CHANDRAIAH B. KALAL, MUMBAI V. DCIT 25(1), MUMBAI

ITA 1057/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101028 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 31-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2011
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: MANISH J SHETH
• Keywords: Business income; Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI PAWAN SINGH , J M ./ ITA NO . 1057 / MUM/20 1 1 ( / ASSESSMENT YEAR : 200 6 - 07 ) SHRI CHANDRAIAH B KALAL, PROP. M/S CB & SONS, PLOT NO.71, D - 1, MANDAR CO - OP HOUSING SOCIETY LIMITED , RSC - 21, GORAI - 1, BORIVALI (W), MUMBAI - 400092 VS. DCIT - 25(1), BANDRA (W), MUMBAI. ./ ./ PAN/GIR NO. : A A BPK 8755 H ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI MANISH J. SHETH /REVENUE BY : SHRI B.S.BIST / DATE OF HEARING : 11 /0 8 / 2015 / DATE OF PRONOUNCEMENT 11/09 /2015 / O R D E R PER PAWAN SINGH (J .M) : TH E PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 24 - 11 - 2010 , PASSED BY THE CIT(A) - 35 , MUMBAI ON THE FOLLOWING GROUNDS : - 1. UNDER THE C IRCUMSTANCES THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 35, MUMBAI , HAS ERRED ON FACTS AND IN LAW BY UPHOLDING THE ASSESSMENT MADE BY THE ID AO U/S144 OF THE INCOME TAX ACT, 1961 2. UNDER THE CIRCUMSTANCES THE LEARNED COMMISSIONER OF INCOME TAX (A PPE5ALS) - 35, MUMBAI , HAS ERRED ON FACTS AND IN LAW BY UPHOLDING THE ADDITIONS MADE BY THE ID AO BY ESTIMATING INCOME FROM OWN CONTRACT AT 8% .. 3. UNDER THE CIRCUMSTANCES THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 35, MUMBAI , HAS ERRED ON FACTS AND IN LAW BY UPHOLDING THE ADDITIONS MADE BY THE ID AO BY ESTIMATING INCOME FROM SUB CONTRACT AT 5%. ITA NO. 1057 /1 1 2 4. UNDER THE CIRCUMSTANCES THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 35, MUMBAI, HAS ERRED ON FACTS AND IN LAW BY UPHOLDING ADDITION OF INTEREST INCOME OF RS.3,29,068/ - UNDER THE HEAD, 'INCOME FROM OTHER SOURCES' AGAIN WHERE INCOME IS ESTIMATED ON TURNOVER AND INTEREST INCOME HAS RESULTED FROM BUSINESS TRANSACTIONS. 5. UNDER THE CIRCUMSTANCES THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 35 , MUMBAI, HAS ERRED ON FACTS AND IN LAW BY UPHOLDING THE DISALLOWANCE OF CLAIM OF DEPRECIATION. 6. UNDER THE CIRCUMSTANCES THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 35, MUMBAI, HAS ERRED ON FACTS AND IN LAW BY UPHOLDING THE ADDITIONS MADE FROM B OOKS OF ACCOUNT WHERE INCOME IS ESTIMATED ON TURNOVER. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WHICH IS ENGAGED IN THE BU SINESS OF CONSTRUCTION CONTRACT, FILED HIS RETURN OF INCOME ON 30 - 10 - 2006 DECLARING TOTAL INCOME OF RS.25,72,130/ - ALONG WIT H STATEMENT OF AUDITED ACCOUNT, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET . THE AO OBSERVED IN HIS ASSESSMENT ORDER THAT THE ASSESSEE HAS SHOWN THE RECEIPTS FROM CONTRACT WORK AT RS. 5,72,61,786/ - AND SUB CONTRACT RECEIPT AT RS.1,29,01,002/ - AND ALSO SHOWN T HE INTEREST ON THE BANK DEPOSIT AND OTHER INCOME TOTALING TO RS.4,41.958/ - . THE ASSESSEE HAS SHOWN NET PROFIT OF RS.24,92,611/ - AND BY WORKING OUT AT 3.55%, HOWEVER, THE AO ON THE BASIS OF NON - BUSINESS RECEIPT I.E. INTEREST ON FDR RS.3,29,068/ - MADE AFTER DISCOUNT OF RS.8096/ - AND INCOME OF RS.104794/ - WERE EXCLUDED THEN NET PROFIT WAS WORKED OUT AT 2.92%. THE ORDER OF THE AO FURTHER REVEALS THAT THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT, VOUCHER FOR VERIFICATION. THEREFORE, GENUINENESS OF THE BOO KS RESULT SHOWN BY THE ASSESSEE COULD NOT ASCERTAINED. THUS, IN THE ABSENCE OF BOOKS OF ACCOUNT AND VOUCHERS, THE NET PROFIT OF SUB CONTRACT WAS ESTIMATED ON THE BASIS OF RS.1,29,01,002/ - @5% WHICH WORKED OUT AT RS.6,45,050/ - AND IN RESPECT ITA NO. 1057 /1 1 3 OF CONTRACTUAL RECEIPT OF RS.5,72,61,786/ - , THE NET PROFIT WAS ESTIMATED AT 8%, AND INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT, AGAINST WHICH APPEAL WAS FILED BEFORE THE CIT(A) AND THE CIT(A) CONFIRMED BOTH THE ADDITIONS AND DISMISSED THE APPEAL BY OBSERVING IN PARA 3 OF THE IMPUGNED ORDER AS UNDER : - 3. THE APPELLANT HAS DISPUTED THE ESTIMATI ON OF INCOME BY THE A.O. IN THE GROUNDS OF APPEAL. THE APPEAL WAS POSTED FOR HEARING ON THE FOLLOWING DATES. 10 - 11 - 09, 4 - 12 - 09, 31.12.09, 28.1.10, 18 - 6 - 10, 22.7.10, 21.9 .10,14.10.10 AND 24 - 11 - 10 . THE APPELLANT DID NOT RESPOND TO THE ABOVE HEARING NOTICES AND, THEREFORE, I PROCEED TO DECIDE APPEAL BASED ON THE MATERIAL AVAILABLE ON THE RECORD. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE APPELLANT NEVER APPEARED BEFORE T HE A.O. AND PRODUCED THE BOOKS OF ACCOUNT, BILL AND VOUCHERS. THE A.O. ISSUED NOTICES ON VARIOUS OCCASIONS AND FINALLY ISSUED SPECIFIC LETTER DATED 23 - 12 - 2008 FIXING THE HEARING ON 29 - 12 - 08 INDICATING THAT THE ASSESSMENT WOULD BE COMPLETED U/S 144. HOWEVER , THE APPELLANT DID NOT PRODUCE THE BOOKS OF ACCOUNTS FOR VERIFICATION. EVEN WHEN THE APPEAL WAS POSTED FOR HE ARING ON MANY OCCASIONS, NONE APPEARED ON BEHALF OF THE APPELLANT. IN THE CIRCUMSTANCES, I FIND THAT THE A.O. HAS REASONABLY ESTIMATED THE INCOME OF THE APPELLANT AT THE RATE OF 8% IN RESPECT OF CONTRACT WORK AND IN RESPECT OF 5 % ON SUB CONT R ACT WORK. 3. WE HAVE HEARD LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AND LD. DR OF THE REVENUE. LD. AR ARGUED BEFORE US THAT NO FAIR AND PROPER OPPORT UNITY WAS GIVEN BY THE AO AS WELL AS BY LD. CIT(A) AND, THUS, DENIED OPPORTUNITY, BOOKS OF ACCOUNT WAS NOT CONSIDERED BY THE AO OR BY THE CIT(A). OUR ATTENTION IS DRAWN BY THE LD. AR OF THE ASSESSEE IN RESPECT OF PAPER BOOK PLACE D ON RECORD WHICH CONTAINS THE COMPUTATION OF INCOME, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. KEEPING IN VIEW THE CONTENTION RAISED AND THE CASE ARGUED BEFORE US AND THE ORDER PASSED BY THE AUTHORITIES BELOW, THE ASSESSEE IS ENTITLED FOR FAIR AND ADEQUATE OPPORTUN ITY BEFORE PASSING THE ORDER IN THE PRESENT MATTER, ITA NO. 1057 /1 1 4 HENCE, THE PRESENT APPEAL IS REMANDED TO THE FILE OF AO TO GIVE FRESH FINDING AFTER APPROPRIATE EXAMINATION OF STATEMENT OF PROFIT AND LOSS ACCOUNT AND OTHER RELEVANT MATERIAL. THE ASSESSEE IS ALSO DIRECT ED TO FULLY COOPERATE AND NOT TO SEEK ANY UNNECESSARY ADJOURNMENT. 4 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 11/0 9 / 201 5 . SD/ - SD/ - ( . . ) ( R.C.SHARMA ) ( ) ( PAWAN SINGH ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED 11/ 09 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//