M/s Inder Construction, v. DCIT, Cuttack

ITA 397/CTK/2011 | misc
Pronouncement Date: 09-11-2011

Appeal Details

RSA Number 39722114 RSA 2011
Assessee PAN AAAFI3925L
Bench Cuttack
Appeal Number ITA 397/CTK/2011
Duration Of Justice 2 month(s)
Appellant M/s Inder Construction,
Respondent DCIT, Cuttack
Appeal Type Income Tax Appeal
Pronouncement Date 09-11-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 09-11-2011
Assessment Year misc
Appeal Filed On 09-09-2011
Judgment Text
IN THE INC O ME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE : SHRI K.K.GUPTA AM AND SHRI K.S.S.PRASAD RAO JM ITA NO. 397/CTK/2011 (ASSESSMENT YEAR 2007 - 08) M/S.INDER CONSTRUCTION TULSIPUR CUTTACK PAN: AAAFI 3925 L VERSUS DCIT CIRCLE 2(1) CUTTACK. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI M.UDAYAPURIYA AR FOR THE RESPONDENT SHRI A.BHATTACHARJEE DR DATE OF HEARING : 21.10.2011 DATE OF PRONOUNCEMENT : 09.11.2011 ORDER SHRI K.S.S.PRASAD RAO JM : THIS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DT.27.6.2011 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE ASSESSEE IS A FIRM DERIVES INCOME FROM EXECUTION OF CONTRACT WORK AND INCOME FROM OTHER SOURCES. IN THE SCRUTINY ASSESSMENT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT PRODUCE THE SUPPORTING VOUCHERS MUSTER ROLL ETC. THEREFORE THE ASSESSING OFFICER DID NOT RELY UPON THE BOOK RESULT AND PROCEEDED TO COMPUTE THE INCOME BY INVOKING THE PROVISIONS U/S.145(3) OF T HE I.T.ACT 1961. ACCORDINGLY HE ESTIMATED NET PROFIT @8% OF THE GROSS RECEIPTS BEFORE DEPRECIATION AND INTEREST AND SALARY TO PARTNERS. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS SHOWN AN AMOUNT OF 44 83 62 TOWARDS PURCHASE OF FIXED ASSETS DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSEE WAS ASKED TO FURNISH THE EVIDENCE REGARDING ADDITION OF THESE ASSETS DURING THE YEAR BUT THE ASSESSEE FAILED TO FURNISH THE SAME IN RESPECT OF PURCHASE OF FIXED ASSETS WORTH 63 940. THE ASSESSING OFFICER TREATED THIS AMOUNT AS UNEXPLAINED INVESTMENT WHICH HE ADDED THE SAME TO THE TOTAL INCOME U/S.69 OF THE I.T.ACT BESIDES DISALLOWING DEPRECIATION @15% ON SUCH AMOUNT AND ACCORDINGLY MADE AN 2 ADDITION OF 73 531 (I.E. 63 940 + 9 591). AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND THE LEARNED CIT(A) CONFIRMED THE ADDITION OF 73 531 MADE U/S.69. HOWEVER SINCE THE INCOME HAS BEEN ESTIMATED BY ADOPTING PROFIT MARGIN THE LEARNED CIT(A) DIRECTED THE ASSESSING OFFICER TO W ITHDRAW THE DEPRECIATION OF 6 57 117 IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. IT IS AGAINST THIS ORDER OF THE LEARNED CIT(A) THE ASSESSEE I S IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS. 1) FOR THAT THE LEARNED C.I.T.(A) IS WHOLLY UNJU STIFIED TO HOLD THAT THE ASSESSING OFFICER IS RIGHT TO IGNORE INTEREST IN AS MUCH AS HE FAILED TO APPRECIATE THE FACT AND CASE LAWS CITED BY THE ASSESSEE EVEN IN HIS OWN CASE AND DID NOT DISCUSS THEM AT ALL IN HIS ORDER AND THEREFORE THE ORDER BEING WHOL LY ARBITRARY ILLEGAL AND AGAINST THE PRINCIPALS OF NATURAL JUSTICE SHOULD BE DECLARED AS UNSUSTAINABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2) FOR THAT ADDITION OF.73 531/ - MADE UNDER SECTION 69 IS VITIATED AND ARBITRARY AND LEARNED C.I.T.(A)S C ONFIRMATION OF THE ABOVE ADDITION IS THE RESULT OF NON APPRECIATION OF THE FACTS AND LAW AND SHOULD BE DELETED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3) FOR THAT THE LEARNED C.I.T.(A) DID NOT FOLLOW THE RULE OF LAW WHILE DIRECTING THE ASSESSING OFFI CER TO WI THDRAW DEPRECIATION ALLOWED AT 6 57 117/ - WHICH TANTAMOUNT TO ENHANCE THE ASSESSMENT WITHOUT ISSUING ANY NOTICE FOR SUCH ENHANCEMENT AND THEREFORE HIS ORDER IS ARBITRARY ILLEGAL AND BAD IN LAW AND SHOULD BE CANCELLED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4) FOR THAT INTEREST ON BORROWED CAPITAL AND DEPRECIATION IS TO BE SEPARATELY ALLOWED WHILE ESTIMATING THE INCOME FROM CONTRACT BUSINESS AS PER PAST RECORDS AND ORDER OF HIGHER AUTHORITIES AND BY NOT FOLLOWING THE ABOVE PRINCIPLE THE LEARNED C.I.T.(A)S ORDER HAS BECOME VITI ATED AND ILLEGAL AND SHOULD BE INTERFERED WITH IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. ON CAREFUL CONSIDERATION OF THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS OF BOTH THE PARTIES WE FIND THAT THE DEPARTMENTAL AUTHORITIES HAVE REJECTED THE BOOKS OF ACCOUNT AND RESORTED TO ESTIMATION OF PROFIT @8% OF THE GROSS RECEIPTS. LAW IS WELL SETTLED THAT WHEN INCOME IS ARRIVED AT ON BASIS OF ESTIMATION OF CERTAIN PERCENTAGE OF PROFIT ALL OTHER DEDUCTIONS ARE DEEMED TO HAVE BEEN TAKEN INTO ACCOUNT WHILE MAKING SUCH AN ESTIMATE. THEREFORE IN SUCH CIRCUMSTANCES NO OTHER ADDITIONS BY WAY OF DISALLOWANCE OF EXPENDITURE ETC. CAN BE MADE. THE DEPARTMENTAL 3 AUTHORITIES HAVE NOT EXAMINED THIS ASPECT OF THE CASE AND HE NCE WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ASSESSMENT AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 9 TH NOVEMBER 2011 H.K.PADHEE SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. T HE APPELLANT: M/S.INDER CONSTRUCTION TULSIPUR CUTTACK 2. THE RESPONDENT: DCIT CIRCLE 2(1) CUTTACK. 3. THE CIT 4. THE CIT(A) 5. THE DR CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY.