SHRI ANIL KUMAR AGRAWAL, JAIPUR V. ACIT, CIRCLE-4, JAIPUR

ITA 1304/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6494 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 27-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUNI PAUL CIT DHK
• Assessee Lawyers: BINOD KR GUPTA
• Keywords: Rejection of books of accounts; Depreciation; Wrong claim
• Section: 143(3); 145(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES B, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH LANHI XLKA ] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI SANDEEP GOSAIN, JM VK;DJ VIHY LA -@ ITA NO. 1304/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2012-13 ANIL KUMAR AGARWAL, 3/360, VIDHYADHAR NAGAR, JAIPUR. CUKE VS. A.C.I.T., CIRCLE-4, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ABKPJ 6701 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI BINOD KR. GUPTA & SHRI DEEPAK SHARMA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. RUNI PAUL (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/09/2020 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 11/09/2020 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 25/06/2019 FOR THE A.Y. 2012-13 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. THE HEARING OF THE APPEAL WAS CONCLUDED THROUGH VIDEO CONFERENCE IN VIEW OF THE PREVAILING SITUATION OF COVID-19 PANDEMIC. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED AS CONTRACTOR WORKING ITA 1304/JP/2019_ ANIL KR. AGARWAL VS ACIT 2 FOR PHED, GOVERNMENT OF RAJASTHAN, IN THE NAME AND STYLE OF M/S. JAI SHREE SHYAM BOREWELL COMPANY. THE ASSESSEE FILED HIS RETURN OF INCOME ON 28.09.2012 DECLARING TOTAL INCOME OF RS. 93,65,980/-. 4. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. BOOKS OF ACCOUNTS WERE REJECTED AND SECTION 145(3) WAS INVOKED. ASSESSMENT WAS MADE U/S 143(3) AT RS. 1,05,36,770/- ON 16.02.2015 MAKING TRADING ADDITION OF RS.11,70,790/- (ESTIMATING NP AT 7% BY APPLYING DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF M/S JAIN CONSTRUCTION COMPANY 5. DURING THE COURSE OF FIRST APPEAL THE ASSESSEE PLEADED BEFORE THE LD.CIT(A) THAT THE AO APPLIED THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF M/S JAIN CONSTRUCTION COMPANY AND APPLIED THE RATE OF 7% BUT THE DEDUCTION OF DEPRECIATION AND INTEREST WAS NOT GIVEN, WHEREAS THE SAME WAS GIVEN IN THE CASE OF M/S JAIN CONSTRUCTION. THE LD.CIT(A) CONFIRMED THE REJECTION OF BOOKS OF ACCOUNTS AND APPLYING THE PAST HISTORY ESTIMATED THE NP RATE OF 6.85%. AGAINST THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE A.O. ISSUED A SCN DATED 06.02.2015 (REPRODUCED AT PAGE-3, PARA-3.2 OF AO ORDER) PROPOSING TO ITA 1304/JP/2019_ ANIL KR. AGARWAL VS ACIT 3 ESTIMATE THE NP RATE FOLLOWING THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF M/S JAIN CONSTRUCTION COMPANY . THE AO APPLIED THIS JUDGMENT AND ESTIMATED THE NET PROFIT @ 7% (AS HELD IN THE CASE OF M/S JAIN CONSTRUCTION). IN THIS JUDGMENT, THE HONBLE RAJASTHAN HIGH COURT ESTIMATED NET PROFIT RATE, SUBJECT TO DEDUCTION ON ACCOUNT OF DEPRECIATION AND INTEREST. APPLYING THE SAME JUDGMENT TO THE INSTANT CASE, THE NET INCOME VIZ A VIZ THE INCOME SHOWN BY THE ASSESSEE WOULD BE AS FOLLOWS:- PARTICULARS AMOUNT (RS.) NET PROFIT @ 7% ON RS. 15,19,43,860/- 1,05,36,769/- LESS : DEPRECIATION 22,63,693/- LESS: BANK INTEREST 5,72,873/- LESS: INTEREST ON LOAN 3,69,390/- LESS: OTHER INTEREST 95,860/- PROFIT TO BE ESTIMATED AS PER DECISION OF M/S JAIN CONSTRUCTION COMPANY (4.76%) 72,34,953/- PROFIT SHOWN BY THE ASSESSEE (6.23%) 94,65,980/- THE ASSESSEE HAS DECLARED PROFIT OF RS. 94,65,980/-. AFTER MAKING THE ADJUSTMENT ON ACCOUNT OF DEPRECIATION AND INTEREST AS ALLOWED BY HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAIN CONSTRUCTION COMPANY THE NET ITA 1304/JP/2019_ ANIL KR. AGARWAL VS ACIT 4 PROFIT COMES TO RS. 72,34,994/-. THEREFORE, PROFIT DECLARED BY THE ASSESSEE IS MORE; HENCE, IT SHOULD BE ACCEPTED EVEN ACCORDING TO THE A.O. THUS, NO ADDITION IS WARRANTED EVEN AS PER THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT AND THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING N.P. RATE AT 7%. 7. EVEN ON MERIT, WE FOUND THAT THE TRADING RESULTS OF THE ASSESSEE OF LAST THREE YEARS ARE AS UNDER: AY TURNOVER NP RATE 2010-11 4,88,23,963 6.23% 2011-12 4,73,12,981 8.10% 2012-13 15,19,43,860 6.23% 8. WE OBSERVE THAT THE A.O. HAS NOT POINTED OUT ANY SPECIFIC DISCREPANCY IN THE BOOKS OF ACCOUNT FOR INVOKING PROVISIONS OF SECTION 145(3). THE AO MADE A GENERAL OBSERVATION THAT EXPENSES AND PURCHASES HAVE BEEN INFLATED WHEREAS NO SPECIFIC DEFECT HAS BEEN POINTED OUT. FURTHER, TIME AND AGAIN DIFFERENT JUDICIAL BODIES HAVE EXPRESSED THE VIEW THAT BOOKS SHOULD NOT BE REJECTED FOR MINOR INSTANCES. 9. WE FOUND THAT COMPLETE BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS WAS PRODUCED BEFORE THE AO, WHICH HE HIMSELF ADMITTED IN FIRST PARA AT PAGE NO.-1 OF HIS ORDER. THE AO OBSERVED THAT THE VOUCHERS ARE ITA 1304/JP/2019_ ANIL KR. AGARWAL VS ACIT 5 NOT HAVING COMPLETE NAME AND ADDRESS OF THE PERSONS TO WHOM PAYMENT HAS BEEN MADE AND PAYMENTS HAVE BEEN MADE IN CASH. THE ASSESSEE IS CARRYING BUSINESS ON CONTRACT BASIS. THE BUSINESS OF THE ASSESSEE IS SUCH THAT HE IS REQUIRED TO WORK AT VARIOUS LOCATIONS OR SITES, SITUATED AT REMOTE LOCATIONS SCATTERED IN ALL AROUND RAJASTHAN. IT IS IMPORTANT TO UNDERSTAND THE NATURE OF WORK WHICH REQUIRES EXTENSIVE USE OF LABOURS, COMPRESSORS, DIESEL, SAND, WATER, PUMP, PIPES, SUBMERSIBLE PUMPS, IRON, STEEL, CEMENT ETC. LOOKING TO THE REQUIREMENT, IT IS FURTHER CLEAR THAT MANY OF THESE HAVE TO BE SOURCED LOCALLY. IN SUCH KIND OF BUSINESS SITES PEOPLE PROVIDING MATERIAL AND SERVICE ARE UNORGANIZED AND DOES NOT PROVIDE PROPER BILLS AND VOUCHERS. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ALL THE REQUIRED INFORMATION, DETAILS WERE FILED AND BOOKS OF ACCOUNTS WERE ALSO PRODUCED ALONGWITH SUPPORTING BEFORE THE A.O. FOR EXAMINATION. FURTHER, SAME HAVE EXAMINED ON TEST CHECK BASIS. 10. IN THE INSTANT CASE ALSO, SINCE THE WORK SITES OF ASSESSEE IS SCATTED ALL OVER RAJASTHAN, THE POSSIBILITY OF SELF MADE VOUCHERS CANNOT BE RULED OUT. FURTHER, THE AO HAS NOT POINTED OUT ANY FALSE CLAIM FOR REJECTING THE BOOKS OF ACCOUNTS. 11. MOREOVER, FROM THE RECORD, WE FOUND THAT THE TURNOVER DURING THE YEAR HAS INCREASED TO RS. 1,519.43 LACS FROM RS. 473.13 LACS IN IMMEDIATE ITA 1304/JP/2019_ ANIL KR. AGARWAL VS ACIT 6 PREVIOUS YEAR, MEANS TURNOVER HAS INCREASED BY MORE THAN 221%. TO ACHIEVE THE INCREMENT IN THE BUSINESS, ASSESSEE HAVE TO TAKE THE BUSINESS AT VERY COMPETITIVE PRICE, RESULTANTLY, THE PROFIT WAS REDUCED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THERE IS NO JUSTIFICATION FOR ANY TRADING ADDITION SO MADE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2020. SD/- SD/- LANHI XLKA JES'K LH 'KEKZ (SANDEEP GOSAIN) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/09/2020 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI ANIL KUMAR AGARWAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-4, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1304/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR