M/s Grfcon Infrastructures,, Chandigarh v. JCIT,, Chandigarh

ITA 865/CHANDI/2009 | 2006-2007
Pronouncement Date: 18-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 86521514 RSA 2009
Assessee PAN AAAAG2509B
Bench Chandigarh
Appeal Number ITA 865/CHANDI/2009
Duration Of Justice 11 month(s) 25 day(s)
Appellant M/s Grfcon Infrastructures,, Chandigarh
Respondent JCIT,, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 18-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 18-08-2010
Date Of Final Hearing 05-05-2010
Next Hearing Date 05-05-2010
Assessment Year 2006-2007
Appeal Filed On 24-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI G.S.PANNU ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 818/CHD/2009 ASSESSMENT YEAR: 2005-06 SHRI GURINDER PAL SINGH VS. THE ADDL CIT CHANDIGARH RANGE-III CHANDIGARH PAN NO.ACNPS7888M ITA NO. 819/CHD/2009 ASSESSMENT YEAR: 2006-07 SHRI GURINDER PAL SINGH VS. THE ACIT CHANDIGARH CIRCLE 5(1) CHANDIGARH PAN NO.ACNPS7888M & ITA NO. 865/CHD/2009 ASSESSMENT YEAR: 2006-07 M/S GRFCON INFRASTRUCTURES VS. THE JCIT RANGE-5 CHANDIGARH CHANDIGARH PAN NO. AAAAG2509B (APPELLANT) (RESPONDENT) APPELLANT BY : SH ATUL MANDHAR RESPONDENT BY: SHRI S.S.KENWAL ORDER PER SUSHMA CHOWLA JM OUT OF THESE THREE APPEALS TWO ARE BY THE SAME AS SESSEE IN HIS INDIVIDUAL CAPACITY AND ANOTHER BY THE PARTNERSHIP FIRM IN WHICH HE IS PARTNER ARE AGAINST DIFFERENT ORDERS OF CIT(A) CH ANDIGARH DATED 10.6.2009 & 6.7.2009 RELATING TO ASSESSMENT YEARS 2 005-06 & 2006-07 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF TH E I.T. ACT. ALL THESE 2 APPEALS HAVING IDENTICAL GROUNDS OF APPEAL WERE HEA RD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. 2. COMMON GROUNDS OF APPEAL RAISED IN ALL THE APPEA LS ARE AS UNDER:- 1. THAT THE ORDER OF THE LEARNED CIT(A) CHANDIGARH I S DEFECTIVE BOTH IN LAW AND FACTS OF THE CASE. 2. THAT THE LEARNED CIT(A) CHANDIGARH HAS NOT BEEN JUSTIFIED IN ENHANCING THE INCOME BY APPLYING NET P ROFIT RATE OF 12%. 3. THAT THE LEARNED CIT(A) CHANDIGARH HAS NOT BEEN JUSTIFIED IN IGNORING CIRCULAR ISSUED BY CBDT WHICH IS BINDING ON THE INCOME TAX DEPARTMENT. 4. THAT THE LEARNED CIT(A) CHANDIGARH HAS NOT BEEN JUSTIFIED IN NOT ALLOWING DEDUCTION ON ACCOUNT OF DEPRECIATION INTEREST AND OTHER EXPENSE DIRECTLY R ELATED TO GOVERNMENT DEPARTMENT WHILE APPLYING PROFIT RATE AS THERE IS NO ELEMENT OF PROFIT. 3. THE ASSESSEE IN ASSESSMENT YEAR 2006-07 (ITA NO. 819/CHD/2009) HAS RAISED ANOTHER GROUND BY WAY OF GROUND NO.5 5. THAT THE LEARNED CIT(A) CHANDIGARH HAS NOT BEEN JUSTIFIED IN NOT REDUCING PAYMENT MADE TO SUB- CONTRACTOR FROM GROSS RECEIPTS WHILE APPLYING PROFI T RATE. 4. THE GROUND NO.1 RAISED BY THE ASSESSEE BEING GEN ERAL IS DISMISSED. 5. THE FACTS IN THE PRESENT APPEAL ARE IDENTICAL H OWEVER FOR ADJUDICATING THE ISSUE A REFERENCE IS BEING MADE TO THE FACTS IN ITA NO.818/CHANDI/2009. THE BRIEF FACTS OF THE CASE AR E THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF ROAD CONSTRUCTION I.E. M AINLY LAYING AND RELAYING OF METAL ROADS. THE SAID BUSINESS WAS CA RRIED ON UNDER THE NAME AND STYLE OF M/S RAJINDER SINGH & CO. IN THE S TATE OF M.P. AND UTRANCHAL. IN EARLIER YEARS THE WORK WAS BEING CA RRIED OUT IN THE STATE OF 3 PUNJAB AND DUE TO POLITICAL REASONS THE BUSINESS H AD TO BE SHIFTED OUT OF PUNJAB. DURING THE COURSE OF ASSESSMENT PROCEEDING S THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT ALONG WITH BI LLS AND VOUCHERS. HOWEVER THE ASSESSEE FAILED TO PRODUCE THE BOOKS O F ACCOUNT AND OTHER DOCUMENTS BEFORE THE ASSESSING OFFICER. THE ASSESS ING OFFICER COMPARED TURN OVER AND THE NET PROFIT DECLARED BY THE ASSESS EE WITH THE COMPARATIVE FIGURES OF PRECEDING YEAR AND FOUND THAT THOUGH THE TURN OVER HAD INCREASED DURING THE YEAR AS COMPARED TO LAST YEAR BUT BOTH THE NET PROFIT AND NET PROFIT RATIO HAD DECLINED. THE ASSESSEE IN ASSESSMENT YEAR 2005-06 HAD DECLARED NP RATE OF 4.16 % AS AGAINST 5 .02% DECLARED IN THE PRECEDING YEAR. THE ASSESSEE EXPLAINED THAT DUE T O THE CHANGE IN PUNJAB GOVERNANCE THE WORKS ASSIGNED TO HIM HAD TO BE SUS PENDED AND HE HAD TAKEN CONTRACTS AT VERY LESS RATES IN THE STATE OF MADHYA PRADESH AND UTTARANCHAL. THE ASSESSING OFFICER REJECTED THE C ONTENTIONS OF THE ASSESSEE AS SIMILAR AMOUNT OF CONTRACT WORK WAS DON E IN THE STATE OF MADHYA PRADESH AND UTTARANCHAL DURING THE PRECEDING YEAR AS EVIDENT FROM THE TDS CERTIFICATES FILED BY THE ASSESSEE ALO NGWITH THE RETURN OF INCOME RELATING TO ASSESSMENT YEAR 2004-05. IN TH E ABSENCE OF THE BOOKS OF ACCOUNT THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 145(2) OF THE ACT AND APPLYING RATE OF 7% AS IN TH E PAST ON THE TOTAL WORK DONE AS REDUCED BY THE VALUE OF MATERIAL SUPPL IED BY THE DEPARTMENT BITUMEN PURCHASED FROM GOVERNMENT AGENC IES COMPUTED THE INCOME FOR THE YEAR. FURTHER THE ASSESSING OFFICE R ALSO INCLUDED A SUM OF RS. 14 73 170/- TO THE TURN OVER OF THE ASSESSEE ON ACCOUNT OF CHEQUES IN HAND AS REFLECTED IN ANNEXURE G TO THE BALANCE SHEET. THE CIT(A) IN APPEAL NOTED THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT IN M/S PRABHAT KUMAR IN ITA NO. 293 OF 2008 (DATE OF DECIS ION 14.11.2008) HAD UPHELD THE NET PROFIT RATE OF 12% IN CASE OF CONTRA CTORS WHO DID NOT 4 PRODUCE THE BOOKS OF ACCOUNTS AND AN ENHANCEMENT NO TICE U/S 251 (2) OF THE ACT WAS ISSUED TO THE ASSESSEE AS TO HIS PROPOS AL TO APPLY THE RATE OF 12% IN THE CASE OF THE ASSESSEE. THE CONTENTS OF THE SHOW CAUSE NOTICE ISSUED FROM TIME TO TIME AND THE REPLIES OF THE ASS ESSEE ARE INCORPORATED IN THE APPELLATE ORDER. THE CONTENTION OF THE LEA RNED AR FOR THE ASSESSEE WAS THAT THE RATIO OF THE JUDGMENT ARE NOT APPLICA BLE TO THE FACTS OF THE CASE AND RATE OF 7% MERITS TO BE APPLIED. THE LEA RNED AR PLACED RELIANCE ON THE PAST HISTORY OF THE CASE WHERE ALL UP TO DAT E ASSESSMENTS WAS FRAMED AT THE RATE OF 7% AND RELIANCE WAS ALSO PLAC ED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF RAJINDER SINGH IN ITA NO. 2 53/CHANDI/2008 RELATING TO ASSESSMENT YEAR 1998-99 WHERE THE TRIB UNAL HAD UPHELD THE RATE OF 8%. THE CIT(A) ALSO NOTED THAT SURVEY U/S 133A OF THE INCOME TAX ACT WAS CONDUCTED ON THE PREMISES OF THE ASSESS EE ON 12.3.2009 AND IT WAS FOUND DURING THE SURVEY OPERATIONS THAT THE BOOKS OF ACCOUNT OF ANY OF THE YEARS WERE NOT AVAILABLE AT THE BUSINESS PREMISES. THE ASSESSEE OFFERED RS. 1.30 CRORES FOR TAXATION AS AD DITIONAL INCOME FOR ASSESSMENT YEAR 2009-10. THE EXPLANATION OF THE ASS ESSEE WAS THAT THE SAID AMOUNT WAS SURRENDERED TO BUY PEACE OF MIND AN D IT INCLUDED UNEXPLAINED INCOME PERTAINING TO PREVIOUS YEAR ON A CCOUNT OF UNEXPLAINED ADVANCES TO THE SUPPLIERS. THE EXPLA NATION OF THE ASSESSEE WAS THAT FOR THE PAST MANY YEARS THE INCOME HAD BEE N ASSESSED ON THE BASIS OF RATE ON NET RECEIPT AND LAST YEAR NET PROF IT RATE OF 7% WAS APPLIED. THE ASSESSING OFFICER VIDE REPORT DATED 29.4.2009 STATED THE ASSESSEE TO HAVE PRODUCED THE LEDGER CASH BOOK AND JOURNAL FOR THE ASSESSMENT YEAR 2005-06 AND 2006-07 BUT COULD NOT SUBMIT THE VOUCHERS FOR EXPENSES EXCEPT FOR FEW VOUCHERS FOR DIESEL AND LUBRICANTS. IN REPLY THE ASSESSEE EXPLAINED THAT THE TOTAL VOUCHERS FOR EXPENSES DEBITED TO P&L ACCOUNT WERE NOT AVAILABLE. THE ASSESSEE HAD A GREED TO THE 5 COMPLETION OF ASSESSMENT ON RATE BASIS AND NO APPEA L WAS FILED AGAINST THE ESTIMATION OF INCOME EXCEPT CHALLENGING THE RAT E TO BE APPLIED. THE CIT(A) OBSERVED THAT THE BOOKS OF ACCOUNT STATED TO BE MAINTAINED BY THE ASSESSEE WERE NOT RELIABLE AND HENCE NET PROFIT RAT E IS TO BE APPLIED. THE CIT(A) APPLYING THE RATIO LAID DOWN BY THE JURISDIC TIONAL HIGH COURT IN M/S PRABHAT KUMAR (ITA NO.293 OF 2008) DATE OF DECI SION 14.11.2008 WAS OF THE VIEW THAT RATE OF 12% IS TO BE APPLIED O N GROSS RECEIPTS AFTER EXCLUDING COST OF MATERIAL SUPPLIED BY THE DEPARTME NT AND NO FURTHER DEDUCTION IS TO BE ALLOWED. THE CIT(A) ACCORDINGL Y ENHANCED THE INCOME FOR ASSESSMENT YEARS 2005-06 AND 2006-07. THE CIT(A) FURTHER HELD THAT THE ASSESSEE IS NOT ENTITLED TO THE BENEF IT OF DEPRECIATION AGAINST THE INCOME ESTIMATED BY APPLYING A NET PROFIT RATE. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE TRIBUNAL IN SHIVAM CO NSTRUCTION COMPANY (ITA NO.383 AND 384/CHANDI/2004 ORDER DATED 30.8.2 006) WHEREIN IT HAS BEEN HELD THAT THE ALLOWANCE OF DEPRECIATION IS NOT TO BE GIVEN AS PER THE MANDATE OF THE LEGISLATURE. THE CLAIM OF THE ASSESSEE OF SURRENDER OF ADDITIONAL INCOME IN THE SUCCEEDING YEAR ON THE BAS IS OF SURVEY WAS REJECTED BY THE CIT(A) AS THE ASSESSEE HAD DECLARED THE INCOME FOR THE FINANCIAL YEAR 2008-09 AND NOT FOR THE EARLIER YEAR S. ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 6. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE WAS A ROAD CONTRACTOR AND THERE IS NO MERIT IN APPLYING T HE RATE APPLIED IN THE CASE OF A CIVIL CONTRACTOR. THE LD. AR FOR THE ASS ESSEE FURTHER POINTED OUT THAT THE CIT(A) HAS FAILED TO POINT OUT ANY COM PARABLE CASE OF ROAD CONTRACTOR. THE PLEA OF THE LD. AR FOR THE ASSESS EE WAS THAT UNDER THE SERVICE TAX ACT THERE IS A DIFFERENTIATION BETWEEN CIVIL AND ROAD CONTRACTOR. THE NEXT PLEA OF THE ASSESSEE WAS THAT THE BUSINESS UNDER THE 6 NAME & STYLE M/S RAJINDER SINGH & CO. WAS BEING CAR RIED ON BY THE FATHER OF ASSESSEE FOR THE PAST SEVERAL YEARS AND R ATE OF 8% WAS APPLIED. EVEN IN THE ASSESSMENT ORDERS PASSED U/S 143(3) OF THE ACT RELATING TO ASSESSMENT YEARS 2003-04 & 2004-05 RATE OF 7% WAS APPLIED. IT WAS FURTHER POINTED OUT THAT THE TRIBUNAL IN ASSESSMENT YEARS 1996-97 & 1998- 99 HAD UPHELD APPLICATION OF RATE OF 8%. THE LD. A R FOR THE ASSESSEE POINTED OUT THAT AS THE BUSINESS CONDITIONS WERE SA ME AND THE ASSESSEE WAS WORKING FOR THE SAME GOVT. AGENCIES THERE WAS NO REASON FOR ENHANCEMENT. THE LD. DR FOR THE REVENUE PLACED REL IANCE ON THE ORDER OF CIT(A) AND THE RATIO LAID DOWN BY THE HON'BLE P UNJAB & HARYANA HIGH COURT IN THE CASE OF PRABHAT KUMAR (SUPRA). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE IS CARRYING ON THE BUSINESS OF ROAD CONTRA CTOR. DUE TO NON PRODUCTION OF BOOKS OF ACCOUNT BY THE ASSESSEE TH E SAME WERE REJECTED BY THE ASSESSING OFFICER AND A NET PROFIT RATE OF 7 % WAS APPLIED TO DETERMINE THE INCOME FOR THE YEAR. THE CIT(A) ENHA NCED THE SAID RATE TO 12% TO DETERMINE THE INCOME IN THE HANDS OF THE ASS ESSEE. THE ASSESSEE IS IN APPEAL AGAINST THE RATE TO BE APPLIED FOR WOR KING OUT THE INCOME FOR THE YEAR. THE ASSESSEE CLAIMS THAT THE BUSINESS WA S BEING CARRIED OUT BY THE FATHER OF THE ASSESSEE IN SOLE PROPRIETORSHIP I N THE EARLIER YEARS AND ON HIS DEATH THE SAME BUSINESS HAS BEEN TAKEN OVER BY THE ASSESSEE. THE ASSESSEE IS CARRYING ON THE BUSINESS OF ROAD CONTRA CTOR AND CLAIMS TO BE DEALING WITH THE SAME GOVERNMENT AGENCIES AS HIS FA THER. WE FIND THAT IN THE CASE OF THE FATHER OF THE ASSESSEE A NET PROFI T RATE OF 8% ON NET RECEIPTS FROM CONTRACT I.E. AFTER DEDUCTION THE COS T OF MATERIAL SUPPLIED BY THE DEPARTMENT INCLUSIVE OF DEPRECIATION WAS APPLIE D BY THE TRIBUNAL IN 7 ITA NO.241/CHANDI/2000 RELATING TO ASSESSMENT YEAR 1996-97 BY ORDER DATED 23.4.2004. SIMILAR RATE WAS APPLIED IN ASSES SMENT YEAR 1998-99 BY THE TRIBUNAL IN ITA NO. 253/CHANDI/2002. THER EAFTER NET PROFIT RATE OF 7% WAS APPLIED BY THE ASSESSING OFFICER IN ASSES SMENT YEARS 2003-04 AND 2004-05. NO OTHER DEDUCTION ON ACCOUNT OF ANY OTHER EXPENDITURE WAS ALLOWED TO THE ASSESSEE EXCEPT THE COST OF MAT ERIAL SUPPLIED BY THE GOVERNMENT AGENCIES. 8. THE ISSUE RAISED IN THE PRESENT GROUNDS OF APPEA L IS AGAINST THE APPLICATION OF RATE TO BE APPLIED TO THE NET CONTRA CT RECEIPTS FOR DETERMINING THE INCOME OF THE ASSESSEE. THE ASSESS ING OFFICER APPLIED A NET PROFIT RATE OF 7% WHICH WAS ENHANCED TO 12% BY THE CIT(A) FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S PARBHAT KUMAR IN ITA NO.29 3 OF 2008 (DATE OF DECISION 14.11.2008). THE CIT(A) ALSO NOTED THAT T HE HON'BLE PUNJAB & HARYANA HIGH COURT IN M/S SHIVAM CONSTRUCTION (ITA NO. 167 OF 2007) DATED 7.5.2007 HAD UPHELD APPLICATION OF NET PROFIT RATE OF 10%. THE LEARNED AR POINTED OUT THAT IN THE FACTS OF THE CAS E BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT THE ASSESSEE WAS ENGAGE D IN THE BUSINESS OF CIVIL CONSTRUCTION WHEREAS THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ROAD CONSTRUCTION AND THE PROFITS EARNED IN THE TWO LINE S OF BUSINESS ARE DIFFERENT. WE ARE NOT IN CONFORMITY WITH THE ORDE R OF CIT(A) THAT IN EACH CASE OF CIVIL CONSTRUCTION A FLAT RATE OF 12% IS T O BE APPLIED. APPLICATION OF DIFFERENT NET PROFIT RATES TO COMPUTE INCOME HA VE BEEN UPHELD BY THE HON'BLE PUNJAB & HARYANA HIGH COURT AS IN M/S PRAB HAT KUMAR (SUPRA) RATE OF 12% HAS BEEN UPHELD WHEREAS THE JURISDICTIO NAL HIGH COURT IN M/S SHIVAM CONSTRUCTION (SUPRA) HAD UPHELD THE APPLICAT ION OF NET PROFIT RATE OF 10%. WE FURTHER FIND THAT THE HON'BLE PUNJAB & HARYANA H IGH COURT 8 IN RAJA RAM CONTRACTORS VS. CIT IN ITA NO. 689 OF 2009 DATE OF DECISION 7.4.2010 HAS UPHELD APPLICATION OF NET PR OFIT RATE OF 10% AS NET PROFIT RATE. IT HAS BEEN FURTHER LAID DOWN BY THE H ON'BLE JURISDICTIONAL HIGH COURT THAT WHERE THE BOOKS OF ACCOUNT HAVE BEE N REJECTED THE ESTIMATION OF INCOME BY APPLYING OF FLAT RATE INHER ENTLY INVOLVES AN ELEMENT OF SUBJECTIVITY . SIMILAR ISSUE OF ROAD CONTRACTOR AROSE BEFORE THE TRIBUNAL IN KUMAR BUILDERS VS. ACIT LUDHIANA (ITA NO.416/CHD/2010) WHEREIN ALSO THE ISSUE RAISED WAS THE APPLICATION O F NET PROFIT RATE. THE ASSESSING OFFICER AND CIT(A) HAD APPLIED NET PROFIT RATE OF 12% TO THE GROSS RECEIPTS TO DETERMINE THE INCOME FOR THE YEAR FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COUR T IN M/S PRABHAT KUMAR (SUPRA). THE TRIBUNAL IN THE CASE OF KUMAR B UILDERS (ITA NO.416/CHD/2010) VIDE ORDER DATED 30.6.2010 HAD DIR ECTED THE ASSESSING OFFICER TO RECOMPUTE THE INCOME AFTER APPLYING NET PROFIT RATE OF 10%. 9. THE NET PROFIT RATE TO THE APPLIED FOR COMPUTING THE INCOME OF THE ASSESSEE IS THUS DEPENDENT ON THE FACTS OF EACH CAS E. WE FIND THAT THE TRIBUNAL IN THE CASE OF THE FATHER OF THE ASSESSEE IN EARLIER YEARS UP TO ASSESSMENT YEAR 1998-99 HAD DIRECTED APPLICATION OF RATE OF 8% ON THE GROSS RECEIPTS LESS THE VALUE OF MATERIAL SUPPLIED BY THE GOVERNMENT AGENCIES. AS PER THE LEARNED COUNSEL FOR THE ASSES SEE NO DEDUCTION WAS ALLOWED ON ACCOUNT OF THE BITUMEN PURCHASED AND VAL UE OF WORK CONTRACT WHICH WAS SUB CONTRACTED. THE ASSESSING OFFICER IN ASSESSMENT YEARS 2003-04 & 2004-05 HAD COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AND APPLIED THE RATE OF 7% TO THE RECEIPTS TO DETER MINE THE INCOME OF THE RESPECTIVE YEARS. THE ASSESSING OFFICER IN ASSESS MENT YEARS 2005-06 AND 2006-07 HAD APPLIED THE NET PROFIT RATE OF 7% WHIC H WAS ENHANCED TO 12% 9 BY THE CIT(A). THE ASSESSEE HAS FILED APPEAL BEFO RE US RELATING TO ASSESSMENT YEARS 2005-06 AND 2006-07 WHEREIN THE C IT(A) HAD ENHANCED THE RATE OF NET PROFIT AT 12% ON THE RECEI PTS LESS THE VALUE OF MATERIAL SUPPLIED BY THE DEPARTMENT. WE FIND NO ME RIT IN THE ORDER OF CIT(A) IN APPLYING NET PROFIT RATIO OF 12% WITHOUT BRINING ON RECORD ANY EVIDENCE TO PROVE THAT ASSESSEE HAS EARNED HIGHER P ROFITS THAN ADOPTED BY THE ASSESSING OFFICER. SIMILAR NET PROFIT RATES HA D BEEN APPLIED IN EARLIER YEARS TO DETERMINE THE INCOME OF THE ASSESSEE IN AS SESSMENTS COMPLETED U/S 143(3) OF THE ACT RELATING TO ASSESSMENT YEARS 2003-04 & 2004-05. IN THE ABSENCE OF ANY CONTRARY FINDINGS AND IN THE ENT IRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE SET ASIDE THE ORDER O F CIT(A) AND UPHOLD THE ORDER OF ASSESSING OFFICER IN DETERMINING THE I NCOME FOR THE YEAR UNDER APPEAL BY APPLYING THE NET PROFIT RATE OF 7% TO THE TOTAL CONTRACT RECEIPTS AS REDUCED BY THE AMOUNT OF MATERIAL SUPPL IED BY THE DEPARTMENT WHILE DETERMINING THE INCOME FOR THE YEARS UNDER AP PEAL WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT THAT NO FURTHER D EDUCTION ON ACCOUNT OF DEPRECIATION INTEREST AND OTHER EXPENSES INCLUDING THE PAYMENTS MADE TO THE SUB CONTRACTOR FROM GROSS RECEIPTS IS TO BE AL LOWED AS NO SUCH DEDUCTION WAS ALLOWED BY THE TRIBUNAL IN THE EARLIE R YEARS WHILE ESTIMATING THE INCOME IN THE HANDS OF THE ASSESSEE. 10. ACCORDINGLY WE UPHOLD THE ORDER OF ASSESSING O FFICER IN APPLYING NET PROFIT RATE OF 7% TO THE RECEIPTS LESS COST OF MATERIAL SUPPLIED BY THE GOVERNMENT AND BITUMEN PURCHASED FROM GOVERNMENT AG ENCIES. AND ALLOW THE GROUND NOS. 2 AND 3 RAISED BY THE ASSESSE E IN ASSESSMENT YEARS 2005-06 AND 2006-07 AND GROUND NO. 4 IN ASSESSMENT YEAR 2005-06 AND GROUND NOS. 4 & 5 IN ASSESSMENT YEAR 2006-07 ARE DI SMISSED. 10 11. THE ASSESSEE IN ITA NO.865/CHD/2009 IS A PARTNE RSHIP FIRM IN WHICH SHRI GURINDER PAL SINGH (THE ASSESSEE IN THE ABOVE APPEALS) IS PARTNER TO THE EXTENT OF 90% SHARE. THE FACTS OF T HE CASE ARE IDENTICAL TO THE FACTS IN ITA NOS. 818 & 819/CHD/2009. THE ASSE SSING OFFICER IN THE PRESENT CASE HAD APPLIED NET PROFIT RATE OF 8% TO T HE GROSS RECEIPTS WHICH WAS ENHANCED TO 12% BY THE CIT(A) FOLLOWING THE ID ENTICAL NATURE OF WORK BEING DONE BY THE ASSESSEE AND SHRI GURINDER P AL SINGH. IN LINE WITH OUR REASONING IN THE PARAS HEREIN ABOVE WE SE T ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE INCOME AFTER APPLYING NET PROFIT RATE OF 8% TO THE CONTRACT RECE IPTS LESS COST OF MATERIAL SUPPLIED BY THE GOVERNMENT AND PURCHASES MADE FROM GOVERNMENT AGENCIES. IN THE FACTS OF THE CASE NO FURTHER DE DUCTION IS ALLOWABLE ON ACCOUNT OF DEPRECIATION INTEREST AND OTHER EXPENSE S ONCE THE INCOME IS DETERMINED BY APPLYING NET PROFIT RATE TO THE RECEI PTS. THE GROUND NO.2 RAISED BY THE ASSESSEE IS THUS ALLOWED AND GROUND N OS. 4 & 5 ARE DISMISSED. 12. THE ASSESSEE IN ASSESSMENT YEAR 2006-07 (ITA NO .865/CHD/2009) HAS RAISED ANOTHER GROUND BY WAY OF GROUND NO.3. 3. THAT THE LEARNED CIT(A) CHANDIGARH HAS NOT BEEN JUSTIFIED IN PASSING AN EX-PARTE ORDER WITHOUT GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 13. IN VIEW OF OUR DECISION AGAINST THE QUANTUM ADD ITION AND IN UPHOLDING THE ORDER OF ASSESSING OFFICER IN APPLYIN G NET PROFIT RATE OF 8% TO THE CONTRACT RECEIPTS WE DISMISS THE GROUND NO. 3 RAISED BY THE ASSESSEE IN ITA NO. 865/CHD/2005. 11 14. IN THE RESULT THE THREE APPEALS IN ITA NOS. 81 8 819 & 865/CHD/2009 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF AUGUST 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 TH AUGUST 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR