The DCIT, (OSD)Circle-9,, Ahmedabad v. Shri Rajesh N. Patel, Ahmedabad

ITA 3482/AHD/2007 | 2004-2005
Pronouncement Date: 07-01-2011 | Result: Dismissed

Appeal Details

RSA Number 348220514 RSA 2007
Assessee PAN ACMPP2027Q
Bench Ahmedabad
Appeal Number ITA 3482/AHD/2007
Duration Of Justice 3 year(s) 4 month(s) 24 day(s)
Appellant The DCIT, (OSD)Circle-9,, Ahmedabad
Respondent Shri Rajesh N. Patel, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 07-01-2011
Date Of Final Hearing 30-12-2010
Next Hearing Date 30-12-2010
Assessment Year 2004-2005
Appeal Filed On 13-08-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AND SHRI D.C. AGRAWAL ACCOUNTANT MEMBER DATE OF HEARING : 30/12/2010 DRAFTED ON: 0 4/01/2011 ITA NO.3482/AHD/2007 ASSESSMENT YEAR : 2004-05 THE DCIT (OSD) AHMEDABAD VS. SHRI RAJESH N.PATEL PROP.N.K.PATEL & CO. GROUND FLOOR VITHTHALBHAI PATEL BHAVAN NR.SARDAR PATEL COLONY AHMEDABAD PAN/GIR NO. : ACMPP 2027 Q ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S.S. SHUKLA D.R. RESPONDENT BY: SHRI MUKESH M.PATEL A.R. O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -XV AHMEDABAD DATED 04/06/2007PASSED FOR ASSESSMENT YEAR 2004-05 AND THE SUBSTANTIVE GROUND READS AS FOLLOWS:- 1. THE LD. COMMISSIONER OF INCOME-TAX(A)-XV AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.22 76 740/- ON ACCOUNT OF ESTIMATION OF INCOME FROM CONTRACT BUSINESS. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG ASSESSMENT ORDER PASSED U/S. 144 OF THE I.T. ACT 1961 DATED 29/12 /2006 WERE THAT THE ITA NO.3482/AHD /2007 DCIT(OSD) VS. SHRI RAJESH N.PATEL ASST.YEAR - 2004-05 - 2 - ASSESSEE AS A PROPRIETARY-CONCERN IN INDIVIDUAL CA PACITY IS IN THE BUSINESS OF SEWERAGE PLANT AND RAILWAY BRIDGES AS A CONTRACT OR OF AHMEDABAD MUNICIPAL CORPORATION. IT WAS INFORMED THAT IN THE CIVIL CONSTRUCTION WORK OF CENTRAL RAILWAYS THE ASSESSEE HAD INCURRED HUGE LOSSES. THE ASSESSING OFFICER HAS RAISED CERTAIN ENQUIRIES PART ICULARLY IN RESPECT OF THE CREDITORS AS APPEARED IN THE BOOKS OF ACCOUNT O F THE ASSESSEE. THE ASSESSEE HAS FURNISHED THE COPIES OF ACCOUNTS OF TH OSE CREDITORS AS PER HIS BOOKS OF ACCOUNT. HOWEVER THE ASSESSING OFFICER WAS NOT SATISFIED AND HELD THAT THE ASSESSEE HAS FAILED TO FURNISH THE CO NTRA ACCOUNTS FROM THE BOOKS OF THOSE CREDITORS. HE WAS OF THE VIEW THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE PURCHASES RECORDED IN THE BOOKS OF ACCOUNT HENCE HELD THAT HE WAS NOT SATISFIED WITH THE CORRECTNESS AND THE COMPLETENESS OF THE ACCOUNTS. IN A BRIEF AND CURSIVE MANNER T HE ASSESSING OFFICER HAS PASSED A CRYPTIC ORDER AND CONCLUDED THAT THE ASSES SMENT HAD TO BE U/S.144 OF THE I.T.ACT 1961. THEREUPON HE HAS AP PLIED THE PROFIT RATE AS DISCLOSED IN THE PAST YEAR AND COMPUTED THE CONTRAC T BUSINESS AT ` 22 76 740/- AS PER THE FOLLOWING OBSERVATION: . LAST YEAR ASSESSEE HAD SHOWN GROSS RECEIPTS RS.3 98 54 990/- ON WHICH NET PROFIT WAS SHOWN RS.6 82 625/- I.E. 1.71% WHICH WAS FURTHER INCREASED BY WAY OF ADDITIO N OF RS.1 02 800/- IN ASSESSMENT U/S.143(3) I.E. TOTAL I NCOME FROM CONTRACT BUSINESS WAS ASSESSED AT RS.7 85 425/- I.E . 1.97% OR SAY 2% WHICH HAS BEEN ACCEPTED BY ASSESSEE AND NO APPEA L WAS FILED. THIS YEAR ALSO INCOME FROM CONTRACT BUSINESS IS ES TIMATED AT 2% OF GROSS RECEIPTS I.E. RS.22 76 740/- ON RS.11 38 3 7 015/-. 3. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY WHO HAS REVERSED THE FINDINGS OF THE ASSESSING OFFICER IN T HE FOLLOWING MANNER: ITA NO.3482/AHD /2007 DCIT(OSD) VS. SHRI RAJESH N.PATEL ASST.YEAR - 2004-05 - 3 - 1.3. IN ORDER TO DECIDE THE ISSUE I HAVE CAREFUL LY CONSIDERED THE VARIOUS ARGUMENTS ADVANCED BY THE LD. AUTHORISED RE PRESENTATIVE IN THIS REGARD AND HAVE PERUSED THE ASSESSMENT ORDE R. THE LD. ASSESSING OFFICER APPEARS TO HAVE PROCEEDED IN A HU RRY IN FRAMING AN EX-PARTE ASSESSMENT IN THIS CASE. AS IS EVIDENT FROM THE RECORDS THE APPELLANT HAS DULY COMPLIED WITH ALL T HE STATUTORY NOTICES ISSUED US/.143(2)/142(1) BY THE ASSESSING O FFICER. THERE IS NO SUCH DEFAULT NOR ANY NON COMPLIANCE ON THE PART OF THE APPELLANT WHICH MAY JUSTIFY THE ACTION OF THE ASSES SING OFFICER IN FRAMING THE EX-PARTE ASSESSMENT. THE ASSESSING OFF ICER HAS APPARENTLY REJECTED THE BOOK RESULTS DECLARED BY TH E APPELLANT BY RESORTING TO SECTION 144 OF THE ACT ON THE GROUND T HAT THE APPELLANT HAS NOT FURNISHED THE CONTRA ACCOUNTS OF ITS CREDIT ORS. THERE APPEARS TO BE NO CORRELATION BETWEEN THE REASONS SO GIVEN FOR REJECTING THE BOOKS OF ACCOUNT WITH THAT OF THE ADD ITION ULTIMATELY MADE BY ESTIMATING THE GROSS PROFIT OF 2% ON THE BA SIS OF THE G.P. RATE SO DECLARED BY THE APPELLANT LAST YEAR. IN TH E BACK GROUND OF THESE FACTS THE ACTION OF THE ASSESSING OFFICER TO PROCEED EX-PARTE IN FRAMING THE PRESENT ASSESSMENT CANNOT BE UPHELD . THE APPLICATION OF THE GROSS PROFIT RATE OF 2% AS HAS B EEN APPLIED BY THE LD. ASSESSING OFFICER TO THE TOTAL CONTRACT REC EIPTS DECLARED BY THE APPELLANT AT RS.11 38 37 015/- ALSO CANNOT BE S USTAINED BECUAE THERE IS NO EVIDENCE WHATSOEVER BROUGHT ON RECORD T O SUPPORT SUCH A FINDING. IN ORDER TO SUBSTANTIATE THEIR BOOK RS UTLS THE APPELLANT HAD FURNISHED A DETAILED EXPLANATION REGARDING THE LOSS SUFFERED BY IT IN A SPECIFIC CONTRACT EXECUTED BY IT WITH THE C ENTRAL RAILWAYS. THE LD. ASSESSING OFFICER HAS PREFERRED TO REMAIN S ILENT ABOUT THE SAID EXPLANATION GIVEN BY THE APPELLANT. THE LD. A SSESSING OFFICER HAS ALSO NOT POINTED OUT ANYTHING TO THE CONTRARY T O SUGGEST THAT THERE WAS ANY MANIPULATION RESORTED TO BY THE APPEL LANT IN SO FAR AS ITS CONTRACT RECEIPTS WERE CONCERNED. IN MY OPI NION IT IS NOT ALWAYS NECESSARY THAT AN ASSESSEE SHOULD EARN ONLY POSITIVE INCOME AND THAT TOO IN EACH AND EVERY CONTRACT EXEC UTED BY IT. SUCH A PRESUMPTION WILL NEITHER BE LOGICALLY CORREC T NOR LEGALLY SUSTAINABLE. IN THIS BACK GROUND OF THE MATTER WH ERE THE ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECOR D TO SUGGEST EVEN REMOTELY ANY KIND OF CONCEALMENT ON THE PART O F THE ITA NO.3482/AHD /2007 DCIT(OSD) VS. SHRI RAJESH N.PATEL ASST.YEAR - 2004-05 - 4 - APPELLANT THE GROSS PROFIT RATE OF 2% AS APPLIED B Y HIM TO THE TOTAL CONTRACT RECEIPTS CANNOT BE UPHELD. THE ADDITION O F RS.22 76 740/- THEREFORE NEEDS TO BE DELETED. 4. AFTER HEARING BOTH THE SIDES WE ARE OF THE VIEW THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY REVERSED THE FINDINGS OF T HE ASSESSING OFFICER BECAUSE THERE WAS NO JUSTIFICATION FOR PROCEEDING EX-PARTE WHEN THE ASSESSEE HAS FURNISHED THE DETAILS AND PRODUCED THE AUDITED ACCOUNTS BEFORE THE ASSESSING OFFICER. THIS OBSERVATION OF T HE LEARNED CIT(APPEALS) APPEARS TO BE CORRECT THAT THE ASSESSI NG OFFICER HAD PROCEEDED IN A HURRY. ONCE THE ASSESSEE HAS INFORM ED THAT IN CIVIL CONSTRUCTION WORK HE HAS INCURRED HUGE LOSSES AND I N SUPPORT FURNISHED THE AUDITED BOOKS OF ACCOUNT THEN THE ASSESSING OF FICER WAS NOT LEGALLY JUSTIFIED IN REJECTING THAT EXPLANATION WITHOUT AS SIGNING ANY COGENT REASON. ANOTHER ASPECT FOR CONFIRMING THE VIEW TAKE N BY THE LEARNED CIT(APPEALS) IS THAT THE ASSESSING OFFICER HAS PROC EEDED TO ESTIMATE THE GROSS PROFIT RATE BUT BEFORE THAT HE HAS NOT REJECT ED THE BOOKS OF ACCOUNT OR EVEN NOT POINTED OUT ANY DEFECT IN THE BOOKS WHI CH WERE STATED TO BE AUDITED BY AN AUDITED REPORT U/S.44AB OF THE I.T.AC T. THE LAW IS SUBTLE THAT ONLY ON REJECTION OF BOOKS OF ACCOUNT THE ASS ESSING OFFICER CAN DISTURB THE PROFIT DECLARED BY THE ASSESSEE IF CIRC UMSTANCES SO WARRANT. THE LAW IS ALSO SETTLED THAT WHILE MAKING A BEST JU DGMENT AS IT HAD HAPPENED IN THE PRESENT CASE THE ASSESSING OFFICER HAS TO PLACE ON RECORD SOMETHING MORE THAN MERE PRESUMPTION AND IT IS EXPECTED NOT TO MAKE A PURE GUESS IN RESPECT OF DETERMINATION OF PR OFIT BECAUSE LOW PROFIT BY ITSELF CANNOT BE THE GROUND FOR INVOKING A BEST JUDGEMENT ASSESSMENT. KEEPING BREVITY IN MIND WE ARE NOT RE FERRING PRECEDENTS ON ITA NO.3482/AHD /2007 DCIT(OSD) VS. SHRI RAJESH N.PATEL ASST.YEAR - 2004-05 - 5 - THIS SUBJECT. THE VIEW TAKEN BY THE LEARNED CIT(AP PEALS) IS HEREBY CONFIRMED AND THE GROUND TAKEN BY THE REVENUE IS DI SMISSED. 5. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 7/ 1 /2011. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL KR. SH RAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED 7 / 01 /2011 T.C. NAIR T.C. NAIR T.C. NAIR T.C. NAIR SR. PS SR. PS SR. PS SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XV AHMEDABAD 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD 1. DATE OF DICTATION.. 04/01/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 05/01/2011 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 D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S7.1.11. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7.1.11. 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER