Appeal details
Counselvise Citation
[2010] 122 COUNSELVISE.COM (IT) 4919 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
8 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
25-06-2010
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
G
Next Hearing Date
23-06-2010
Assessment Year
2002-2003
Appeal Filed On
08-10-2009
Judgement Text
ITA NO. 978/DEL/2008 & CO NO. 340/DEL/09 A.Y. 2002-03 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 978/DEL/2008 A.Y. : 2002-03 INCOME TAX OFFICER, WARD-2, VS. M/S SHIV SHANKAR C ONSTRUCTION CO. D-29&30, INDUSTRIAL AREA, C/O S.K. MONGA & ASSOCIA TES, INDUSTRIAL AREA, HARIDWAR BIRLA ROAD, P.O. BOX N O. 41, (UTTRAKHAND) HARIDWAR (UTTRAKHAND) (PAN: AAFFS 3671 L) AND C.O. NO. 340/DEL/2009 (I.TA. NO. 978/DEL/2008) A.Y. 2002-03 M/S SHIV SHANKAR CONSTRUCTION CO. VS. INCOME TAX O FFICER, WARD-2, C/O S.K. MONGA & ASSOCIATES, D-29&30, INDUSTRIAL AR EA, BIRLA ROAD, P.O. BOX 41, INDUSTRIAL AREA, HARID WAR HARIDWAR (UTTRAKHAND) (UTTRAKHAND) (PAN: AAFFS 3671 L) [APPELLANT] (RESPONDENT) DEPARTMENT BY : MRS. LEENA SRIVASTAVA, DR ASSESSEE BY : SHRI S.K. MONGA, ADVOCATE PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE EMANATE OUT OF ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 20.12.2007 PERTAINING TO ASSESSMENT YEAR 2002-03. ITA NO. 978/DEL/2008 & CO NO. 340/DEL/09 A.Y. 2002-03 2 REVENUES APPEAL 2. THE GROUNDS RAISED READ AS UNDER:- THAT THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FAC TS IN ESTIMATING THE INCOME BY THE APPLICATION OF PROFIT RATE WHEREAS TH E ASSESSING OFFICER MADE VARIOUS ADDITIONS BY FOLLOWING THE PROVISIONS OF SEC. 68, 69, & 69A ETC., THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACTS I N APPLYING THE NET PROFIT RATE OF 4% ON THE CONTRACTUAL RECEIPTS OF RS. 3,42, 84,435/-. 3. THE ASESSEE IN THIS CASE IS A FIRM CARRYING ON B USINESS AS A CIVIL CONTRACTOR. IT FILED ITS RETURN OF INCOME DECLARING INCOME OF RS. 1,79,790/-. ASSESSING OFFICER OBSERVED THAT THE BOOKS PROFITS DECLARED BY THE AS SESSEE AFTER DEDUCTING SALARY AND INTEREST TO PARTNERS COMES TO RS. 1.78% WHICH I S VERY LOW. ASSESSING OFFICER EXAMINED THE BOOKS AND RECORDS. HE FOUND THAT ASSES SEE HAS SHOWN LABOUR PAYMENTS TO THE EXTENT OF RS. 1,92,90,811/- WHICH WERE NOT FULLY VERIFIABLE. ASSESSING OFFICER DISALLOWED A SUM OF RS. 16,34,82 7/- IN THIS CONNECTION. ASSESSING OFFICER FURTHER DISALLOWED A SUM OF RS. 2,33,673/- OUT OF DIESEL EXPENSES CLAIMED BY THE ASSESSEE. ASSESSING OFFIC ER FURTHER NOTED THAT ASSESSEE HAS DEBITED RS. 64,185/- AS PROVISION OF INCOME TA X. ASSESSEE FILED REVISED RETURN AND PAID TAXES. ASSESSING OFFICER HELD TH AT SINCE THE RETURN WAS REVISED BY THE ASSESSEE ONLY AFTER RECEIVING A LETTER, THE ASSESSING OFFICER ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ASSESSING OFFI CER FURTHER NOTED THAT ASSESSEE HAS SHOWN RS. 9 LACS PAYMENT UNDER THE HEA D LABOUR. HOWEVER, BANK STATEMENT REVEALED THAT RS. 8 LACS ONLY WAS WITHDRA WN FROM CHEQUES. HENCE ASSESSING OFFICER HELD THAT ASSESSEE HAS FAILED TO ADDUCE ANY PLAUSIBLE EXPLANATION IN THIS REGARD. HENCE HE ADDED RS. 1 LAKH TO THE INCOME OF THE ITA NO. 978/DEL/2008 & CO NO. 340/DEL/09 A.Y. 2002-03 3 ASSESSEE IN THIS REGARD. ASSESSING OFFICER FURT HER FOUND THAT ASSESSEE HAD RECEIVED A SUM OF RS. 1,50,000/- ON 28.9.2001 THROU GH CHEQUE NO. 82 OF INDIAN OVERSEAS BANK. HOWEVER ASSESSING OFFICER FOUND I N THE BANK STATEMENT THAT THERE WAS NO SUCH ENTRY. ASSESSEE EXPLAINED THA T THIS WAS A CHEQUE ISSUED TO M/S GURU NANAK BRICK FIELD WHICH WAS RETURNED BACK. HOWEVER, ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CONTENTION BY HOLDIN G THAT THE CASH BOOK DOES NOT REVEAL ANY ENTRY SHOWING OF ISSUE OF CHEQUE TO THE ABOVE PARTY. HE ADDED THIS AMOUNT ALSO AS UNEXPLAINED CASH CREDIT U/S 68 OF TH E IT ACT. ASSESSING OFFICER FURTHER FOUND THAT BANK STATEMENT OF BANK OF BARODA HAD SHOWN WITHDRAWAL OF RS. 4,50,000/- THROUGH SELF-CHEQUES, BUT IN CASH BO OK ONLY RS. 90,000/- WAS ENTERED WHEN THE SAME WAS POINTED OUT, ASSESSEE ACC EPTED THAT IT WAS A MISTAKE. ASSESSING OFFICER ALSO ADDED THIS DIFFERENCE OF RS . 3,60,000/- AS UNEXPLAINED MONEY U/S 69 OF THE IT ACT. SIMILARLY, ASSESSING OFFICER FOUND DEPOSITS OF RS. 1,50,000/- THROUGH CHEQUE IN INDIAN OVERSEAS B ANK WHEREAS THE BANK STATEMENT REVEALED ENTRY OF RS. 15,000/- ONLY. A SSESSEE COULD NOT SATISFACTORILY EXPLAINED THIS. HENCE, ASSESSING OFFICER ADDED THE DIFFERENCE AS UNEXPLAINED CASH CREDIT U/S 69 OF THE IT ACT. ACCORDINGLY, ASSESSING OFFICER MADE THE TOTAL ADDITION OF RS. 26,77,685/- 4. AGAINST THE ABOVE ORDER THE ASSESSEE APPEALED B EFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). LD. COMMISS IONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE ASSESSEES SUBMISSI ONS HELD AS UNDER:- I HAVE GONE THROUGH THE ORDER OF THE ASSESSING OFF ICER AND THE SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE VERY CAREFULL Y. THE APPELLANT DURING THE COURSE OF APPEAL PROCEEDINGS HAS SUBMITTED COPY OF THE CONTRACTS AND THE TENDER DOCUMENTS. THE APPELLANT FIRM HAS TAKE N LARGE NUMBER OF ITA NO. 978/DEL/2008 & CO NO. 340/DEL/09 A.Y. 2002-03 4 CONTRACTS AND MOST OF THESE CONTRACTS ARE LABOUR IN TENSIVE. THE APPELLANT HAS FURTHER SUBMITTED THAT LABOUR IS ORGANIZED THRO UGH THE THEKADARS AND PAYMENT IS MADE TO THE THEKADARS EVERY FORTNIGHT. PRIMA FACIE PERUSAL OF THE LABOUR REGISTER SHOW CERTAIN DISCREPANCIES AND THIS DOES NOT RULE OUT THE POSSIBILITY OF APPELLANT INFLATING THE EXPENSES UNDER THE HEAD LABOUR PAYMENTS. THE APPELLANT HAS TRIED TO EXPLAIN TH E DISCREPANCIES SUCH AS DISCREPANCY IN THE PAYMENTS MADE TO KISSAN FILLING STATION AND THE PAYMENT CONFIRMED BY THAT PARTY, DISCREPANCY IN TH E BANK ACCOUNT OF INDIAN OVERSEAS BANK AND BANK OF BARODA. THE DISC REPANCY OF WITHDRAWING RS. 4,50,000/- THROUGH SELF CHEQUE FROM INDIAN OVER SEAS BANK BUT ACCOUNTING ONLY RS. 90,000/- IN THE CASH BOOK CERTA INLY LEAD TO THE CONCLUSION THAT BOOKS HAVE NOT BEEN MAINTAINED PRO PERLY AND THESE CANNOT BE RELIED TO ARRIVE AT THE CORRECT PROFIT O F THE APPELLANT. WITH SUCH TYPE OF ERROR TRIAL BALANCE WILL NOT TALLY. UNDER T HE CIRCUMSTANCES, THE MOST REASONABLE VIEW, IN MY OPINION, WILL BE THE ESTIMAT E THE INCOME TAKING INTO ACCOUNT THE NATURE OF CONTRACT, PAST HISTORY OF TH E CASE AND THE FACT THAT THIS WAS THE FIRST YEAR IN WHICH APPELLANT GOT LARG E NUMBER OF CONTRACTS. THE APPELLANT WAS ASKED TO GIVE THE DETAILS OF PRO FIT DECLARED IN THE PAST YEARS AND THE SAME IS REPRODUCED AS UNDER:- A.Y. 2001-02 2002-03 (UNDER APPEAL) 2003-04 2004-05 GROSS RECEIPTS 2597265 34280435 13788330 2760682 NET PROFIT INCLUDING I.T. 15234 235335 103430 28842 N.P. RATE 0.59% 0.69% 1.75% 1.05% ADDITION MADE BY ASSESSING OFFICER ACCEPTED 2677685 ACCEPTED ACCEPTED TAKING INTO ACCOUNT THE VARIOUS DISCREPANCIES IN T HE ACCOUNT BOOKS AND THE FACT THAT MOST OF THE CONTRACTS DURING THE PERIOD U NDER CONSIDERATION WERE LABOUR INTENSIVE IN WHICH EXCAVATION OF MURRAM WAS INVOLVED, IT WILL BE FAIR ITA NO. 978/DEL/2008 & CO NO. 340/DEL/09 A.Y. 2002-03 5 AND REASONABLE IN MY OPINION, IF THE NET PROFIT I S ESTIMATED AT 4% OF THE GROSS RECEIPTS OF RS. 3,42,84,435/-. IT IS OBSERVE D HERE THAT APPELLANT HAD OF ITS OWN INCLUDED INCOME TAX PAID IN THE P&L ACCO UNT RS. 64,185/- AND PAID TAXES THEREON. THE ASSESSING OFFICER AFTER WO RKING OUT THE NET PROFIT IS DIRECTED TO ALLOW THE INTEREST AND SALARY PAID, AS PER LAW. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT ASSESSING OFFICER IN THIS CASE HAS MADE THE ADDITI ON BY FINDING CERTAIN DISCREPANCIES IN THE BOOKS OF ACCOUNTS MAINTAINED B Y THE ASSESSEE. A NUMBER OF DISCREPANCIES WERE WITH REGARD TO ENTRY IN THE AS SESSEES BOOKS OF ACCOUNT AS AGAINST THE ENTRIES IN THE BANK STATEMENT. THE DI SCREPANCIES WERE ALSO FOUND IN THE BOOKING OF LABOUR PAYMENT AND SUPPORTING THEREO F. IN OUR CONSIDERED OPINION, FINDING MISTAKES IN THESE ASPECTS OF BOOK KEEPING A ND MAKING ADDITION FOR THESE CANNOT LEAD TO CORRECT COMPUTATION OF TAXABLE INCOM E. 6.1 UNDER THESE CIRCUMSTANCES, WE FIND THAT LD. COM MISSIONER OF INCOME TAX (APPEALS)S CONCLUSION THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT PROPERLY MAINTAINED AND THEY COULD NOT ARRIVE AT A CORRECT PROFIT CONTAIN SUFFICIENT COGENCY. LD. COMMISSIONER OF INCOME TA X (APPEALS) IS ALSO CORRECT IN HOLDING THAT WITH THE KIND OF DISCREPANCIES OBSERVE D THE TRIAL BALANCE WILL NOT TALLY AND IN SUCH CIRCUMSTANCES, STATEMENT OF ACCOUNT MAD E FROM SUCH TRIAL BALANCE WOULD BE MISLEADING ONE. IN SUCH CIRCUMSTANCES, TH E BEST WAY TO FIND THE TAXABLE PROFITS HAS TO BE BASED UPON A REASONABLE ESTIMATE. THE ESTIMATE CAN BE MADE BY REFERENCE TO THE PAST RECORDS OF THE ASSESSEE AS WELL AS BY REFERRING TO THE SYSTEM PREVAILING IN THE BUSINESS. THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE NET PROFITS DECLARE D BY THE ASSESSEE HAS COME TO ITA NO. 978/DEL/2008 & CO NO. 340/DEL/09 A.Y. 2002-03 6 THE CONCLUSION THAT THE NET PROFIT ESTIMATE @ 4% OF THE GROSS RECEIPT WOULD BE FAIR AND JUSTIFIED. IN OUR CONSIDERED OPINION THI S IS A FAIR AND REASONABLE ESTIMATE AND DOES NOT NEED ANY INTERFERENCE ON OUR PART. AS NOTED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE HAS ALREADY INCLUDED THE INCOME TAX PAID IN THE PROFIT AND LOSS ACCOUNT AND PAID TA XES THEREON. HENCE WE AFFIRM THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS). 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ASSESSEES CROSS OBJECTION 8. IN THE CROSS OBJECTION OF THE ASSESSEE, THE ASSE SSEE HAS SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S). WE HAVE ALREADY CONFIRMED THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) IN THE REVENUES APPEAL ABOVE. HENCE THE CO FILED BY THE ASESSEE STANDS DISMISSED AS INFRUCTUOUS. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A ND CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/06/2010. SD/- SD/- [RAJPAL YADAV] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 25/06/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES
