Saroj Kumar Swain, Koraput v. ACIT, Berhampur

ITA 507/CTK/2011 | 2008-2009
Pronouncement Date: 17-02-2012

Appeal Details

RSA Number 50722114 RSA 2011
Assessee PAN AGVPS3654D
Bench Cuttack
Appeal Number ITA 507/CTK/2011
Duration Of Justice 2 month(s) 5 day(s)
Appellant Saroj Kumar Swain, Koraput
Respondent ACIT, Berhampur
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2012
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 17-02-2012
Assessment Year 2008-2009
Appeal Filed On 12-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE : SHRI K.K.GUPTA AM AND SHRI K.S.S.PRASAD RAO JM ITA NO. 507/CTK/2011 (ASSESSMENT YEAR 2008 - 09) SAROJ KUMAR SWAIN BHEJAPUR DAMANJODI 763 008 DIST. KORAPUT. PAN: AGVPS 3654 D VE RSUS ASST.COMMISSIONER OF INCOME - TAX BERHAMPUR CIRCLE BERHAMPUR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI D.K.SETH AR FOR THE RESPONDENT SHRI A.BHATTACHARJEE DR DATE OF HEARING : 14.02.2012 DATE OF PRONOUNCEMENT : 17.02.2012 ORD ER SHRI K.K.GUPTA AM : THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY ISSUE OF THE REJECTION OF BOOKS OF ACCOUNT AND ESTIMATING THE INCOME AT 8% ON GROSS RECEIPTS BY THE ASSESSING OFFICER CONFIRMED BY THE LEARNED CIT(A). 2. THE ASSESSEE IS A CONTRACTOR AND FILED RETURN OF INCOME DECLARING 11 67 690 INCOME WHICH WAS SUBJECTED TO SCRUTINY U/S.143(3). THE ASSESSING OFFICER ISSUED NOTICES U/S S .143(2) AND 142(1) IN OCTOBER 2010 TO PASS THE ORDER ON 20.12.2010 WHEN AFTER VERIFYING THE EXPLANATION AND SUBMISS IONS OF THE ASSESSEE WHO WAS PURPORTEDLY NOT HOLDING PROPER BOOKS OF ACCOUNT PROCEEDED TO INVOKE THE PROVISIONS OF SECTION 145 AND ESTIMATION OF INCOME AT 8% OF THE GROSS RECEIPTS AMOUNTING TO 18 89 015. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO JUSTIFIED THE ACTION OF THE ASSESSING OFFICER BY NEGATING THE CLAIM OF THE ASSESSEE APPELLANT THAT THE BOOKS OF ACCOUNT ARE DULY AUDIT ED U/S.44AD AND THE ASSESSEE HAD PRODUCED THE COPIES OF LEDGER ACCOUNTS AS DIRECTED BY THE ASSESSI NG OFFICER. HE HAS ALSO CONSIDERED THE CASE OF THE ASSESSEE WHEN FOR THE ASSESSMENT YEAR 2005 - 06 THE LEARNED CIT(A) E STIMATED INCOME AT 5.5% VIDE HIS ORDER DT.21.6.2010. HE NOTED THAT THE ASSESSEE HAD BEEN GIVEN ADEQUATE OPPORTUNITY TO EXPLAIN HIS CASE WHI CH WAS NOT UTILIZED BY THE ASSESSEE AND HE ITA NO. 507/CTK/2011 2 SUSTAINED THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOK RESULTS FOLLOWING VARIOUS DECISIONS OF THE ITAT WHEN THE ADOPTION OF 8% INCOME OF THE GROSS RECEIPTS I N SIMILARLY PLACED BUSINESS ES HAVE BEEN CON FIRMED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATED HIS ARGUMENTS BY SUBMITTING THAT THE AUTHORITIES BELOW MISDIRECTED THEMSELVES TO REJECT THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145 WITHOUT BRINGING OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT WHEN THE A SSESSEE HAS BEEN REPEATEDLY CLAIMING THAT THE BOOKS OF ACCOUNT WERE VERIFIED AND AUDITED . THE VARIOUS DECISIONS WHICH THE AUTHORITIES BELOW HAVE RELIED UPON ARE PECULIAR TO THE FACTS AS WERE AVAILABLE IN THOSE CASES INSOFAR AS HE IS ALSO SUPPORTED BY VARIOUS DECISIONS WHEN NET PROFIT AT 6% HAS BEEN CONFIRMED BY THE TRIBUNAL. HE POINTED OUT THAT THE PARAMETER FOR CONSIDERING NET PROFIT VIS - - VIS THE GROSS PROFIT HAS TO BE SPECIFICALLY POINTED OUT WHEN THE ISSUE HAS BEEN DELIBERA TED UPON BY THE AUTHORITIES FOR POINTING OUT NON - ALLOWANCE OF DEPRECIATION AND SALARY AND INTEREST TO THE PARTNERS . HE POINTED OUT THAT THE ADOPTION OF THE SPECIFIC PERCENTAGE AS NP TO BE TAXED HAS TO BE ON SPECIFIC GROUNDS WHICH BOTH THE AUTHORITIES BELOW HAVE FAILED TO BRING OUT. HE POINTED OUT THAT HE HAS BEEN INSTRUCTED TO END OR DISCONTINUE THE LITIGATION INSOFAR AS THE LEARNED CIT(A) HAD ACCEPTED 5.5 OF THE GROSS RECEIPTS AS THE NET INCOME FOR THE ASSESSMENT YEAR 2005 6 AGAINST WHICH NO FURTHER APP EAL WAS MADE. HE SUBMITTED THAT 6% OF THE GROSS RECEIPTS FOR THE YEAR UNDER APPEAL MAY KINDLY BE DIRECTED TO ADOPT BY THE ASSESSING OFFICER. HE POINTED OUT THAT THE MAINTENANCE OF BOOKS OF ACCOUNT WOULD HAVE NO MEANING IF THE PERCENTAGE OF INCOME WAS TO BE AS NET PROFIT AND NOT GROSS MARGIN. IN A CONTRACT BUSINESS ALL THE EXPENSES ARE DIRECTLY RELATED TO THE CONTRACT WORK RENDERED WHICH ARE BILLED AND ARE SUBJECTED TO SCRUTINY BY THE PAYEES. ITA NO. 507/CTK/2011 3 4. THE LEARNED DR SUPPORTED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW FOR HIS PART OF SUBMISSIONS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE INCLINED TO FIND THE CONTENTION OF THE LEARNED C OUNSEL FOR THE ASSESSEE APPROPRIATE INSOFAR AS THERE IS NO BENCHMARK FOR CONSIDERING A FIXED RETURN OF PROFIT ON THE BASIS OF GROSS RECEIPTS WHEN THE LAW ONLY PROVIDES THAT ACCEPTING INCOME AT A CERTAIN PERCENTAGE IN THE ABSENCE OF BOOKS OF ACCOUNT. BOOKS OF ACCOUNT ARE MAINTAINED TO SUBSTANTIATE THE CLAIM IN ACCORDANCE WITH THE BOOK RESULT WHICH HAVE TO BE SPECIFICALLY POINTED OUT FOR DEFECT S IF ANY. THE BOOKS OF ACCOUNT ARE BASICALLY ARE RECORD OF TRANSACTION HAVING TAKEN PLACE WHICH CONTROL THE BUSINESS FOR THE ASSESSEE TO JUSTIFY THE NET RESULT DISCLOSED AT THE CLOSE OF THE FINANCIAL YEAR. THE CASE LAWS CITED BY THE ASSESSEE AND THE REVENUE THEREFORE ARE PECULIAR TO THEIR OWN FACTS AND THESE CANNOT BE TAKEN AS A BENCHMARK FOR ESTIMATION OF INCOME AS AGA INST THAT RETURNED BY THE RESPECTIVE ASSESSEES. THE LEARNED CIT(A) THEREFORE ERRED IN ADOPTING THE DEEMING PROVISION OF 8% WHICH WAS NEITHER THE CASE OF THE ASSESSEE I N THE FIR S T PLACE AS BROUGHT ON RECORD BY THE ASSESSING OFFICER IN HIS ORDER U/S.143(3). THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE TO ACCEPT 6% NET PROFIT O F THE GROSS RECEIPTS THEREFORE BECOMES COROLLARY TO UNDERSTAND THE ISSUE I N THE LIGHT OF THE FAT THAT THE LEARNED CIT(A) IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06 HAD DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT AT 5.5% WHICH WAS NOT APPEALED AGAINST BEFORE THE TRIBUNAL. OBVIOUSLY NET PROFIT OF 6% AS AGAINST 4.5% DECLARED BY THE ASSESSEE APPEARS US TO BE REASONABLE. THEREFORE WE SET ITA NO. 507/CTK/2011 4 ASIDE THE I MPUGNED ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO ADOPT NET INCOME AT 6% OF THE GROSS RECEIPTS. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 17.02.2012 H.K.PADHEE SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SAROJ KUMAR SWAIN BHEJAPUR DAMANJODI 763 008 DIST. KORAPUT 2. THE RESPONDENT: ASST.COM MISSIONER OF INCOME - TAX BERHAMPUR CIRCLE BERHAMPUR. 3. THE CIT 4. THE CIT(A) 5. THE DR CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY.