M/S RAJ CONSTRUCTION CO., Jaipur v. DCIT, Jaipur

ITA 267/JPR/2010 | 2006-2007
Pronouncement Date: 23-09-2011 | Result: Dismissed

Appeal Details

RSA Number 26723114 RSA 2010
Bench Jaipur
Appeal Number ITA 267/JPR/2010
Duration Of Justice 1 year(s) 5 month(s) 30 day(s)
Appellant M/S RAJ CONSTRUCTION CO., Jaipur
Respondent DCIT, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 23-09-2011
Date Of Final Hearing 09-11-2010
Next Hearing Date 09-11-2010
Assessment Year 2006-2007
Appeal Filed On 24-03-2010
Judgment Text
1 ITA 447(2)-08 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 447/JP/2008 ASSTT. YEAR : 2004-05. THE DCIT CIRCLE-5 VS. M/S. RAJ CONSTRUCTION CO MPANY JAIPUR. A-18 SETHI COLONY JAIPUR. ITA NO. 267/JP/2010 ASSTT. YEAR : 2006-07. M/S. RAJ CONSTRUCTION COMPANY VS. THE DCIT CIRCL E-5 JAIPUR. JAIPUR. (APPELLANTS) (RESPONDENTS) APPELLANT BY : SHRI D.K. MEENA RESPONDENT BY : SHRI MAHENDRA GARGIEYA DATE OF HEARING : 13.9.2011. DATE OF PRONOUNCEMENT : 23.9.2011 ORDER DATE OF ORDER : 23/09/2011. PER R.K. GUPTA J.M. THESE ARE TWO APPEALS BY DEPARTMENT AND ASSESSEE R ELATING TO ASSESSMENT YEARS 2004-05 AND 2006-07. FOR ASSESSMENT YEAR 2004-05 TH E APPEAL WAS FILED BY THE DEPARTMENT WHICH IS DISPOSED OFF FIRST. 2. THE ONLY ISSUE IN THIS APPEAL IS AGAINST ADOPTIN G N.P. RATE OF 8.5% AS AGAINST 10% APPLIED BY THE AO AND THEREBY ALLOWING RELIEF OF RS . 6 27 695/-. 2 3. THE ASSESSEE IS A CIVIL CONTRACTOR ENGAGED IN TA KING CONTRACT FROM VARIOUS GOVERNMENT DEPARTMENTS MAINLY OF CPWD AIRPORT AUTH ORITY OF INDIA AND MES. AFTER REDUCING THE MATERIAL COST THE NET CORRECT RECEIPT WAS SHOWN AT RS. 2.66 CRORES OR ODD ON WHICH NET PROFIT RATE OF 8.21% WAS DECLARED. THE A .O. HAS FOUND THAT ASSESSEE HAS NOT MAINTAINED STOCK REGISTER THEREFORE THE CONSUMPTI ON OF RAW MATERIAL SHOWN IS NOT VERIFIABLE AND THE VALUATION OF CLOSING STOCK AS WE LL AS OF WORK IN PROGRESS WAS SHOWN ON ESTIMATE BASIS. MANY OTHER DEFECTS WERE ALSO NOTED BY THE AO I.E. PAYMENT TO LABOURERS WAS MADE IN CASH AND NO COMPLETE POSTAL ADDRESSES O F LABOURERS WERE MAINTAINED. CERTAIN VOUCHERS WERE KACHHA BILLS ON THE BASIS OF WHICH PA YMENTS IN CASH WERE MADE. THEREFORE THE ASSESSEE WAS ALLOWED OPPORTUNITY TO EXPLAIN THAT WHY BOOKS OF ACCOUNT BE NOT REJECTED. 4. AFTER CONSIDERING THE REPLY THE PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BRITISH PAINTS INDIA L TD 188 ITR 44 (SC) THE BOOKS OF ACCOUNT WERE REJECTED AND APPLIED 10% NET PROFIT RA TE ON WHICH NET PROFIT WORKED OUT TO RS. 26 67 595/-. IN THIS WAY TOTAL INCOME WAS WORK ED OUT AT RS. 15 04 676/- WHICH RESULTED NET TRADING ADDITION OF RS. 6 90 480/-. D ETAILED WRITTEN SUBMISSIONS WERE FILED BEFORE LD. CIT (A). TRADING RESULT OF EARLIER YEAR ALSO APPLIED. IT WAS SUBMITTED THAT IN ASSESSMENT YEAR 2002-03 ON TURNOVER OF RS. 1.77 CRO RES NET PROFIT RATE OF 8.5% WAS APPLIED AND NO APPEAL AGAINST ORDER WAS FILED BY TH E DEPARTMENT. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD TH E LD. CIT (A) APPLIED 8.5% NET PROFIT RATE SUBJECT TO ALLOWING DEPRECIATION INTEREST ON FINANCES AND OTHER PARTIES INTEREST ON CAPITAL OF PARTNERS AND PARTNERS REMUNERATION. IN THIS WAY A TOTAL ADDITION OF RS. 6 27 695/- WAS DELETED AND REMAINING AMOUNT WAS SUS TAINED. 3 5. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6. THE LD. D/R PLACED RELIANCE ON THE ORDER OF AO. IT WAS ALSO SUBMITTED THAT IN EARLIER YEAR NET PROFIT RATE SHOWN BY ASSESSEE WAS ON HIGHER SIDE. 7. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A) AND FILED WRITTEN SUBMISSION ALSO. 8. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A) AND SUBMISSIONS OF BOTH THE PARTIES WE FIND NO INFIRMITY IN THE FINDINGS O F LD. CIT (A) WHO HAS ALLOWED PART RELIEF TO THE ASSESSEE TAKING INTO CONSIDERATION THE PAST THREE YEARS HISTORY OF THE CASE. FOR ASSESSMENT YEAR 2002-03 8.5% NET PROFIT RATE WAS A PPLIED AND THE SAME HAS BEEN APPLIED BY THE LD. CIT (A) FOR THE YEAR UNDER CONSIDERATION . IT IS SEEN THAT FOR ASSESSMENT YEAR 2002-03 THE ASSESSEE PREFERRED APPEAL BEFORE THE LD . CIT (A) AND THEREAFTER BEFORE TRIBUNAL AND THE TRIBUNAL HAS DIRECTED TO APPLY 8. 5% NET PROFIT RATE SUBJECT TO DEPRECIATION INTEREST TO PARTNERS AND THIRD PARTIE S AND REMUNERATION TO PARTNERS. COPY OF ORDER IS PLACED IN THE RECORD. SINCE THE ORDER OF LD. CIT (A) IS IN CONSONANCE WITH THE FINDING OF TRIBUNAL FOR ASSESSMENT YEAR 2002-03 TH EREFORE WE SEE NO REASON TO INTERFERE WITH THE FINDINGS OF LD. CIT (A). ACCORDINGLY WE CONFIRM THE FINDINGS OF LD. CIT (A). 9. NOW WE WILL TAKE UP THE APPEAL OF ASSESSEE FOR A SSESSMENT YEAR 2006-07. 10. FOUR GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE. 11. GROUND NOS. 1 AND 4 ARE GENERAL IN NATURE. 12. GROUND NO. 2 RELATES TO CONFIRMING THE APPLICAT ION OF SECTION 145(3) AND NET PROFIT RATE OF 9.6% SUBJECT TO DEPRECIATION INTERE ST AND SALARY TO PARTNERS APPLIED BY THE AO AGAINST 7.41% SUBJECT TO DEPRECIATION INTEREST AND SALARY TO PARTNERS AND INTEREST TO BANK AND OTHERS DECLARED BY THE ASSESSEE. 4 13. NATURE OF BUSINESS HAS ALREADY BEEN DISCUSSED A BOVE WHILE DISPOSING THE APPEAL OF THE DEPARTMENT FOR ASSESSMENT YEAR 2004-05. SIM ILAR TYPE OF VOUCHERS AND BOOKS OF ACCOUNT MAINTAINED DURING THE YEAR UNDER CONSIDERAT ION. THE AO BY OBSERVED THAT PROVISIONS OF SECTION 145(3) WAS APPLIED IN ASSESSM ENT YEAR 2004-05 AND THEREFORE HE APPLIED FOR THE YEAR UNDER CONSIDERATION ALSO AS TH E DEFECTS WERE SIMILAR. FOLLOWING THE ORDER OF TRIBUNAL FOR ASSESSMENT YEAR 2004-05 THE AO APPLIED NET PROFIT RATE OF 9.6% SUBJECT TO DEPRECIATION INTEREST ON CAPITAL AND RE MUNERATION TO PARTNERS. THE LD. CIT (A) ALSO CONFIRMED THE ACTION OF THE AO AS THE AO MADE ADDITION ON THE BASIS OF ORDER OF TRIBUNAL FOR ASSESSMENT YEAR 2004-05. 14. THE LD. COUNSEL OF THE ASSESSEE STATED THAT ORD ER OF TRIBUNAL FOR ASSESSMENT YEAR 2004-05 WAS RECALLED AS THE SAME WAS DECIDED EX PAR TE. IT WAS FURTHER SUBMITTED THAT APPEAL OF THE DEPARTMENT FOR ASSESSMENT YEAR 2004-0 5 HAS ALREADY BEEN ARGUED AND FACTS ARE SIMILAR. THEREFORE SIMILAR ARGUMENTS ARE ADVA NCED FOR THE YEAR UNDER CONSIDERATION. 15. ON THE OTHER HAND THE LD. D/R MADE SIMILAR ARG UMENTS AS WERE MADE WHILE ARGUING APPEAL FOR ASSESSMENT YEAR 2004-05. 16. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD WE DIRECT THE AO TO RECALCULATE THE PROFIT BY APPLYING NET PR OFIT RATE OF 8.5% SUBJECT TO DEPRECIATION INTEREST AND SALARY TO PARTNERS AND I NTEREST TO BANK AND OTHERS. THESE FINDINGS ARE BASED ON FINDING GIVEN FOR A.Y. 2004-0 5 BY WHICH WE HAVE UPHELD THE APPLICATION OF NET PROFIT RATE OF 8.5% SUBJECT TO V ARIOUS DEDUCTIONS AS MENTIONED ABOVE AS THE FACTS ARE SIMILAR TO THE FACTS INVOLVED FOR ASSESSMENT YEAR 2004-05. 17. GROUND NO. 3 WAS NOT PRESSED THEREFORE THE SA ME IS DISMISSED AS NOT PRESSED. 5 18. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISM ISSED AND APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 19. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23 .9.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR D/- COPY FORWARDED TO :- THE DCIT CIRCLE-5 JAIPUR. M/S. RAJ CONSTRUCTION COMPANY JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 447(2)/JP/2008) BY ORDER AR ITAT JAIPUR.