Subash Chandra Sutar, Cuttack V. ACIT, Circle-2(2), Cuttack

ITA 135/CTK/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5381 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 18-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUNAL SINGH
• Assessee Lawyers: B R PANDA
• Keywords: Depreciation
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 135 / CTK /20 1 6 ( / ASSESSMENT YEAR : 20 10 - 20 1 1 ) SHRI SUBASH CHANDRA S UTAR, PROP: SLAA SUPPLIERS, TALAGARH, NATAJ, CUTTACK VS. ACIT, CIRCLE - 2(2), CUTTACK ./ ./ PAN/GIR NO. : A LAPS 5188 C ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI B.R.PANDA , AR /REVENUE BY : SHRI KUNAL SINGH, CITDR / DATE OF HEARING : 11 / 10 /201 7 / DATE OF PRONOUNCEMENT 12 / 10 /201 7 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH E ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF CIT(A), BERHAMPUR, CAMP : BHUBANESWAR , IN APPEAL NO. 0250 / 12 - 13 , DATED 07.03.2014 , PASSED U/S.14 4 /250 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 20 10 - 20 1 1 , WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 1. FOR TH A T T HE ORDERS OF THE FORUMS BELOW ARE IMPROPER, EXCESSIVE AND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. FOR THAT THE L.A.O. EVEN THOUGH THE PROFIT WA S DETERMINED IN ESTIMATE BASIS AFTER REJECTIN G THE BOOKS OF ACCOUNTS, THE CLAIM OF DEPRECIATIO N SHOULD HAVE BEEN ALLOWED FROM THE NET PROFIT SEPARATELY ON THE BASIS OF THE CIRCULAR OF THE C.B.D.T. THEREFORE, THE ORDER PASSED INFLATING THE INCOME IS LIABLE TO BE REDUCED ACCORDINGLY. 3. FOR THAT, THE LD. CIT (A) HAS ERRED IN ALLOWING THE DEPRECIAT ION SEPARATELY FROM THE NET PROFIT AND DEPOSING OF THE ORDER CATEGORICALLY DIRECTING THE A.O. TO DEDUCT THE DEPRECIATION FORM THE GROSS CONTRACT INCOME IN STEAD OF CONSIDERING THE DEPRECIATION SEPARATELY TO BE DEDUCTED AFTER ESTIMATION OF NET PROFIT. THERE FORE, THE ORDER PASSED BY THE LD. CIT (A) IS LIABLE TO BE QUASHED ENTIRELY. ITA NO. 135 /CTK/201 6 2 4. FOR THAT, IT IS OBVIOUS THAT WHEN THE NET PROFIT IS DET - ERMINED ON ESTIMATE BASIS AFTER REFLECTING THE BOOKS OF ACCOUNT, THE DEPRECIATION SHOULD HAVE BEEN DEDUCTED FROM NET P ROFIT BEFORE COMPUTATION OF TAXABLE INCOME. THEREFORE THE ORDERS PASSED BY THE FORUMS BELOW WITHOUT FOLLOWING THE PRINCIPLES LAID DOWN BY THE BOARD IGNORING THE LEGAL POSITION APPLICABLE TO THE FACT OF THE CASE AND PASSED THE ORDERS INFLATING THE RETURN IN COME ABNORMALLY ARE LIABLE TO BE REDUCED. 5. OTHER GROUNDS WILL BE URGED AT THE TIME OF HEARING. . 2. AS PER THE OFFICE NOTE, THERE IS A DELAY O F 727 DAYS IN FILING THE APPEAL. FROM THE RECORD, WE FOUND THAT THE ORDER IMPUGNED WAS CHALLENGED BY THE LD. A R OF THE ASSESSEE DIRECTLY BEFORE THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT VIDE ORDER DATED 29.03.2016 HAS OBSERVED AS UNDER : - 29.03.2016 HEARD MR. B. PANDA, LEARNED SENIOR COUNSEL FOR THE PETITIONER AND MR. S.K.ACHARYA, LEARNED SENIOR STANDING C OUNSEL FOR THE INCOME TAX DEPARTMENT. CHALLENGE HAS BEEN MADE IN THIS WRIT PETITION TO AN ORDER DATED 07.03.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), BERHAMPUR IN I.T.APPEAL NO. 0250/12 - 13 UNDER ANNEXURE - 2 FOR THE ASSESSMENT OF YEAR 2010 - 11. ADMITTEDLY, THE SAID ORDER CAN BE CHALLENGED BEFORE THE TRIBUNAL. HENCE, WE ARE NOT INCLINED TO ENTERTAIN THE WRIT PETITION SINCE AN ALTERNATIVE REMEDY BY WAY OF FILING THE APPEAL IS AVAILABLE TO THE PETITIONER. A CCORDINGLY, WE DIRECT HAT IF SUC H AN APP EAL IS FILED WITHIN A PERIOD OF FOUR WEEKS FROM TODAY ALONG WITH AN APPLICATION FOR CONDO NATION OF DELAY, THE DELAY SHALL BE CONSIDERED LIBERALLY IN VIEW OF THE PENDENCY OF THE WIT PETITION BEFORE THIS COURT AND THE APPEAL SHALL BE HEARD AND DISPOSED OF ON ITS OWN MERITS. WITH THE AFORESAID OBSERVATIONS AND DIRECTIONS, THE WRIT PETITION IS DISPOSED OF. A FREE COPY OF THIS ORDER BE HANDED OVER TO THE LEARNED SENIOR STANDING COUNSEL FOR THE INCOME TAX DEPARTMENT. URGENT CERTIFIED COPY OF THIS ORDER BE GRANTED ON PROPER APPLICATION ITA NO. 135 /CTK/201 6 3 CONSIDERING THE DIRECTION OF HON BLE HIGH COURT, WE CONDONE THE DELAY OF 727 DAYS IN FILING THE PRESENT APPEAL AND THE APPEAL IS HEARD ON MERITS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN LABOUR SUPPLY FOR CIVIL CONTRACT WORK AND ALSO DERIVES INCOME , INTEREST ON DEPOSITS AND SUB - CONTRACT WORKS AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 2011 ON 30.09.2010 WITH TOTAL INCOME OF RS. 40,80,768/ - AND THE RETURN OF INCOME WAS PROCESSED U/S.143(1 ) OF THE ACT AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) & 142(1) WERE DULY SERVED ON THE ASSESSEE . IN COMPLIANCE TO THE SAME, THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND THE CASE WAS DISCUSSED. THE AO FOUND THAT THE ASSESSEE COULD NOT SUBMIT SUPPORTING BOOKS OF ACCOUNTS/DOCUMENTS LIKE CASH BOOK, LEDGER OR BANK BOOK , BILLS AND VOUCHERS O N THE BASIS OF WHICH THE AUDIT IS CONDUC T ED WERE NOT PRODUCED IN SPITE OF ADEQUATE OPPORTUNITY WAS PROVIDED. SINCE T HE AO HAD NO OTHER ALTERNATIVE BUT TO REJECT THE BOOKS OF ACCOUNTS U/S.145(3) OF THE ACT AND ESTIMATED PROFIT @5% ON GROSS CONTRACT RECEIPT S AND ASSESSED THE TOTAL INCOME AT RS. 59,58,770/ - AND PASSED THE ORDER U/S.144 OF THE ACT, DATED 16.11.2012 . 4 . ON APPEAL, LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 6 . BEFORE US, LD. AR ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE IN THE ASSESSMENT PROCEEDINGS. L D. ARS CONTENTION ITA NO. 135 /CTK/201 6 4 THAT THE AO SHOULD HAVE ALLOWED DEPRECIATION FROM THE ESTIMATED INCOME AND THE INCOME OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME IS AS PER THE TRADE PRACTICE WHICH IS BEING ACCEPTABLE AND PRAYED FOR GRANT OF CLAIM OF DEPRECIATION FR OM THE ESTIMATED INCOME. CONTRA, LD. DR VEHEMENTLY OPPOSED TO THE GROUNDS AND EXPLAINED THAT THE ALLOW ANCE OF DEPRECIATION WILL RESULT TO REDUCING THE PERCENTAGE OF ESTIMATED PROFIT AND PRAYED FOR DISMISSAL OF THE APPEAL OF THE ASSESSEE. 7 . WE HAVE HEARD T HE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE CRUX OF THE DISPUTED ISSUE ARGUED BY THE LD. AR WITH RESPECT TO CLAIM OF DEPRECIATION OF RS. 18,94,000/ - . LD. AR SUBMITTED THAT THE AO SHOULD HAVE ALLOWED DEPRECIATION FROM THE ESTIMATED INCO ME AT 5% WHICH WAS DECLINED AND THE CIT(A) HAS CONFIRMED THE ACTION OF AO. WE FOUND THAT THE ASSESSEE HAS FILED RETURN OF INCOME WITH TOTAL INCOME OF RS.40,80,768/ - AFTER CLAIMING DEPRECIATION BY THE ASSESSEE, WHEREAS DUE TO NON - COOPERATION OF THE ASSESSEE AND NON - PRODUCTION OF BOOKS OF ACCOUNTS AND BILLS AND VOUCHERS, THE AO HAS NO OTHER ALTERNATIVE BUT TO REJECT THE BOOKS OF ACCOUNTS U/S.145(3) OF THE ACT AND ESTIMATED THE NET PROFIT AT 5% ON THE GROSS RECEIPTS WHICH WORKS OUT TO RS. 60,56,680/ - . FURTHER THE ASSESSEE HAS NOT EXPLAINED EVEN BEFORE THE LOWER AUTHORITIES NOR BEFORE US REASONS FOR NON - PRODUCTION OF BOOKS OF ACCOUNTS AND BILLS AND VOUCHERS , WE ARE OF THE OPINION THAT THE AO HAVING NO OTHER ALTERNATIVE HAS MADE BEST JUDGMENT ASSESSMENT U/S.144 O F THE ACT . IN THE ASSESSMENT PROCEEDINGS, LD. ARS EXPRESSION OF INABILITY TO PRODUCE THE BOOKS OF ACCOUNTS AND BILLS AND VOUCHERS, CREATE S SOME DOUBT IN THE ITA NO. 135 /CTK/201 6 5 MINDS OF REVENUE AUTHORITIES. W E ARE OF THE OPINION THAT THE AO AFTER PROVIDING REASONABLE OPPORTU NITY TO THE ASSESSEE HAS MADE BEST JUDGMENT ASSESSMENT AND CONFIRMED BY THE CIT(A). ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT(A) AND WE UPH O LD THE SAME AND DISMISS THE APPEAL OF ASSESSEE. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE I S DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12/10 /2017. SD/ - (N. S. SAINI) SD/ - ( PAVAN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 12/10 /2017 . . /PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//