SHIVA ENTERPRISES, Jaipur V. ACIT, Jaipur

ITA 107/JPR/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5181 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 29-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 107/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 M/S. SHIVA ENTERPRISES 102, MAHARAJA APARTMENTS, BANI PARK JAIPUR CUKE VS. THE ACIT CIRCLE- 3 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAPFS 9267 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI DEVANG GARGIEYA & SHRI MAHENDRA GARGIEYA, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY:SHRI R.A. VERMA , ADDL.CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/08/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 22/08/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 8-11-2012 FOR THE ASSESSM ENT YEAR 2008-09 RAISING THEREIN FOLLOWING GROUND:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN FACTS AND IN LAW IN ESTIMATING THE GROSS PROFIT RATE AT 13% AND CONSEQUENTLY CONFIRMING THE ADDITION TO THE EXTENT OF RS. 2,72,900/- AS TRADING ADDITION AGAINST THE DISALLOWANCE OF LABOUR CHARGES MADE BY THE AO. ITA NO. 107/JP/2013 M/S. SHIVA ENTERPRISES VS. ACIT, CIRCLE- 3, JAIPUR . 2 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME ON 30-09-2008 DECLARING INCOME AT RS. 12,06, 500.0. THE CASE OF THE ASSESSEE WAS SELECTED UNDER SCRUTINY THROUGH CA SS. ACCORDINGLY, THE NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 22-09-20 09 AND SERVED ON THE ASSESSEE. THE BOOKS OF ACCOUNT OF ASSESSEE WERE TES T CHECKED BY THE AO DURING ASSESSMENT PROCEEDINGS. THE AO OBSERVED THAT THE ASSESSEE FIRM UNDERTOOK THE WORK OF ROAD CONSTRUCTION ON CONTRACT BASIS WHICH INVOLVED EMPLOYMENT OF LABOURERS. THE AO OBSERVED THAT THE E XPENSES INCURRED ON LABOUR CHARGES WERE NOT VERIFIABLE AND THE AUTHENTI CITY OF SELF MADE VOUCHERS WAS DOUBTFUL. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO REJECTED IT BY OBSERVING THAT VOUCHERS WERE SELF MADE AND SOME OF THEM WERE UNSIGNED BY THE RECIPIENTS AND ALL THE PA YMENTS WERE MADE IN CASH AND THUS THEY WERE NOT SUBJECT TO VERIFICATION . WITH THIS OBSERVATION, THE AO DISALLOWED 5% OF THE PAYMENTS MADE TO LABOUR ERS OF RS. 1,68,43,394/- WHICH RESULTED INTO AN ADDITION O F RS. 8,42,170/-. 2.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO HAS ESTIMATED THE GROSS PROFIT RATE AT 1 3% AND THUS REDUCED THE TRADING ADDITION TO RS. 2,72,900/- BY OBSERVING AS UNDER:- 4.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND THE SUBMISSION OF THE A.R. GIVEN THE OBSERVATIONS O F THE AO REGARDING THE UN-VERIFIABILITY OF THE VOUCHERS WITH REFERENCE TO THE PAYMENTS TO LABOURERS, IT APPEARS THAT THE B OOKS OF ITA NO. 107/JP/2013 M/S. SHIVA ENTERPRISES VS. ACIT, CIRCLE- 3, JAIPUR . 3 ACCOUNT MAINTAINED ARE NOT ENTIRELY RELIABLE. IT IS ALSO A FACT THAT THE TURNOVER HAS DECLINED DURING THE YEAR AS COMPARED TO THE PREVIOUS ASSESSMENT YEAR THOUGH THE GROSS PR OFIT RATE HAS INCREASED MARGINALLY. THE GROSS PROFIT RATE IS ESTIMATED AT 13% DURING THIS ASSESSMENT YEAR RESULTING IN CONFIR MATION OF A TRADING ADDITION OF RS. 2,72,900/-. 2.3 NOW THE ASSESSEE IS BEFORE ME WITH THE PRAYER T HAT THE LD. CIT(A) HAS APPLIED THE GROSS PROFIT RATE AT 13% WHICH IS NOT REASONABLE AND THUS THE LD. CIT(A) REDUCED THE TRADING ADDITION AMOUNTI NG TO RS. 2,72,900/-. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSES SEE HAS DECLARED BETTER GROSS PROFIT RATE IN THIS YEAR FOR WHICH THE ASSESS EE HAS SUBMITTED THE FOLLOWING CHART FOR CONSIDERATION. A.Y. GROSS RECEIPT (RS.) GROSS PROFIT GP RATE NET PROFIT N.P. RATE 2008-09 4,90,50,488/- 61,03,663/- 12.44% 37,19,176 /- 7.58% 2007-08 6,47,39,768/- 74,76,864/- 11.55% 50,09,654/ - 7.74% 2006-07 3,30,03,772/- 35,78,839/- 10.84% 21,02,113/ - 6.37% THE LD. AR OF THE ASSESSEE RELIED ON THE FOLLOWING CASE LAWS:- (I) CIT VS. MAHARAJA SHREE UMAID MILLS LTD. 192 ITR 565 (RAJ.) (II) DCIT VS. ASSOCIATED STONE INDUSTRIES (KOTAH) X XII TW 155 (JP) (III) CIT VS. POPULAR ELECTRIC CO. (P) LTD. (1993) 203 ITR 630 (CAL) (IV) M.A. RAUF VS. CIT (1958) 33 ITR 843 (PAT.) ITA NO. 107/JP/2013 M/S. SHIVA ENTERPRISES VS. ACIT, CIRCLE- 3, JAIPUR . 4 (V) GOTAN LIME KHANIJ UDYOG , 256 ITR 234 (RAJ.) (VI) M/S. KANSARA BEARING (P) LTD. VS. ACIT 270 IT R 235 (RAJ.) 2.4 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTICED THAT THE ASSESSE E IS ENGAGED IN THE ROAD CONSTRUCTION WORK WHICH IS A LABOUR ORIENTED WORK. IT IS OBSERVED THAT THE ASSESSEE HAD TAKEN CONSTRUCTION WORK AT NEEM KA TH ANA AND BIKANER IN NEARBY RURAL AREAS. THE LABOURERS ENGAGED WERE MOST LY FROM VILLAGES WHO DID NOT HAVE ANY BANK ACCOUNT AND THUS THE PAYMENTS WERE MADE IN CASH TO THE LABOURERS BY THE ASSESSEE IN THAT SITUATION. IT IS OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE DECLARE D G.P. RATE AT 12.44% ON TURNOVER OF RS.4,90,50,488/- AS COMPARED TO GROSS PROFIT RATE AT 11.55% ON THE TURNOVER OF RS.6,47,39,768/- IN THE I MMEDIATELY PRECEDING YEAR. THE ASSESSEE SUBMITTED THAT DURING THE ASSESS MENT PROCEEDINGS, BOOKS OF ACCOUNT WERE PRODUCED ALONGWITH LABOURERS PAYMENTS DETAILS AND VOUCHERS . HOWEVER, THE AO OBJECTED THE AUTHENT ICITY OF SELF MADE VOUCHERS AS DOUBTFUL AND UNVERIFIABLE. THE AO THUS DISALLOWED THE EXPENSES TO THE EXTENT OF RS.8,42,170/- TOWARDS LAB OURERS PAYMENTS WHICH WERE REDUCED BY THE CIT(A) TO THE EXTENT OF RS. 2,72,900/- ESTIMATING THE GROSS PROFIT RATE AT 13%. THE LD. CI T(A) HAS ALSO NOT GIVEN ITA NO. 107/JP/2013 M/S. SHIVA ENTERPRISES VS. ACIT, CIRCLE- 3, JAIPUR . 5 OPPORTUNITY TO ASSESSEE AS REQUIRED BY SECTION 251( 2) OF THE ACT FOR CHANGING THE BASIS OF ADDITION. IT IS NOTICED THAT THE AO HAS NEITHER FOUND ANY DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE NOR INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. THE GROSS PROFIT RATE OF THE ASSESSEE IS BETTER THAN THE PREVIOUS YEARS AS INDIC ATED ABOVE. IN THIS VIEW OF THE MATTER, I DO NOT FIND THAT THE LD. CIT(A) IS JUSTIFIED IN MAKING THE TRADING ADDITION OF RS. 2,72,900/- BY ESTIMATING TH E GROSS PROFIT RATE AT 13%. THUS TAKING INTO CONSIDERATION ALL THE RELEVAN T FACTS AND CIRCUMSTANCES OF THE CASE, THE APPEAL OF THE ASSESS EE DESERVES TO BE ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/08/20 16 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22 /08/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-M/S. SHIVA ENTERPRISES, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 3 JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 107/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR