The ITO, Ward-2, Baroda V. Bright Construction, Bharuch

ITA 1347/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6651 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 29-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Section: 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH (BEFORE S/SHRI T.K. SHARMA, JUIDICIAL MEMBER AND A.K. GARODIA, ACCOUNTANT MEMBER) ITA NO.1347/AHD/2010 [ASSTT. YEAR : 2004-2005] ITO, WARD-2 BHARUCH. PAN : AAGFB 7619 E VS. M/S.BRIGHT CONSTRUCTION AT & PO ACHHOD, DIST. BHARUCH. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI R.K. DHANESTA O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS)-VI, BARODA DATED 22.01.2010 FOR ASSES SMENT YEAR 2004-2005. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION TO THE EXTENT OF RS. 11,35,880/- ON ACCOUNT OF DIFFERENCE BETWEEN THE CONTRACT RECEIPTS AS PER RETURN OF INCOME AND TDS CERTIFICATES BY DIRECTING TO ADOPT NET PROFIT @ 8% OF ACTUAL DIFFERENCE OF RS.12,34,652/- INSTEAD OF MAKING ADDI TION OF THE ENTIRE DIFFERENTIAL AMOUNT OF RS.12,34,652/-. 1(B) THE CIT(A) FURTHER ERRED IN DIRECTING TO ALLOW INTEREST AND REMUNERATION TO THE PARTNERS FROM THE NET PROFIT ES TIMATED @ 8% OF THE DIFFERENTIAL RECEIPT OF RS.12,34,652/-. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF SERVICE OF NOTICE AS PER THE ACKNOWLEDGEMENT AVAILABLE ON RECORD, HENCE WE PROCEED TO DECIDE THE MATTER EX PARTE QUA THE ASSESSEE. 4. BRIEF FACTS ARE THAT IT IS NOTED BY THE ASSESSIN G OFFICER IN THE ASSESSMENT ORDER THAT ON VERIFICATION OF THE TDS CERTIFICATE, IT IS GATHERED THAT TOTAL CONTRACT RECEIPT OF THE YEAR UNDER CONSIDERATION WAS RS.91.9 3 LAKHS WHEREAS THE ASSESSEE HAS SHOWN CONTRACT RECEIPT OF RS.79.59 LAK HS IN THE PROFIT AND LOSS ITA NO.1347/AHD/2010 -2- ACCOUNT AND HENCE, THE ASSESSEE HAS SHOWN CONTRACT RECEIPT LESS OF RS.12.34 LAKHS. ON THE BASIS OF THIS FACT, THE ASSESSING OF FICER REOPENED THE ASSESSMENT PROCEEDINGS AND SERVED NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSING OFFICER ALSO ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT ALONG WITH DETAILED QUESTIONNAIRE ON 21.05.2008 FIXING THE DATE OF HEAR ING ON 28.07.2008. THE ASSESSING OFFICER HAD NOTED THAT NOBODY ATTENDED NO R ANY DETAILS/SUBMISSIONS WERE FILED. IT WAS ALSO NOTED THAT A LETTER DATED 20.06.208 WAS ALSO ISSUED FOR NON-COMPLIANCE OF NOTICE UNDER SECTION 142(1) OF TH E ACT AND ALSO FIXED HEARING ON 28.07.2008 AND ON THAT DATE ALSO NOBODY ATTENDED AND NO ADJOURNMENT WAS SOUGHT BY THE ASSESSEE. THE ASSESS ING OFFICER AGAIN ISSUED FINAL SHOW CAUSE NOTICE ON 18.12.2008 AS TO WHY THE RECEIPT OF RS.12.34 LAKHS SHOULD NOT BE ADDED TO THE TOTAL INCOME. THEREAFTE R, SHRI RAJENDRA CHAUHAN FROM MINO MODI & CO., CHARTERED ACCOUNTANTS, ATTEND ED AND FILED SUBMISSIONS. THE ASSESSING OFFICER HAS REPRODUCED THE SUBMISSIONS IN THE ASSESSMENT ORDER, BUT HE WAS NOT SATISFIED AND HE M ADE ADDITION OF THIS AMOUNT OF RS.12,34,652/- BEING THE DIFFERENCE BETWEEN THE CONTRACT RECEIPT AS PER PROFIT AND LOSS ACCOUNT AND AS PER THE TDS CERTIFICATE. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO HAS HELD THAT THE ENTIRE AMOUNT OF DIFFE RENCE IN RECEIPTS CANNOT BE ADDED. HE NOTED THAT THE ASSESSEE HAD REPORTED NET PROFIT RATE OF 3.88% AS PER ITS BOOKS AND HENCE HE DIRECTED THE ASSESSING OFFIC ER TO MAKE THE ADDITION ONLY OF A SUM OF RS.98,772/- I.E. 8% OF RS.12,34,652/- I NSTEAD OF MAKING ENTIRE ADDITION. NOW, THE REVENUE IS IN APPEAL BEFORE US. 6. IT IS SUBMITTED BY THE LEARNED DR FOR THE REVENU E THAT IT IS A CASE WHERE ALL THE PURCHASES AND EXPENSES ARE DULY RECORDED BU T SOME SALES ARE UNREPORTED AND HENCE, THE ENTIRE AMOUNT OF DIFFERENCE IS TO BE ADDED. THE ADDITION OF GP ONLY OF DIFFERENCE WILL BE JUSTIFIED IN SUCH CASES WHERE PURCHASES AND EXPENSES ARE ALSO NOT REPORTED IN THE BOOKS IN RESPECT OF OU T OF BOOKS TURNOVER. ITA NO.1347/AHD/2010 -3- 7. WE HAVE CONSIDERED SUBMISSIONS OF THE LEARNED DR AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AGAINST THE R EPORTED TURNOVER OF RS.79.59 LAKHS, THE ASSESSEE HAD DECLARED INCOME OF RS.47,12 7/-. HENCE, IT APPEARS THAT IT IS NOT A CASE OF NOT RECORDING OF PURCHASE AND E XPENSES IN RESPECT OF OUT OF BOOKS TURNOVER AND HENCE, THERE IS FORCE IN THE CON TENTION OF THE LEARNED DR THAT THE GP RATE CAN BE APPLIED FOR MAKING ADDITION IN RESPECT OF OUT OF BOOKS TURNOVER IN THOSE CASE ONLY WHERE THE PURCHASES AND EXPENSES ARE NOT RECORDED IN RESPECT OF SUCH OUT OF BOOKS TURNOVER. IN THE P RESENT CASE, THERE IS NO FINDING GIVEN BY THE CIT(A) IN THIS REGARD THAT EXPENSES OF PURCHASE AND OTHER EXPENSES WERE NOT RECORDED IN THE BOOKS OF THE ASSE SSEE IN RESPECT OF OUT OF BOOKS TURNOVER AND HENCE, THE GP RATE CANNOT BE APP LIED FOR THE OUT OF BOOK TURNOVER AND IN THE FACTS OF THE PRESENT CASE, THE ADDITION MADE BY THE AO TO THE EXTENT OF TURNOVER OUT OF BOOKS IS JUSTIFIED. WE, THEREFORE, REVERSE THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND RESTORE THAT OF THE ASSESSING OFFICER. 8. IN RESULT, REVENUES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13 TH MAY, 2011 SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (A. K. GARODIA) ACCOUNTANT MEMBER PLACE : AHMEDABAD DATE : 13-05-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD