The Saraswati Co-op L&C, V. Asstt.Commissioner of Income Tax, Kurukshetra

ITA 1288/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8352 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 1288/CHD /2016 ASSESSMENT YEAR : 2010-11 THE SARASWATI CO-OP L&C VS THE ACIT, SOCIETY LTD., VILLAGE-SURMI, CIRCLE, TEHSIL - PEHOWA, KURUKSHETRA. DISTT.- KURUKSHETRA. PAN/GIR NO. AABAT5542L & ITA NO. 1289/CHD /2016 ASSESSMENT YEAR : 2010-11 THE PEHOWA SARASWATI CO-OP VS THE ACIT, L&C SOCIETY LTD., PEHOWA, KURUKSHETRA. TEHSIL - PEHOWA, DISTT.- KURUKSHETRA. PAN/GIR NO. AACAT2232Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 01.02.2017 DATE OF PRONOUNCEMENT : 02.02.2017 O R D E R THIS ORDER SHALL DISPOSE OFF BOTH THE APPEALS FILED BY DIFFERENT ASSESSEES ON IDENTICAL FACTS. 2 2. BOTH THE APPEALS BY DIFFERENT ASSESSEES ARE DIRECTED AGAINST DIFFERENT ORDERS OF LD. CIT(APPEAL S) KARNAL DATED 19.09.2016 FOR ASSESSMENT YEAR 2010-11 . 3. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. 4. BRIEFLY THE FACTS OF THE CASES ARE THAT THE ASSE SSEES ARE CO-OPERATIVE SOCIETY DEALS IN LABOUR AND CONSTRUCTION. THE ASSESSING OFFICER DISCUSSED THE ISSUE OF PRODUCTION OF THE BOOKS OF ACCOUNT AND NOTED THA T NO BOOKS OF ACCOUNT OR VOUCHERS WERE PRODUCED FOR VERIFICATION, HOWEVER, LATER ON ASSESSING OFFICER H AS OBSERVED THAT ONLY CASH BOOK AND LEDGER WERE PRODUC ED BUT RELEVANT BILLS AND VOUCHERS WERE NOT PROVIDED A ND THERE WERE NO RECORDS TO PROVE THAT THERE WAS COLLE CTIVE DISPOSAL OF WORK BY THE MEMBERS OF THE SOCIETY. 5. IN ITA 1288/2016, THE ASSESSEE HAS DECLARED NET PROFIT RATE AT 0. 39% AND IN ITA 1289/2016, ASSESSE E HAS DECLARED NET PROFIT RATE OF 0.59%. THE ASSESSI NG OFFICER REJECTED BOOK RESULTS BY APPLYING PROVISION S OF SECTION 145(3) OF INCOME TAX ACT AND FOLLOWING THE DECISION IN THE CASE OF SHRI PRABHAT KUMAR VS CIT APPLIED 12% NET PROFIT RATE TO COMPUTE THE INCOME O F THE ASSESSEE AFTER REDUCING THE MATERIAL SUPPLIED T O THE ASSESSEES SOCIETY. THE LD. CIT(APPEALS) CONFIRMED THE REJECTION OF THE BOOKS OF ACCOUNT, HOWEVER, REDUCED THE 3 APPLICATION OF NET PROFIT RATE TO 8% AS AGAINST 12% APPLIED BY THE ASSESSING OFFICER. 6. THE LD. COUNSEL FOR THE ASSESSEE PRESSED THE ISS UE OF APPLICATION OF NET PROFIT RATE OF 8% AND SUBMITT ED THAT HE WOULD NOT BE PRESSING THE REMAINING GROUNDS ABOUT REJECTION OF BOOKS OF ACCOUNT. HE HAS FILED THE CHART SHOWING HISTORY OF THE ASSESSEE IN BOTH THE C ASES. IN THE CASE OF SARASWATI CO-OPERATIVE L&C SOCIETY, IN PRECEDING ASSESSMENT YEAR 2009-10, NP RATE OF 3.08% HAVE BEEN SHOWN AND IN SUBSEQUENT ASSESSMENT YEARS 2011-12 AND 2012-13, NP RATE OF 1.34% AND 1.08% HAV E BEEN DECLARED BY ASSESSEE. SIMILARLY IN THE CASE O F PEHOWA SARASWATI CO-OPERATIVE L&C SOCIETY, ASSESSEE IN PRECEDING ASSESSMENT YEAR 2009-10 HAS DECLARED NET PROFIT RATE OF 0.86% AND IN SUBSEQUENT YEAR 2012-13 , ASSESSEE DECLARED NET PROFIT RATE OF 0.93%. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE IS NOT A CONSTRUCTION OR BUILDER SOCIETY ALONE. THEREFORE , PROFIT RATE OF 8% IS EXCESSIVE CONSIDERING HISTORY OF THE ASSESSEE. HE HAS SUBMITTED THAT THE AUTHORITIES BE LOW HAVE APPLIED DECISION IN THE CASE OF SHRI PRABHAT K UMAR (SUPRA) WHICH HAVE BEEN CONSIDERED BY HON'BLE PUNJA B & HARYANA HIGH COURT IN THE CASE OF CIT VS PARVEEN KUMAR MITTAL ITA 272 OF 2011 DATED 13.10.2011 IN WHICH CONSIDERING THE RATE OF PROFIT ACCEPTED BY DEPARTMENT IN PREVIOUS ASSESSMENT YEARS, 4% NET PRO FIT RATE WAS APPLIED WHICH WAS CONSIDERED AS QUESTION O F 4 FACT AND DEPARTMENTAL APPEAL HAVE BEEN DISMISSED. HE HAS, THEREFORE, SUBMITTED NP RATE OF 8% IS EXCESSIV E AND UNREASONABLE. 6(I) ON THE OTHER HAND, LD. DR RELIED UPON ORDERS O F THE AUTHORITIES BELOW. 7. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW THAT APPLICATION OF NET PROFIT RATE OF 8% IS EXCESSIVE, UNREASONABLE AND EXORBITANT CONSIDERING HISTORY OF ASSESSEES. IN THE CASE OF SARASWATI COOPERATIVE L&C SOCIETY, THE NET PROFIT RATE DECLAR ED IN PRECEDING ASSESSMENT YEAR 2009-10 WAS 3.08% AND IN SUBSEQUENT YEARS 2011-12 AND 2012-13, NET PROFIT RA TE IS 1.34% AND 1.08%. SIMILARLY IN THE CASE OF PEHOW A SARASWATI COOPERATIVE L&C SOCIETY, IN PRECEDING ASSESSMENT YEAR 2009-10, NET PROFIT RATE IS 0.86% A ND IN SUBSEQUENT ASSESSMENT YEARS 2012-13, NET PROFIT RATE DECLARED IS 0.93%. THEREFORE, APPLICATION OF N P RATE IN BOTH THE CASES AT 8% RESTRICTED BY LD. CIT(APPEA LS) IS HIGHLY EXCESSIVE AND UNREASONABLE. THEREFORE, CONSIDERING ASSESSEES BOOK RESULT ARE NOT RELIABLE AND BOOKS ARE REJECTED AND IN TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE HISTO RY OF THE ASSESSEE, IT WOULD BE REASONABLE AND PROPER TO DIRECT TO COMPUTE INCOME OF THE ASSESSEE BY APPLYIN G NP RATE OF 3% AS AGAINST 8% IN BOTH THE CASES. THE DECISION IN THE CASE OF SHRI PRABHAT KUMAR (SUPRA) 5 RELIED UPON BY THE AUTHORITIES BELOW HAVE BEEN CONSIDERED BY HON'BLE PUNJAB & HARYANA HIGH COURT I N THE CASE OF CIT VS PARVEEN KUMAR MITTAL (SUPRA) AND ORDER OF THE TRIBUNAL HAVE BEEN CONFIRMED WHEREIN N ET PROFIT RATE OF 4% WAS ADOPTED AS WAS ADOPTED IN PRECEDING ASSESSMENT YEARS. 8. CONSIDERING THE ABOVE DISCUSSION, I SET ASIDE AN D MODIFY THE ORDERS OF AUTHORITIES BELOW TO THE EXTEN T THAT THE INCOME OF THE ASSESSEES SHALL BE COMPUTED BY TH E ASSESSING OFFICER BY APPLYING NET PROFIT RATE OF 3% IN BOTH THE CASES. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SA INI JUDICI AL MEMBER DATED: 3 RD FEBRUARY,2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT JAIPUR