ACIT, V. Shri Kumar Narendra Prasad Singh,

ITA 113/RAN/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85456 (ITAT-RANCHI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 14-03-2014
• Court: TRIBUNAL
• Department Lawyers: RAKESH KR DAS JCITLD
• Assessee Lawyers: SHR D SANNIGRAHICA LD
• Section: 143(3)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, RANCHI BEFORE HON'BLE SHRI H.L. KARWA, PRESIDENT , AND HON'BLE SHRI B.R. BASKARAN, ACCOUNTANT M EMBER ITA NO . 11 3 /RAN/201 4 A.Y 20 0 9 - 10 A.C.I.T, CIR - 2, RANCHI VS. SRI KUMAR NAR ENDRA PRASAS PAN AGJPS6406M ( APPELLANT ) ( RESPONDENT ) FOR THE APPELLANT :SH RI RAKESH KR. DAS, JCIT/LD.DR FOR THE RESPONDENT : SHR D. SANNIGRAHI,CA, LD.AR DATE OF HEARING : 01 - 12 - 2014 DATE OF PRONOUNCEMENT: 01 - 12 - 2014 O R D E R SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THIS APPEAL F ILED BY TH E REVENUE IS DIRECTED AGAINST THE ORDER DATED 2 3 - 12 - 2013 PASSED BY LD. CIT(A) , RANCHI (JHARKHAND) AND IT RELATES TO THE ASSESSMENT YEAR 20 0 9 - 10 . 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN RESPECT OF THE FOLLOWING ISSUES: - A . D EDUCTION OF INCOME ESTIMATED FROM THE CONTRACT WORKS B . D EDUCTION OF RENTAL INCOME ESTIMATED FROM JCB MACHINES/MACHINERIES 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. 4. THE FACTS RELATING TO THE ABOVE ISSUES ARE STATED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF UNDERTAKING OF CONSTRUCTION WORKS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE NET PROFIT [NP] AT 6% OF THE GROSS CONTRACT RECEIPTS. THE ASSE SSING 2 ITA NO. 11 3 / RAN/14 SRI KUMAR NARENDRA PRASAD OFFICER FURTHER NOTICED THAT THE ASSESSEE HAS RENTED OUT ITS JCB MACHINES AT RS. 1 LAKH/ - P.M . DURING THE YEAR UNDER CONSIDERATION, THE JCB MACHINE W A S GIVEN ON RENT ONLY FOR 2 MONTHS . HENCE, T HE ASSESSEE SHOULD HAVE DISCLOSED RENTAL INCOME OF RS. 2 LAKH S DURING THIS YEAR . HOWEVER, THE ASSESSEE HAD SHOWN ONLY RS. 1.8 0 LAKHS . HENCE, THE ASSESSING OFFICER ADDED THE DIFFERENCE AMOUNT OF RS.20,000/ - TO THE INCOME FROM JCB MACHINES AND ASSESSED THE SAME SEPARATELY IN ADDITION TO THE CONTRACT INC OME ESTIMATED BY HIM . 5. IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) NOTICED THAT THE NET PROFIT MARGINS DECLARED BY THE ASSESSEE IN THE ASSESSMENT Y E ARS 2005 - 06 TO 2009 - 10 WAS IN THE RANGE OF 1.16% TO 2.86% . ACCORDINGLY, THE LD.CIT(A) HELD THAT IT WOU LD BE REASONABLE TO ESTIMATE THE GP RATE AT 3.05% AND ISSUED DIRECTIONS TO THE ASSESSING OFFICER ACCORDINGLY . 6. W ITH REGARD TO THE RENTAL INCOME FROM JCB MACHINES, THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT THE SAME SHOULD BE CONSIDERED AS FORMI NG PART OF GROSS RECEIPTS. ACCORDINGLY, IT WAS CONTENDED THAT THE ASSESSING OFFICER NOT JUSTIFIED IN ASSESSING THE SAME SEPARATELY. THE LD. CIT(A) NOTICED THAT THE ASSESSEE HAD INCLUDED THE RENTAL INCOME UNDER THE HEAD MISC. RECEIPTS OF RS. 2,48,513/ - DECLARED BY THE ASSESSEE ACCORDINGLY, THE LD. CIT(A) HELD THAT THE INCOME FROM MISCELLANEOUS RECEIPTS MAY BE ESTIMATED AT 20% OF RS.2,48,513/ - AND ORDERED ACCORDINGLY. THE REVENUE IS AGGRIEVED BY THE ORDER PASSED BY LD.CIT(A) ON BOTH THE ISSUES. 7. WE HAVE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICE THAT THE LD.CIT(A) HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNT AND THE ASSESSEE IS NO IN APPEAL CHALLENGING THE SAID DECISION . HENCE, THE ISSUE RELATING TO REJECTION OF BOOKS OF AC COUNT HAS REACHED FINALITY . HOWEVER , THE LD.CIT(A) HAS REDUCED THE NP R A TE ESTIMATED BY THE ASSESSING OFFICER FROM 6% TO 3.05%. THOUGH THE LD.AR SUBMITTED THAT THE ASSESSMENTS RELATING TO THE ASSESSMENT YEARS 2005 - 06 AND 2006 - 07 HAVE BEEN COMPLETED U/ S. 143(3) OF THE ACT. , YET WE NOTICE THE QUESTION OF 3 ITA NO. 11 3 / RAN/14 SRI KUMAR NARENDRA PRASAD REJECTION OF BOOKS OF ACCOUNT DID NOT ARISE IN THOSE ASSESSMENT YEARS I.E THE AO HAD COMPLETED THE ASSESSMENT IN THOSE YEARS BY MAKING SPECIFIC ADDITIONS. HOWEVER , IN THE INSTANT YEAR, IT IS AN ADMITTED FACT THAT THE ASSESSEE COULD NOT PRODUCE THE VOUCHERS FOR VERIFICATION BEFORE THE ASSESSING OFFICER. HENCE, THE VA RACITY OF THE EXPENDITURE CLAIM COULD NOT BE EXAMINED BY THE AO ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT TAK E SUPPORT OF THE ASSESSMENT ORDERS OF EARLIER EARS. FURTHER, WE NOTICE ONE MORE VITAL DISTINGUISHING FACTOR, VIZ. THE TURNOVER OF THE ASSESSEE FOR THE CURRENT YEAR DOUBLED WHEN COMPARED WITH THE IMMEDIATELY PRECEDING YEAR, I.E THE TURNOVER HAS GONE U P FROM RS.3.62 CRORES RE PORTED IN THE ASSESSMENT YEAR 2008 - 09 TO 6.18 CRORES IN THE CURRENT YEAR. HOWEVER, WE NOTICE THAT THE GP RATE DECLARED BY THE ASSESSEE REMAINED TH E SAME DESPITE THE FACT OF INCREAS E IN THE TURNOV ER. IT IS IN THE COMMON KNOWLEDGE THAT THE NET PROFIT WOULD INCREASE DUE TO INCREASE IN THE TURNOVER , SINCE MAJORITY OF FIXED EXPENSES DO NOT INCREASE PROPORTIONATE TO THE TURNOVER . CONSIDERING THESE FACTS, WE ARE OF THE VIEW THAT T HIS ISSUE WOULD MEET THE ENDS OF JUSTICE , IF THE NP RATE IS DETERMINED AT 4% OF THE GROSS CONTRACT RECEIPTS . WE ORDER ACCORDINGLY. 8. WITH REGARD TO THE RENTAL INCOME FROM JCB MACHINES, WE NOTICE THAT THE ASSESSEE HAS INCLUDED THE SAME UNDER THE HEAD MISC. RECEIPTS . THO UGH THE ASSESSEE HAS CONTENDED THAT THE RENTAL RECEIPTS ALSO FORM PART OF CONTRACT RECEIPTS, YET WE ARE UNABLE TO AGREE WITH THE SAME. SINCE THE ASSESSEE HAD GIVEN JCB MACHINE ON MONTHLY RENTAL BASIS THE SAME CANNOT CONSIDERED INCLUDED IN THE CONTRACT RECEIPTS. THE ASSESSEE COULD CLAIM EXPENDITURE, IF IT IS SHOWN THAT HE HAD INCURRED THE SAME IN CONNECTION WITH THE RENTING OF THE SAME. HOWEVER, NO SUCH DETAILS WERE GIVEN TO THE TAX AUTHORITIES. THOUGH THE LD.CIT(A) HAS ESTIMATED INCOME AT 20% OF THE RE NTAL RECEIPTS, YET HE HAS NO BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE COULD HAVE INCURRED EXPENSES AGAINST THE RENTAL RECEIPTS TO THE EXTENT OF 80% . ACCORDINGLY, WE DO NOT ANY JUSTIFICATION IN THE DECISION TAKEN BY THE LD.CIT(A) ON THIS I SSUE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND SUSTAIN THE ADDITION MADE BY THE AO . 4 ITA NO. 11 3 / RAN/14 SRI KUMAR NARENDRA PRASAD 9 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 01 - 12 - 20 14 SD/ - SD/ - [ H.L. KARWA ] [ B.R. BASKARAN ] PRESIDENT ACCOUNTANT MEMBER DT. 01 - 12 - 2014 PLACE : RANCHI PP, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT : 2 THE RESPONDENT: 3. .THE C IT, 4.THE CIT(A), 5.DR, ITAT CIRCUIT BENCH, RANCHI 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT. REGISTRAR 5 ITA NO. 11 3 / RAN/14 SRI KUMAR NARENDRA PRASAD 1. DATE OF DICTATION ............. 01 - 12 - 2014 ....................... 2. DATE ON WHICH THE T YPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ........................OTHER MEMBER ..... 02 - 12 - 2014 ........................ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. ..................... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEF ORE THE DICTATING MEMBER FOR PRONOUNCEMENT................................ 01 - 12 - - 2014 ................................................... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S ................ 6. DATE ON WHICH THE FILE GOES TO THE B ENCH CLERK ....................................... 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ......................................... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ......................... ........................................................................ 9. DATE OF DESPATCH OF THE ORDER ..............................................................