COMMISSIONER OF INCOME TAX, ROHTAK V. PARVEEN KUMAR MITTAL

ITA/272/2011

AI Insights

The case involves an appeal by the Commissioner of Income Tax, Rohtak against the decision of the Income Tax Appellate Tribunal, Delhi, which set aside the Commissioner of Income Tax (Appeals)'s order that applied a net profit rate of 12% on gross receipts. The Tribunal instead adopted a 4% rate, referencing the net profit rates from the assessee's previous assessment years (2003-04 and 2004-05). The main legal contention was whether the Tribunal was correct in applying a 4% net profit rate despite the Commissioner of Income Tax (Appeals)'s enhancement to 12%. The High Court of Punjab and Haryana dismissed the appeal, agreeing with the Tribunal's factual basis for the 4% rate.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 719008 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 13-10-2011
• Assessment Year: misc
• Other Referred Cases: Parbhat Kumar, Contractor Sirsa
• Laws Referred To: Indian Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: INDERPREET SINGH
• Keywords: Best Judgment Assessment; Commissioner of Income Tax; Gross receipts; Income tax appellate tribunal; Net profit rate
• Section: 143(3); 143(2); 143(1); 260A

Judgement Text

"ITA No.272 of 2011 -: 1 :- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.272 of 2011 Date of decision: October 13, 2011. The Commissioner of Income Tax, Rohtak ... Appellant(s) v. Shri Parveen Kumar Mittal ... Respondent(s) CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MR. JUSTICE G.S. SANDHAWALIA Present: Shri Inderpreet Singh, Advocate, for the appellant(s). Hemant Gupta , J. (Oral): The revenue is in appeal under Section 260A of the Indian Tax Act, 1961 (for short the Act) arising out of the order passed by the Income Tax Appellate Tribunal, Delhi Bench, Delhi, dated 20.1.2011, whereby the order passed by the Commissioner of Income Tax (Appeals) applying the rate of profit @ 12% was set aside and instead rate of profit @ 4% was adopted. The revenue has claimed following substantial question of law:- “1. Whether the ITAT was right in directing to apply net profit rate of 4% on the gross receipts instead of 12% enhanced by learned CIT(A) from 5% as assessed by Assessing Officer in light of the fact that assessee failed to produce books of ITA No.272 of 2011 -: 2 :- accounts during assessment as well as during both the stages of appellate proceedings? 2. Whether the ITAT was right in not following the ratio laid down in the decision of Hon'ble Punjab & Haryana High Court in the case of Parbhat kumar, Contractor Sirsa by reducing the N.P. Rate to 4% of gross receipts as against 12% decided by learned CIT(A)?” The said questions of law are claimed on the fact that the assessee furnished his return on 31.10.2006 declaring total income of Rs.12,80,189/-. The Assessing Officer served notice under Section 143(2) and 143(1) of the Act and after giving opportunity, framed best judgment- assessment applying net profit for the year at the rate of 5% and made additions against the net profit. In appeal, the Commissioner of Income Tax, after serving a notice, applied net profit rate of 12% after relying upon a judgment of this Court in Parbhat Kumar's case, in ITA No.293 of 2008 decided on 14.11.2008. The assessee further filed an appeal before the ITAT, New Delhi (for short the Tribunal). The Tribunal considered the net rate of profit for the last assessment years, i.e., 2003-04 and 2004-05 wherein the income of the assessee has been assessed with net profit rate of 6.37% and 2.15% respectively. Considering the said rate of profit accepted by the Department in the previous assessment years, i.e., 2003-04 and 2004-05, applied the net profit at the rate of 4% in view of the rate adopted in the immediately preceding assessment year. The sole argument raised by learned counsel for the appellant is that this Court has upheld the rate of 12% as net profit in the case of civil ITA No.272 of 2011 -: 3 :- contractor, therefore, there was no reason as to why such rate could be interfered with by the Tribunal. We do not find any merit in the said argument. The assessee's return for the year 2003-04 was accepted under Section 143(1) of the Act and when assessee has claimed 6.37% as net profit. In the subsequent year, i.e., 2004-05, assessment was completed under Section 143(3) of the Act with 2.15% as the net profit rate. Keeping in view the profits allowed by the revenue in the previous two assessment years, the assessment by applying rate of net profit as 4% is a question of fact. We do not find any substantial question of law arising for consideration of this Court. The appeal is dismissed. [ Hemant Gupta ] Judge [ G.S. Sandhawalia ] October 13, 2011. Judge kadyan "