SHRI VINOD KUMAR GOYAL, Jaipur V. ITO, Jaipur

ITA 1064/JPR/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7787 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K R SABARWAL
• Keywords: Depreciation; Opportunity of being heard
• Section: 145

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 1064/JP/2011 ASSTT. YEAR- 2008-09 PAN NO. AAPPG 1934 L SHRI VINOD KUMAR GOYAL, THE I.T.O., B-68, SAKRT CONOLY, VRS. WARD 5(2), JAIPUR. ADARSH NAGAR, JAIPUR. (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI K.R. SABARWAL DEPARTMENT BY :- SHRI RAJESH OJHA. DATE OF HEARING : 09/09/2014 DATE OF PRONOUNCEMENT : 26/09/2014 O R D E R PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 19/09/2011 OF THE LEARNED C.I.T.(A)-II, JAIPUR FOR T HE A.Y. 2008-09. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED: 1. IN CONFIRMING THE APPLICABILITY OF SECTION 145( 3) OF THE IT ACT. 2. IN NOT APPRECIATING PROPERLY THE PECULIAR CIRCUM STANCES OF THE CASE AND COMPARABLE CASES RELIED BY THE APPELLANT/A SSESSEE AND THEREBY CONFIRMING THE APPLICABILITY OF NET PROFIT RATE OF 8% OF GROSS RECEIPTS SOLELY ON THE GROUND THAT, IN THE PR ECEDING YEARS, NET PROFIT RATE OF 8% WAS CONFIRMED BY THE APPELLATE AUTHORITIES, AND 3. THE APPELLANT RESERVES THE RIGHT TO ADD, ALTER, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL BEFORE HEARING. ITA NO. 1064/JP/2011 VINOD KUMAR GOYAL VS. ITO 2 2. GROUND NO. 1 OF THE ASSESSEES APPEAL IS AGAINST REJECTION OF BOOKS U/S 145(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ), WHICH HAS NOT BEEN PRESSED, THEREFORE, WE DISMISS THE GROUND NO. 1 OF THE APPEAL. 3. GROUND NO. 2 OF THE APPEAL IS AGAINST CONFIRMING THE ADDITION OF NET PROFIT RATE @ 8% BY THE LEARNED CIT(A). THE ASSESSEE IS A CIVIL CONTRACTOR. THE ASSESSEE HAS SHOWN NET PROFIT OF RS. 1,90,554/- ON TOTAL RECEIPT OF RS. 7,04,58,779/-. THE ASSESSING OFFICER REJECTED THE B OOK RESULT U/S 145(3) OF THE ACT ON THE BASIS THAT NO DAY TO DAY STOCK REGISTER/ CONSUMPTION REGISTER, OPENING AND CLOSING STOCK MAINTAINED. THE ASSESSEE H AD ALSO NOT MAINTAINED ANY DETAILS, VOUCHERS, REGISTERS, PAYMENT SHEETS AN D MUSTER ROLL ETC.. THE PAYMENTS WERE ALSO MADE IN CASH. THE EXPENSES INCLUD ED VIZ RAW MATERIAL, LABOUR & CARTAGE EXPENSES, MACHINERY HIRE EXPENSES, FOR WHICH NO DETAIL VOUCHERS WERE MAINTAINED BY THE ASSESSEE. THE ASSESSI NG OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD AFTER REJECTI NG THE BOOKS OF ACCOUNT U/S 153(3) OF THE ACT FOR ESTIMATING THE NET PROFIT @ 8% . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS AGREED TO O FFER NET PROFIT @ RANGING FOR 4% TO 4.5%. HE FURTHER RELIED UPON THE DECISION OF HONBLE ITAT B BENCH OF JAIPUR IN THE CASE OF M/S VIJAY BUILDE RS, JAIPUR WHEREIN NET PROFIT WAS ACCEPTED @ 5%. AFTER CONSIDERING THE ASSESSEES R EPLY, THE LEARNED ASSESSING OFFICER DISTINGUISHED THE CASE LAW CITED B Y THE ASSESSEE I.E M/S VIJAY BUILDERS, JAIPUR. IT IS FURTHER OBSERVED THAT IN PA ST, ASSESSEES OWN CASE NET ITA NO. 1064/JP/2011 VINOD KUMAR GOYAL VS. ITO 3 PROFIT @ 8% SUBJECT TO DEPRECIATION AND BANK INTERES T HAD BEEN HELD JUSTIFIED BY THE HONBLE ITAT IN A.Y. 2003-04. IN A.Y. 2006-07 AND 2007-08, THE NET PROFIT RATE WAS APPLIED BY THE ASSESSING OFFICER @ 8% ON NET PROFIT RATE SUBJECT TO ALLOWABILITY OF DEPRECIATION AND BANK INT EREST. ACCORDINGLY, THE LEARNED ASSESSING OFFICER MADE ASSESSMENT @ 8% ON GR OSS RECEIPTS AND SUBJECT TO DEPRECIATION AND INTEREST. 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A), WHO HAD CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- 3. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE A PPELLANT. THE APPELLANT IS ENGAGED IN THE BUSINESS OF CIVIL CONST RUCTION. THE A.O. NOTICED THAT THE ASSESSEE HAD SHOWN NET PROFIT OF RS. 1,90,554/- ON TOTAL CONTRACT RECEIPTS OF RS. 7,04,5 8,779/-. THE A.O. HAD REJECTED THE BOOKS OF ACCOUNT ON THE GROUN D THAT THE ASSESSEE WAS NOT MAINTAINING STOCK RECORDS AND DAY T O DAY CONSUMPTION RECORDS. THE ASSESSEE HAD NOT MAINTAINED VOUCHERS, PAYMENT SHEETS OR MUSTER ROLL IN RESPECT OF LABOUR AND CARTAGE EXPENSES. THE PURCHASES OF RS. 5,33,48,771/- IN RESP ECT OF RAW MATERIAL WERE NOT SUPPORTED BY EXTERNAL EVIDENCES. TH E ASSESSEE HAD NOT MAINTAINED ANY SITE WISE RECORD OF RECEIPTS AND EXPENSES. MY PREDECESSOR IN THE CASE OF THE ASSESSEE HAD UPHE LD REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE IT ACT AND TR ADING ADDITION MADE BY THE A.O. FOR A.Y. 2004-05 BY MAKING FOLLOWIN G OBSERVATIONS IN HIS ORDER NO. 431/06-07 DATED 21/01 /2008 IN PARA 1.3: ITA NO. 1064/JP/2011 VINOD KUMAR GOYAL VS. ITO 4 I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENTS TAKEN BY SH. GUPTA QUITE CAREFULLY. IT IS SEEN THAT VARIOUS AFOR ESAID DEFECTS AS POINTED OUT BY A.O. IN ASSESSMENT ORDER ARE PATENT DEFECTS AND THESE COULD NOT BE NEGATED IN THE APPELLATE PROCEED INGS BY SH. GUPTA. THE HONBLE ITAT IN THE CASE OF APPELLANT IN EARLIER YEAR AS WELL AS CIT(A)-II, JAIPUR ALSO IN THE CASE OF AP PELLANT FOR A.Y. 2002-03 HAS UPHELD THE REJECTION OF BOOKS OF ACCOUN TS. CONSIDERING THESE ADMITTED DEFECTS IN MY CONSIDERED VIEW, THE A.O. WAS FULLY JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT BY INVOKING PROVISIONS OF SECTION 145 OF IT ACT. NOW T HE QUESTION COMES THAT WHAT SHOULD HAVE BEEN ESTIMATED NET PROF IT RATE. SINCE THE BASIS TO ADOPT 10.5% NET PROFIT RATE IS T HE NET PROFIT RATE ADOPTED BY A.O. IN ASSESSMENT ORDER OF A.Y. 20 02-03 AND THERE IS NO OTHER BASIS FOR THE SAME AND CIT(A) VID E HIS APPELLATE ORDER DATED 25/11/2005 HAS ALREADY UPHELD 8% NET PROFIT RATE SUBJECT TO DEPRECIATION AND INTEREST CL AIMED AND AS SUCH IN MY CONSIDERED VIEW FOR THIS YEAR ALSO IT SH ALL MEET THE END OF JUSTICE TO ADOPT SUCH NET PROFIT RATE OF 8% SUBJECT TO ALLOWABLE DEPRECIATION AND INTEREST. ON THIS BASIS THE NET PROFIT COMES TO RS. 39,20,183/- AND AFTER REDUCING ALLOWAB LE DEPRECIATION AND INTEREST AS PER WORKING GIVEN BY T HE A.O. AS PER ASSESSMENT ORDER AT RS. 15,91,594/-, THE REMAIN ING BUSINESS PROFIT IS WORKED OUT AT RS. 23,28,589/-. IN THIS MA NNER, THE APPELLANT GETS A RELIEF OF RS. 12,25,058/-. THE HONBLE JAIPUR TRIBUNAL IN THE CASE OF ASSESSEE FOR A.Y. 2001- 02 AND A.Y. 2002-03 VIDE ITS ORDER IN ITA NO. 205/J P/2006 DATED 26/10/2007 AND ITA NO. 146/JP/2006 DATED 26/10/2007 HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF IT ACT AND NP RATE OF 8% SUBJECT TO ALLOWANCE OF INTEREST AND D EPRECIATION. FURTHER THE CASES RELIED UPON BY THE COUNSEL OF THE ASSESSEE FOR APPLICATION OF NP OF 5% WERE REJECTED BY THE HONBLE TRIBUNAL IN ABSENCE OF ANY FINANCIAL RESULTS OF THOSE CASES ON RECORD. THE OBSERVATIONS OF THE HONBLE TRIBUNAL FOR A.Y. 2001-0 2 IN PARA 6 OF ITS ORDER DATED 26/10/2007 ARE REPRODUCED AS UNDER: ITA NO. 1064/JP/2011 VINOD KUMAR GOYAL VS. ITO 5 WE HAVE PERUSED THE FACTS OF THE CASE. THE ASSESSE E IS NOT MAINTAINING THE DAY TO DAY STOCK REGISTER, THE LABO UR REGISTER IS FOUND INCOMPLETE, NO DETAILS OF CONSUMPTION OF MATE RIAL TENDER- WISE IS MAINTAINED AND IN SUCH CIRCUMSTANCES AND FA CTS OF THE CASE, THE BOOKS OF ACCOUNT CANNOT BE SAID TO BE COR RECT AND COMPLETE AND THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) WHO HAS RIGHTLY CONFIRMED THE APPLI CABILITY OF SECTION 145(3) OF THE ACT. AS REGARDS THE APPLICABI LITY OF NET PROFIT RATE OF 8%, THE CASES RELIED UPON BY THE LEA RNED AR ARE OF NO BENEFIT TO THE ASSESSEE. THE LEARNED AR HAS REL IED UPON THE RESULTS IN THE CASE OF THE ASSESSEE IN THE PRECEDIN G YEARS BUT AT THE SAME TIME, THE TYPE OF WORK ALLOTTED IN THE PRE CEDING YEARS AND THE SIMILARITY OF PRECEDING YEARS WITH THE IMPU GNED YEAR HAS NOT BEEN BROUGHT ON RECORD AND THEREFORE, IN SUCH C IRCUMSTANCES AND FACTS OF THE CASE, THE RESULTS OF THE PRECEDING YEAR IN ASSESSEES OWN CASE CANNOT BE A GUIDE IN THE PRESEN T CASE. THEREFORE, THE ESTIMATION MADE BY THE AUTHORITIES B ELOW APPEARS TO BE REASONABLE AND WE FIND NO INFIRMITY IN THE OR DER OF THE LEARNED CIT(A) WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. THUS, GROUND NO. 2 AND 2.2 OF THE ASSESSEE ARE DISM ISSED. FURTHER IN A.Y. 2004-05, THE APPELLANT HAD SHOWN N. P. OF 7.03% WHICH WAS ESTIMATED AT 8% BY CIT(A) AND ALSO SUSTAINE D BY THE HONBLE ITAT. THERE IS NO MATERIAL CHANGE IN THE FACT S AND CIRCUMSTANCES OF THE CASE DURING THE YEAR AS COMPAR ED TO THE PRECEDING YEARS. THE COUNSEL OF THE APPELLANT HAS PL ACED RELIANCE ON THE DECISION IN THE CASE OF M/S VIJAY BUILDERS. HOWEVER, THE FACTS IN THE CITED CASE WERE DISTINGUISHABLE. IN THE CASE OF M/S VIJAY BUILDER, THE ASSESSEE HAD CARRIED OUT CIVIL P ROJECTS AS BACKWARD AREAS OF KUTCH REGION. FURTHER THESE WERE DE FENCE RELATED CONTRACTS AND DUE TO LACK OF BASIC INFRASTR UCTURE, TRANSPORT FACILITY AND SKILLED LABOUR, NET PROFIT RATE OF 5% WAS APPLIED. SIMILARLY, THE FINANCIAL RESULTS OF THE CASES NAMEL Y M/S MODERN CONSTRUCTION CO. AND PADAM CHAND BHANSALI ARE NOT A VAILABLE ON RECORD. THEREFORE, NO COGNIZANCE CAN BE GIVEN TO THE SE CASES. ITA NO. 1064/JP/2011 VINOD KUMAR GOYAL VS. ITO 6 RESPECTFULLY FOLLOWING THE DECISION OF MY PREDECESSO R AND HONBLE ITAT IN THE CASE OF APPELLANT FOR EARLIER YEAR I.E. 2001-02, A.Y. 2002-03 AND A.Y. 2004-05, THE ADDITION MADE BY THE A.O. ON ACCOUNT OF ESTIMATION OF NP @ 8% SUBJECT TO ALLOWANCE OF DEPRECIATION AND INTEREST IS CONFIRMED. THESE GROUND S OF APPEAL ARE DISMISSED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED A.R. FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE FILED HIS INCOME TAX RETURN ON 18/9/2008 DECLARING TOTAL INCO ME AT RS. 2,04,460/-. THE ASSESSEES ACCOUNTS ARE AUDITED U/S 44AB OF THE ACT . THE ASSESSEE HAS MAINTAINED ALL THE REGULAR BOOKS OF ACCOUNT I.E. TH E CASH BOOK, LEDGER, BANK ACCOUNT ETC. THE ACCOUNTS BOOK WAS ADMITTEDLY PRODUCE D BEFORE THE ASSESSING OFFICER AND SHE COULD NOT FIND ANY SPECIFIC DEFECTS THEREIN. THE ASSESSING OFFICER HAS REJECTED THE ACCOUNT BOOK ON THE BASIS OF NON-MAINTAINING DAY TO DAY REGISTER, CONSUMPTION REGISTER, OPENING AND CLO SING STOCK INVENTORY ETC. THE ASSESSING OFFICER HAS FURTHER OPINED THAT THE AS SESSEE HAS NOT MAINTAINED VOUCHERS, PAYMENT SHEETS AND MUSTER ROLL. THE LEARNE D ASSESSING OFFICER HAS NOT POINTED OUT ANY SERIOUS DEFECT IN THE ACCOUNTS BOOK. THUS HE PRAYED TO DELETE THE ADDITION CONFIRMED BY T HE LEARNED CIT(A). 6. AT THE OUTSET, THE LEARNED D.R. SUPPORTED THE ORD ER OF THE LEARNED CIT(A) AND ARGUED THAT 8% N.P. RATE IS REASONABLE I N CASE OF CIVIL CONTRACTOR. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN PAST, IN ASSESSEES OWN CASE FOR A.Y. 2001-02 AND 2002- ITA NO. 1064/JP/2011 VINOD KUMAR GOYAL VS. ITO 7 03 IN ITA NO. 205/JP/2006 DATED 26/12/2007 AND ITA NO. 146/JP/2006 DATED 26/10/2007, HAD DECIDED N.P. RATE @ 8% SUBJECT TO AL LOWANCE OF INTEREST AND DEPRECIATION. THE ASSESSEE HAS RELIED UPON THE VARIO US CASE LAWS BEFORE US BUT THEIR FINANCIAL RESULTS ARE NOT AVAILABLE FOR V ERIFICATION WHEREIN N.P. RATE WAS REDUCED TO 5% BY THE HONBLE ITAT. THE LEARNED AR HAD NOT CONTROVERTED THE FINDINGS GIVEN BY THE LEARNED CIT(A). HE HAD ACC EPTED THE DEFECTS IN THE BOOKS OF ACCOUNT BY NOT PRESSING THE GROUND OF APPE AL FOR REJECTION OF BOOK RESULT. THEREFORE, WE UPHELD THE ORDER OF THE LEARNED CIT(A). 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/09/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 26 TH SEPTEMBER, 2014 * RANJAN COPY FORWARDED TO :- 1. SHRI VINOD KUMAR GOYAL, JAIPUR 2. THE ITO, WARD 5(2), JAIPUR 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 1064/JP/2011) BY ORDER, AR ITAT JAIPUR.