Asstt.Commissioner of Income Tax,Circle,Korba, KORBA(CG) v. Shri Jai Singh Agrawal, KORBA(CG)

ITA 35/BIL/2012 | 2008-2009
Pronouncement Date: 31-07-2015 | Result: Dismissed

Appeal Details

RSA Number 3524714 RSA 2012
Assessee PAN ABAPA0858M
Bench Raipur
Appeal Number ITA 35/BIL/2012
Duration Of Justice 3 year(s) 4 month(s) 23 day(s)
Appellant Asstt.Commissioner of Income Tax,Circle,Korba, KORBA(CG)
Respondent Shri Jai Singh Agrawal, KORBA(CG)
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-07-2015
Assessment Year 2008-2009
Appeal Filed On 07-03-2012
Judgment Text
1 ITA NO.35/BLPR/2012 IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH RAIPUR. BEFORE SHRI MUKUL K. SHRAWAT JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER. I.T. A. NO. 35/BLPR/2012 ASSESSMENT YEAR : 2008-09. ASSTT. COMMISSIONER OF INCOME-TAX SHRI JAI SINGH AGRAWAL CIRCLE KORBA V/S. PROP. M/S. J.S. AGRAWAL AGRASEN MARG KORBA (C.G.) . ABAPA0858M (APPELLANT) RESPONDENT. APPELLANT BY : SHRI D. LAHARI. RESPONDENT BY : SHRI G.S. AGRAWAL. DATE OF HEARING : 19-06-2015 DATE OF PRONOUNCEMENT : 31 ST JULY 2015. O R D E R PER SHRI MUKUL K. SHRAWAT J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FOR M THE ORDER OF LD.CIT (A) BILASPUR DATED 29/12/2011 AND THE GROUNDS RAI SED ARE AS UNDER :- 1. (A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING RELI EF OF ` .10 22 930/- BY DIRECTING THE A.O. TO APPLY THE N.P. RATE @ 5. 5% AS AGAINST THE RATE APPLIED BY THE A.O. @ 8% ON THE TURNOV ER OF ` .4 09 17 256/-. 2 ITA NO.35/BLPR/2012 (B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING THE ABOVE RELIEF AND COMPLETELY IGNORED THE METICULOUS FINDINGS OF THE A.O. AS DISCUSSED IN THE ASSESSMENT ORDER. (C) THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING THE ABOVE RELIEF IN SPITE OF HIS OWN OBSERVATION [PARA 3 OF PAGE-4 OF THE APPELLATE ORDER] THAT THERE ARE MANY COMPARABLE CASES AT KO RBA WHERE THE NET PROFIT ON CIVIL CONTRACT WORKS HAS BEEN DISCL OSED AT MORE THAN 6% OF THE GROSS RECEIPTS FOR THE YEAR UNDER CONSI DERATION. 2) FACTS IN BRIEF AS PER THE ASSESSMENT ORDER DAT ED 30/12/2010 PASSED U/S 144 OF THE ACT WERE THAT THE ASSESSEE IN INDIVIDUAL CAP ACITY DERIVES INCOME FROM THE EXECUTION OF CIVIL CONTRACT WORKS AS A PROPRIETOR O F HIS CONCERN. RETURN OF INCOME AT RS 32 75 460/- WAS FILED. ACCORDING TO A. O. THERE WAS NO PROPER COMPLIANCE ON THE PART OF THE ASSESSEE THEREFORE AN EX-PARTE ORDER U/S 144 WAS PASSED. ALTHOUGH IT IS WORTH TO MENTION AT THIS STE P THAT THE ASSESSEE HAD CONTESTED THAT INADEQUATE OPPORTUNITY WAS GRANTED B ECAUSE THE LAST NOTICE U/S 143(2) WAS ISSUED ON 24/11/2010 ALONG WITH A QUESTI ONNAIRE AND THE DATE OF HEARING WAS FIXED ON 30/11/2010. THE CASE WAS ABOUT TO GET BARRED BY LIMITATION ON 31/12/2010 SO THE ASSESSMENT WAS FINALISED ON3 0/12/2010. 2.1) AS PER THE ASSESSMENT ORDER THE INCOME WAS FINALLY DETERMINED AS UNDER :- 3. THE ASSESSEE IS A CIVIL CONTRACTOR. HE HAS SHOW N TURNOVER TO THE TUNE OF ` .4 09 17 256/- AND WORK-IN-PROGRESS WORTH OF ` .10 50 000/-. THIS FACT IS EVIDENT FROM THE PROFIT & LOSS A/C FI LED BY THE ASSESSEE. THE ASSESSEE HAS ALSO DEBITED VARIOUS EXPENSES IN HIS PROFIT & LOSS A/C. THE CAREFUL PERUSAL OF THE BALANCE SHEET REVEALS THE F ACT THAT THERE ARE SUNDRY CREDITORS TO THE TUNE OF ` .1 17 13 791/- WHICH IS ALMOST MORE THAN 25% OF THE TOTAL TURNOVER. SUCH A HUGE CREDIT BALANCES OF THE SUNDRY CREDITORS APPEAR TO BE VERY MUCH DOUBTFUL. THEREFORE THE AS SESSEE WAS REQUIRED TO 143(2) DATED 24.11.2010 AS MENTIONED ABOVE. APART FROM THIS IT IS ALSO SEEN FROM THE SCHEDULES & ANNEXURES OF THE BALANCE SHEET THAT THERE IS CAPITAL ACCREATION OF ` .10 00 000/- IN THE CAPITAL ACCOUNT OF THE ASSESSEE . 3 ITA NO.35/BLPR/2012 FURTHER THERE ARE PROVISIONS FOR AGGREGATING TO ` .2 53 779/-. FOR WANT OF INFORMATION CALLED FOR VIDE QUESTIONNAIRE DATED 24 .11.2010 AND IN ABSENCE OF BOOKS OF A/CS THE VERACITY OF CREDITORS PROVISIONS MADE AND WORK-IN-PROGRESS SHOWN CANNOT BE VCERIFIED. AS THE ASSESSEE HAS FURNISHED THE AUDITED FINANCIAL STATEMENTS ALONGWI TH TAX AUDIT REPORT OF THE AUDITOR IN FORM NO. 3CB & 3CD IT CANNOT BE SA ID THAT THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS. HOWEVER FOR WANT OF CALLED FOR INFORMATION AND NON-PRODUCTION OF BOOKS OF A/CS T HE FIGURES SHOWN IN THE BALANCE SHEET IN RESPECT OF WORK-IN-PROGRESS A ND SUNDRY CREDITORS AS WELL AS PROVISIONS ARE NOT VERIFIABLE. UNDER THESE CIRCUMSTANCES I DO NOT HAVE ANY OPTION BUT TO ESTIMATE THE NET PROFIT OF THE ASSESSEE @ 8% OF THE TOTAL TURNOVER. THE NET PROFIT SHOWN BY THE ASSESS EE IS ` .20 55 223/- ON TURNOVER OF ` . 4 09 17 256/-. THE 8% OF THE TURNOVER WORKS TO ` .32 73 380/- AND THIS IS TAKEN AS INCOME FROM CONTR ACT WORK. 3) WHEN THE MATTER WAS CARRIED BEFORE TH E FIRST APPELLATE AUTHORITY A PART RELIEF WAS GRANTED BY APPLYING 5.35% OF NET P ROFIT AS AGAINST THE 8% NET PROFIT ADOPTED BY THE A.O. AFTER ASSIGNING FOLLOWIN G REASONS :- IN THE PRESENT CASE IN HAND THE A.O. WHILE ADOPT ING THE NET PROFIT RATE AT 8% OF THE GROSS CONTRACT RECEIPTS HAS BRO UGHT TO RECORD ANY BASIS OR MATERIAL JUSTIFYING HIS ACTION. SIDE BY SIDE I T IS SEEN THAT THE LD. AR RELIED ON THE BOOK RESULT OF THE CONTRACTORS NOT L OCATED IN THE SAME LOCALITY. THERE ARE MANY COMPARABLE CASES AT KORBA WHERE THE NET PROFIT ON CIVIL CONTRACT WORKS HAS BEEN DISCLOSED AT MORE THAN 6% OF THE GROSS RECEIPTS FOR THE YEAR UNDER CONSIDERATION. FOR EXA MPLE SHRI SARABJIT SINGH CHHATWAL KORBA HAS DISCLOSED NET PROFIT AT 6.5% OF THE GROSS RECEIPTS FOR THE CONCERNED ASSESSMENT YEAR. THE PERCENTAGE OF NET PROFIT FOR THE ASSESSMENT YEA R 2006-07 WAS 5.35% OF THE TURNOVER OF ` . 64 15 527. IN VIEW OF OVERALL FACTS AND CIRCUMSTA NCES OF THE CASE THE AO IS DIRECTED TO APPLY NET PROFI T RATE AT 5.5% OF THE GROSS RECEIPTS OF THE YEAR AND GRANT RELIEF DUE TO THE A PPELLANT. 4) IN THE LIGHT OF THE ABOVE FACTS WE HAVE HE ARD BOTH THE SIDES. FROM THE SIDE OF THE REVENUE LD DR MR. D. LAHARI APPEARED AND PLA CED BEFORE US A PHOTO COPY OF THE ORDER SHEET TO DEMONSTRATE THAT THE ASS ESSEE HAD NOT PRODUCED THE 4 ITA NO.35/BLPR/2012 BOOKS OF ACCOUNT. HE HAS FURTHER PLEADED THAT THE P ROFIT PERCENTAGE AS ADOPTED BY THE A.O. WAS VERY REASONABLE BECAUSE THE CASE OF THE ASSESSEE DID NOT FALL UNDER THE CATEGORY OF THE CLASS OF ASSESSEE GOVERNE D U/S 44AD OF THE ACT DUE TO THE REASON THAT THE ASSESSEES TURN- OVER HAD EXCEE DED RS. 40 LAKS. ACCORDING TO HIS ARGUMENTS THERE WERE FEW INSTANCES WHERE IN THE SAID JURISDICTION EVEN HIGHER RATE OF PROFIT WAS ASSESSED. HE HAS THUS PLE ADED THAT THE RELIEF WAS UNJUSTIFIABLE. 4.1 ) FROM THE SIDE OF THE RESPONDENT ASSESSEE LD. A.R. MR. G.S. AGRAWAL APPEARED AND DRAWN OUR ATTENTION ON THE COMPARATIV E FIGURES OF PERCENTAGE OF PROFIT OF THE PAST YEARS ASSESSED IN THE CASE OF TH E ASSESSEE AS UNDER :- COMPARATIVE TRADING RESULT. PARTICULARS ASSTT. YEAR ASSTT. YEAR ASSTT. Y EAR. 2008-09 2007-08 2 006-07 TURNOVER 4 09 17 256 2 43 41 103 6 4 15 527 NET PROFIT 20 55 223 12 50 365.97 3 43 497 PERCENTAGE OF N.P. 5.02% 5.13% 5 35% 4.2) ON HEARING THE SUBMISSIONS OF BOTH T HE SIDES IN THE LIGHT OF THE FACTS AND THE EVIDENCES ON RECORD WE ARE OF VIEW THAT LD. C IT (A) WAS CORRECT IN MAKING THIS OBSERVATION THAT IT IS NOT PERMISSIBLE TO THE ASSESSEE TO AVOID THE ASSESSMENT PROCEEDINGS. BUT FOR NON-COMPLIANCE OF NOTICE OR NON-ATTENDANCE OF HEARING THE I.T. ACT HAS CERTAIN PROVISIONS EITHER TO COMPEL FOR THE PRESENCE OR TO PUNISH FOR NON-COMPLIANCE BY IMPOSING PENALTY. H OWEVER AS FAR AS THE QUESTION OF ASSESSMENT OF INCOME IS CONCERNED THE ACT SAYS THAT IT OUGHT TO BE A BEST JUDGEMENT. THIS IS ALSO TRUE THAT SEC 44AD IS A SPECIAL PROVISION FOR 5 ITA NO.35/BLPR/2012 COMPUTING PROFITS AND GAINS OF BUSINESS ON PRESUMPT IVE BASIS . THIS SECTION PRESCRIBES TO ASSESS THE INCOME @ 8% ON THE TOTAL T URNOVER IF DO NOT EXCEED RS. 40 LAKHS. ADMITTEDLY THE ASSESSEES TURNOVER HAD EX CEEDED THE LIMIT. IN SUCH CIRCUMSTANCES WHEN THERE IS NO IDENTICAL COMPARABLE CASE WAS REFERRED BY THE A.O. AND THE PROVISIONS OF 44AD ARE NOT APPLICABLE IN LETTER & SPIRIT THEN THE REMEDY AVAILABLE IS TO FOLLOW THE PAST HISTORY OF T HIS VERY ASSESSEE. MOREOVER A CONSISTENCY IS TO BE MAINTAINED IF AFTER SCRUTINY A PERCENTAGE OF PROFIT HAD BEEN ASSESSED BY THE A.O. FOR THIS REASON A COMPARATIVE CHART OF THE NET PROFIT ASSESSED IN THE PAST HAS BEEN FILED. LD. CIT(A) HAS ALSO REFERRED THAT IN A.Y. 2006-07 THE NET PROFIT PERCENTAGE WAS ASSESSED AT 5 .35%. THEREFORE UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND NO INFIRMITY IN THE FINDINGS OF LD. CIT(A) DIRECTING TO APPLY NET PROFI T RATE AT 5.5%. WE HAVE BEEN INFORMED THAT THE ASSESSEE HAS NOT EVEN PREFERRED A N APPEAL AGAINST THE SAID ORDER OF CIT(A) . THE GROUNDS RAISED ARE HEREBY DIS MISSED 5) THIS APPEAL OF THE REVENUE DEPARTMENT IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF JULY 2015. SD/- SD/- ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER. JUDICIAL MEMBER NAGPUR DATED: 31 ST JULY 2015. 6 ITA NO.35/BLPR/2012 COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT NAGPUR. 5. THE D.R. ITAT NAGPUR. 6. GUARD FILE. T RUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR ITAT NAGPU R