ITO, v. Shri Vithal T. Patil,

ITA 367/PUN/2006 | 2002-2003
Pronouncement Date: 31-01-2011 | Result: Dismissed

Appeal Details

RSA Number 36724514 RSA 2006
Assessee PAN ADVPS1334P
Bench Pune
Appeal Number ITA 367/PUN/2006
Duration Of Justice 4 year(s) 9 month(s) 18 day(s)
Appellant ITO,
Respondent Shri Vithal T. Patil,
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 31-01-2011
Assessment Year 2002-2003
Appeal Filed On 12-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 367/PN/06 (ASSTT YEAR: 2002-03) INCOME-TAX OFFICER WARD-2(3) AURANGABAD APPELLANT VS. SHRI VITHAL TRIMBAK PATIL RESPONDENT PROP. M/S V T PATIL ENGINEERS & CONTRACTORS 6 TAPADIA CINE MARKET CIDCO AURANGABAD PAN ADVPS1334P AND CROSS OBJ. NO14/PN/08 (IN ITA NO 367/PN/06 A.Y:2002-03) SHRI VITHAL TRIMBAK PATIL CROSS OBJECTOR PROP. M/S V T PATIL ENGINEERS & CONTRACTORS AURANGABAD VS. I NCOME-TAX OFFICER WARD-2(3) AURANGABAD RESPONDENT ASSESSEE BY : NONE DEPARTMENT BY : SHRI HEMANT KUMAR C LEUVA ORDER PER G.S. PANNU A.M: THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II AURANGABAD DATED 29.12.2005 WHICH IN TURN HAVE ARISEN FROM AN ORDER DATED 31.3.2005 PASSED BY THE ASSESSI NG OFFICER UNDER ITA 367/PN/06 & CO 14/PN/08 SHRI VITHAL T PATIL AURANGABAD 2 SECTION 143(3) OF THE INCOME-TAX ACT 1961 (IN SHOR T THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2002-03. 2. AT THE TIME OF HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF THE REVENUE WHILE NONE APPEA RED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE OF HEARING HAVING BEEN ISSUED BY REGISTERED POST A.D SUFFICIENTLY IN ADVANCE. THEREF ORE BOTH THE APPEAL AND THE CROSS OBJECTION ARE DISPOSED OF EX PARTE QU A ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE ON MERITS. 3. FIRST GROUND OF APPEAL RAISED BY REVENUE RELATES TO DELETION BY THE COMMISSIONER OF INCOME-TAX (APPEALS) OF ADDITIO N OF RS 6 25 000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF T HE ACT. THE RELEVANT FACTS IN BRIEF ARE THAT ASSESSEE IS ENGA GED MAINLY IN EXECUTION OF CIVIL CONSTRUCTION CONTRACTS OF THE GO VERNMENT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER NOTICED THAT ASSESSEE HAD INTRODUCED AN AMOUNT OF RS 10 58 729/- WHICH INTER ALIA INCLUDED A SUM OF RS 6 25 000/- AS SHARE FROM HUF. ON BEING ASKED TO EXPLAIN THE SOURCE OF INCOME OF THE HUF ASSESSEE S UBMITTED THAT THE HUF WAS HAVING 62 ACRE OF ANCESTRAL IRRIGATED LAND AND HAD SUFFICIENT AGRICULTURAL INCOME. THE ABOVE SUM OF RS 6 25 000/ - WAS GIVEN BY THE HUF TO ASSESSEE OUT OF ITS ACCUMULATED AGRICULTURAL INCOME. IN SUPPORT OF THE AGRICULTURAL INCOME ASSESSEE HAD PRODUCED S OME BILLS OF HAVING SOLD AGRICULTURAL PRODUCE. ON THESE FACTS THE ASSE SSING OFFICER HELD THAT A COPARCENER OF AOP CAN ENJOY PROPERTY/SHARE O NLY WHEN THERE IS LEGAL PARTITION BY METES AND BOUNDS. FOR THIS PURPO SE THE ASSESSING OFFICER RELIED ON THE DECISION OF THE HONBLE SUPRE ME COURT IN THE CASE OF UNION OF INDIA V M V VALLIAPPAN 238 ITR 1027 (SC ). HE FURTHER HELD THAT ASSESSEE WAS NOT ABLE TO ESTABLISH THE CONDITI ONS AS LAID DOWN ITA 367/PN/06 & CO 14/PN/08 SHRI VITHAL T PATIL AURANGABAD 3 UNDER SECTION 68 OF THE ACT. THE ASSESSING OFFICER THEREFORE INVOKED PROVISIONS OF SECTION 68 OF THE ACT AND MADE AN ADD ITION OF THE ABOVE AMOUNT OF RS 6 25 000/-. 4. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) ASSESSEE FILED WRITTEN SUBMISSIONS REITERATING THE STAND TAKEN BEFORE THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME-T AX (APPEALS) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFIC ER. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE REMAND REPORT OF THE ASSESSING OFFICER AS PER THE COMMISSIONER OF INCOME-TAX (APPEALS) FOLLOWING FACTS EMERGED. THE ASSESSEE A CIVIL CONTRACTOR HAS INTRODUCED AN AMOUNT OF RS 6 25 000 /- IN HIS CAPITAL ACCOUNT STATED TO BE OUT OF AGRICULTURAL INCOME RE CEIVED FROM THE HUF. ASSESSEE IS A COPARCENER OF HUF AND THAT THE HUF IS HAVING INCOME AS IS CLEAR FROM 7/12 EXTRACTS AND SALE PATTIES AND BILL BUT IN THE ABSENCE OF SALE BILLS ETC. THE EXACT QUANTUM OF INC OME CANNOT BE ESTIMATED. AS PER THE COMMISSIONER OF INCOME-TAX (A PPEALS) IT WAS A FACT THAT LOOKING INTO THE NATURE OF AGRICULTURE MA RKET IT IS DIFFICULT TO PRODUCE ALL THE BILLS ETC. AND TRUE INCOME FROM THE AGRICULTURE CANNOT BE ARRIVED AT PURELY ON THE BASIS OF SALE BILLS ETC . THAT THERE WAS NO PARTITION OF HUF PROPERTIES AND WHAT THE ASSESSEE R ECEIVED FROM THE HUF WAS PART OF INCOME TO BE USED IN CONSTRUCTION O F THE HOUSE. THE COMMISSIONER OF INCOME-TAX (APPEALS) AFTER ANALYZIN G THE ABOVE FACTS VIS--VIS LEGAL POSITION AND PROVISIONS OF SECTION 68 OF THE ACT CAME TO THE FOLLOWING CONCLUSIONS: NOW COMING TO THE APPLICATION OF SECTION 68 TO THE FACTS OF THE CASE: IT HAS ALREADY BEEN DISCUSSED ABOVE THAT THOUGH ASS ESSEE HAS NOT BEEN ABLE TO ESTABLISH HIS CASE VIS--VIS SALE PATTI BI LLS AND BANK ACCOUNT FILED. BUT AT THE SAME TIME THIS ALSO CANNOT BE DENIED THA T HUF IS HAVING SUFFICIENT FUNDS AS IT POSSESSES 62 ACRES OF IRRIGATED LAND. IN THIS CONNECTION ASSESSEE HAS GIVEN CERTIFICATE FROM TALATHI WHICH ALSO INDICATES THE AVERAGE YIELD PER ACRE. ITA 367/PN/06 & CO 14/PN/08 SHRI VITHAL T PATIL AURANGABAD 4 MOREOVER THIS AMOUNT HAS NOT BEEN GIVEN AT ONE TIME . IT HAS BEEN TAKEN BY THE ASSESSEE ON DIFFERENT DATES FOR THE CONSTRUCTIO N OF THE HOUSE. THEREFORE KEEPING IN VIEW THE TOTALITY OF CIRCUMST ANCES IT CAN BE SAID THAT THE AMOUNT OF RS 6 25 000/- HAS BEEN INTRODUCED BY THE ASSESSEE OUT OF THE SALE PROCEEDS OF AGRICULTURAL PRODUCTS OF HUF. THER EFORE THE ADDITION IS HEREBY DELETED. 5. AGGRIEVED BY THE ABOVE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) REVENUE IS IN APPEAL BEFORE US. THE LEAR NED DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE REVENUE CONTENDE D THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIF IED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. RELYING UPO N THE ORDER OF THE ASSESSING OFFICER IN SUPPORT OF THE REVENUES CASE THE LEARNED DEPARTMENTAL REPRESENTATIVE PLEADED THAT THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) MAY BE REVERSE D AND THE ADDITION OF RS 6 25 900/- MADE BY THE ASSESSING OFF ICER UNDER SECTION 68 OF THE ACT BE CONFIRMED. 6. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE L EARNED DEPARTMENTAL REPRESENTATIVE AS WELL AS PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND FIND THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS DISCUSSED THE ISSUE IN DETAIL AND PAS SED A WELL REASONED ORDER. THE COMMISSIONER OF INCOME-TAX (AP PEALS) ON PRAGMATIC CONSIDERATIONS HAS RIGHTLY CONSIDERED TH E AMOUNT OF RS 6 25 000/- AS EXPLAINED WITHIN THE MEANING OF SECTI ON 68 OF THE ACT AND THEREFORE WE DO NOT FIND ANY REASON TO INTERF ERE WITH HIS ORDER AND ACCORDINGLY WE AFFIRM THE ORDER OF THE COMMIS SIONER OF INCOME- TAX (APPEALS) ON THIS ASPECT. REVENUE FAILS ON THI S GROUND. 7. THE NEXT GROUND RAISED BY THE REVENUE RELATES TO AN ADDITION OF RS 51 527/- MADE UNDER SECTION 68 OF THE ACT. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAD INTRODUCED AN AMOUNT OF RS 51 527/- IN THE CAPITAL ITA 367/PN/06 & CO 14/PN/08 SHRI VITHAL T PATIL AURANGABAD 5 ACCOUNT. ON BEING REQUIRED TO EXPLAIN THE SOURCE OF SUCH INTRODUCTION OF CAPITAL ASSESSEE EXPLAINED THAT THE AMOUNT WAS INTRODUCED OUT OF HIS PAST SAVINGS. HOWEVER ASSESSEE COULD NOT PRODU CE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF SUCH PLEA AND T HEREFORE THE ASSESSING OFFICER MADE AN ADDITION OF RS 51 527/- U NDER SECTION 68 OF THE ACT. IN APPEAL BEFORE THE COMMISSIONER OF INCOM E-TAX (APPEALS) EVEN THOUGH ASSESSEE COULD NOT PRODUCE ANY DOCUMENT ARY EVIDENCE IN SUPPORT OF HIS PAST SAVINGS IT WAS CONTENDED THAT HE IS MAKING THE TRADING TO THE TUNE OF RS 6 TO 7 LAKHS IN A YEAR AN D THE STATED AMOUNT OF PERSONAL SAVINGS CANNOT BE RULED OUT. AFTER CONS IDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE THE COMMISSIONER OF IN COME-TAX (APPEALS) DELETED THE IMPUGNED ADDITION AGAINST WHI CH REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW CAREFULLY AND DO NOT FIND ANY REASON TO INTERFERE W ITH THE FINDINGS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ASPECT . WE ACCORDINGLY AFFIRM HIS DECISION. REVENUE FAILS ON THIS GROUND ALSO. 9. THE NEXT GROUND OF REVENUE IS IN RESPECT OF THE RELIEF GRANTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON ACCOUNT OF NET PROFIT RATE. DURING THE ASSESSMENT PROCEEDINGS THE ASSESS ING OFFICER NOTICED VARIOUS DEFECTS IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE AND THEREFORE AND BY INVOKING PROVISIONS OF SECTIO N 145(3) OF THE ACT THE ASSESSING OFFICER REJECTED THE BOOK RESULTS TH EREBY ESTIMATING PROFIT AT THE RATE OF 7% ON CONTRACT RECEIPTS AND 4 % ON SUB-CONTRACT RECEIPTS. 10. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) ASSESSEE FILED WRITTEN REPLY IN SUPPORT OF THE PROF IT SHOWN BY IT AS WELL ITA 367/PN/06 & CO 14/PN/08 SHRI VITHAL T PATIL AURANGABAD 6 AS CITED SOME COMPARABLE CASES WHEREIN ON SIMILAR L INE OF BUSINESS REVENUE HAS ADOPTED A PROFIT RATE OF 5%. AFTER CON SIDERING THE ABOVE SUBMISSIONS THE COMMISSIONER OF INCOME-TAX (APPEAL S) DIRECTED THE ASSESSING OFFICER TO COMPUTE THE INCOME OF ASSESSEE BY TAKING NET PROFIT AT THE RATE OF 5.3% INSTEAD OF 7% ON THE TOT AL ASSESSED TURNOVER. AS REGARDS RATE OF PROFIT ON SUB-CONTRACTS THE COM MISSIONER OF INCOME-TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO ADOPT THE SAME AT 3.5% INSTEAD OF 4% TAKEN BY THE ASSESSING OFFICE R. 11. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AND HAVE ALSO GONE THRO UGH THE ORDERS OF THE AUTHORITIES BELOW. WE DO NOT FIND ANY INFIRMITY IN THE REASONING GIVEN BY THE COMMISSIONER OF INCOME-TAX (APPEALS) W ARRANTING AY INTERFERENCE ON OUR PART. WE ACCORDINGLY AFFIRM HI S DECISION. THUS REVENUE FAILS ON THIS GROUND ALSO. 12. IN THE RESULT REVENUES APPEAL IS DISMISSED. 13. IN THE CROSS-OBJECTION FILED BY THE ASSESSEE F IRST OBJECTION IS IN RELATION TO THE ESTIMATION OF NET PROFIT AT 5.3% ON CONTRACT RECEIPTS DIRECTED TO BE ADOPTED BY THE COMMISSIONER OF INCOM E-TAX (APPEALS). WE HAVE CONSIDERED THE SAME ISSUE IN THE APPEAL FIL ED BY THE REVENUE WHEREIN WE HAVE AFFIRMED THE DECISION OF T HE COMMISSIONER OF INCOME-TAX (APPEALS) AND THEREFORE WE DO NOT F IND ANY MERIT IN THIS GROUND OF CROSS-OBJECTION OF ASSESSEE AND DISMISS T HE SAME. 14. THE NEXT GRIEVANCE IS IN REGARD TO ADDITION IN PROFIT ON ACCOUNT OF TREATING WORK-IN-PROGRESS AS SALE. THE COMMISSION ER OF INCOME-TAX (APPEALS) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN INVOKING PROVISIONS OF SEC.145 OF THE ACT AND ESTIMATING THE PROFIT BY REJECTING THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. IN VIEW OF THE CLEAR ITA 367/PN/06 & CO 14/PN/08 SHRI VITHAL T PATIL AURANGABAD 7 FINDINGS GIVEN BY THE COMMISSIONER OF INCOME-TAX (A PPEALS) THAT THE CORRECT COMPUTATION OF PROFITS OF THE ASSESSEE CANN OT BE MADE ON THE BASIS OF THE BOOKS OF ACCOUNT MAINTAINED BY THE ASS ESSEE AND THAT THE ASSESSING OFFICER WAS FULLY JUSTIFIED IN INVOKING T HE PROVISIONS OF SEC. 145 OF THE ACT THEREBY ESTIMATING NET PROFIT BY RE JECTING THE BOOKS OF ACCOUNT WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ABOVE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPE ALS). THUS ASSESSEE FAILS ON THIS GROUND OF CROSS-OBJECTION. 15. IN THE RESULT THE CROSS-OBJECTION OF THE ASSES SEE IS DISMISSED. 16. RESULTANTLY BOTH THE APPEAL FILED BY THE REVEN UE AS WELL AS CROSS-OBJECTION OF ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 31ST DAY OF J ANUARY 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU ) JUDICIAL MEMBER ACC OUNTANT MEMBER PUNE DATED: 31ST JANUARY 2011 COPY TO:- 1) SHRI VITHAL T PATIL AURANGABAD 2) THE ITO WD-2(3) AURANGABAD 3) THE CIT (A)-II AURANGABAD 4) THE CIT-1 AURANGABAD 5) THE D R B BENCH ITAT PUNE. BY ORDER TRUE COPY ASSTT.REGISTRAR I.T.A.T. PUNE B