Shri Kirtiman Singh, Ranchi V. DCIT, Ranchi

ITA 121/RAN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9795 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K MONDAL CIT LD
• Assessee Lawyers: DEVESH PODDAR LD
• Keywords: Depreciation; Document seized; Retraction; Documents seized; TDS
• Section: 143(3); 147; 131; 2

Judgement Text

1 ITA NO S . 121 & 122 /RAN/16 SHRI KIRTIMAN SINGH IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI (BEFORE SHRI S. S. GODARA , J.M. & DR.A.L.SAINI, A.M.) IT A NO. 1 21 /RAN/1 6 : ASSTT. YEAR : 20 09 - 10 IT A NO. 122/RAN/16 : ASSTT. YEAR : 20 10 - 11 SHRI KIRTIMAN SINGH PAN: AWMPS 5592F VS D.C.I.T, CIR - 2, RANCHI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEVESH PODDAR, ADVOCATE, LD.AR RESPONDENT BY : SHRI P.K. MONDAL, CIT, LD. DR DATE OF HEARING : 0 8 - 01 - 2019 DATE OF PRONOUNCEMENT: 05 - 0 4 - 2019 ORDER PER BENCH : THE CAPTIONED TWO APPEAL S FILED BY THE ASSESSEE , PERTAINING TO ASSESSMENT YEAR S 20 09 - 10 AND 2010 - 11 , ARE DIRECTED AGAINST THE SEPARATE ORDER S PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS), RANCHI IN I.T / APPEAL NO S . 58/RAN/OTH/14 - 15 & 35/RAN/OTH/13 - 14, DATED 01.02.2016 AND 04 - 02 - 2016 RESPECTIVELY , WHICH IN TURN ARISE OUT OF SEPARATE ASSESSMENT ORDER S DATED 25 - 03 - 2014/30 - 03 - 2013 PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME - TAX ACT, 1961 (IN SHORT, THE ACT ). 2. SINCE THESE TWO APPEALS PERTAIN TO THE SAME ASSESSE, DIFFERENT ASSESSMENT YEARS , COMMON AND IDENTICAL ISSUES ARE INVOLVED, THEREFORE, THESE HAVE BEEN CLUBBED 2 ITA NO S . 121 & 122 /RAN/16 SHRI KIRTIMAN SINGH AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIE NCE AND BREVITY. ITA NO. 121/RAN/2016 FOR THE A.Y 2009 - 10 ( BY THE ASSESSE) 3 . THE GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS: - 1. FOR THAT INITIATION OF PROCEEDINGS U/S 147 WAS AB INITIO VOID AND ILLEGAL. SURVEY OPERATION TOOK PLACE OF THE APP ELLANT ON 16.03.2011. NO DOCUMENT RELATING TO A.Y 2009 - 10 WAS FOUND TO SUGGEST ANY UNDER ASSESSMENT OR ESCAPEMENT OF INCOME. AS SUCH, PROCEEDINGS INITIATED U/S. 147 ON HEARSAY GROUND IS UNJUSTIFIED AND ILLEGAL. 2. FOR THAT LD. AO OBSERVED THAT PROCEEDING S WERE INITIATED U/S. 147 FOR THE ALLEGED SUBMISSION MADE BY THE APPELLANT DURING SURVEY THAT HE WILL DISCLOSE ADDITIONAL INCOME FOR DIFFERENT ASSESSMENT YEARS. STATEMENT DURING SURVEY CANNOT BE TAKEN AS AN AUTHENTIC EVIDENCE FOR INITIATION OF PROCEEDINGS U/S. 147, AS SUCH, INITIATION ITSELF IS ILLEGAL AND INCORRECT. 3. FOR THAT THE APPELLANT IS PROPRIETOR OF M/S. MANN CONSTRUCTION DOING BUSINESS OF CONTRACT. THE APPELLANT DISCLOSED A TURNOVER OF RS. 1,26,56,058/ - ON WHICH PROFIT OF RS. 6,09,240/ - WAS DI SCLOSED. THE PROFIT DISCLOSED AS PER BOOKS OF ACCOUNTS WAS ACCEPTED BY LD. AO . HOWEVER, LD. AO OBSERVED OR ESTIMATED THE ALLEGED UNDISCLOSED TRANSACTION OF RS. 6,63,49,942/ - AND ESTIMATED A NET PROFIT OF RS. 53,07,995/ - . AS SUCH, AN ADDITION OF RS. 53,07, 995/ - WAS MADE. THE ADDITION MADE IS UNJUSTIFIED, ARBITRARY, ILLEGAL AND INCORRECT. 4. FOR THAT THE AO OBSERVED IN THE ORDER OF ASSESSMENT THAT IN A SHEET OF PAPER FOUND IT WAS OBSERVED THAT CERTAIN SANCTION WAS MADE TO GET WORK DONE UNDER NREP. NREP WAS NOT AUTHORIZED TO GET THE WORK DONE BY OUTSIDERS OR TO GIVE CONTRACT TO THE OUTSIDERS. THE ESTIMATE OF TURNOVER ON THE BASIS OF SANCTION, DOCUMENT WHICH HAS NO RELATION WITH THE APPELLANT, IS ILLEGAL AND INCORRECT. THE ADDITION MADE, THEREFORE, IS UNJUSTIF IED, ARBITRARY AND UNCALLED FOR. 5. FOR THAT WITHOUT PREJUDICE TO OUR CONTENTION MENTIONED ABOVE, THE ESTIMATE OF PROFIT AS MADE BY LD. AO IN THE CASE OF THE APPELLANT IS 3 ITA NO S . 121 & 122 /RAN/16 SHRI KIRTIMAN SINGH ILLEGAL. NO DOCUMENT WAS FOUND TO SUGGEST THAT APPELLANT EXECUTED ANY WORK OF CONTRA CT WHICH WAS NOT DISCLOSED. 6. FOR THAT LD. ASSESSING OFFICER WAS NOT JUSTIFIED IN CHARGING INTEREST ON ASSESSED INCOME. FOLLOWING THE DECISION OF HONBLE JHARKHAND HIGH COURT, INTEREST IS TO BE CHARGED ON THE RETUNED INCOME ONLY. 7. FOR THAT OTHER GROUN DS IN DETAIL WILL BE ARGUED AT THE TIME OF HEARING. ITA NO. 12 2 /RAN/2016 FOR THE A.Y 2009 - 10 ( BY THE ASSESSE) 4 . THE GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS: - 1. FOR THAT LD. AO MADE AN ESTIMATE OF PROFIT AT 10% WHICH WAS REDUCED TO 8% BY L D. CIT(A). THE TURNOVER OF RS.2,00,97,709/ - WAS ACCEPTED. THE APPELLANT HAS MAINTAINED AUDITED BOOKS OF ACCOUNTS WHICH WAS VERIFIABLE IN PAST, THE BOOK RESULT DISCLOSED WAS ACCEPTED. LD. AO WAS, THEREFORE, NOT JUSTIFIED IN MAKING AN ESTIMATE OF PROFIT WIT HOUT ANY VALID REASON AND FINDING. NO INDISCRIMINATING DOCUMENT WAS FOUND DURING SURVEY. |THE ESTIMATE MADE, THEREFORE, WAS UNJUSTIFIED, ILLEGAL, HIGHLY EXCESSIVE AND WITHOUT ANY BASIS. 2. FOR THAT LD. AO WAS NOT JUSTIFIED IN ESTIMATING THE CONTRACT RE CEIPTS ON THE BASIS OF DEPOSITS MADE IN ORIENTAL BANK OF COMMERCE IN THE NAME OF THE APPELLANT. THE ESTIMATE OF PROFIT AT 10% ON THE ALLEGED DEPOSIT IS UNJUSTIFIED AND ILLEGAL. IT WAS ALLEGED THAT THE APPELLANT HAD SUPPLIED LABOUR AND SOME MATERIAL ON REQU EST OF THE EXECUTIVE ENGINEER OF NREP. THE COST WAS REIMBURSED BY MAKING PAYMENT AND DEPOSITING THE SAME IN THE BANK ACCOUNT. IN ANY CASE, THE PROFIT ESTIMATED AT 10% ON SUPPLY OF LABOUR AND SOME MATERIAL IS ILLEGAL, INCORRECT AND UNCALLED FOR. 3. FOR THAT LD. CIT(A) WAS NOT JUSTIFIED IN CONSIDERING THE BANK ACCOUNT MATAINED BY SRI SUKHRA ORAN AS PERTAINING TO THE APPELLANT. HERE AGAIN, THE DEPOISTS WERE CONSIDERED AS CONTRACT RECEIPT AND 10% PROFIT WAS ESTIMATED. 4. FOR THAT THE LD. CIT(A) WAS NOT J USTIFIED IN CONFIRMING THAT BANK ACCOUNT IN THE NAME OF SRI ALOK NATH BHAGAT PERTAINS TO THE 4 ITA NO S . 121 & 122 /RAN/16 SHRI KIRTIMAN SINGH APPELLANT. THE DEPOSITS WERE CONSIDERED AS CONTRACT RECEIPT AND ESTIMATE OF 10% PROFIT WAS MADE. 5. FOR THAT IN ANY VIEW OF THE CASE, THE BANK ACCOUNT OF THE OTHE R PERSONS OPERATED BY OTHER PERSONS HAVING NO CONTRACT WITH THE APPELLANT SO FAR THE WORK IS DONE. MERELY BECAUSE BOTH OF THEM HAVE BEEN WORKING WITH THE APPELLANT IN REGULAR COURSE, THE PRESUMPTION THAT THE WORK WAS DONE BY THE APPELLANT IS UNJUSTIFIED, I LLEGAL AND INCORRECT. 6. FOR THAT THE STATEMENT OF SRI BAIDYANATH SINGH, EMPLOYEE OF APPELLANT, STATEMENT OF SRI BINOD SARKAR, TAX CONSULTANT FOR THE APPELLANT AND THE STATEMENT OF THE APPELLANT TAKEN THEREOF TO INVOLVE THE APPELLANT TO SUGGEST THAT SUKH RA ORAN AND SRI ALOK NATH BHAGAT WERE THE BENAMIDAR OF THE APPELLANT AND THE SUPPLY OF LABOUR OR ANY OTHER WORK WAS DONE BY THE APPELLANT FOR WHICH PAYMENT RECEIVED BY THEM WAS DEPOSITED IN THEIR BANK ACCOUNT. THERE WAS NO EVIDENCE TO SUGGEST THAT ANY WORK ORDER WAS ALLOTTED TO THEM OR TO THE APPELLANT FOR DOING ANY WORK. NO TDS WAS DEDUCTED ON THE DEPOSITS MADE IN THE BANK ACCOUNT. THE ESTIMATE OF PROFIT AS BELONGING TO THE APPELLANT IS, THEREFORE, UNJUSTIFIED, ARBITRARY AND ILLEGAL. 7. FOR THAT IN ANY VI EW OF THE CASE, WITHOUT PREJUDICE TO OUR CONTENTION MENTIONED ABOVE, THE ESTIMATE OF PROFIT AT 10% IS UNJUSTIFIED, EXCESSIVE, ARBITRARY AND UNCALLED FOR. 8. FOR THAT LD. ASSESSING OFFICER WAS NOT JUSTIFIED IN CHARGING INTEREST ON ASSESSED INCOME. FOLLOWIN G THE DECISION OF HONBLE JHARKHAND HIGH COURT, INTEREST IS TO BE CHARGED ON THE RETURNED INCOME ONLY. 9. FOR THAT OTHER GROUNDS IN DETAIL WILL BE ARGUED AT THE TIME OF HEARING. 5 . GROUND NO. 1 AND 2 RAISED BY THE ASSESSE IN ITA NO. 121/RAN/16 FOR A.Y 2 009 - 10 ARE NOT PRESSED BY ASSESSEE, THEREFORE, THEY DO NOT REQUIRE ADJUDICATION. 5 ITA NO S . 121 & 122 /RAN/16 SHRI KIRTIMAN SINGH 6 . THE BRIEF FACTS QUA THE ISSUE ARE THAT IN THE ASSESSEE CASE UNDER CONSIDERATION A SURVEY PROCEEDING U/S. 13 3A OF THE ACT WAS CONDUCTED ON 16 - 03 - 2011 IN THE PREMISES OF SHRI KIRTIMAN SING, PROP: M/S. MAAN CONSTRUCTIONS, RANCHI. DURING THE C OUR S E OF SUCH SURVEY OPERATION VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. DURING THE COURSE OF SUCH SURVEY PROCEEDINGS A STATEMENT OF SHRI KIRTIMAN SING WAS RECORDED U/S . 131 OF THE ACT, WHEREIN HE STATED THAT HE WAS READY TO FILE REVISE RETURN OF INCOME DISCLOSING THEREIN THE AMOUNT O F PROFIT EARNED ON THE BUSINESS REMAINED UNDISCLOSED . DURING THE STATEMENT OF OATH, HE HAD OFFERED 10% PROFIT OF THE TURNOVER OF RS. 4 C RORES FOR THE A.Y 20 09 - 10, AS ADDITIONAL INCOME. THE AO NOTED THAT THE ASSESSE E HAS NOT REVISED HIS RETURN OF INCOME AS PER HIS STATEMENT ON OATH GIVEN BY HIM DURING THE SURVEY PROCEEDING. DURING THE COURSE OF SURVEY PROCEEDING , ON THE BASIS OF INCRIM INATING DOCUMENTS FOUND/SEIZED THE ASSESSE HIMSELF OFFERED 10% PROFIT OF THE TURNOVER OF RS. 4 CRORES FOR THE A.Y 2010 - 11 AS ADDITIONAL INCOME. DURING THE ASSESSMENT PROCEEDINGS , T HE AO HAS ALSO WROTE A LETTER TO THE ASSESS E E DT. 14 - 08 - 2013 ASKING THE AS SESSE E TO GIVE SOURCE OF DEBIT AND CREDIT AMOUNTS FOUND DURING THE COURSE OF SURVEY . HOWEVER, THE ASSESSE DID NOT MAKE ANY COMPLIANCE TO THE ABOVE SAID ISSUES RAISED . 7 . IN THE LIGHT OF ASSESSEES RETRACTION FROM HIS STATEMENT GIVEN ON THE BASIS OF DOCUM ENTS SEIZED FROM HIS BUSINESS PREMISES DURING THE COURSE OF SURVEY. THEREFORE, AO HAS NO OTHER OPTION EXCEPT TO ASSESS THE INCOME OF ASSSSEE ON THE BASIS OF SEIZED DOCUMENTS CONSIDERING WHICH QUESTIONNAIRES WERE ISSUED TO ASSESSE E . FOLLOWING UNRECORDED O R UNDISCLOSED TRANSACTION WERE MADE BY ASSESSE DURING THE YEAR 2008 - 09: - 6 ITA NO S . 121 & 122 /RAN/16 SHRI KIRTIMAN SINGH SL. DATE AMOUNT PARTICULARS 1 18.11.2008 157,46,000/ - SANCTION ORDER BY THE DIRECTOR, RIMS, RANCHI, IN CONNECTION WITH CONSTRUCTION OF COMMUNITY HALL AND CONSTRUCTION OF HALIPAD A T RIMS, RANCHI 2 - 632,60,000/ - SANCTION IN CONNECTION WITH CONSTRUCTION IN RIMS BY EXECUTIVE ENGINEER, NEP - 1 TOTAL : 790,06,000/ - THE AO NOTED THAT E XAMINATION OF INFORMATION AVAILABLE ON RECORD WHICH REVEALS THAT ASS ESSE E HAS SHOWN ONLY RS.126,56,058/ - AS BY GROSS RECEIPTS FROM CONTRACT AND SUPPLIES IN ITS RETURN OF INCOME. HOWEVER, DURING THE COURSE OF SURVEY, TOTAL CONTRACT AND SUPPLIES WORK WAS FOUND TO HAVE BEEN MADE BY ASSESSE TO THE TUNE OF RS.790,06,000 / - . HENCE, DIFFERENCE OF RS. 6,63,49,942/ - WAS F OUND OUT AS UNDISCLOSED WORK CONTRACT DONE BY ASSESSE DURING THE PERIOD UNDER CONSIDERATION. HENCE, AO NOTED THAT IT IS CLEAR THAT ASSESSE E HAS NOT DISCLOSED THE AMOUNT OF RS. 6,63,49,942/ - AS CONTRACT RE CEIPTS. HENCE, IN ABSENCE OF PROPER EXPLANATION SUBMITTED BY ASSESSE E , THE AO HAD NO OTHER OPTION EXCEPT TO ESTIMATE FARE PERCENTAGE OF PROFIT @8% OF TOTAL UNDISCLOSED TURNOVER OF ASSESSE E WHICH C AME TO RS. 53,07,995/ - 8 . AGGRIEVED BY THE STAND SO TAKEN BY THE AO THE ASSESSE CARRIED HIS MATTER IN APPEAL BEFORE THE LD. CIT - A, WHO HAS DISMISSED THE GROUNDS OF APPEAL OF ASSESSEE BY STATING/OBSERVING AS UNDER: - 5.12 ADMITTEDLY THE DOCUMENTS IMPOUNDED SHOW THAT THE WORKS WERE CARRIED OUT BY THE APPELLANT AND WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE APPELLANT HAD STATED THAT THE VALUE OF SUCH WORK WOULD BE AROUND RS. 4 CORES. THIS FACT IS CORROBORATED BY THE OTHER DOCUMENTS WHICH WERE IMPOUNDED WHICH SHOW S EXPENSES WHICH ARE WAY BEYOND THE EXP ENSES ENTERED INTO IN THE REGULAR BOOKS OF ACCOUNTS AS WELL AS THE STATEMENTS OF THE APPELLANT RECORDED ON OATH AS WELL AS THAT OF HIS ACCOUNTANT AND HIS SITE SUPERVISOR. THESE IMPOUNDED DOCUMENTS CORROBORATE THE FACT THAT THE 7 ITA NO S . 121 & 122 /RAN/16 SHRI KIRTIMAN SINGH WORK WAS EXECUTED BY THE APP ELLANT AND SINCE NO AGREEMENT WERE EXECUTED FOR NREP WORK AS ADMITTED, THE CONTRACT RECEIPTS IN THE IMPOUNDED DOCUMENTS HAVE TO BE CONSIDERED AS RELIABLE EVIDENCE. THE APPELLANT HIMSELF HAD ADMITTED PROFIT OF 10% ON HIS UNDISCLOSED CONTRACT RECEIPTS. UNDER THE CIRCUMSTANCES, THE LD. ASSESSING OFFICER, THEREFORE, RIGHTLY ESTIMATE D PROFIT FROM THIS UNDISCLOSED WORK AT 8%. GROUND OF APPEAL DISMISSED. 9 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSE IS IN APPEAL BEFORE US. 10 . SHRI DEVESH PODDAR, ADVOCATE, LD. AR OF THE ASSESSE E SUBMITTED BEFORE THE BENCH THAT ESTIMATION ADDITION MADE BY AO @ 8% OF UNDISCLOSED CONTRACT RECEIPTS, IS AT HIGHER SIDE AND IT SHOULD BE 5%. 1 1 . ON THE OTHER HAND THE LD. DR OF THE REVENUE HAS RELIED ON THE ORDER OF THE AO . 1 2 . WE HAVE GIVEN CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE AO ESTIMATED THE UNDISCLOSED CONTRACT RECEIPTS OF RS.6,63,49,942/ - AND ESTIMATED THE N.P @ 8% AT RS. 53 , 07 , 995/ - . WE NO TE THAT THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS UNJUSTIFIED AND IS ON HIGHER SIDE. WE FIND THAT THE ISSUES INVOLVED IN THE SE APPEALS ARE COVERED BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT OF JHARKHAND, WHERE THE HONBL E HIGH COURT CONFIRMED THE ADDITION ON THIS ISSUE @ 5% PROFIT AFTER DEPRECIATION AND PARTNERS REMUNERATION. WE NOTE THAT HONBLE HIGH COURT OF PATNA IN THE CASE OF RISHI BUILDERS INDIA (P) LTD IN APPEAL NO. 694 OF 2010, HELD THAT ESTIMATION OF GROSS PROF IT @ 6% IN CASE OF CIVIL CONSTRUCTION IS FAIR AND REASONABLE. 1 3 . BASED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT S OF JHARKHAND AND PATNA WE RESTRICT THE ADDITION AT 5% OF PROFIT OF CONTRACT RECEIPTS OF RS.6,63 , 49 , 942/ - . WE ALSO DIRECT THE AO TO ALLOW THE DEPRECIATION AND PARTNERS 8 ITA NO S . 121 & 122 /RAN/16 SHRI KIRTIMAN SINGH REMUNERATION OUT OF THE ESTIMATED N.P @ 5% OF PROFIT OF CONTRACT RECEIPTS . THEREFORE, WE ALLOW THIS GROUND OF ASSESSEES APPEAL PARTLY. 1 4 . NEXT GRIEVANCE RAISED BY THE ASSESSE E IS RELATING TO CHARGING O F INTEREST ON ASSESSED INCOME. WE NOTE THAT THE SAID ISSUE AS RAISED BY THE ASSESSE E IS NOT R ES - INTEGRA. THEREFORE, THE INTEREST SHOULD BE CHARGED ON RETURNED INCOME AND NOT ON THE ASSESSED INCOME. THEREFORE, WE DIRECT THE AO TO CHARGE INTEREST U/S. 234 B ON RETURNED INCOME AND NOT ON THE ASSESSED INCOME. 1 5 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSE E ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 - 0 4 - 2019 SD/ - SD/ - ( S. S. GODARA ) (DR. A.L.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: - 0 4 - 2019 *PRADIP (SR.PS) COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT/ ASSESSEE: SHRI KIRTIMAN SINGH, 357/A PROFESSOR COLONY, KARAM TOLI, BEHIND ABHILASHA BUILDING, MORABADI, RANCHI - 834001. 2 THE RESPONDENT / DEPARTMENT: THE DCIT, CIR - 2, RANCHI. 3. THE CIT - , 4. THE CIT(A) - , 5. DR, RANCHI BENCHES, RANCHI TRUE COPY, BY ORDER, SENIOR P.S ITAT, RANCHI BENCHES , RANCHI