ACIT, CHENNAI V. Marg Limited, CHENNAI

ITA 1151/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8006 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-10-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 28-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M M BHUSARI
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . . ! ' , # $% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1151/MDS/2016 & '& /ASSESSMENT YEAR : 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -4 (1), CHENNAI. V. M/S.MARG LIMITED, MARG AXIS, 4/318, RAJIV GANDHI SALAI, KOTTIVAKKAM, CHENNAI 600 041. PAN: AACCM 8770 G ( () /APPELLANT) ( *+() /RESPONDENT) () , - /APPELLANT BY : DR.M.M.BHUSARI, CIT *+(),- /RESPONDENT BY : NONE ,.# /DATE OF HEARING : 19.10.2016 /0' ,.# /DATE OF PRONOUNCEMENT : 25.11.2016 /O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) -8, CHENNAI DATED 29.02.2016 AND PERTAINS TO ASSESS MENT YEAR 2012-13. 2 I.T.A. NO.1151/MDS/2016 2. NO ONE APPEARED FOR THE ASSESSEE INSPITE OF SERV ICE OF NOTICE. THE REGISTRY HAS PLACED ON RECORD THE POSTAL ACKNOW LEDGEMENT AS A PROOF OF SERVICE OF NOTICE. THEREFORE, WE HEARD THE LEARNED REPRESENTATIVE FOR THE DEPARTMENT AND PROCEEDED TO DISPOSE OFF THE APPEAL ON MERIT. 3. SHRI M.M.BHUSARI, THE LEARNED DEPARTMENT REPRESE NTATIVE SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS ADDITION OF RS.21,40,00,000/- ON ESTIMATE BASIS. ACCORDING TO T HE LEARNED DEPARTMENT REPRESENTATIVE, THE ASSESSEE ENGAGED ITS ELF IN THE BUSINESS OF CONSTRUCTION. DURING THE YEAR UNDER CONSIDERATIO N, THE ASSESSEE CONSTRUCTED RESIDENTIAL PROJECTS FOR THE GOVERNMENT AND OTHER GOVERNMENTAL AGENCIES ACROSS THE COUNTRY. THE ASSES SEE HAS NOT PRODUCED THE BILLS AND VOUCHERS EITHER FOR THE EXPE NDITURE CLAIMED FOR CARRYING OUT THE CONTRACT WORK. IN THE ABSENCE OF B ILLS AND VOUCHERS, THE ASSESSING OFFICER FOUND THAT THE CORRECT INCOME OF THE ASSESSEE COULD NOT BE ASCERTAINED FROM ALL THE PROJECTS DONE BY THE AS SESSEE. THE ASSESSING OFFICER HAS ALSO FOUND THAT THE ASSESSEE HAS RETURN ED LESS THAN 5% OF THE GROSS RECEIPT AS PROFIT. IF WE CONSIDER THE INTERES T PAID BY THE ASSESSEE AND THE DEPRECIATION CLAIMED, THE PROFIT DECLARED B Y THE ASSESSEE WOULD GO BELOW 5%. THEREFORE, THE ASSESSING OFFICER ESTIM ATED THE PROFIT AT 5% 3 I.T.A. NO.1151/MDS/2016 AND FOUND THAT THERE WAS A DEFICIENCY OF RS.21.39 C RORES. ACCORDINGLY, THE ASSESSING OFFICER ESTIMATED THE INCOME AS RS.21 .40 CRORES ON ESTIMATE BASIS AT 5% ON ALL THE PROJECTS. 4. ON A QUERY FROM THE BENCH, WHETHER THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED DEPARTMENT REPRESENTATIVE VERY FAIRLY SUBMITTED THAT THERE IS NO REFERENCE IN THE ASSESSMENT ORDER IN THE REJECTION OF BOOKS OF ACCOUNT. REFERRING TO THE ORDER OF CIT(A), THE LEARNED DEPARTMENT REPRESENTATIVE SUBMITTED THAT WHEN THE A SSESSING OFFICER COULD NOT COMPUTE THE CORRECT TAXABLE INCOME FOR WA NT OF BILLS AND VOUCHERS, IT IS FOR THE ASSESSING OFFICER TO DECIDE TO WHAT EXTENT THE BOOKS OF ACCOUNT CAN BE RELIED UPON. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DEPARTMENT REPRESENTATIVE AND ALSO PERUSED THE RELEVANT MATERI AL AVAILABLE ON RECORD. A BARE READING OF THE ASSESSMENT ORDER SHOW S THAT THE ASSESSING OFFICER ESTIMATED THE PROFIT IGNORING THE BOOKS OF ACCOUNT AT THE RATE OF 5% ON THE GROUND THAT THE INCOME DISCLOSED FOR SOME OF THE PROJECTS ARE LESS THAN 5%. THE ASSESSING OFFICER HAS ALSO OBSERV ED IN THE ASSESSMENT ORDER THAT THE INCOME EARNED BY THE ASSESSEE IN SOM E OF THE PROJECTS ARE 4 I.T.A. NO.1151/MDS/2016 REASONABLE IN RELATING TO THE REGULAR CONTRACT BUSI NESS. THE QUESTION ARISES FOR CONSIDERATION IS, CAN THE PROFIT OF THE ASSESSEE BE ESTIMATED WITHOUT REJECTING THE BOOKS OF ACCOUNT? ADMITTEDLY, THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS NOT REJECTED. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSSESSEE IS NOT MAINTAINING THE BOOKS OF ACCOUNT PROPERLY AND THE CORRECT INCOME OF THE ASSESSEE COU LD NOT BE COMPUTED ON THE BASIS OF THE BOOKS OF ACCOUNT MAINTAINED IN THE COURSE OF BUSINESS, THE BOOKS OF ACCOUNT CAN BE REJECTED. THE ASSESSING OFFICER CAN ESTIMATE THE PROFIT ON THE BASIS OF THE MATERIAL AV AILABLE ON RECORD. IN THE CASE BEFORE US, THE BOOKS OF ACCOUNT OF THE ASS ESSEE ARE NOT REJECTED BY THE ASSESSING OFFICER. MERELY BECAUSE, THE ASSES SEE HAS DISCLOSED THE PROFIT LESS THAN 5% IN SOME OF THE PROJECT, THAT AL ONE CANNOT BE A REASON FOR THE ASSESSING OFFICER TO ESTIMATE THE PROFIT UN IFORMLY AT 5% FOR ALL THE PROJECTS. IT IS FOR THE ASSESSING OFFICER TO EXAMIN E THE BOOKS OF ACCOUNT AND FIND OUT WHY HE COULD NOT ACCEPT PROFIT OF THE ASSESSEE ON THE BASIS OF BOOKS OF ACCOUNT MAINTAINED. SINCE SUCH AN EXERC ISE WAS NOT DONE AND THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS NOT RE JECTED, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RI GHTLY ALLOWED THE CLAIM OF THE ASSESSEE. THEREFORE, THIS TRIBUNAL DO NOT FI ND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY, THE SAME IS CONFIRMED. 5 I.T.A. NO.1151/MDS/2016 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON 25 TH NOVEMBER, 2016 AT CHENNAI. SD/- SD/- ( . . ! ' ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) # /ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 1 /DATED, THE 25 TH NOVEMBER, 2016. SP. , *.!2 32'. /COPY TO: 1. () /APPELLANT 2. *+() /RESPONDENT 3. 4. ( )/CIT(A) 4. 4. /CIT, 5. 25 *. /DR 6. & 6 /GF.