DCIT, Jaipur V. SHRI COLLECTOR RAM SHARMA, Jaipur

ITA 1077/JPR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7888 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 08-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Keywords: Rejection of books of accounts; Depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHA JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.K. SAINI ) ITA NO. 1077/JP/2011 ASSESSMENT YEAR : 2008-09 PAN: AGWPS 1561 Q THE DCIT VS. SHRI COLLECTOR RAM SHARMA CIRCLE- 6 C-47, MAHESH NAGAR JAIPUR TONK PHATKA, JAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY : MISS. ROSHANTA MEENA ASSESSEE BY : SHRI RAJEEV SOGANI DATE OF HEARING : 29.08.2012. DATE OF PRONOUNCEMENT: . 29.08.2012 ORDER PER N.K. SAINI, A.M. THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 21-09-2011 OF THE LD. CIT(A)-II, JAIPUR FOR THE ASSESSMENT YEAR 2008-09. 2.1 THE ONLY GROUND RAISED BY THE DEPARTMENT IN THI S APPEAL IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE LD. CIT(A) AND IN LAW THE LD. CIT(A) HAS ERRED IN:- (1) ALLOWING DEPRECIATION AND INTEREST OF RS. 25,9 8,064/- FROM 8% NET PROFIT RATE APPLIED BY THE AO WITHOUT APPRECIATING THAT WHERE NET PROFIT RATE HAS BEEN APPLIED AFTER CONSIDERING ALL THE FAC TS OF THE CASE, THERE COULD BE NO FURTHER DEDUCTION OF DEPRECIATION AND INTERES T. 2.2 THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 29-09-2008 DECLARING AN INCOME OF RS. 35,41,580/-. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTI CED THAT THE ASSESSEE IS A CIVIL CONTRACTOR AND DECLARED THE NET PROFIT RATE OF 4.70 % (AFTER CLAIMING DEPRECIATION) ON THE 2 TURNOVER OF RS. 7,76,69,605/-. HE ALSO POINTED OUT THAT THE ASSESSEE HAD SHOWN INTEREST INCOME AMOUNTING TO RS. 5,47,301/- IN THE PROFIT AN D LOSS ACCOUNT EARNED FROM FDS IN BANKS. THE AO OBSERVED THAT THE ASSESSEE DID NOT MA INTAIN THE DAY TODAY STOCK REGISTER, CONSUMPTION REGISTER, OPENING AND CLOSING STOCK INV ENTORY AND THE DETAILS IN RESPECT OF LABOUR CHARGES AMOUNTING TO RS. 2,12,56,420/- AND H ARDLY MAINTAINED ANY VOUCHERS, BILLS AND EVIDENCES IN RESPECT OF MATERIAL EXPENSES CLA IMED AT RS. 4,08,15,573/-. ACCORDING TO THE AO, THE LABOUR CHARGES AND MATERIAL EXPENSES CONSTITUTED AROUND 83.53% OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE AGAINST CONT RACT WORK, HE HAD CARRIED OUT. THE AO ON THE BASIS OF THE AFORESAID DEFECTS REJECTED THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND APPLIED THE NET PROFIT RATE OF 8%. HE DID NOT ALLOW THE BENEFIT OF DEPRECIATION CLAIMED BY THE ASSESSEE AND CONSIDERED THE INTEREST INCOME AS INCOME FROM OTHER SOURCES. 2.3 THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT( A) WHO OBSERVED THAT ITAT JAIPUR BENCH HAD UPHELD THE REJECTION OF BOOKS OF ACCOUNTS IN THE CASE OF THE ASSESSEE FOR THE EARLIER YEAR BY STATING THAT THE ASSESSEE DID NOT M AINTAIN THE STOCK REGISTER AND DAY TODAY CONSUMPTION RECORDS. HOWEVER, THE LD. CIT(A) DIREC TED THE AO TO ALLOW THE DEDUCTION ON ACCOUNT OF DEPRECIATION AND INTEREST OUT OF THE ESTIMATED PROFITS @ 8% ON CONTRACT RECEIPTS BY FOLLOWING THE DECISION OF ITAT JAIPUR B ENCH IN ITA NO.849/JP/2009 DATED 30-09-2011 FOR THE ASSESSMENT YEAR 2007-08 IN ASSES SEE'S OWN CASE. 2.4 NOW THE DEPARTMENT IS IN APPEAL. 2.5 THE LD. DR SUPPORTED THE ORDER OF THE AO. 2.6 IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR T HE ASSESSEE STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND STATED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY EARLIER ORDER OF THE TRIB UNAL DATED 30-09-2010 IN ITA NO.849/ 3 JP/2009 FOR THE ASSESSMENT YEAR 2007-08 AND THE COP Y OF THE SAID ORDER WAS ALSO FURNISHED WHICH IS PLACED ON RECORD. 2.7 AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES AND THE MATERIALS AVAILABLE ON RECORD, IT IS NOTICED THAT IN EARLIER YEAR THE I TAT JAIPUR BENCH VIDE ITS ORDER DATED 30-09-2010 IN ITA NO. 849/JP/2009 FOR THE ASSESSMEN T YEAR 2007-08 IN ASSESSEE'S OWN CASE CONFIRMED THE ORDER OF THE LD. CIT(A) IN DIR ECTING THE AO TO ALLOW DEPRECIATION AND INTEREST FROM NET PROFIT BUT SUSTAINED THE ADDITION OF RS. 25,000/- ON ACCOUNT OF DISCREPANCIES POINTED OUT IN THE TELEPHONE EXPENSES , GENERAL EXPENSES ETC. THE LD. CIT(A) BY FOLLOWING THE AFORESAID DECISION DIRECTED THE AO TO ALLOW THE BENEFIT OF DEPRECIATION AND INTEREST TO THE ASSESSEE AFTER APPLYING THE NET PROFIT RATE OF 8% AND THAT VIEW IS ALSO SUPPORTED BY JUDGEMENTS OF HON'BLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS. JAIN CONSTRUCTION, 245 ITR 527 AND CIT VS. BHAWAN VA PAT H NIRMAN (BOHRA) AND CO. 258 ITR 440. WE THEREFORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 3.0 IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 29-08-201 2 ) SD/- SD/- ( R.K. GUPTA ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR, *MISHRA COPY FORWARDED TO :- 1.THE DCIT, CIRCLE- 6, JAIPUR 2. SHRI COLLECTOR RAM SHARMA, JAIPUR BY ORD ER 3. THE LD CIT (A) 4. THE LD. CIT 5. THE D/R 6. GUARD FILE (ITA NO. 1077/JP/2011) AR ITAT JAIPUR. 4