A.C.I.T.-24(1), MUMBAI v. M/S. SHAMA CONSTRUCTION CO., MUMBAI

ITA 2869/MUM/2009 | 2005-2006
Pronouncement Date: 18-11-2011 | Result: Dismissed

Appeal Details

RSA Number 286919914 RSA 2009
Assessee PAN AABFS6499Q
Bench Mumbai
Appeal Number ITA 2869/MUM/2009
Duration Of Justice 2 year(s) 6 month(s) 13 day(s)
Appellant A.C.I.T.-24(1), MUMBAI
Respondent M/S. SHAMA CONSTRUCTION CO., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 18-11-2011
Date Of Final Hearing 31-10-2011
Next Hearing Date 31-10-2011
Assessment Year 2005-2006
Appeal Filed On 05-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI BENCHES MUMBAI BENCHES MUMBAI BENCHES E EE E MUMBAI MUMBAI MUMBAI MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI B. B. B. B. RAMAKOTAIAH RAMAKOTAIAH RAMAKOTAIAH RAMAKOTAIAH ( (( (A AA A.M.) .M.) .M.) .M.) AND AND AND AND SHRI SHRI SHRI SHRI VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ( (( (J JJ J.M .M.M .M. .. .) )) ) ITA NO. ITA NO. ITA NO. ITA NO.2869 2869 2869 2869/ // /MUM/ MUM/ MUM/ MUM/2009 2009 2009 2009 ASSESSMENT ASSESSMENT ASSESSMENT ASSESSMENT YEAR: YEAR: YEAR: YEAR: 2005 2005 2005 2005- -- -06 0606 06 A.C.I.T. 24(1) R.NO.503 C-13 5 TH FLOOR PRATYAKSH KAR BHAVAN BANDRA (EAST) MUMBAI 400 051 VS VSVS VS. .. . SHAMA CONSTRUCTION CO. 12/6 VALCHAND APARTMENTS AMRUT NAGAR JOGESHWARI (W) MUMBAI 400 102 PAN : AABFS 6499 Q PAN : AABFS 6499 Q PAN : AABFS 6499 Q PAN : AABFS 6499 Q ( (( (ASSESSEE ASSESSEE ASSESSEE ASSESSEE) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ITA NO. ITA NO. ITA NO. ITA NO.3310 3310 3310 3310/MUM/200 /MUM/200 /MUM/200 /MUM/2009 99 9 ASSESSMENT ASSESSMENT ASSESSMENT ASSESSMENT YEAR: YEAR: YEAR: YEAR: 2005 2005 2005 2005- -- -06 0606 06 SHAMA CONSTRUCTION CO. 12/6 VALCHAND APARTMENTS AMRUT NAGAR JOGESHWARI (W) MUMBAI 400 102 PAN : AABFS 6499 Q PAN : AABFS 6499 Q PAN : AABFS 6499 Q PAN : AABFS 6499 Q VS. VS. VS. VS. A.C.I.T. 24(1) R.NO.503 C-13 5 TH FLOOR PRATYAKSH KAR BHAVAN BANDRA (EAST) MUMBAI 400 051 ( (( (ASSESSEE ASSESSEE ASSESSEE ASSESSEE) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SHRI G.P. TRIVEDI DR ASSESSEE BY : SHRI K.GOPAL/JITENDRA SINGH DATE OF HEARING: 31/10/2011 DATE OF PRONOUNCEMENT: 18/11/2011 O R D E R O R D E R O R D E R O R D E R PER PER PER PER B. B.B. B.RAMAKOTAIAH A.M RAMAKOTAIAH A.M RAMAKOTAIAH A.M RAMAKOTAIAH A.M THESE CROSS APPEALS BY THE ASSESSEE AND REVENUE AR E DIRECTED AGAINST THE ORDER OF CIT (A) DATED 6.3.2009. THE IS SUES CONTESTED BY THE PARTIES PERTAIN TO ESTIMATION OF GROSS PROFIT AND A DDITIONS U/S 68 & 69. ITA NOS 2869 & 3310 OF 2009 SHAMA CONSTRUCTION CO MUMBAI 2 2. BRIEFLY STATED THE ASSESSEE A REGISTERED FIRM IS A CIVIL CONTRACTOR. ON THE REASON THAT THE BOOKS OF ACCOUNT WERE DESTRO YED IN FLOODS DURING 26/07/2005 THE ASSESSEE ON THE BASIS OF TDS CERTIF ICATES ARRIVED AT THE NET RECEIPT OF `4 30 03 604/- AND ESTIMATED THE INC OME AT 2% OF THE SAID RECEIPTS AT `8 60 100/-. WHILE ACCEPTING THAT THE F LOOD DAMAGED THE BOOKS OF ACCOUNT THE ASSESSING OFFICER IN THE SCRUTINY P ROCEEDINGS TRIED TO RECONCILE THE OUTSTANDING AMOUNTS ON THE BASIS OF B ALANCE SHEETS AS ON 31.03.2004 AND 31.3.2006. HE WAS OF THE OPINION THA T AN AMOUNT OF `4 50 000/- WHICH HAS INCREASED IN OUTSTANDING AMOU NT WITH M/S IS CONSTRUCTION WAS NOT PROPERLY EXPLAINED. FURTHER A S THE ASSESSEE STATED TO HAVE DISCHARGED SOME OUTSTANDING AMOUNT IN THE P ERIOD AN AMOUNT OF `20 28 249/- AGAINST 3 PARTIES AS DISCUSSED IN PAR A 5 AND 6 OF THE ASSESSMENT ORDER WAS TREATED AS INCOME UNDER SECTI ON 69C OF THE ACT. IN ADDITION HE ALSO ESTIMATED THE INCOME AT 5% OF THE GROSS RECEIPTS ON THE BASIS OF TDS CERTIFICATES CLAIMED DURING THE YEAR A T `5 38 13 620/- AND DETERMINED THE INCOME ACCORDINGLY. 3. BEFORE THE CIT (A) THE ASSESSEE FILED ADDITIONA L EVIDENCE IN THE FORM OF CONFIRMATIONS ETC. WHICH THE CIT (A) SENT ON RE MAND AND AFTER CONSIDERING THE REPORT OF THE ASSESSING OFFICER AND OBJECTIONS BY THE ASSESSEE HE GAVE RELIEF OF `.17 15 249/- ON THE PA YMENT TO RETIRED PARTNER AND CONFIRMED THE BALANCE OF ADDITIONS. THE REVENUE IS CONTESTING THE SAID RELIEF IN ITS GROUNDS. THE ASSESSEE IS CONTEST ING THE BALANCE OF ADDITIONS CONFIRMED. WITH REFERENCE TO THE G.P. AD DITION CONSIDERING THE ORDER OF ITAT IN EARLIER YEARS THE CIT (A) DIRECTE D THE ASSESSING OFFICER TO ITA NOS 2869 & 3310 OF 2009 SHAMA CONSTRUCTION CO MUMBAI 3 ADOPT 4.5% WHICH THE ASSESSEE IS CONTESTING IN GROU ND 1.C. THESE ISSUES ARE DEALT HEREWITH. WE HAVE HEARD THE LEARNED COUNS EL SHRI K. GOPAL AND LEARNED DR SHRI G.P. TRIVEDI IN DETAIL. ITA 3310/M/2009: ITA 3310/M/2009: ITA 3310/M/2009: ITA 3310/M/2009: 4. IN GROUND 1.A THE ASSESSEE IS CONTESTING THE ADD ITION OF `4 50 000/-. THE ASSESSING OFFICER MADE THE ADDITION OF `4 50 00 0/- ON THE REASON THAT THE OUTSTANDING LOAN OF `28 50 000/- AS ON 31-03-04 IN THE NAME OF M/S IS CONSTRUCTIONS HAD INCREASED TO `33 00 000/- AS ON 3 1.3.2006 AND IN THE AUDIT REPORT FOR ASSESSMENT YEAR 2006-07 THE AUDIT OR CERTIFIED THAT NO NEW LOANS WERE RECEIVED DURING THAT YEAR AND ASSES SEE HAS NOT EXPLAINED THE RECEIPT DURING THE YEAR. IT WAS THE ASSESSEES CONTENTION THAT THERE ARE DISPUTES WITH THE SAID PARTY SO CONFIRMATION C OULD NOT BE FILED BUT THE LOAN WAS TAKEN IN ASSESSMENT YEAR 2006-07 AND F ILED ACCOUNT COPY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE SAME WERE NOT ACCEPTED BY THE ASSESSING OFFICER AND THE CIT (A). 5. AFTER CONSIDERING THE RIVAL CONTENTIONS AND EXAM INING THE PAPER BOOK WE ARE OF THE OPINION THAT THE ADDITION MADE DESERVES TO BE DELETED. DURING THE YEAR THE ASSESSEES BOOKS OF AC COUNT COULD NOT BE EXAMINED AS THEY WERE FOUND TO BE DESTROYED. HOWEVE R THE TWO BALANCE SHEETS COMPARED BY THE ASSESSING OFFICER WERE FROM 31.3.2004 TO 31.3.2006. IT CAN NOT BE STATED THAT THE AMOUNT WAS RECEIVED ONLY DURING 31.3.2004 TO 31.3.2005 IE. IN THE IMPUGNED YEAR. ON LY ON THE BASIS OF 3CD REPORT OF THE AUDITOR WHO STATED THAT THERE WERE N O LOANS DURING THE PERIOD 01.04.2005 TO 31.03.2006 THE ADDITION WAS M ADE. THE LEDGER ITA NOS 2869 & 3310 OF 2009 SHAMA CONSTRUCTION CO MUMBAI 4 ACCOUNT COPY FILED DO INDICATE THE RECEIPT OF THREE CHEQUES IN THE MONTHS OF APRIL 2005 AUGUST 2005 AND MARCH 2006. AS VERIF IED THERE ARE NO CREDITS DURING PRESENT PERIOD IN THE BANK A/C PLACE D ON RECORD (FROM 1.4.2004 TO 31.3.2005 OF CANARA BANK). SO THE ACCO UNT COPY FURNISHED BY THE ASSESSEE CANNOT BE REJECTED OUTRIGHT. MOREOVER THE NATURE OF RECEIPT MAY NOT BE A LOAN. IN THE ABSENCE OF ANY ENQUIRY BY THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS THE BANK TRANSACTIONS CA NNOT BE REJECTED ON THE BASIS OF STATEMENT BY AUDITOR IN THE 3CD REPORT . THE ASSESSING OFFICER HIMSELF ACCEPTS THAT THE BOOKS OF ACCOUNT FOR THE P ERIOD WERE DESTROYED. THERE IS NO EVIDENCE THAT THE AMOUNTS WERE RECEIVED DURING THE YEAR. IT WAS ON PRESUMPTIONS THE ADDITION WAS MADE ON COMPAR ING THE BALANCE SHEET OF 31.3.2004 AND 31.3.2006 I.E. GAP OF TWO YE ARS. THE ASSESSEE SUBSTANTIATED ITS CLAIM THAT THE AMOUNT WAS RECEIVE D IN THE LATER YEAR BY WAY OF CHEQUES. SO THE SAME CANNOT BE REJECTED WIT HOUT ANY EVIDENCE TO THE CONTRARY. AS THE AMOUNT WAS RECEIVED IN LATER Y EAR THE SAID AMOUNT CAN NOT BE INCOME OF THIS YEAR. THEREFORE THE ADDI TION MADE IS DELETED. GROUND NO.1.A IS ALLOWED. 6. GROUND NO.1B. ADDITION U/S 69C GROUND NO.1B. ADDITION U/S 69C GROUND NO.1B. ADDITION U/S 69C GROUND NO.1B. ADDITION U/S 69C 3 13 000/ 3 13 000/ 3 13 000/ 3 13 000/- -- - : THIS GROUND CONTAINS TWO AMOUNTS OF `1 13 000/- AND `2 00 000/-.THE AMOU NT OF `2 00 000/- STATED TO BE REPAYMENT TO M/S INDUSTRIAL AGENCIES D URING THE YEAR WAS NOT PRESSED BEFORE US ON THE REASON THAT THE ASSESSEE I S NOT IN A POSITION TO AFFIRM ITS CONTENTION THAT THE PAYMENT WAS MADE IN LATER YEAR. THEREFORE THE ADDITION OF `2.00 LAKHS MADE BY THE ASSESSING O FFICER STAND CONFIRMED. THE BALANCE AMOUNT IS OF `1 13 000/- IN THE NAME OF NAZREEN ITA NOS 2869 & 3310 OF 2009 SHAMA CONSTRUCTION CO MUMBAI 5 S. SAYYED. THE ABOVE PERSON IS DAUGHTER OF MR. SHAK UR A.J. SAYYED ONE OF ITS PARTNERS WHO RETIRED ON 31.03.2003. THERE ARE O UTSTANDING CREDITS IN THE NAME OF MR. S.A.J. SAYYED AND HIS DAUGHTER IN T HE BOOKS AS ON 31.3.2004. THE ASSESSING OFFICER MADE ADDITION OF B OTH THE CREDITS AS REPAYMENT WAS NOT EXPLAINED BY THE ASSESSEE DURING THE YEAR AND NO AMOUNT WAS OUTSTANDING AS ON 31.3.2006. DURING THE REMAND PROCEEDINGS THE ASSESSEE SUBMITTED THAT THE PARTIE S CREDIT AS ON 1.4.2003 WAS TREATED AS LOAN AND THAT AMOUNT ALONG WITH THE CREDIT OF PARTNERS DAUGHTER (I.E. NAZREEN S. SAYYED) WAS SET TLED BY WAY OF TRANSFER OF PROPERTY PURCHASED BY THE FIRM EARLIER IN THE NA ME OF THE PARTNER. SAID MR. S.A.J. SAYYED FILED CONFIRMATION TO STATE THAT AMOUNT WAS SETTLED BY WAY OF TRANSFER OF PROPERTY. 6.2 IT WAS THE SUBMISSION THAT THE FIRM OWED `17 15 249/- TO MR. SAYYED AND `1 13 000/- TO MS. NAZREEN AND THE ENTIR E AMOUNT OF `18.28 LAKHS WAS SETTLED BY THE TRANSFER OF PROPERTY WHICH WAS ACCOUNTED IN THE BOOK AT `18.40 LAKHS.. ACCEPTING THAT MR.SAYYED HAD CONFIRMED THE TRANSACTION THE CIT (A) DELETED THE ADDITION MADE IN THAT NAME. HOWEVER THE CIT (A) DID NOT ACCEPT THE CONTENTION THAT THE AMOUNT TO THE CREDIT OF MS NAZREEN WAS ALSO SETTLED IN THE ABSENCE OF ANY CONFIRMATION. 6.3 AFTER CONSIDERING THE RIVAL CONTENTIONS WE ARE OF THE OPINION THAT THE ADDITION IS TO BE CONFIRMED. AS STATED BY THE C IT (A) NO DOCUMENT WAS FILED AT ANY STAGE TO SHOW THAT HER DUES WERE ALSO SETTLED. THE EXPLANATION OF THE ASSESSEE IS A PLAUSIBLE EXPLANATION AS THE A MOUNTS TALLY BUT THE ITA NOS 2869 & 3310 OF 2009 SHAMA CONSTRUCTION CO MUMBAI 6 SAME CANNOT BE ACCEPTED IN THE ABSENCE OF ANY EVIDE NCE. THE ASSESSEE FILED CONFIRMATION FOR MR.SAYYED ABOUT SETTLEMENT O F HIS DUES. THERE IS NO MENTION OF SETTLEMENT OF HIS DAUGHTERS AMOUNT ALSO . ASSESSEE ALSO DID NOT FILE ANY CONFIRMATION FOR MS. NAZREEN EVEN THO UGH HER FATHERS CONFIRMATION WAS FILED. IN THE ABSENCE OF ANY CONFI RMATION FROM MS. NAZREEN THAT THE CREDIT IN HER NAME WAS ALSO SETTLE D ALONG WITH HER FATHERS ACCOUNT THE CONTENTION CANNOT BE ACCEPTED . ASSESSEE ALSO DID NOT DISPUTE THAT THE LOAN WAS NOT REPAID DURING THE YEAR. THEREFORE THE ADDITION OF `1 13 000/- IS CONFIRMED ON THESE REASO NS. GROUND 1.B IS REJECTED. 7. GROUND NO.1C GROUND NO.1C GROUND NO.1C GROUND NO.1C. . . . GROSS PROFIT GROSS PROFIT GROSS PROFIT GROSS PROFIT ADDITION ADDITION ADDITION ADDITION OF RS.18 30 581: OF RS.18 30 581: OF RS.18 30 581: OF RS.18 30 581: THIS GROUND IS TAKEN AGAINST ADDITION OF `18 30 581/-. THE ASSESSE E HAD SHOWN GROSS RECEIPTS OF `5 07 91 311/-. HOWEVER IT HAD SHOWN T HE PROFIT @ 2% OF `4 30 03 604/- ON THE PLEA THAT THE RECEIPTS OF `7 7 87 707/- WERE ALREADY ACCOUNTED IN THE ASSESSMENT YEAR 2004-05. AS PER TH E TDS CERTIFICATES FILED BY IT PERTAINING TO THE FINANCIAL YEAR 2004-0 5 THE GROSS RECEIPTS WERE DETERMINED BY THE ASSESSING OFFICER AT `5 38 13 620 /-. AS MENTIONED ABOVE THE ASSESSEE HAD NOT PRODUCED BOOKS OF ACCOU NTS FOR THE REASON THAT THEY WERE DESTROYED IN THE FLOOD. THE RESULTS SHOWN BY THE ASSESSEE WERE NOT SUPPORTED BY BOOKS OF ACCOUNTS. ON SIMILAR FACTS AS THE CIT (A) CONFIRMED THE PROFIT AT 5% OF THE CONTRACT RECEIPTS IN THE ASSESSMENT YEAR 2004-05 THE ASSESSING OFFICER FOLLOWED THE SAID OR DER OF THE CIT (A) AND COMPUTED THE PROFIT @5% OF `5 38 13 620/-. THIS RES ULTED IN AN ADDITION OF `18 30 581/-. THE ASSESSEE SUBMITTED THAT THE RECEI PTS OF `77 87 707/- ITA NOS 2869 & 3310 OF 2009 SHAMA CONSTRUCTION CO MUMBAI 7 ACCOUNTED IN THE ASSESSMENT YEAR 2004-05 SHOULD HAV E BEEN REDUCED FOR COMPUTING THE PROFIT OF THE YEAR UNDER CONSIDERATIO N. IT FURTHER SUBMITTED THAT THE HON'BLE ITAT REDUCED THE PROFIT TO 4.5% OF THE GROSS CONTRACT RECEIPTS IN THE ASSESSMENT YEAR 2003-04 AND 2040-05 AND SO THE PROFIT SHOULD BE REDUCED TO 4.5%. 7.1 THE CIT (A) CONSIDERED THE SUBMISSION AND REDUC ED THE ADDITION AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMIS SIONS OF LEARNED AUTHORISED REPRESENTATIVE CAREFULLY. THE AS SESSING OFFICER COMPUTED THE GROSS CONTRACT RECEIPT AT `5 38 13 620/- ON THE BASIS OF THE TDS CERTIFICATES RELEVANT FOR THE ASSESSMENT YEAR 2005-06 ONLY. THE ASSESSEE COULD NOT PROVE WITH EVIDENCE THAT ANY OF THESE RECEIPTS WERE ACCOUNTED IN EARLIER YEARS. I THEREFORE DO NOT FI ND ANY INFIRMITY IN SUCH DETERMINATION OF GROSS CONTRACT R ECEIPTS. HON'BLE ITAT VIDE ITS ORDER IN ITA NO.6332 AND 633 3/M/2007 FOR ASSESSMENT YEAR 2003-04 AND 2004-05 IN THE CASE OF THE ASSESSEE DATED 24/07/2008 ESTIMATED THE PROFIT AT 4 .5% OF THE GROSS CONTRACT RECEIPTS. THE FACTS DURING THIS YEAR ARE SIMILAR. I THEREFORE DIRECT THE ASSESSING OFFICER TO RECOMPUTED THE PROFIT @ 4.5% OF `5 38 13 620/-. 7.2 SHRI K. GOPAL THE LEARNED COUNSEL FOR THE ASSE SSEE REITERATED THE CONTENTIONS RAISED BEFORE THE FIRST APPELLATE AUTHO RITY. WHILE SUBMITTING THAT THE ASSESSEE WAS IN A DISADVANTAGEOUS POSITION TO PRODUCE EVIDENCE DUE TO THE FACT THAT THE RECORDS OF THE ASSESSEE WE RE DESTROYED IN THE COURSE OF FLOODS HE CONTENDED THAT ALL POSSIBLE EV IDENCE WERE PRODUCED AND THE ESTIMATION OF GROSS PROFIT AT 4.5% OF THE G ROSS RECEIPTS BY THE FIRST APPELLATE AUTHORITY IS EXCESSIVE AND UNREASONABLE. HE FILED A CHART GIVING THE PERCENTAGE WISE PURCHASES LABOUR & WAGES; TRAN SPORT CHARGES; DIESEL PETROL AND FUEL ASSESSMENT YEAR-WISE RIGHT FROM THE ASSESSMENT YEAR ITA NOS 2869 & 3310 OF 2009 SHAMA CONSTRUCTION CO MUMBAI 8 1999-2000 TO 2004-05 TO THE GROSS RECEIPTS AND THE NET PROFIT IN THOSE YEARS. HE SUBMITS THAT THE ASSESSEES BUSINESS SUFF ERED AFTER RETIREMENT OF PARTNER AND CONSISTENT WITH THE PERCENTAGE OF PR OFIT THAT HAS BEEN RETURNED AND ACCEPTED IN THE PREVIOUS YEARS THE AP PLICATION OF 4.5% GROSS PROFIT IS EXCESSIVE AND UNREASONABLE. 7.3 THE LEARNED DR HOWEVER SUBMITTED THAT THE FACT S BEING SIMILAR THE ADDITION AT 4.5% CAN BE CONFIRMED. IT WAS HIS SUBMI SSION THAT THE BOOK RESULTS SHOWN IN CHART COULD BE VERIFIED IN THESE Y EARS BUT THE SAME CAN NOT BE VERIFIED AS THE ESTIMATION WAS RESORTED TO I N ASSESSMENT YEARS 2003-04 AND 2004-05 AND ALSO IN THIS YEAR ON SIMIL AR FACTS. 7.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON SI MILAR FACTS THE ITAT CONFIRMED ESTIMATION OF INCOME IN ASSESSMENT YEAR 2 003-04 AND 2004-05 AS UNDER: 6. RIVAL CONTENTIONS HEARD. WE HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND PERUSED THE MATER IAL ON RECORD. WE FIND THAT THE FIRST APPELLATE AUTHORITY HAS OBSERVED THAT THE GENUINENESS OF THE TRADING RESULT S SHOWN BY THE ASSESSEE COULD NOT BE SUBSTANTIATED BY IT WI TH THE HELP OF BOOKS OF ACCOUNT BILLS/VOUCHERS OR ANY OTH ER DETAILS AND PARTICULARS. HE ALSO OBSERVED THAT THE PROFIT F ROM CONTRACTS DECLARED BY THE ASSESSEE WAS EXTREMELY LO W AT 1.44% OF THE CONTRACT RECEIPTS FOR THE ASSESSMENT Y EAR 2004- 05. AT THE SAME TIME THE FIRST APPELLATE AUTHORITY AGREED WITH THE COUNSEL FOR THE ASSESSEE THAT SECTION 44AD IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE AS THE TURNO VER WAS `40 LAKHS. HOWEVER WITHOUT GIVING ANY COGENT REASO NS OR LOGICAL CONCLUSIONS THE FIRST APPELLATE AUTHORITY HAS SIMPLY ESTIMATED 5% OF THE CONTRACT RECEIPTS AS THE PROFIT S AND DIRECTED THE ASSESSING OFFICER TO ADOPT THE SAME. T HE REVENUE HAS NOT COME UP IN APPEAL BEFORE US. WE FIN D FROM THE CHARTS FURNISHED TO US BY THE ASSESSEE THAT IN ALL THE ITA NOS 2869 & 3310 OF 2009 SHAMA CONSTRUCTION CO MUMBAI 9 EARLIER ASSESSMENT YEARS THE ASSESSEE HAS BEEN DECL ARING A PERCENTAGE OF 0.94% TO 1.38% AS NET PROFIT FROM THE GROSS CONTRACT RECEIPTS. THIS IN OUR CONSIDERED OPINION IS VERY LOW. NO SPECIAL REASONS OR EXPLANATIONS ARE GIVEN BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM THAT THE PERCENTAGE OF NE T PROFIT IN THIS CASE WOULD BE AS LOW AS THAT CLAIMED AND DECLA RED BY THE ASSESSEE. NORMALLY THE GROSS PROFIT PERCENTAGE IN THE CASE OF CONTRACTORS IS ESTIMATED BETWEEN 8% AND 12. 5% BEFORE DEPRECIATION AND PARTNERS REMUNERATION. IN CASES WERE WHERE SECTION 44AD APPLIES PROFIT IS ESTIMATED AT 8% AFTER DEPRECIATION. ON THESE FACTS AND CIRCUMSTANCE S WE ARE OF THE CONSIDERED OPINION THAT THE ARGUMENT OF THE ASSESSEE FOR ACCEPTANCE OF BOOK RESULTS IS TO BE REJECTED. I N ANY EVENT IN VIEW OF THE STATISTICS FURNISHED BY THE ASSESSEE AND IN VIEW OF THE PECULIAR CIRCUMSTANCES THAT PREVAILED IN ASS ESSEES CASE DUE TO WHICH THE ASSESSEE COULD NOT PRODUCE AN Y DOCUMENTS OR PROOF IN SUPPORT OF HIS CLAIM AND IN V IEW OF THE TURNOVER WHICH IS BEYOND `7.58 CRORES FOR THE ASSES SMENT YEAR 2003-04 AND `6.45 CRORES FOR THE ASSESSMENT Y EAR 2004-05 IN OUR HUMBLE OPINION IN THE INTEREST OF JUSTICE THE GROSS PROFIT MAY BE ESTIMATED AT 4.5% OF THE RECEIP TS. THIS PERCENTAGE SHALL NOT BE TAKEN AS A PRECEDENCE IN AN Y OTHER ASSESSMENT YEAR. THESE GROUNDS OF THE ASSESSEE ARE PARTLY ALLOWED. . 7.5 EVEN THOUGH THE ITAT ORDER DID MENTION THAT THE SAME CANNOT BE TAKEN AS PRECEDENCE THE FINDINGS ON THE RESULTS OF EARLIER YEARS MADE ARE STILL VALID. THERE IS NO EXPLANATION ABOUT SUCH LOW PROFIT. MOREOVER THE TURNOVER HAS FALLEN IN LATER YEARS WHICH RESULTED I N LOSS BUT IN ASSESSMENT YEAR 2009-10 AND 2010-11 ON MORE OR LESS SAME TURN OVER THE ASSESSEES PROFITS INCREASED FROM 4.78% TO 5.89%. THEREFORE 2% OFFERED BY THE ASSESSEE CANNOT BE ACCEPTED. HOWEVER CONSIDERING T HAT THE INCOME WAS ESTIMATED ON GROSS RECEIPTS AS AGAINST THE NET RECE IPTS OFFERED BY THE ASSESSEE WE ARE OF THE OPINION THAT GROSS PROFIT C AN BE ESTIMATED AT 3.5% AS AGAINST 4.5% CONFIRMED BY THE LEARNED CIT (A). ITA NOS 2869 & 3310 OF 2009 SHAMA CONSTRUCTION CO MUMBAI 10 7.6 RELATED CONTENTION IS ABOUT THE GROSS RECEIPTS. IT WAS CONTENDED THAT AN AMOUNT OF `77 87 707 HAS TO BE REDUCED AS T HE SAME WAS ACCOUNTED IN ASSESSMENT YEAR 2004-05. THIS CONTENTI ON WAS WITHDRAWN ON THE REASON THAT THE TURNOVER AS PER TDS CERTIFICATE S CANNOT BE RECONCILED WITH THE BOOKS OF ACCOUNT AS THE BOOKS OF ACCOUNTS IN EARLIER TWO YEARS ALSO WERE DESTROYED AND ESTIMATION WAS RESORTED TO. THEREFORE THE GROSS RECEIPTS AS DETERMINED BY THE ASSESSING OFFICER AT `5 38 13 620/- IS TO BE CONSIDERED FOR ESTIMATING THE G.P. ASSESSING OFFICE R IS DIRECTED TO RECOMPUTE THE ADDITION ACCORDINGLY. GROUND 1.C IS P ARTLY ALLOWED. ITA NO.2869/M/2009 ITA NO.2869/M/2009 ITA NO.2869/M/2009 ITA NO.2869/M/2009 : 8. IN THIS REVENUE APPEAL THE ONLY ISSUE CO NTENDED WAS THAT THE CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF ` 17 15 249/-. THE FACTS OF THE ADDITION WAS BRIEFLY STATED WHILE DISCUSSING TH E MATTER IN ASSESSEE APPEAL AT GROUND 1.B. THE CIT (A) CONSIDERED THE SU BMISSION AND DELETED THE SAME STATING AS UNDER: 5.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSIONS OF THE ASSESSEE CAREFULLY. THE SUBMISSIONS OF THE A SSESSEE THAT IT HAD PURCHASED THE SAID FLAT IN THE NAMES OF ITS PARTNERS FOR `18 40 000/- IN 1999 AND THE FLAT WAS GIVEN BY IT TO THE RETIRING PARTNER MR.SHAKUR A.J. SAYYED TO SETTLE HI S DUES WERE NOT REBUTTED BY THE ASSESSING OFFICER IN THE REMAND REPORT BY ANY FINDING OF CONTRARY FACTS. THERE IS NO FINDING BY THE ASSESSING OFFICER THAT THE DUES OF MR.SHAKUR A.J.SA YYED WERE SETTLED ON PAYMENT OF CASH AND NOT BY THE TRANSFER OF THE FLAT. I THEREFORE CANNOT CONFIRM THE ADDITION OF `.17 1 5 249/- MADE ON ACCOUNT OF SETTLEMENT OF DUES TO MR.SHAKUR A.J.S AYYED. REGARDING MS. NAZREEN S. SAYYED I AGREE WITH THE A SSESSING OFFICER THAT NO DOCUMENT HAS BEEN FILED AT ANY STAG E TO SHOW THAT HER DUES WERE ALSO SETTLED BY THE TRANSFER OF THE FLAT TO MR.SHAKUR A.J.SAYYED. THE ASSESSEE ALSO FAILED TO E XPLAIN WITH PROPER DOCUMENTS THE SOURCE OF REPAYMENT OF `.2 00 000/- TO M/S INDUSTRIAL AGENCIES. IN VIEW OF THE AFORESAID F ACTS THE ITA NOS 2869 & 3310 OF 2009 SHAMA CONSTRUCTION CO MUMBAI 11 ADDITION OF `17 15 249/- IN THE NAME OF MR.SHAKUR A .J.SAYYED IS DELETED AND THE BALANCE ADDITION OF `3 13 000/- IS CONFIRMED. 9. AFTER CONSIDERING THE RIVAL ARGUMENTS AND DOCUME NTS ON RECORD WE DO NOT SEE ANY REASON TO DIFFER FROM THE FINDINGS O F THE CIT (A). THERE IS CONFIRMATION ON RECORD THAT THE AMOUNT WAS SETTLED BY WAY OF TRANSFER OF PROPERTY IN THE BOOKS OF THE FIRM. THERE IS NO OTHE R EVIDENCE WITH THE ASSESSING OFFICER TO CONTRADICT THE SAME. THEREFORE THE GROUND RAISED BY THE REVENUE IS REJECTED. 10. IN THE RESULT ASSESSEE APPEAL IS PARTLY ALLOWE D AND REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS DAY OF 18 TH NOVEMBER 2011. SD/- (VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) (JUDICIAL MEMBER) SD/- (B. RAMAKOTAIAH B. RAMAKOTAIAH B. RAMAKOTAIAH B. RAMAKOTAIAH ) (ACCOUNTANT MEMBER) MUMBAI DATED:18 TH NOVEMBER 2011 VNODAN/SPS COPY TO: 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DEPARTMENTAL REPRESENTATIVE BENCH E MUMBAI //TRUE COPY// BY ORDER ASST. REGISTRAR ITAT MUMBAI