The Hooda Co-operative L/C Society Ltd., Rohtak V. JCIT, Rohtak

ITA 1566/DEL/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6884 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 20-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 18-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS SHAVETA NAKRA DUTTA
• Assessee Lawyers: NAVEEN GUPTA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-I : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.1566/DEL/2015 ASSESSMENT YEAR : 2011-12 THE HOODA CO-OPERATIVE L/C SOCIETY LTD., H.NO.404, SECTOR-2, ROHTAK. PAN: AAAJT0984E VS. JCIT, ROHTAK RANGE, INCOME TAX OFFICE, ROHTAK. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NAVEEN GUPTA, ADVOCATE DEPARTMENT BY : MRS. SHAVETA NAKRA DUTTA, SR. DR DATE OF HEARING : 20.07.2016 DATE OF PRONOUNCEMENT : 20.07.2016 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE CIT(A) ON 20.01.2015 IN RELATION TO T HE ASSESSMENT YEAR 2011-12. ITA NO.1566/DEL/2015 2 2. THE FIRST TWO EFFECTIVE GROUNDS ARE AGAINST THE REJECTION OF BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND CONSEQUENTIA L CONFIRMATION OF ADDITION OF RS.34,90,928/- TO ITS TOTAL INCOME. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE SOCIETY IS ENGAGED IN THE WORK OF CIVIL CONSTRUCTION. IT FILE D ITS RETURN DECLARING GROSS TOTAL INCOME OF RS.2,91,265/- AND TOTAL INCOM E AT RS. NIL AFTER CLAIMING DEDUCTION U/S 80P(2)(A)(VI) OF THE INCOME- TAX ACT, 1961. THE AO REQUIRED THE ASSESSEE TO PRODUCE BOOKS OF ACCOUN T, DETAILS OF OPENING AND CLOSING WORK-IN-PROGRESS, DETAILS OF AL L THE CONTRACT WORKS AND OTHER FINANCIAL DETAILS ETC. TO VERIFY THE AUTH ENTICITY OF THE COMPUTED PROFIT. THE ASSESSEE FURNISHED A REGISTER CONTAINI NG MINUTES OF THE GENERAL BODY MEETING HELD ON FOUR OCCASIONS. APART FROM THAT, THE ASSESSEE PRODUCED WAGE SHEETS IN ORIGINAL AND VOUCH ERS OF EXPENSES AND SALARY REGISTERS ALONG WITH BACK UP COPY OF BOOKS OF ACCOUNTS. THE AO OBSERVED THAT THE TOTAL GROSS RECEIPTS OF THE ASSES SEE SOCIETY WERE TO THE TUNE OF RS.6.65 CRORE, WHICH INCLUDED PAYMENT OF R S.3.84 CRORE TO SUB- CONTRACTOR. REJECTING THE BOOKS OF ACCOUNT, THE AO APPLIED 4% PROFIT ITA NO.1566/DEL/2015 3 RATE ON THE CONTRACTS EXECUTED THROUGH SUB-CONTRACT ORS AND 8% ON THE CONTRACTS EXECUTED DIRECTLY. THAT IS HOW, THE ASSE SSEES BUSINESS INCOME WAS COMPUTED AT RS.37,82,192/-. AS THE ASSE SSEE HAD ALREADY SHOWN PROFIT AT RS.2,91,264/-, AN ADDITION OF RS.34 ,90,928/- WAS MADE. THE LD. CIT(A) ECHOED THE ASSESSMENT ORDER ON THIS ISSUE. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. THE AO HAS REJECTED THE BOOKS OF ACCOUNT BY NOTICING THAT THE ASSESSEE DID NOT MAINTAIN BOOKS O F ACCOUNT IN NORMAL COURSE AND MANIPULATED THE BOOKS BECAUSE IN HIS OPI NION, ALL THE VOUCHERS OF EXPENSES AND SALARIES AND WAGE SHEETS, ETC., `APPEARED TO HAVE BEEN PREPARED IN ONE GO. IN MY CONSIDERED OP INION, THIS CANNOT BE A GOOD REASON TO REJECT THE BOOKS OF ACCOUNT, MORE SPECIFICALLY, WHEN DETAILS OF ALL THE RELEVANT EXPENSES BACKED BY THE NECESSARY EVIDENCE ALONG WITH THE BOOKS OF ACCOUNT WERE PRODUCED BEFOR E THE AO. ANY APPREHENSION CANNOT TAKE THE PLACE OF AN EVIDENCE. SINCE THE AO ONLY SUSPECTED THAT THE VOUCHERS OF EXPENSES, SALARIES A ND WAGE SHEETS WERE PREPARED IN ONE GO WITHOUT CONTROVERTING THE EVIDEN CE SUBSTANTIATING THE ITA NO.1566/DEL/2015 4 PAYMENT OF SUCH EXPENSES, I FIND IT DIFFICULT TO CO UNTENANCE THE REJECTION OF THE BOOKS OF ACCOUNT. THE MAINTENANCE OF ACCOUN TS IN PROPER MANNER IS, ERGO, UPHELD AND CONSEQUENTLY, THE ESTIMATION O F INCOME MADE BY THE AO AT 8% AND 4% OF THE CONTRACTS EXECUTED DIRECTLY AND THROUGH SUB- CONTRACTORS IS SET ASIDE AND THE DECLARED PROFIT OF RS.2,91,264/- IS ACCEPTED. 5. THE NEXT ISSUE IS AGAINST THE DISALLOWANCE OF CL AIM OF DEDUCTION U/S 80P(2)(A)(VI) AND GRANTING DEDUCTION U/S 80P(2)(C)( II). THE ASSESSEE CLAIMED DEDUCTION FOR THE FULL INCOME UNDER 80P(2)( A)(VI) WHICH WAS TURNED DOWN BY THE AO WHO HELD THAT THE CASE OF THE ASSESSEE DID NOT FALL UNDER THIS PROVISION AS THERE WAS INCOME FROM SUB-CONTRACT AND THE REQUIREMENT U/S 80P(2)(A)(VI) BEING THE COLLECTIVE DISPOSAL OF THE LABOUR OF ITS MEMBERS WAS NOT SATISFIED. HE, THEREFORE, A LLOWED DEDUCTION U/S 80P(2)(C)(II) AT RS.50,000/-. THE LD. CIT(A) UPHEL D THE ASSESSMENT ORDER ON THIS POINT. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE RELEVANT MATERIAL ON RECORD. IN MY CONSIDERED OPINION, NO FAULT CAN B E FOUND IN THE ITA NO.1566/DEL/2015 5 OPINION OF THE AUTHORITIES BELOW IN REJECTING THE A SSESSEES CLAIM FOR DEDUCTION U/S 80P(2)(A)(VI) BECAUSE THE ASSESSEE WA S NOT ENGAGED IN THE DISPOSAL OF LABOUR OF ITS MEMBERS ALONE AS IT HAS A LSO SUB-CONTRACTED THE CONTRACT WORK TO SOME EXTENT. I, THEREFORE, APPROV E THE VIEW TAKEN BY THE AUTHORITIES IN GRANTING DEDUCTION U/S 80P(2)(C) (II). THIS GROUND IS NOT ALLOWED. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.07.201 6. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED, 20 TH JULY, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.