M/S RAMESHWAR PRASAD SHARMA, BHARATPUR V. ACIT, BHARATPUR

CO 55/JPR/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5596 (ITAT-JAIPUR)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-01-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 11-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S C GUPTA
• Assessee Lawyers: D K MEENA
• Section: 40A(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI N.L. KALRA, ACCOUNTANT MEMBER ITA NO. 26/JP/2011 ASSTT. YEAR : 2002-03 PAN:AADFR1852J ASSTT. COMMR. OF INCOME-TAX, VS. M/S. RAMESHWAR PRA SAD SHARMA, CIRCLE BHARATPUR. CONTRACTOR, BHARATPUR. (APPELLANT) (RESPONDENT) C.O. NO.55/JP/2011 (ARISING OUT OF ITA NO.26/JP/2011) ASSESSMENT YEAR : 2002-03 M/S. RAMESHWAR PRASAD SHARMA VS. ASSTT. COMMISSION ER OF INCOME-TAX, CONTRACTOR, BHARATPUR. CIRCLE, BHARATPUR. C.O. NO.15/JP/2011 (ARISING OUT OF ITA NO.26/JP/2011) ASSESSMENT YEAR : 2002-03 M/S. RAMESHWAR PRASAD SHARMA VS. ASSTT. COMMISSION ER OF INCOME-TAX, CONTRACTOR, BHARATPUR. CIRCLE, BHARATPUR. APPELLANT BY : SHRI D.K. MEENA, DR RESPONDENT BY : SHRI S.C. GUPTA, DATE OF HEARING : 30/12/2011 DATE OF PRONOUNCEMENT:O3.01.2012 ORDER 2 PER BENCH: THE APPEAL FILED BY THE REVENUE AND TWO C.OS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A), ALWAR DATED 28.10.2010 RELATING TO ASSESSMENT YEAR 2002-03. 2. IN C.O. NO.15, THE ASSESSEE IS OBJECTING CONFIRM ING THE NET PROFIT RATE @ 10.5% AGAINST NET PROFIT RATE DECLARED BY THE ASS ESSEE AT 10%. THE ASSESSEE ALSO FILED ANOTHER C.O. NO.55/JP/2011, IN WHICH ALSO THE ASSESSEE IS OBJECTING NET PROFIT RATE OF 10.5% INSTEAD OF 10% D ECLARED BY THE ASSESSEE. 3. THE LD. COUNSEL FOR THE ASSESSEE, STATED THAT ON E C.O. MAY BE TREATED AS WITHDRAWN, AS DUE TO MISTAKE TWO COS HAVE BEEN F ILED. ACCORDINGLY, C.O. NO.55/JP/2011 FILED ON 11.05.2011 IS DISMISSED. THE OTHER C.O. LISTED AT SL. NO.15/JP/2011 WILL BE TAKEN INTO CONSIDERATION. 4. IT IS SEEN THAT ON A TURNOVER OF RS.4,61,31,489/ -, THE ASSESSEE HAS SHOWN NET PROFIT RATE OF 10%. THE AO FOUND THAT THE RE ARE CERTAIN DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCOUNT. THEREFORE, HE REJECTED THE BOOKS OF ACCOUNT AND APPLIED NET PROFIT RATE OF 12.5%. THE A O MADE DISALLOWANCE UNDER SECTION 40A(3) AT RS.6,08,290/- AND ALSO ADD ED A SUM OF RS.6,40,250/- UNDER EXPLANATION OF SECTION 37(1) OF THE INCOME-TAX ACT, 1961 (IN SHORT, THE ACT). IN THIS WAY, TOTAL INCO ME WAS ASSESSED AT RS.21,98,100/- AS AGAINST DECLARED INCOME OF RS.9,4 9,560/-. 3 5. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A), WHO AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERI ALS ON RECORD REDUCED THE NET PROFIT RATE TO 10.5% AGAINST 12.5% APPLIED BY THE AO. THEREAFTER, LD. CIT(A) DELETED THE DISALLOWANCE MADE UNDER SECTION 40A(3) AND U/S 37(1) OF THE ACT, BY OBSERVING THAT NO SEPARATE ADDITION IS WARRANTED, AS HE CONFIRMED THE TRADING ADDITION BY APPLYING NET PROFIT RATE AT 10.5% AGAINST 10% DECLARED BY THE ASSESSEE. THEREFORE, OTHER ADDITION S MADE UNDER SECTION 40A(3) AND U/S 37(1) WERE DELETED. 6. NOW THE DEPARTMENT IS IN APPEAL AGAINST DELETION OF ADDITIONS MADE UNDER SECTION 40A(3) AND U/S 37(1) AND ASSESSEE IS OBJECTING APPLICATION OF NET PROFIT RATE @ 10.5%. 7. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE A .O. IT WAS FURTHER SUBMITTED THAT THOUGH THE ADDITIONS MADE U/S 40A(3) & 37(1) WERE DELETED BY THE LD. CIT(A) IN EARLIER YEAR ALSO AND THE ORDE R OF THE CIT(A) HAS BEEN CONFIRMED, HOWEVER, EVERY YEAR IS AN INDEPENDENT YE AR AND RES-JUDICATA DOES NOT APPLY IN INCOME-TAX PROCEEDINGS. THE ASSESSEE H AS VIOLATED THE PROVISIONS OF SECTION 40A(3) AND THEREFORE, ADDITI ON MADE BY THE AO IS LIABLE TO BE CONFIRMED. 4 8. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE RELIED ON THE ORDER OF THE CIT(A) AND THE ORDER OF THE TRIBUNAL. REGARD ING NET PROFIT RATE, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT REASONABLE VIE W BE TAKEN. 9. AFTER CONSIDERING SUBMISSIONS MADE BY BOTH THE P ARTIES AND PERUSING THE MATERIALS ON RECORD, WE FIND THAT THE APPEAL OF THE DEPARTMENT AS WELL AS C.O. OF THE ASSESSEE ARE LIABLE TO BE REJECTED. ON IDENTICAL FACTS, THE ADDITIONS WERE MADE FOR THE ASSESSMENT YEAR 2000-01 UNDER SEC TION 40A(3) AND U/S 37(1). THE LD. CIT(A) DELETED BOTH THESE ADDITIONS AND THE ORDER OF THE CIT(A) HAS BEEN AFFIRMED BY THE TRIBUNAL WHILE PAS SING THE ORDER IN ITA NO.274/JP/2011, VIDE ORDER DATED 23.09.2011. A COPY OF THE SAME IS PLACED ON RECORD. FINDINGS OF THE TRIBUNAL HAVE BEEN RECOR DED IN PARA 6 OF THE ORDER. THESE FINDINGS OF THE TRIBUNAL ARE APPLICABL E ON THE FACTS OF THE PRESENT CASE ALSO IN THE CASE OF DEPARTMENTS APPEA L. AS ONCE NET PROFIT RATE HAS BEEN APPLIED, NO OTHER ADDITION IS WARRANTED IN THE PROFIT & LOSS ACCOUNT AS HELD BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSIDHAR 229 ITR 229. THEREFORE, THE LD. CIT( A) HAS RIGHTLY DELETED THE ADDITIONS MADE U/S 40A(3) AND U/S 37(1) OF THE ACT. ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONFIRMED IN THIS REGARD. 10. REGARDING TRADING ADDITION SUSTAINED BY THE CI T(A) BY APPLYING NET PROFIT RATE AT 10.5%, WE FIND THAT THE PROVISIONS O F SECTION 145(3) OF THE ACT 5 ARE APPLICABLE AS CERTAIN DEFECTS WERE THERE. THE ASSESSEE ITSELF HAS SHOWN NET PROFIT RATE AT 10%. THE A.O. APPLIED NET PROFIT RATE AT 12.5% WHICH HAS BEEN REDUCED TO 10.5% BY THE LD. CIT(A). WE SEE NO UNREASONABLENESS IN THE ORDER OF THE CIT(A). IT WAS FURTHER STATED THAT IN EARLIER YEAR ALSO NET PROFIT RATE OF 9.5% WERE APPLIED BY THE AO AS AGAINST 7.2 5% SHOWN BY THE ASSESSEE. THE TRIBUNAL HAS CONFIRMED THE NET PROFIT RATE OF 8.5%. THE FACTS OF THE CASE ARE SIMILAR AS ADMITTED BY THE LD. COUN SEL HIMSELF. THEREFORE, IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING TO APPLY NET PROFIT RATE AT 10.5%. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS CONFIRMED ON THIS ISSUE. 11. IN THE RESULT, APPEAL OF THE DEPARTMENT AS WELL AS C.OS. OF THE ASSESSEE ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 03.01 .2012 SD/- SD/- (N.L. KALRA) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED : 03.01.2012 /SKR/ COPY FORWARDED TO :- THE ASSESSEE:M/S. RAMESHWAR PRASAD SHARMA, BHARATPU R. THE ACIT, CIRCLE BHARATPUR THE CIT (A), THE CIT, THE D/R, ITAT, JAIPUR. GUARD FILE (ITA NO. /JP/2011 BY ORDER, 6