The Asstt. Commissioner of Income-tax, Srinagar V. M/s. Star Constructions, Srinagar

ITA 149/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0788 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL DR SH UPENDRA BHAT
• Assessee Lawyers: E PASS SRINAGAR PANAATFSA
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER [ I.T.A NO.149 (ASR)/2014 ASSESSMENT YEAR: 2008-09 ACIT, CIRCLE-3, SRINAGAR. VS. M/S STAR CONSTRUCTIONS, ALNOOR COMPLEX, HYDERPORA BYE PASS, SRINAGAR. PAN:AATFS0796A (RESPONDENT) APPELLANT BY: SH. S. S. KANWAL (DR) RESPONDENT BY: SH. UPENDRA BHAT (CA) DATE OF HEARING: 05.05. 2016 DATE OF PRONO UNCEMENT: 06.05.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF LEARNED CIT(A) DATED 19.12.2013 FOR ASST. YEAR 2008-09. 2. THE REVENUE HAS RAISED FOUR GROUNDS OF APPEAL BU T THE CRUX OF GRIEVANCE OF REVENUE IS THE ACTION OF LEARNED CIT(A ), BY WHICH HE HAD REDUCED THE NET PROFIT APPLIED BY ASSESSING OFFICER @ 10% TO 7% OF GROSS RECEIPTS. 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE ASSE SSMENT ORDER ARE THAT ASSESSEE IS A CIVIL CONTRACTOR AND HAD FILED I TS RETURN OF INCOME DECLARING LOSS OF RS.20,55,928/-. THE CASE WAS SELE CTED FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER ISSUED VARIOUS ITA NO.149 (ASR)/2014 ASST. YEAR: 2008-0 9 2 NOTICES AND QUESTIONNAIRE BUT ASSESSEES COUNSEL AP PEARED ONLY ON 13.12.2010 AND HE WAS DIRECTED TO PRODUCED CERTAIN VOUCHERS AND BOOKS OF ACCOUNT AND CASE WAS ADJOURNED TO 16.12.20 10. ON 16.12.2010 ACCOUNTANT WORKING IN THE OFFICE OF COUNSEL APPEARE D AND REQUESTED FOR ADJOURNMENT AND THE CASE WAS ADJOURNED TO 20.12.201 0. ON 20.12. 2010 AGAIN NO BODY ATTENDED, THEREFORE, ASSESSING OFFICE R FINALIZED THE ASSESSMENT U/S 144. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD DECLARED GROSS PROFIT @ 3.47% ON TOTAL GROSS RECEIP TS WHICH WAS ON THE LOWER SIDE AND RELYING UPON THE JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SHIVAM CONSTRUCTI ON COMPANY, ITA NO.167 OF 2007 APPLIED NET PROFIT RATE @ 10% ON GRO SS RECEIPTS. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LEARN ED CIT(A) AND SUBMITTED VARIOUS SUBMISSIONS AGAINST THE ACTION OF ASSESSING OFFICER IN COMPLETING ASSESSMENT U/S 144 AND ALSO SUBMITTED VA RIOUS SUBMISSIONS ON MERITS OF THE CASE. THE LEARNED CIT(A) REJECTED THE ARGUMENTS OF ASSESSEE REGARDING COMPLETION OF ASSESSMENT U/S 144 HOWEVER, HE REDUCED THE NET PROFIT RATE OF 10% APPLIED BY ASSES SING OFFICER TO 7% BY HOLDING AS UNDER: 5.2 GROUND OF APPEAL NO 2 RELATES TO APPLICATION O F NET PROFIT RATE OF 10% OR TURNOVER OF CIVIL CONTRACTOR BUSINESS. I HAVE GO NE THROUGH THE SUBMISSION OF THE APPELLANT, ASSESSMENT ORDER AND REMAND REPOR T. AS ALREADY DISCUSSED IN ABOVE PARA IN SPITE OF VARIOUS OPPORTU NITIES PROVIDED TO THE APPELLANT, BOOKS OF ACCOUNTS WERE NOT PRODUCED BEFO RE THE AO , THEREFORE, THE AO WAS NOT LEFT WITH ANY OPTION BUT TO REJECT T HE BOOKS OF ACCOUNTS AND APPLY NET PROFIT RATE TO THE TURNOVER OF THE APPELL ANT. THE APPELLANT HAS ARGUED THAT THE AO HAS IGNORED THE PAST HISTORY OF THE CASE WHICH IS THE BEST GUIDE FOR ESTIMATING NET PROFIT AFTER REJECTIN G THE BOOKS. IT S EITHER THE ITA NO.149 (ASR)/2014 ASST. YEAR: 2008-0 9 3 PAST HISTORY OF THE APPELLANT OR ANY COMPARABLE CAS E WHICH SHOULD BE MADE BASIS FOR ESTIMATING INCOME. HAVING REGARD TO THE NATURE OF BUSINESS, HILLY TERRAIN IN WHICH THE APPELLANT OPER ATES, TOUGH WEATHER CONDITIONS, HIGH LABOUR COST INVOLVED ETC PAST HIST ORY OF THE APPELLANT, IN MY OPINION, THE RATE APPLIED BY THE AO IS ON THE HI GHER SIDE. IT IS TO MENTION THAT IN THE CASE OF M/S CONSTRUCTION ENGINE ERING SRINAGAR VS. ACIT RANGE-3, SRINAGAR ITA NO.493(ASR)2010 DATED 11 .05.2010 THE HONBLE ITAT BENCH HAS UPHELD A RATE OF 7% PROFIT O N TOTAL RECEIPTS. THE APPELLANT HAS QUOTED ANOTHER CASE OF M/S KASANA BRO THERS KANGAN GANDERBAL WHERE 6% PROFIT RATE HAS BEEN TAKEN BY TH E FIRST APPELLATE AUTHORITY CIT(A. THE. THE ABOVE CITED CASE BY THE A PPELLANT OPERATED ITS SITE IN REMOTE AREA INFESTED WITH , MILITANCY AND I N EXTREMELY ADVERSE WEATHER CONDITION HENCE, THE FACTS OF THE CASE ARE DIFFERENT AND THIS COMPARISON BY THE APPELLANT IS NOT FAIR. KEEPING A BOVE IN VIEW, I AM OF THE CONSIDERED OPINION THAT A RATE OF 7% PROFIT WOULD M EET THE END OF JUSTICE. IT IS THUS DIRECTED TO REDUCE THE NET PROFIT RATE FROM 10% TO 7% SUBJECT TO NO FURTHER ALLOWANCE ON ACCOUNT OF INTEREST/SALARY TO PARTNER. THIS GROUND OF APPEAL IS PARTLY ALLOWED AND A RELIEF OF RS.30,46,7 24/- IS ALLOWED TO THE APPELLANT. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, THE LEARNED DR SUBMITTED THAT BEF ORE ASSESSING OFFICER NOTHING WAS FILED AND THEREFORE, ASSESSING OFFICER HAD RIGHTLY APPLIED THE RATE OF 10% TO GROSS RECEIPTS RELYING U PON THE JUDGMENT OF PUNJAB AND HARYANA HIGH COURT IN CASE OF CIT VS. SH IVAM CONSTRUCTION COMPANY (SUPRA). 7. THE LEARNED AR, ON THE OTHER HAND, SUBMITTED THA T ASSESSEE WAS OPERATING IN SRINAGAR AND DUE TO HILLY TERRAIN, TOU GH WEATHER CONDITIONS, HIGH LABOUR COST WAS INVOLVED, THEREFORE, THE CASE LAW OF PUNJAB AND HARYANA HIGH COURT IN CASE OF CIT VS. SHIVAM CONSTR UCTION COMPANY (SUPRA) WAS NOT APPLICABLE TO THE FACTS AND CIRCUMS TANCES OF THE PRESENT CASE. IT WAS FURTHER SUBMITTED THAT THE HONBLE BEN CH IN THE CASE OF ASSESSEE ITSELF FOR ASST. YEAR 2007-08 IN ITA NO. 1 06/2012 HAD UPHELD ITA NO.149 (ASR)/2014 ASST. YEAR: 2008-0 9 4 THE RATE OF 6.5% AND THEREFORE, THE RATE OF 7% APPL IED BY LEARNED CIT(A) IS QUITE REASONABLE. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT LEARNED CIT (A) HAD NOTED THAT M/S. CONSTRUCTION ENGINEERING, SRINAGAR, WHO WERE A LSO WORKING IN JAMMU AND KASHMIR AND WHERE THE HONBLE ITAT APPLIE D A RATE OF 7% OF TOTAL RECEIPTS AND THEREFORE, HE REDUCED THE ADDITI ON FROM 10% TO 7% BY HOLDING THAT ASSESSEE WAS ALSO OPERATING IN THE SAM E AREA OF JAMMU AND KASHMIR. 9. WE FIND THAT THE LEARNED CIT(A) HAS ALSO NOTED T HAT THE RATE APPLIED BY ASSESSING OFFICER WAS ON HIGHER SIDE KEEPING IN VIEW THE FACT THAT ASSESSING OFFICER HAD IGNORED PAST HISTORY OF THE A SSESSEE. KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT LEARNED CIT(A)S ORDER IS A REASONED ORDER AND WE DO NOT FI ND ANY INFIRMITY IN THE CASE. [ 10. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE R EVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH MAY, 2016. SD/- SD/- (A.D. JAIN) (T. S . KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:06.05.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE ITA NO.149 (ASR)/2014 ASST. YEAR: 2008-0 9 5 (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER