L H Patil Constructions Pvt Ltd, Jalgaon V. Deputy Commissioner of Income tax, Jalgaon

ITA 1102/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1571 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-12-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 04-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Business income; Rectification of order; Agreed addition
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO. 1102 /PUN/20 17 / ASSESSMENT YEAR : 2010 - 11 L H PATIL CONSTRUCTIONS PVT. LTD. 2, ARCHANA, JAI NAGAR, JILHA PETH, JALGAON - 425 001 PAN : AAACL3083B ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1, JALGAON. / RESPONDENT A SSESSEE BY : SMT. DEEPA KHARE REVENUE BY : SHRI S.P WALIMBE / DATE OF HEARING : 1 1 . 1 2 .2020 / DATE OF PRONOUNCEMENT : 14 . 1 2 .2020 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(APPEAL) - 2, NASHIK DATED 17.02.2017 FOR THE ASSESSMENT YEAR 2010 - 11 AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD: 2 ITA NO. 1102 /PUN/20 17 A.Y. 2010 - 11 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.22,54,821/ - AS MISTAKE APPARENT FROM RECORD U/S. 154 IN RESPECT OF INTEREST INCOME WHICH WAS DULY CONSIDERED IN THE AGREED A DDI TION MADE BY THE LEARNED AO. 2. LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPREC IATING THAT THE TOTAL ADDITION OF RS.48,40,203/ - WAS ARRIVED AT AFTER DUE CONSI DERATION OF RETURNED INCOME OF THE APPELLANT AND ACCEPTED BY THE ASSESSING O FFICER. ANY CHA NGE IN THE SAID OFFER BY THE APPELLANT AND ACCEPTANCE BY TH E ID AO WOULD NOT BE A MISTAKE APPARENT FROM RECORD AND WILL BE A MATTER OF DEBATE AND DISCUSSION. 3. THE ADDITION OF RS. 22,54,821/ - U/S.154 IS WITHO UT THE PROPER JURISDICTION NOT BEING A MISTAKE APPARENT FROM RECORD MAY KINDLY BE CANCELLED. 4. THE APPELLANT CRAVES TO ADD, ALTER, MODIFY OR SUBSTITUTE ANY GROUND OF APPEAL AT THE TIME OF HEARING. 2. THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO THE ADDITION MADE THROUGH ORDER OF RECTIFICATION U/S.154 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEAL). 3. THE FACTS ON THIS ISSUE ARE WELL ENUMERATED AT PARA 6 OF THE ORDER OF LD. CIT(APPEAL) WHICH IS EXTRA CTED HEREIN BELOW: 6. FROM THE ASSESSMENT ORDER U/S. 143(3) DATED.22/08/2012, THE A.O. HAD NOTICED THAT THE APPELLANT HAD FILED SUBMISSION DATED 12/07/2012. W HEREIN , IT HAD WORKED OUT THE AGREED ADDITION AS UNDER: PARTICULARS AMOUNT (RS.) TOTAL CONTRACT RECEIPTS 15,07,89,759/ - LESS. CONTRACTS AND SUB CONTRACTS AWARDED 5,51,39,691/ - BALANCE 9,56,50,068/ - PROFIT @14% ON OWN CONTRACTS 1,33,91,010/ - PROFIT ON CONTRACTS AND SUB CONTRACTS @2.22% 12,24,101/ - TOTAL 1,46,15,111/ - LESS: INCOME DECLARED 98,00,250/ - ADDITION 48,14,861/ - THE A.O. HAS NOTICED THAT THE INCOME' RETURNED RS.98,00,250/ - , INCLUDES INCOME' FROM CONTRACT BUSINESS OF RS.75,45,428/ - AND INCOME FROM OTHER SOURCES ON ACCOUNT OF BANK FD INTEREST AND I. T. REFUND OF 3 ITA NO. 1102 /PUN/20 17 A.Y. 2010 - 11 RS.22,54,821/ - . THE, A.O. WAS OF THE OPINION THAT THE INCOME FROM BUSINESS .HAS BEEN OFFERED TO TAX BY THE APPELLANT DURING ASSESSMENT PROCEEDINGS AS PER THE ABOVE WORKING FILE D BY THE APPELLANT DURING ASSESSMENT PROCEEDINGS AT RS.1,46,15,111/ - WHICH DOES NOT INCLUDE INCO ME FROM OTHER SOURCES MAINLY ON ACCOUNT OF BANK FDR INTEREST. THE A.O. HAD NOTICED THAT THE SAID INCOME FROM OTHER SOURCES WH ICH WAS ALSO DEDUCTED AS INCOME RETURNED FROM THE BUSINESS INCOME OFFERED TO TAX BY THE APPELLANT OF RS.1,46,15,111/ - WHILE ARRIVI NG AT ADDITION TO INCOME RETURNED. IN VIEW OF THE ABOVE FACTS, THE AO HAD HELD THAT THERE IS MISTAKE APPARENT FROM RECORD THAT THE INCOME FROM OTHER SOURCES OF RS.22,54,821/ - WAS REMAINED TO BE ASSESSED IN THE ASSESSMENT ORDER U/S.143(3) DATED 22.08.2012. THE AO HAS ACCORDINGLY MADE ADDITION OF RS.22,54,821/ - IN THE ORDER PASSED U/S.154 OF THE ACT. 4. THAT DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE CONTENDED THAT THE SPECIFIC AMOUNT OF RS.48,40,200/ - WAS OFFERED TO TAX AS AGREED ADDITION T O BUY PEACE OF MIND AND TO CO OPERATE WITH THE DEPARTMENT. THE ASSESSEE FURTHER CLAIMED THAT WHILE AGREEING FOR THE ASSESSED INCOME AT RS.1,46,15,111/ - , THE AMOUNT OF RS.22,54,821/ - WAS CONSIDERED IN THE SAID AMOUNT. THEREFORE, THE IMPUGNED AMOUNT COULD NO T BE SEPARATELY ADDED U/S.154 OF THE ACT. THE CIT(APPEAL) ON THIS ISSUE HAS OBSERVED AS FOLLOWS: 8. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTICED THAT THE AO HAS HELD THAT THE NET PROFI T @14% OFFERED TO TAX BY THE APPELLANT DURING ASSESSMENT PROCEEDINGS ON CONTRACT RECEIPTS AND NET PROFIT ON SUB CONTRACTS RECEIPTS OFFERED TO TAX @2.22% WORKS OUT TO RS.1,46,15,111/ - WHICH DOES NOT INCLUDE INCOME FROM OTHER SOURCES ON ACCOUNT OF INTEREST ON FIXED DEPOSITS OF RS.21,79,112/ - AND INTEREST ON I T REFUND RS.75,709/ - . ON THE OTHER HAND THE APPELLANT HAS CONTENDED THAT THE ADDITION OF RS.48,14,861/ - WAS AGREED AFTER CONSIDERING INCOME FROM OTHER SOURCES OF RS.22,54,821/ - . HOWEVER, IN VIEW OF THE COMPUTATION OF AGREED ADDITION, THE CONTENTION OF THE APPELLANT CANNOT BE ACCEPTED. THE SAID COMPUTATION SUBMITTED BY THE APPELLANT TO THE AO IS AS UNDER : PARTICULARS AMOUNT (RS.) TOTAL CONTRACT RECEIPTS 15,07,89,759/ - LESS. CONTRACTS AND SUB CONTRACTS AWARDED 5,51,39,691/ - BALANCE 9,56,50,068/ - PROFIT @14% ON OWN CONTRACTS 1,33,91,010/ - PROFIT ON CONTRACTS AND SUB CONTRACTS @2.22% 12,24,101/ - TOTAL 1,46,15,111/ - LESS: INCOME DECLARED 98,00,250/ - ADDITION 48,14,861/ - 4 ITA NO. 1102 /PUN/20 17 A.Y. 2010 - 11 IN THE ABOVE COMPUTATION THE PROFIT FROM CONTRACT BUSINESS WAS OFFERED TO TAX AT RS.1,46,15,111/ - WHICH DOES NOT INCLUDE INCOME FROM OTHER SOURCES RS.22,54,821/ - . THEREFORE, THE CONTENTION OF THE APPELLANT IS REJECTED. 9. IN THE RESULT, THE A PPEAL IS DISMISSED. 5. WE HAVE PERUSED THE RELEVANT DOCUMENTS ON RECORDS SPECIFICALLY ASSESSMENT ORDER, RECTIFICATION ORDER U/S.154 OF THE ACT AND THE ORDER OF THE LD. CIT(APPEAL) CONFIRMING THE SAID RECTIFICATION ORDER WHEREIN THE ADDITION OF RS.22,54,821/ - WAS CONFIRMED. IT IS NOTICED THAT THE ASSESSEE FILED RETURN DECLARING TOTAL INCOME OF RS.98,00,250/ - . A C OPY OF C OMPUTATION OF INCOME IS AVAILABLE AT PAGE 1 OF THE PAPER BOOK , WHICH DEPICTS I NCOME FROM BUSINESS AT RS.75,45,429/ - AND INCOME F ROM OTHER SOURCES (FDR INTEREST) AT RS.22,54,821/ - . DURING THE ASSESSMENT PROCEEDING, THE AO POINTED OUT CERTAIN INFIRMITIES IN THE BUSINESS INCOME AS RECORDED AT PARA 5.2 OF THE ORDER, SUCH AS, SUB - CONTRACTS WERE NOT PROPERLY BACKED BY EVIDENCE; NO INVENT ORY MAINTAINED FOR OPENING STOCK, WIP AND CLOSING STOCK; AND DISCRE PA NCIES IN EXPENSES VOUCHERS. THE ASSESSEE AGREED WITH SUCH SHORTCOMINGS AND AGREED FOR BUSINESS INCOME AT RS.146 CRORE AND ODD DETERMINED BY TAKING PROFIT RATE OF 14% ON OWN CONTRACTS AN D 2.2% ON SUB - CONTRACTS. A C OPY OF THE ASSESSEES LETTER AGREEING WITH SUCH AMOUNT OF B USINESS INCOME HAS BEEN REPRODUCED AT P AGE 5 OF THE ASSESSMENT ORDER GIVING FIGURE OF RS.1,46,15,111/ - . THEREAFTER, THE ASSESSEE REDUCED THE DECLARED INCOME OF RS.98,00, 250/ - TO WORK OUT ADDITIONAL INCOME RS.48,14,861/ - . THE ASSESSING OFFICER , AT THE TIME OF COMPUTATION OF TOTAL INCOME STARTED WITH THE FIGURE OF INCOME DECLARED AS PER RETURN AT RS.98,00,250/ - AND T HEREAFTER, ADDED RS.48,14,861/ - , BEING THE ADDITIONAL INCO ME, THEREBY DETERMININ G TOTAL INCOME AT RS.1.46 CRORE . IT IS PERTINENT TO 5 ITA NO. 1102 /PUN/20 17 A.Y. 2010 - 11 NOTE THAT THE ASSESSEE AGREED FOR B USINESS INCOME FROM CONTRACT RECEIPTS AT RS.1.46 CRORES , WHICH WAS INDEPENDENT OF INCOME FROM BANK INTEREST AT RS.22.54 L AKHS THAT WAS DECLARED BY THE ASSESSEE UNDER THE HEAD I NCOME OF OTHER SOURCES. THUS, THE ASSESSING OFFICER IN THE ASSESSMENT ORDER INADVERTENTLY ADOPTED B USINESS INCOME OF RS.1.46 CRORES AS T OTAL INCOME , WHICH HAD THE EFFECT OF EXCLUDING I NCOME FROM OTHER SOURCES AT RS.22.54 LAK HS , WHICH WAS INDEPENDENTLY OFFERED BY THE ASSESSEE IN ITS RETURN OF INCOME AND WAS NOT A SUBJECT MATTER OF ANY DISPUTE. IT IS THIS MISTAKE WHICH THE ASSESSING OFFICER RECTIFIED IN THE CURRENT PROCEEDING S U/S.154 OF THE ACT BY ALSO INCLUDING INCOME FROM OTHER SOURCES AMOUNTING TO RS.22.54 LAKHS IN THE TOTAL INCOME , WHICH WAS EARLIER OMITTED TO BE INCLUDED IN THE ORIGINAL ASSESSMENT ORDER . IN OUR CONSIDERED OPINION, IT IS A CLEAR - CUT CASE OF THE AO CARRYING OUT RECTIFICATION OF A GLAR ING AND PATENT MISTAKE COMMITTED IN THE O RIGINAL ASSESSMENT ORDER. BY NO STANDARD, IT CAN BE CONSTRUED AS A DEBATABLE POINT AMENABLE TO TWO VIEWS. WE, THEREFORE, UPHOLD T HE IMPUGNED ORDER . 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRO NOUNCED ON 14 TH DAY OF DECEMBER , 20 20 . SD/ - S D/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 14 TH DECEMBER , 2020. SB 6 ITA NO. 1102 /PUN/20 17 A.Y. 2010 - 11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 2, NASHIK. 4. THE PR. CIT - 2, NASHIK. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6 . / GUARD FILE. / BY ORDER, // TRUE COPY // / PRIVATE SECRETARY , / ITAT, PUNE . 7 ITA NO. 1102 /PUN/20 17 A.Y. 2010 - 11 * DATE 1 DRAFT DICTATED ON 1 1 . 12 .2020 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 1 1.12 .2020 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER