M/s Mago Construction (P) Ltd., Agra v. ACIT - 4(1), Agra

ITA 21/AGR/2010 | 2004-2005
Pronouncement Date: 16-11-2011 | Result: Dismissed

Appeal Details

RSA Number 2120314 RSA 2010
Assessee PAN AACCM5870B
Bench Agra
Appeal Number ITA 21/AGR/2010
Duration Of Justice 1 year(s) 9 month(s) 12 day(s)
Appellant M/s Mago Construction (P) Ltd., Agra
Respondent ACIT - 4(1), Agra
Appeal Type Income Tax Appeal
Pronouncement Date 16-11-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 16-11-2011
Date Of Final Hearing 16-11-2011
Next Hearing Date 16-11-2011
Assessment Year 2004-2005
Appeal Filed On 03-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER ITA NO. 21/AGRA/2010 ASSTT. YEAR : 2004-05 M/S. MAGO CONSTRUCTION (P) LTD. VS. A.C.I.T. 4(1 ) AGRA. 14 KISHANGARH WEST IDGAH AGRA (PAN : AACCM 5870B) ITA NO. 56/AGRA/2010 ASSTT. YEAR : 2004-05 D.C.I.T. 4(1) AGRA. VS. M/S. MAGO CONSTRUCTION (P) LTD. 14 KISHANGARH WEST IDGAH AGRA (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI A.K. SHARMA JR. D.R. FOR ASSESSEE : SHRI SAHIB P. SATSANGEE C.A. DATE OF HEARING : 16.11.2011 DATE OF PRONOUNCEMENT : 16.11.2011 ORDER PER BENCH: THESE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARISE OUT OF THE IMPUGNED ORDER DATED 14.12.2009 PASSED BY THE LD. CIT(A)-I AGRA. FOLLOWING GROUNDS HAVE BEEN RAISED IN THE PRESENT APPEALS : GROUNDS IN ITA NO. 21/AGRA/2010: 1. BECAUSE THE LEARNED AUTHORITIES BELOW HAVE ERR ED BOTH ON FACTS AND IN LAW IN REJECTING THE BOOK RESULT BY INVOKING THE PR OVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT 1961 WITHOUT APPRECIATING THAT THE ASSESSEE IS A COMPANY AND HAVE MAINTAINED FULL AND COMPLETE BOOKS OF ACCOUNTS AS PER MERCANTILE METHOD REGULARLY EMPLOYED DURING THE COURSE OF BUSINESS. 2. BECAUSE THE LEARNED AUTHORITIES BELOW HAVE ERRE D BOTH ON FACTS AND IN LAW IN CONSIDERING THE INTEREST EARNED ON FDR AMOUN TING TO RS.1 62 483 AS 2 INCOME FROM OTHER SOURCES IGNORING THAT THE FDRS A RE COMMERCIAL ASSETS NOT ACQUIRED OUT OF SURPLUS FUNDS AND UTILIZED FOR THE PURPOSE OF BUSINESS. 3. BECAUSE THE LEARNED AUTHORITIES BELOW HAVE ERRE D BOTH ON FACTS AND IN LAW IN IGNORING THAT THE FDRS HAVE BEEN PURCHASED O UT OF FUNDS BORROWED FROM THE BANK AND THERE IS DIRECT NEXUS BETWEEN THE INTE REST PAID ON BORROWING AND INTEREST EARNED ON FDRS. GROUNDS IN ITA NO. 56/AGRA/2010: 1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A )-I AGRA HAS ERRED IN LAW AND ON FACT IN HOLDING NET PROFIT RATE AS 6% RE ASONABLE AS AGAINST 10% APPLIED BY THE AO FOLLOWING THE FINDINGS OF LEARNED CIT(A) IN ASSESSEES OWN CASE FOR THE A.Y. 2001-02. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A) -I AGRA HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.1 50 000/- IGNOR ING THE FACTS THAT THE ASSESSEE ITSELF HAS SHOWN THIS AMOUNT UNDER THE HEAD OTHER I NCOME FROM OTHER SOURCES HENCE THIS ADDITION SHOULD HAVE BEEN CONFIRMED. 3. THAT THE DECISION OF LD. CIT(A)-I AGRA BEING E RRONEOUS IN LAW AND ON FACTS DESERVES TO BE QUASHED AND THAT OF THE AO DES ERVED TO BE RESTORED. 2. THE FACTS RELATING TO THE ISSUES IN DISPUTE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND FILED ITS RETURN OF INCOME ON 01.11.200 3 DECLARING TOTAL INCOME OF RS.48 25 220/-. THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE U/S. 143(2) AND 142(1) OF THE INCOME-TAX ACT. IN RESPONSE TO THE SAME THE AR OF THE ASSESSEE APP EARED AND FILED WRITTEN REPLY AND DETAILS AS REQUIRED BY THE ASSESSING OFFICER BUT COMPLETE DET AILS PARTICULARLY REGARDING PURCHASE PAYMENT OF LABOUR THE ASSESSEE HAS NOT FILED BEFORE THE ASS ESSING OFFICER. THE ASSESSEE HAS ALSO NOT FILED COMPLETE BOOKS OF ACCOUNT AS REQUIRED BY THE ASSESS ING OFFICER. AS PER RECORD THE ASSESSEE IS A CONTRACTOR MAINLY DERIVING INCOME FROM EXECUTION OF CONTRACT WORK FOR GARRISON ENGINEERS KHERIA AGRA GWALIOR NORTH MEERUT CANTT. AND SHOWN GROSS RECEIPTS AT RS.10 81 03 344/- BY CLAIMING VARIOUS EXPENSES BEFORE DEPRECIATION AT RS .52 22 053/- WHICH INCLUDE OTHER INCOME OF RS.3 12 483/-. AFTER CLAIMING DEPRECIATION OF RS.3 45 400/- NET INCOME HAS BEEN SHOWN AT RS.48 25 220/-. THE ASSESSING OFFICER ISSUED NOTICE U/S. 143(2) ON 10.02.2005 FIXING THE DATE ON 3 25.02.2005. IN RESPONSE TO THE SAME THE ASSESSEE NO R HIS AR APPEARED. THEREAFTER NOTICE U/S. 143(2) AND 142(1) DATED 06.07.2006 WERE ISSUED REQU IRING THE ASSESSEE TO FURNISH CERTAIN DETAILS WHICH ALSO INCLUDED THE DETAILS OF ALL THE RECEIPTS EXPENSES AND TO JUSTIFY THE INCOME SHOWN UNDER DIFFERENT HEADS WITH REFERENCE TO BOOKS OF AC COUNT AND OTHER SUPPORTING EVIDENCE. THE AR OF THE ASSESSEE APPEARED AND REQUESTED FOR ADJOURNM ENT. THE SAME WAS GRANTED BY THE ASSESSING OFFICER. AS PER ASSESSMENT ORDER THE ASSESSING OFF ICER ALSO ISSUED NOTICE U/S. 271(1)(B) TO THE ASSESSEE. THE ASSESSING OFFICER VIDE ORDER SHEET EN TRY DATED 30.11.2006 DIRECTED THE ASSESSEE TO FURNISH SOME DETAILS. IN RESPONSE TO THE SAME THE A SSESSEE FILED ITS REPLY DATED 08.12.2006 EXPRESSING ITS INABILITY TO FURNISH THE DETAILS REQ UIRED BY THE ASSESSING OFFICER WHICH HAS BEEN MENTIONED AT THE BOTTOM PAGE NO. 2 IN THE ASSESSMEN T ORDER BUT THE ASSESSEE STATED IN REPLY DATED 08.12.2006 THAT THE ASSESSEE IS MAINTAINING I TS ACCOUNTS SEPARATELY CAMP-WISE AND LASTLY MERGED WITH HEAD OFFICE AGRA AND THE ELEMENT OF PR OFIT HAS BEEN WORKED OUT CONSOLIDATED. IT IS NOT POSSIBLE TO MAINTAIN THE ACCURATE COMPONENT OF EXPENSES INCURRED IN EXECUTION OF THE CONTRACT PROJECT-WISE. SOME MATERIAL HAS BEEN PURCH ASED FROM HEAD OFFICE AGRA AND DISPATCHED TO THE PROJECT SITE AS PER REQUIREMENT. AS REGARDS TO THE PROFIT THE ASSESSEE STATED THAT DURING THE YEAR UNDER CONSIDERATION IT IS 4.46% COMPARING TO PREVIOUS YEAR 5.75% AND REQUESTED TO THE ASSESSING OFFICER THAT THE SAME MAY BE ACCEPTED. 3. AFTER EXAMINATION OF THE BOOKS OF ACCOUNT OF THE ASSESSEE AND OTHER DOCUMENTARY EVIDENCE FILED THE ASSESSING OFFICER IS OF THE OPI NION THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS AS REQUIRED BY HIM AND HAS ALSO NOT FURNISH ED THE DETAILS OF EPF AND ESI DEDUCTED AND DEPOSITED FROM ITS EMPLOYEES AND THE GENUINENESS OF PAYMENT MADE TO THE EMPLOYEES AND LABOUR ARE NOT VERIFIABLE AND THE ASSESSING OFFICER WORKED OUT THE INCOME OF THE ASSESSEE ON THE BASIS 4 OF ASSESSEES OWN PAST HISTORY AND DETERMINED THE P ROFIT RATE OF 10% ON GROSS RECEIPTS SUBJECT TO DEPRECIATION AND FINANCIAL CHARGES AS REASONABLE AN D COMPLETED THE ASSESSMENT VIDE ORDER DATED 21.12.2006 PASSED U/S. 143(3) OF THE ACT. AGGRIEVED BY THE SAME THE ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO VIDE T HE IMPUGNED ORDER DATED 14.12.2009 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY APPLYING THE NET PROFIT @ 6% OF CONTRACT RECEIPTS SUBJECT TO DEPRECIATION AND FINANCIAL CHARGES AND CONFIRMED TH E ADDITION OF RS.1 62 483/- BY HOLDING THAT IF DEDUCTION FOR GROSS INTEREST IS ALLOWED AS PER THE ASSESSMENT ORDER WITHOUT ADDING THE INTEREST INCOME SEPARATELY OR REDUCING IT THEREFROM THE APP ELLANT WOULD WRONGFULLY GET DOUBLE DEDUCTION OF SUCH AMOUNT OF RS.1 62 483/- AND HE CONFIRMED TH E SAME. NOW THE REVENUE IS AGGRIEVED BY REDUCING THE NET PROFIT RATE AS 6% AGAINST 10% APPL IED BY THE ASSESSING OFFICER AS WELL AS DELETION OF ADDITION OF RS.1 50 000/-. ON THE OTHER SIDE THE ASSESSEE IS AGGRIEVED BY THE FINDING OF THE LD. FIRST APPELLATE AUTHORITY FOR INVOKING T HE PROVISIONS OF SECTION 145(3) IN THE CASE OF ASSESSEE AS WELL AS THE ADDITION OF RS.1 62 483/- A S INCOME FROM OTHER SOURCES. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE STATED THAT HE IS NOT PRESSING THE ISSUE INVOLVED IN GROUND NO. 2 & 3 AND REQUESTED TH AT THE SAME MAY BE DISMISSED. THE LD. DR HAS NOT RAISED ANY OBJECTION TO THE REQUEST OF THE ASSESSEES COUNSEL. KEEPING IN VIEW OF THE REQUEST MADE BY THE LD. COUNSEL FOR THE ASSESSEE T HE ISSUE INVOLVED IN GROUND NOS. 2 & 3 IN APPEAL FILED BY THE ASSESSEE I.E. ITA NO. 21/AGRA /2010 IS DISMISSED. 5. AS REGARDS TO THE ISSUE INVOLVED IN APPEAL OF TH E ASSESSEE IN GROUND NO.1 REGARDING APPLICABILITY OF THE PROVISIONS OF SECTION 145(3) O F THE ACT THE LD. COUNSEL FOR THE ASSESSEE STATED 5 THAT THE SAME HAS WRONGLY BEEN APPLIED BY THE ASSES SING OFFICER AND CONFIRMED BY THE LD. FIRST APPELLATE AUTHORITY. 6. ON THE CONTRARY THE LD. DR RELIED UPON THE ORDE R PASSED BY THE LD. FIRST APPELLATE AUTHORITY. 7. AFTER PERUSING THE ORDERS PASSED BY THE REVENUE AUTHORITIES WE ARE OF THE CONSIDERED OPINION THAT THE LD. FIRST APPELLATE AUTHORITY HAS APPLIED THE PROVISIONS OF SECTION 145(3) IN THE CASE OF ASSESSEE ON THE BASIS OF PREVIOUS YEAR WHIC H HAS BEEN ACCEPTED BY THE ASSESSEE BECAUSE THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE O RDER OF THE CIT(A) FOR A.Y. 2003-04 AND THERE IS NO CHANGE IN THE NATURE OF BUSINESS CARRIED BY T HE ASSESSEE. KEEPING IN VIEW OF THE DETAILED DISCUSSION ON THE ISSUE IN DISPUTE IN THE IMPUGNED ORDER WE ARE NOT INTERFERING IN THE IMPUGNED ORDER ON THE ISSUE IN DISPUTE AND WE CONFIRM THE SA ME BY DISMISSING THE ISSUE INVOLVED IN GROUND NO. 1 RAISED BY THE ASSESSEE IN ITS APPEAL. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 8. AS REGARD TO THE APPEAL FILED BY THE REVENUE I. E. ITA NO. 56/AGRA/2010 AFTER HEARING THE BOTH PARTIES WE ARE OF THE CONSIDERED OPINION THAT THE LD. FIRST APPELLATE AUTHORITY HAS REDUCED THE NET PROFIT @ 6% AGAINST 10% APPLIED BY THE ASSE SSING OFFICER ON THE BASIS OF ASSESSEES OWN CASE FOR A.Y. 2001-02. THE LD. FIRST APPELLATE AUTH ORITY HAS GIVEN VARIOUS INSTANCES FOR REDUCING THE NET PROFIT @ 6% AGAINST 10% APPLIED BY THE ASSE SSING OFFICER IN THE CASE OF ASSESSEE FOR PREVIOUS YEARS AND THE SAME HAS BEEN ACCEPTED BY TH E ASSESSEE ALSO. AFTER GOING THROUGH THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AU THORITY WE ARE OF THE VIEW THAT THE LD. FIRST 6 APPELLATE AUTHORITY HAS PASSED WELL REASONED ORDER AND REDUCED THE NET PROFIT RATE AT 6% FROM 10% APPLIED BY THE ASSESSING OFFICER ON THE BASIS O F NET PROFIT OF PREVIOUS YEAR. THEREFORE NO INTERFERENCE IS CALLED IN THE IMPUGNED ORDER. WE UP HOLD THE SAME BY DISMISSING THE APPEAL FILED BY THE REVENUE ON THE ISSUE INVOLVED IN GROUND NO. 1. 9. AS REGARD TO THE DELETION OF ADDITION OF RS.1 50 000/- ON ACCOUNT OF SALE OF WASTE MATERIAL THE LD. FIRST APPELLATE AUTHORITY HAS RIG HTLY HELD THAT THE INCOME FROM SALE OF WASTE MATERIAL HAVING ARISEN IN THE CASE OF ASSESSEES C ONTRACT BUSINESS ESSENTIALLY HAS THE EFFECT OF REDUCING THE COSTS. THEREFORE SEPARATE ADDITION IS NOT WARRANTED AND ADDITION OF RS.1 50 000/- COMPRISED IN THE ADDITION OF RS.3 12 483/- HAS BEEN RIGHTLY DELETED. WE FIND NO REASON TO INTERFERE IN THE IMPUGNED ORDER. THEREFORE WE CONF IRM THE SAME BY DISMISSING THE APPEALS. 10. IN THE RESULT BOTH THE APPEALS FILED BY THE AS SESSEE AND THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.11.2011. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH NOVEMBER 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT CONCERNED 5. DR ITAT AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY