A.C.I.T Cir - 2,Asansol, Asansol V. Shri Mritunjoy Mukherjee, Burdwan

ITA 1183/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4647 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RJAT KR KUREEL J
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 118 3 /KOL/ 2013 & C.O. NO.89/KOL/2013 (A/O ITA NO.1183/KOL/2013) ASSESSMENT YEAR:2009-10 ACIT, CIRCLE-2, PARMAR BUILDING, APAKAR GARDEN (WEST), 54, G.T. ROAD, ASANSOL-713304 SRI MRITUNJOY MUKHERJEE SRIPALLY, ASANSOL, DIST. BURDWAN [ PAN NO.AAKFA 3496 J ] / V/S . / V/S . SRI MRITUNJOY MUKHERJEE, SRIPALLY, ASANSOL, DIST. BURDWAN, WEST BENGAL ACIT, CIRCLE-2, PARMAR BUILDING, APAKAR GARDEN (WEST),54, G.T. ROAD, ASANSOL-713304 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI RAVI TULSIYAN, FCA /BY REVENUE SHRI RJAT KR. KUREEL, JCIT-DR /DATE OF HEARING 22-06-2016 /DATE OF PRONOUNCEMENT 24-06-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL AND CROSS OBJECTION (CO) BY THE REVENU E AND ASSESSEE ARE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), ASANSOL DATED 18.02.2013. ASSESSMENT WAS FRAMED BY ACIT CIR CLE-2, ASANSOL U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) VIDE HIS ORDER DATED 23.12.2011 FOR ASSESSMENT YEAR 2009 -10. ITA NO.1183/KOL/2013 & CO NO.89/KOL/2013 A.Y. 200 9-10 ACIT CIR-2, ASL. V. SH MRITUNJOY MUKHERJEE PAGE 2 SHRI RAVI TULSIYAN, LD AUTHORIZED REPRESENTATIVE A PPEARED ON BEHALF OF ASSESSEE AND SHRI RAJAT KUMAR KUREEL, LD DEPARTMEN TAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.1183/KO L/2013. 2. AT THE THRESHOLD IT IS NOTED THAT THERE IS VERY SMALLNESS DELAY IN FILING THE APPEAL BY THE REVENUE. THE REVENUE HAS FLED CONDONA TION PETITION, STATING THE REASONS THAT THE DELAY IS OCCURRED DUE TO CONCE RNED OFFICIAL WAS ON LEAVE. LD. AR FOR ASSESSEE SUBMITTED THAT CONSIDERING DELA Y HE SHOULD NOT BE HAVING ANY OBJECTION TO THE BENCH IF THE DELAY OF CONDONAT ION. THUS, IN OUR CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTANCES THIS DELAY DESERVES TO BE CONSIDERED AND THEREFORE THE SAME IS CONDONED AND H EARING PROCEEDED WITH. 3. SOLE ISSUE RAISED BY REVENUE IS THAT LD CIT(A) ERRED IN TREATING THE PROFIT @ 10.5% OF CONTRACT RECEIPTS. 4. FACTS IN BRIEF ARE THAT ASSESSEE IS AN INDIVIDUA L AND ENGAGED IN BUSINESS OF CIVIL CONSTRUCTIONS UNDER THE NAME & ST YLE OF PROPRIETARY FIRM M/S MRITYUNJOY MUKHERJEE & CO. DURING THE YEAR UNDER CO NSIDERATION THE ASSESSEE HAS CLAIMED VARIOUS EXPENSES IN ITS PROFIT AND LOSS ACCOUNT. HOWEVER, THE ASSESSEE FAILED TO SUBSTANTIATE THE VARIOUS EXPENSE S CLAIMED AND DEBITED IN THE PROFIT & LOSS ACCOUNT DURING ASSESSMENT PROCEED INGS. ACCORDINGLY, THE AO DISALLOWED THE EXPENSES AND ADDED TO THE TOTAL INCO ME OF THE ASSESSEE AS DETAILED BELOW : I) ON ACCOUNT OF BOGUS EXPENSES RS.28,24,850 II) ON ACCOUNT OF TRANSPORTING CHARGE RS. 92, 605 III) ON ACCOUNT OF LABOUR CHARGES INCLUDING HIRE CHARGES RS.28,66,611 IV) ON ACCOUNT OF GENERAL EXPENSES RS. 49,972 V) ON ACCOUNT OF SITE EXPENSES RS. 47,774 RS.58,81,812 ITA NO.1183/KOL/2013 & CO NO.89/KOL/2013 A.Y. 200 9-10 ACIT CIR-2, ASL. V. SH MRITUNJOY MUKHERJEE PAGE 3 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO GAVE PARTLY RELIEF TO ASSESSEE BY OBSERVING AS UNDER:- 16. ON A CAREFUL CONSIDERATION OF FACTS, I RELYING ON DECISIONS SIN PARAGRAPH 9 CONCLUDE THAT INCOME HAS TO BE DETERMIN ED AT A FIXED PERCENTAGE OF GROSS RECEIPTS LESS MATERIALS SUPPLIE D, IF ANY. THE PERCENTAGE CANNOT LEAD TO FIGURE EQUALING OR BE NEA R 33.41% FIXED BY ASSESSING OFFICER SINCE THERE IS NO PRECEDENT. ON T HE OTHER HAND, CONSIDERING THE LEVEL OF ABSENCE OF VOUCHERS OR ITS DEFECTS (CONSIDERED HIGH IN THIS CASE) 8% INS NOT JUSTIFIED. ACCORDINGL Y I DIRECT THE ASSESSING OFFICER TO ASSESS THE INCOME FROM CONTRACT WORK AT 10.5% OF THE FIGURE OBTAINED BY REDUCING VALUE OF MATERIALS SUPPLIED FR OM GROSS CONTACT RECEIPTS. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 6. BEFORE US LD. DR SUBMITTED THAT LD. CIT(A) HAS W ORKED OUT THE INCOME ON ESTIMATE BASIS @ 10.5% OF THE GROSS RECEIPT WITH OUT REJECTING THE BOOKS OF ACCOUNT OF ASSESSEE AND VEHEMENTLY RELIED ON THE OR DER OF AO. ON THE OTHER HAND, LD. AR SUBMITTED THAT THERE ARE VARIOUS COMPANIES IN THE IDENTICAL BUSINESS AND THEIR PROFIT FROM THE BUSINE SS DO NOT EXCEED MORE THAN 8% ON THE GROSS RECEIPTS. THE ASSESSEE AGREED FOR T HE ADDITION OF INCOME @ 8% OF THE GROSS TURNOVER TO BUY THE PEACE OF MIND. THE LD. AR ALSO SUBMITTED THAT PROFIT ASSESSED UNDER SECTION 143(3) OF THE AC T IN THE EARLIER YEARS IS 8% APPROX ONLY. 7. WE HAVE RIVAL PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE AFORESAID DISCUSSION, WE FIND THE AO HAS D ISALLOWED THE VARIOUS EXPENSES AS THESE WERE NOT VERIFIED. BUT THE LD.CIT (A) HAS TREATED THE INCOME OF THE ASSESSEE @ 10.5% OF THE GROSS RECEIPT. SO TH E REVENUE IS IN APPEAL BEFORE US. NOW THE QUESTION BEFORE US ARISES FOR AD JUDICATION IS AS TO WHETHER THE ACTION OF THE LD. CIT(A) IS CORRECT FOR WORKING OUT THE INCOME @ 10.50% OF THE GROSS RECEIPT. FROM THE FACTS OF THE CASE, WE F IND THAT THE NATURE OF THE WORK OF THE ASSESSEE HAS NOT BEEN DOUBTED AND IN TH E SIMILAR FACTS AND ITA NO.1183/KOL/2013 & CO NO.89/KOL/2013 A.Y. 200 9-10 ACIT CIR-2, ASL. V. SH MRITUNJOY MUKHERJEE PAGE 4 CIRCUMSTANCES VARIOUS HONBLE COURTS HAVE HELD THAT A REASONABLE PERCENTAGE OF PROFIT CAN BE WORKED OUT WHICH ARE CITED BELOW. 1. IN THE CASE OF M/S TRIVENI ENTERPRISE, HYDERABAD VS THE INCOME-TAX OFFICER WD 6(1) ITA NO. 352/HYD/2011 & 353.HYD/2011 IT HAS BEEN HELD THAT IN THE AY 2006-07 AND 2008-09, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. ASSESSEE FAILS TO PROVE THE EXPENSES WITH DETAILS AO ESTIMATED THE INCOME OF THE ASSESSEE AT 12% OF THE GROSS RECE IPT. ON APPEAL, LEARNED CIT(A) DIRECTED THE AO TO ESTIMATE THE INCOME AT 8% IN THE CASE OF MAIN CONTRACT RECEIPTS AND AT 6% ON THE SUB CONTRACT REC EIPT. TRIBUNAL DIRECT THE ASSESSING OFFICER TO ESTIMATE THE INCOME OF THE ASS ESSEE AT 8% ON MAIN CONTRACT RECEIPTS AND AT 5% OF THE SUB CONTRACT REC EIPTS AS ABOVE SAID. 2. IN THE CASE OF SHRI OM PRAKASH TRIPATHI VS ACIT (CONTRACTOR) CIRCLE 2(1), FARRUKHABAD. ITA NO. 330/AGR/2005 IT HAS BEEN HELD THAT IN THE AY 2001-02, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CIVIL C ONSTRUCTION. NET PROFIT RATE SHOWN BY THE ASSESSEE 5.32%. THE SAME BEING ACCEPTE D BY THE AO CIT(A), AGRA. REJECTED THE BOOKS OF ACCOUNT BY APPLYING PRO VISIONS OF SECTION 145 AND ESTIMATED THE NET PROFIT AT 7% OF THE GROSS REC EIPTS. TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A) ON THE ISSUE WITH CONCLUSIO N THAT THE RATE APPLIED HAS BEEN RIGHTLY BASED ON THE NET PROFIT RATE ON DIFFER ENT YEARS. 3. IN THE CASE OF METROPOLITAN ENGG. CO. OPT. SOCIE TY LTD. VS. ACIT ITA NO.S 2172 & 2172/KOL/2010 IT HAS BEEN HELD THAT IN THE AY 2001-02, THE ASSES SEE IS ENGAGED IN CIVIL CONTRACT BUSINESS WITH OTHERS B USINESS SEGMENTS. AO ESTIMATED NET INCOME FROM THE WORK CONTRACT @ 10% O N THE GROSS CONTRACT RECEIPTS. ASSESSEE FAILED TO FURNISH NECESSARY EVID ENCE FOR PURCHASE AND OTHER EXPENSES. PURCHASE & EXPENSES NOT CONFIRMED O N AN ENQUIRY CONDUCTED BY THE AO U/S. 133(6). LD. CIT(A) CONFIRM ED THE ORDER OF THE ASSESSING OFFICER. TRIBUNAL RELIED ON THE DECISION OF HONBLE ORISSA HIGH COURT DECISION IN THE CASE OF CIT VS NANDARAM HUNDA RAM (1976) 103 ITR 433, WHEREIN IT IS HELD THAT IF THE ASSESSEE FAILED TO PRODUCE ACCEPTABLE ACCOUNTS REVENUE WOULD BE ON THE DECISION OF ROYAL MEDIAL HALL VS. CIT (1962) 46 ITR 748 (AP) WHEREIN IT IS HELD THAT ESTIMATE OF INCOME ON THE BASIS OF MATERIALS AVAILABLE AND THE PAST ASSESSMEN T RECORD WAS HELD PROPER AND TRIBUNAL DIRECTED THE ASSESSING OFFICER TO RE COMPUTED THE INCOME BY APPLYING 6% OF NET PROFIT ON GROSS CONTRA CT RECEIPTS. 4. IN THE CASE OF PRAVIN PANDURANG PATIL, ISLAMPUR IN ITA NO. 850/PN/08 IT HAS BEEN HELD THAT IN THE AY 2005-06, THE ASSESSEE IS E NGAGED IN CIVIL CONTRACT BUSINESS WITH OTHERS BUSINESS SEGMENTS. AO REJECTED THE BOOKS OF ACCOUNT INVOKING THE PROVISIONS OF SECTION 145(3) AND ESTIM ATED NET INCOME FROM THE CONTRACT BUSINESS @ 8%. ASSESSEE FAILED TO PRODUCE THE LABOUR PAYMENT VOUCHERS AND PURCHASE BILLS TO VERIFY THE EXPENSES PURCHASE AND CLOSING STOCK. LD. CIT(A) HAS ESTIMATED THE INCOME FROM REG ULAR CONTRACT BUSINESS AT 8% OF THE CONTRACT RECEIPTS AND 4% IN SO FAR SUB-CO NTRACTING IS CONCERNED. HONBLE LORDSHIP OF TRIBUNAL, DIRECTED TO ESTIMATE T HE INCOME @ 6% FROM THE CONTRACT BUSINESS SAND SO FAR AS PROFIT ON SUB-CONT RACT BUSINESS AND ROAD ROLLER HIRING IS CONCERNED UPHOLD THE ESTIMATION AS ADOPTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) TO MEET THE EN D OF JUSTICE. ITA NO.1183/KOL/2013 & CO NO.89/KOL/2013 A.Y. 200 9-10 ACIT CIR-2, ASL. V. SH MRITUNJOY MUKHERJEE PAGE 5 5. IN THE CASE OF THE ACIT GANDHIDHAM CIRCLE VS. M/ S ISHWAR CONSTRUCTION CO. GANDHIDHAM, ITA NO. 1140/RJT/2009 IT HAS BEEN HELD THAT IN THE AY 2005- 06, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CIV IL CONSTRUCTION. ASSESSEE FAILS TO PROVIDE PROPER EVIDENCE IN THE SHAPE OF BI LLS, VOUCHERS, UNABLE TO VERIFY PURCHASES BEFORE THE AO AND AO MADE ADDITION FOR UNEXPLAINED PURCHASE, SUB-CONTRACT EXPENSES AND UNDER VALUATION OF WORK-IN-PROGRESS. THE LD. CIT(A) ESTIMATED THE TOTAL INCOME BY APPLYI NG NET PROFIT RATE OF 4%. BOTH THE ASSESSEE AND REVENUE HAS CHALLENGED TO THE EXTENT OF ORDER AGAINST THEM. THE TRIBUNAL INCLINED UPON THE ORDER OF THE L D. CIT(A) AND ACCORDINGLY CONFIRMED. RESPECTFULLY FOLLOWING THE SAME AND CONSIDERING THE PROFIT IN ITS OWN CASE FOR THE EARLIER YEARS @ 8% APPROX OF THE GROSS RECEIPTS WHICH WAS ACCEPTED BY THE REVENUE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, REVENUES APPEAL DISMISSED. NOW COMING TO ASSESSEES CO NO.89/KOL/2013. 6. IN THE CO, THE ASSESSEE HAS CHALLENGED TH E RATE 10.50% AT WHICH THE LD. CIT(A) DIRECTED THE AO TO COMPUTE THE PROFIT. T HE LD. AR SUBMITTED THAT THE ASSESSEE SHOULD BE CHARGED PROFIT @ 8% OF THE G ROSS RECEIPTS. AT THE OUTSET WE FIND THAT THE LD. CIT(A) IN HIS ORDER HAS GIVEN SUBSTANTIAL RELIEF TO THE ASSESSEE AND WE HAVE ALREADY UPHELD THE SAME. ACCOR DINGLY WE FIND NO SUBSTANCE IN THE CO FILED BY THE ASSESSEE. HENCE WE DISMISS THE SAME. 7. IN THE RESULT, APPEAL OF REVENUE STANDS DISMISSED A ND THAT ALSO ASSESSEES CO IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 24/06/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP '#$ - 24/06/2016 / KOLKATA ITA NO.1183/KOL/2013 & CO NO.89/KOL/2013 A.Y. 200 9-10 ACIT CIR-2, ASL. V. SH MRITUNJOY MUKHERJEE PAGE 6 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-SRI MRITUNJOY MUKHERJEE, SRIPALLY, ASANSO L, DIST. BURDWAN, WB 2. /REVENUE-ACIT, CIRCLE-2, PARMAR BUILDING, APKAR GAR DEN (WEST) 54, G.T. ROAD , ASANSOL-713304 3. ##%& ' / CONCERNED CIT 4. ' - / CIT (A) 5. ()* ++%& , %& / DR, ITAT, KOLKATA 6. *,- / GUARD FILE. BY ORD ER/ , /TRUE COPY/ / # %&,