Dy.C.I.T., Circle-5, Firozabad V. M/s Vikas Builders, Firozabad

ITA 155/AGR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6975 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 14-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 155/AGRA/2010 ASSTT. YEAR : 2005-06 D.C.I.T., CIRCLE 5, VS. M/S. VIKAS BUILDERS, FIROZABAD. 208-B, FRIENDS COLONY, FIROZABAD. (PAN : AAEFV 2603 C) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI VINOD KUMAR, JR. D.R. FOR RESPONDENT : NONE ORDER PER P.K. BANSAL, A.M. : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 10.02.2010 ON THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 1. THAT THE LEARNED CIT(APPEALS)-II, AGRA HAS ERRE D IN LAW AND ON FACTS IN DIRECTING TO APPLY NET PROFIT RATE OF 7% AS AGAI NST 10% APPLIED BY THE AO WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. THAT THE LEARNED CIT(APPEALS)-II, AGRA HAS ERRE D IN LAW AND ON FACTS IN DIRECTING TO TREAT THE INTEREST INCOME AS INCOME FR OM BUSINESS BRUSHING ASIDE THE FACTS OF THE CASE. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THO UGH THE NOTICE WAS SENT THROUGH REGISTERED A/D TWICE. WE, THEREFORE, TOOK THE VIEW THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING THE APPEAL AND DECIDED TO DISPOSE OF TH E APPEAL AFTER HEARING THE LEARNED DR. THE LEARNED DR RELIED ON THE ORDER OF THE ASSESSING OFF ICER. 3. WE NOTED THAT IN THIS CASE THE ASSESSEE IS A CIV IL CONTRACTOR. HE SUBMITTED RETURN DECLARING INCOME OF RS.24,02,721/- ON 03.10.2005 CLAIMING THE REFUND OF RS.1,94,350/-. NOTICE U/S. 143(2) 2 WAS ISSUED FROM TIME TO TIME. THE COUNSEL OF THE AS SESSEE SOUGHT ADJOURNMENT ON ONE PRETEXT OR THE OTHER. AFTER GIVING SEVEN ADJOURNMENTS, ONE SHR I RANVEER SINGH CLAIMED TO BE THE ACCOUNTANT OF THE ASSESSEE APPEARED, BUT DID NOT PR ODUCE BOOKS OF ACCOUNT NOR ANY DETAILS OR DOCUMENTS ASKED BY THE ASSESSING OFFICER. ONLY ON 0 8.03.2007 WHEN THE NOTICE U/S. 271(1)(B) WAS ISSUED, HARD COPY OF CASH BOOK AND LEDGER WITHO UT ANY DETAIL OR INFORMATION AND EXPLANATION WERE PRODUCED AND THE CASE WAS ADJOURNED FOR 16.03. 2007. AGAIN THE NECESSARY INFORMATION AS DESIRED BY THE ASSESSING OFFICER WERE NOT PRODUCED. EVEN THE NOTICE U/S. 142(1) DATED 12.09.2007, 03.10.2007 AND 21.11.2007 REMAINED UN-C OMPLIED. THE ASSESSING OFFICER UNDER THESE CIRCUMSTANCES COMPLETED THE ASSESSMENT U/S. 1 44 BY REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THE CI T(A) AND BEFORE THE CIT(A) THE ASSESSEE CHALLENGED INVOKING OF THE PROVISIONS OF SECTION 14 4 AND CONTENDED THAT THE PARTNER OF THE FIRM WAS SICK. PROPER OPPORTUNITY NOT BEING GIVEN, THE A SSESSMENT COMPLETED U/S. 144 OF THE ACT IS NOT SUSTAINABLE. THE ASSESSING OFFICER APPLIED THE PROF IT RATE OF 10% INCLUDING THE INTEREST INCOME SHOWN BY THE ASSESSEE WHILE IN THE PRECEDING ASSESS MENT YEAR, I.E., 2006-07, THE NET PROFIT RATE OF 4.78% WAS ASSESSED. THE ASSESSEE HAS SHOWN NET PROF IT OF 5.04% DURING THE YEAR. THE CIT(A) DIRECTED THE ASSESSING OFFICER TO REDUCE THE NET PR OFIT RATE @ 7% AND CONFIRMED THE REJECTION OF BOOKS OF ACCOUNT. THE CIT(A) HAS ALSO DIRECTED THE ASSESSING OFFICER TO TAKE INTEREST RECEIVED BY THE ASSESSEE TO BE THE PART OF THE GROSS RECEIPTS S O THAT ON IT ALSO THE NET PROFIT @ 7% COULD BE COMPUTED. 4. SO FAR AS THE APPLICABILITY OF THE PERCENTAGE OF NET PROFIT IS CONCERNED, IN OUR OPINION, THE ASSESSEES RESULTS IN THE EARLIER YEAR, AS ACCEPTED BY THE DEPARTMENT, ARE THE BEST COMPARATIVE INSTANCE. THE ASSESSING OFFICER WHILE MAKING THE AS SESSMENT ORDER FOR THE ASSESSMENT YEAR 2006-07 U/S. 143(3) HAS REMITTED THE INCOME BY APPL YING THE NET PROFIT @ 4.78%. UNDER THESE 3 FACTS AND CIRCUMSTANCES IN OUR OPINION, SINCE THE A SSESSEE IS NOT IN APPEAL, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A) WHILE HE DIRE CTED THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT BY APPLYING THE NET PROFIT RATE @ 7%. THUS, TO THE EXTENT OF NET PROFIT RATE, WE CONFIRM THE ORDER OF CIT(A). 5. SO FAR AS THE SECOND GROUND OF REVENUE IS CONCER NED, WE DO NOT AGREE WITH THE ORDER OF THE CIT(A) THAT THE PERCENTAGE OF NET PROFIT BE APP LIED ON THE INTEREST INCOME. THE INTEREST RECEIVED BY THE ASSESSEE HAS TO BE ASSESSED AS A SE PARATE SOURCE OF INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS LTD. 262 ITR 278 (SC). WE, THEREF ORE, SET ASIDE THE ORDER OF THE CIT(A) SO FAR AS IT RELATES TO THE APPLICABILITY OF NET PROFI T RATE TREATING THE INTEREST RECEIVED FROM BANK TO BE THE PART OF THE CONTRACT RECEIPTS WHILE ESTIMATING THE INCOME. THE BANK INTEREST SHOWN BY THE ASSESSEE AMOUNTING TO RS.2,06,986/- HAS TO BE ASSES SED SEPARATELY AND THE NET PROFIT HAS TO BE ESTIMATED @ 7% BY EXCLUDING INCOME FROM BANK INTERE ST. TO THAT EXTENT WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO RECOMPUT ED THE INCOME OF THE ASSESSEE BY ASSESSING THE BANK INTEREST INCOME SEPARATELY. THUS, GROUND N O. 2 IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2011. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH JUNE, 2011 *AKS/- 4 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY