE FIND THAT ASSESSING OFFICER HAS NOT FOUND ANY DEF ECTS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND NOT REJECTED THE BOOKS OF ACCOUNTS U/S. 145 OF THE I.T. ACT 1961. THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED AND NO S PECIFIC DEFECTS WERE PROVED BY THE ASSESSING OFFICER. THE LD. I .T.A NO. 195 /RJT /20 15 A.Y. 2010 - 11 PAGE NO M/S. AMBER CONSTRUCTION CO. VS. ITO 5 CIT(A) ALSO AGREED THAT THE ASSESSING OFFICER HAS NOT MENTIONED DEFECTS IN THE BOOKS OF ACCOUNTS. HOWEVER THE LD. COMMISSIONER OF INCOME TAX(A) HELD THAT THE ASSESSEE HAS SHOWN G.P. @ 12.72% AND HELD THAT IT WOULD SERVE THE INTEREST OF NATURAL JUSTICE IF THE G.P. IS TAKEN @ 14% ON THE DIRECT WORKS THEREFORE HE RESTRICTED THE ADDITION TO RS. 2 37 646/ - . WE CONSIDER THAT LD. COMMISSIONER OF INCOME TAX(A) HAS MADE THIS ADDITION WITHOUT PROPER R EASONING ON SURMISES AS THE ASSESSING OFFICER HAS NOT QUESTIONED THE ASSESSEE ABOUT ANY GROSS PROFIT DISCREPANCY IN HIS ORDER. IN VIEW OF THE ABOVE STATED FACTS AND FINDINGS WE CONSIDER THAT LD. COMMISSIONER OF INCOME TAX(A) IS NOT JUSTIFIED TO PARTLY SU STAINED THE ADDITION MADE BY THE AS SESSING OFFICER THEREFORE WE ALLOW THE APPEAL OF THE ASSESSEE. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 21 - 10 - 201 6 SD/ - SD/ - ( S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 21 /10 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER I .T.A NO. 195 /RJT /20 15 A.Y. 2010 - 11 PAGE NO M/S. AMBER CONSTRUCTION CO. VS. ITO 6 ASSISTANT REGISTRAR INCOME TAX APP ELLATE TRIBUNAL RAJKOT