ITO 25(3)(3), MUMBAI v. AMRUTHREDDY K. KODMANLLI, MUMBAI

ITA 677/MUM/2009 | 2001-2002
Pronouncement Date: 30-04-2010 | Result: Allowed

Appeal Details

RSA Number 67719914 RSA 2009
Assessee PAN AABPD0448G
Bench Mumbai
Appeal Number ITA 677/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 27 day(s)
Appellant ITO 25(3)(3), MUMBAI
Respondent AMRUTHREDDY K. KODMANLLI, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-04-2010
Date Of Final Hearing 19-04-2010
Next Hearing Date 19-04-2010
Assessment Year 2001-2002
Appeal Filed On 02-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI. BEFORE SHRI R.V. EASWAR SENIOR VICE-PRESIDENT AND SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER. I.T.A. NO. 6 77/MUM/2009. ASSESSMENT YEARS : 2001-02. THE INCOME-TAX OFFICER AMRUTHRE DDY K. KODMNALLI 25(3)(3) MUMBAI. VS. PROP. M /S BHAGYAVATI CONSTRUCTION 102 AMI APARTMENT ASHA NAGAR THAKUR COMPLEX KANDIVALI (E) MUMBAI 400 101. PAN AABPD0448G APPELLANT RESPONDENT APPELLANT BY : SHRI SANDEEP DAHIYA. RESPONDENT BY : NONE. O R D E R PER J. SUDHAKAR REDDY A.M. THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED A GAINST THE ORDER OF THE CIT(APPEALS)-XXV MUMBAI DATED 18 TH NOV. 2008 FOR THE ASSESSMENT YEAR 2001-02. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE ISSUAL OF NOTICE BY RPAD. THERE IS NO REQUEST FOR ADJOURNMENT NOR HAS ANY COUNSEL FILED A VAKALAT ON BEHALF OF THE ASSESSEE. EARLIER THE CASE HAS COME UP BEFORE THIS BENCH ON 30-11-2009 AND 10-02-2 010. ON BOTH THESE OCCASIONS ALSO THOUGH NOTICES WERE ISSUED BY REGIS TERED POST THE ASSESSEE CHOSE NOT TO APPEAR. IN VIEW OF THE ABOVE WE ARE OF THE CONSIDERED OPINION THAT NO USEFUL PURPOSE WOULD BE SERVED BY ADJOURNING 2 THE MATTER. THUS WE DISPOSE OF THE REVENUES APPEAL EXPARTE QUA THE ASSESSEE ON MERITS AFTER HEARING THE LEARNED DR. 3. HEARD SHRI SANDEEP DAHIYA LEARNED DR. THE ASSE SSEE IS IN THE BUSINESS OF TELECOMMUNICATION CABLE LAYING DU CTING TRENCHING WHICH IS MAINLY LABOUR INTENSIVE. HE CARRIES ON HIS BUSINESS IN THE NAME AND STYLE OF M/S BHAGYAVANTI CONSTRUCTION CO. THE A SSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02 ON 31-10-2001 DECLARING A TOTAL INCOME OF RS.19 44 550/-. THE RET URN OF INCOME WAS ACCOMPANIED BY COMPUTATION OF TOTAL INCOME PROFIT & LOSS ACCOUNT AND BALANCE SHEET AS WELL AS AUDIT REPORT IN FORM 3CB/3 CD. THE CASE WAS SELECTED FOR SCRUTINY AND VARIOUS NOTICES WERE ISSU ED TO THE ASSESSEE. THERE WAS NO COMPLIANCE. THE ASSESSEES AR SUBMITTE D THAT RELEVANT BOOKS OF ACCOUNT/DOCUMENTS CANNOT BE PRODUCED AS TH EY WERE IN THE CUSTODY OF THE SALES TAX DEPARTMENT MUMBAI WHICH H AS IMPOUNDED THE SAME ON 16-01-2002. THE AO PROCEEDED TO COMPLETE TH E ASSESSMENT EXPARTE U/S 144 OF THE ACT ON 30-03-2004 AND ESTIMA TED THE NET PROFIT AT 8% OF THE TURNOVER BASED ON THE SUB PROVISIONS OF S ECTION 44AD FOR COMPUTING THE GAINS OF THE BUSINESS OF CIVIL CONTRA CT WORK. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST AP PELLATE AUTHORITY CONFIRMED THE ESTIMATION BY RELYING ON THE DECISIO N OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1992-9 3 AND 1993-94. AGGRIEVED WITH THIS ORDER OF THE FIRST APPELLATE AU THORITY DATED 30-11- 2004 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE IT AT. THE ITAT MUMBAI VIDE ITS ORDER IN ITA NO. 1200/MUM/2005 DATE D 29-09-2006 SET ASIDE THE ASSESSMENT TO THE FILE OF THE AO WITH THE DIRECTIONS WHICH ARE REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE : WE CONSIDER IT APPROPRIATE UNDER THE EXCEPTIONAL CIRCUMSTANCES THAT THE ASSESSEES BOOKS OF ACCOUNT HAVING ALSO BE ING BEEN 3 SUBJECTED TO TAX AUDIT COPY OF THE AUDIT REPORT HA VING BEEN FILED IN THE PAPER BOOKS BEFORE US AND THE GROSS RECEIPT S FROM CONTRACT WORKS BEING OF A SUBSTANTIAL AMOUNT OF RS.6.10 CROR ES THAT IT WOULD BE FIT TO SET ASIDE THE ASSESSMENT TO THE FIL E OF THE ASSESSING OFFICER WITH THE DIRECTIONS TO COMPLETE THE ASSESS MENT AFRESH AFFORDING THE ASSESSEE DUE OPPORTUNITY OF HEARING. THE ASSESSEE IS DIRECTED THAT THE RESPONSIBILITY IS ON IT TO COMPLY IN THE PROCEEDINGS BEFORE THE ASSESSING OFFICER UNDER THE FACTS IN IT S CASE. THEREAFTER THE AO ISSUED NOTICES TO THE CHANGED ADD RESS OF THE ASSESSEE WITHOUT ANY RESPONSE. THEREAFTER THE AO RECORDED TH AT THE ASSESSEE HAS NOTIFIED A FALSE ADDRESS. HE ALSO CAME TO A CONCLUS ION THAT THE SUBMISSION THAT THE BOOKS OF ACCOUNT ETC. ARE IN THE CUSTODY O F THE SALES TAX DEPARTMENT WAS FALSE AS THE ADDITIONAL COMMISSIONER OF SALES TAX INVESTIGATION-5 MUMBAI REPLIED VIDE HIS LETTER DAT ED 27-08-2007 THAT THE SAME WERE NOT IMPOUNDED BY HIM. THE AO AT PAGE 6 LI STED OUT THE NUMBER OF OPPORTUNITIES GIVEN TO THE ASSESSEE AND THEREAFTER ISSUED A SHOW CAUSE NOTICE ON 18-10-2007 TO THE ASSESSEE PRO POSING ESTIMATION OF THE GROSS PROFIT AT 8% OF THE TURNOVER. THE ASSESSE E RESPONDED BY RELYING ON THE ORDER OF THE TRIBUNAL IN THE CASE MR. CHATU RVEDI & FAMILY WHEREIN GROSS PROFIT WAS ESTIMATED AT 6%. THEREAFT ER ONE MORE OPPORTUNITY WAS GIVEN TO THE ASSESSEE AND AFTER CON SIDERING THE REPLY THE AO PROCEEDED TO COMPUTE THE INCOME AT 8% OF THE GRO SS TURNOVER BY APPLYING SECTION 44AD. THE ASSESSEE CARRIED THE MAT TER IN APPEAL. THE FIRST APPELLATE AUTHORITY IN HIS ORDER DATED 18-11- 2008 HELD THAT THE ASSESSEES ATTITUDE AT THE TIME OF ASSESSMENT PROCE EDINGS HAD BEEN NOT COOPERATIVE. SE HELD THAT THE PURCHASE REGISTER PU RCHASE BOOKS AND BANK BOOKS WERE NOT IMPOUNDED BY THE SALES TAX DEPARTMEN T ON 16-11-2002. SHE PRODUCED THE LIST OF BOOKS IMPOUNDED AT PAGE 5 OF HER ORDER. AFTER CONSIDERING THE FACT THAT OTHER BOOKS OF ACCOUNT WE RE NOT MAINTAINED BY THE ASSESSEE AND THE NET PROFIT RATE FOR VARIOUS Y EARS DIRECTED THE AO TO ESTIMATE THE PROFIT RATE AT 4.96%. SHE CONFIRMED AN ADDITION OF 4 RS.12 84 310/-. AGGRIEVED THE REVENUE IS IN APPEAL ON THE FOLLOWING GROUNDS : 1. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING TO ESTIMATE THE P ROFIT @ 4.96% AS AGAINST 8% ESTIMATED BY THE A.O. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN APPRECIATING THE FACTS OF T HE ORIGINAL ASSESSMENT IN THIS CASE FOR THE YEAR UNDER CONSIDER ATION COMPLETED AFTER REJECTING THE BOOKS OF ACCOUNTS AND THE NET PROFIT WAS ESTIMATED @ 8% AND LATER THE SAME WAS CONFIRMED BY THE LD. CIT(A) VIDE ORDER DATED 30.11. 2004. (C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING TO ESTIMATE THE N ET PROFIT @ 4.96% WITHOUT APPRECIATING THE FACTS THAT EVEN AT T HE TIME OF FRESH ASSESSMENT PROCEEDINGS AT THIS JUNCTURE ASSES SEE FAILED TO PRODUCE BOOKS OF ACCOUNTS. (D) ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN RESTRICTING THE NET PROFIT @ 4.96% BY COMPARING THE PROFIT RATIO WITH EARLIER TWO YEARS I .E. A.Y. 1998-99 AND 1999-2000 AND SUBSEQUENT TWO YEARS I.E. A.YRS. 2003-04 AND 2004-05 WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES INVOLVED IN THE PRESENT ASSESSMENT YE AR WHICH ARE ENTIRELY DIFFERENT AS COMPARED TO EARLIER AND S UBSEQUENT TWO YEARS. (E) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN APPRECIATING THE FACTS THAT IN ASSESSEES OWN CASE FOR A.YRS. 1992-93 AND 1993-94 THE HONBLE ITAT A BENCH MUMBAI IN ITS ORDER DIRECTE D THE REVENUE TO APPLY THE NET PROFIT @ 8% AS AGAINST 10% APPLIED BY THE A.O. AND 5% CONFIRMED BY THE LD. CIT(A). 4. WE HAVE HEARD MR. SANDEEP DAHIYA LEARNED DR. O N A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCE S OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF T HE AUTHORITIES BELOW WE HOLD AS FOLLOWS. 5. THE UNDISPUTED FACT IS THAT THE ASSESSEE HAS NO T MAINTAINED ALL THE REQUIRED RECORDS TO SUBSTANTIATE ITS CLAIM THAT THE PROFITS FOR THE 5 CURRENT YEAR 2001-02 WAS ONLY RS.18 38 323/-. IN FA CT HE HAS NOT BEEN COOPERATIVE WITH THE DEPARTMENT AT VARIOUS STAGES. THE BURDEN OF PROOF IS ON THE ASSESSEE AND HE HAS FAILED TO DISCHARGE THE SAME. THE ONLY ISSUE THAT REMAINS IS THE PERCENTAGE OF NET PROFIT THAT H AS TO BE APPLIED IN THIS CASE. THIS BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 3335/MUM/96 FOR THE ASSESSMENT YEAR 1992-93 AND ITA NO. 3048/MUM/97 FOR THE ASSESSMENT YEAR 1993-94 HAS UPH ELD THE ESTIMATION OF GROSS PROFIT AT 8%. RESPECTFULLY FOLLOWING THE S AME WE SET ASIDE THE ORDER OF THE FIRST APPELLATE AUTHORITY AND UPHOLD T HE ORDER OF THE AO ON THIS GROUND. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS ALL OWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF APRIL 2010. SD/- SD/- (R.V. EASWAR) (J. SUDHAKAR REDDY) SENIOR VICE-PRESIDENT. ACCOUNTANT MEMBER. MUMBAI DATED : 30 TH APRIL 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR A-BENCH. (TRUE COPY) BY ORDER ASSTT. REGISTRAR ITAT MUMBAI BENCHES MUMBAI.