ACIT, Circle-2, Jalpaiguri, Jalpaiguri V. M/s Road (india)Internation, Uttar Dinajpur

ITA 1591/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100069 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 01-11-2012
• Court: TRIBUNAL
• Department Lawyers: D NASKAR
• Assessee Lawyers: N O N E
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO. 1591/KOL/2012 ASSESSMENT YEAR: 2004-05 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. M/S. RO AD (INDIA) INTERNATIONAL CIRCLE-2, JALPAIGURI. (PAN: AAEFR5856K) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 18.11.2015 DATE OF PRONOUNCEMENT: 20.11.2015 FOR THE APPELLANT: SHRI D. NASKAR, JCIT FOR THE RESPONDENT: N O N E ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A), JALPAIGURI IN APPEAL NO. 488/JAL/CIT(A)/JAL/06-07 DATED 10.07.2012. ASSESSM ENT WAS FRAMED BY ACIT, CIRCLE-2, JALPAIGURI U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2004-05 VIDE ITS ORDER DATED 27.1 2.2006. 2. AT THE OUTSET, IT IS SEEN THAT THIS APPEAL BY RE VENUE IS DELAYED BY 11 DAYS AND REVENUE HAS FILED CONDONATION PETITION FOR THE SAME . FROM THE REASONS STATED IN THE CONDONATION PETITION AND GOING BY THE SMALLNESS OF DELAY, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) IN COMPUTING THE PROFIT @ 6% AFTER REJECTING THE BOOKS OF ACCOUNT AND DELETING THE OTHER ADDITIONS. FOR THIS, REVENUE HAS RAISED FOLLOWING TWO GROUNDS: 2. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WITHOUT GOING IN THE MERIT OF THE ADDITION ASKED TO COMPUTE THE P ROFIT @ 6% AS A WHOLE. THE A.O. DISALLOWED 20% OF THE EXPENDITURE ON FUELS AS CLAIM ED BY THE ASSESSEE AS THE ASSESSEE FAILED TO JUSTIFY IT'S CLAIM. HERE, THE DE EMING PROVISION OF SECTION 68 OF THE I.T. ACT 1961 OR 69A OF THE I.T. ACT, 1961 IS APPLI CABLE. SAI CONSTRUCTION VS. ITO (ITAT, CUTTAK) 31, DTR 33 3. THAT, ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE LD. CIT(A) WITHOUT GOING IN THE MERIT OF THE CASE DIRECTED TO COMPUTE THE PROFI T @6% ON RECEIPT. THE A.O. ON SCRUTINIZING THE BOOKS OF ACCOUNT OF THE ASSESSEE F OUND THAT THE ASSESSEE HAS REFLECTED SUNDRY CREDITORS WORTH RS.3,00,89,070/- I N BOOKS OF ACCOUNTS. ON ENQUIRY, IT WAS FOUND THAT AN AMOUNT OF RS.14,68,000/- WAS F OUND NOT TO BE GENUINE. THE A.O. INTIMATED THE ASSESSEE THE FACT IN WRITING BUT THE ASSESSEE FAILED TO DISCHARGE HIS ONUS AS CREDITWORTHINESS OF SUNDRY CREDITORS AN D GENUINENESS OF THE TRANSACTIONS. 'THE SECTION 68 OF THE I.T. ACT, 1961 DOES NOT CONFINE TO CASH ENTRIES IN BOOKS, IF THE LIABILITY SHOWN IN THE ACCOUNTS IS FO UND TO BE BOGUS AND THERE IS NO PLAUSIBLE AND REASONABLE EXPLANATION FROM THE ASSES SEE, THE AMOUNT CAN CERTAINLY BE ADDED TOWARDS INCOME OF THE ASSESSEE.' 2 ITA NO. 1591/KOL/2012 M/S. ROAD (INDIA) INTERNATIONAL AY 2004-05 VISP PVT LTD. VS CIT(MP) 265 ITR 202); 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE DERIV ES INCOME FROM CIVIL CONSTRUCTION. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE THAT IT IS UNABLE TO PRODUCE THE CO MPLETE BILLS AND VOUCHERS IN RESPECT TO FUEL EXPENSES AND THERE IS DISPROPORTIONATE GROWTH IN FUEL EXPENSES FROM RS.3,03,938/- TO RS.14,54,472/- I.E. ALMOST MORE THAN BY 2.62 TIMES. ACCORDINGLY, HE DISALLOWED 20% OF FUEL EXPENSES DEBITED TO THE P&L ACCOUNT AND MADE A DDITION OF RS.2,90,894/-. SIMILARLY, THE AO MADE ADDITION OF ACCRUED INTEREST ON FD TO THE TUNE OF RS.41,868/- AND ALSO BOGUS SUNDRY CREDITORS TO THE TUNE OF RS.17,66 ,590/- FOR THE REASON THAT COMPLETE NAMES AND ADDRESSES OF THE SUNDRY CREDITOR AND CRED IT BALANCE AGAINST NAMES OF EACH SUCH PARTY COULD NOT BE PROVIDED. ACCORDING TO AO, THE ASSESSEE HAS SHOWN SUNDRY CREDITOR TO THE TUNE OF RS.3,03,87,660/- BUT HE TRE ATED THE SUNDRY CREDITOR TO THE EXTENT OF RS.17,66,590/- AS BOGUS. AGGRIEVED, ASSESSEE PREFE RRED APPEAL BEFORE CIT(A). THE CIT(A) DIRECTED THE AO TO RE-COMPUTE THE INCOME BY APPLYING NET PROFIT RATE @ 6% BY OBSERVING AS UNDER: IN THE PRESENT CASE UNDER APPEAL, BOOKS OF A/C WA S MAINTAINED. THE AO MADE SOME DISALLOWANCES OUT OF THE FUEL EXPENSES DEBITED TO T HE P&L A/C ON ESTIMATE BASIS. HE ALSO MADE CERTAIN ADDITION ON ACCOUNT OF LIABILITIES FOR WHICH NO DETAIL WAS SUBMITTED. THE AO ALSO MADE ADDITION OF RS.14,68,000/- IN CASES OF TW O SUNDRY CREDITORS ON THE BASIS OF INQUIRY REPORT OF THE INSPECTOR. IF ALL THE ADDITI ONS MADE BY THE AO ARE TAKEN TOGETHER WITH THE NET PROFIT DISCLOSED BY THE ASSESSEE, THE NET PROFIT WOULD BE 8.65% OF THE CONTRACTUAL RECEIPT WHICH IS ON THE HIGHER SIDE IN VIEW OF THE SEVERAL DECISIONS REFERRED TO HEREIN BEFORE. AS STATED, THE ITAT DID NOT FOLLOW ANY STANDARD FOR MULA, BUT HAS GIVEN THE DECISIONS ON CASE TO CASE BASIS FOR MAKING THE ESTIMATE. THUS, CONSIDERING THE FACTS OF THE CASE (THAT TWO OF THE SUNDRY CREDITORS DENIED TO HAVE ANY OUTS TANDING BALANCE WITH THE ASSESSEE AND THE ASSESSEE DID NOT OBJECTED MUCH TO THIS ADDITION ) AND NATURE OF BUSINESS OF THE ASSESSEE, FOR THE SAKE OF JUSTICE, THE AO IS DIRECTED TO TREA T 6% (SIX) OF THE CONTRACTUAL RECEIPTS AS INCOME OF THE ASSESSEE IGNORING THE ADDITIONS/DISAL LOWANCES MADE BY HIM EXCEPT THE ADDITION OF RS.41,868/- MADE ON ACCOUNT OF INTEREST ON FD. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US LD. SR. DR COULD NOT SUPPORT THE REVENUE S CASE DESPITE QUERY FROM THE BENCH THAT WHAT IS THE DEFECT IN THE ORDER OF THE CIT(A). WE FIND THAT THE GROSS RECEIPTS OF THE ASSESSEE FROM CIVIL CONTRACT IS RS.5,64,50,152/- AN D ASSESSEE HAS SHOWN RETURNED INCOME AT RS.28,24,840/- AS AGAINST THE SAME THE CIT(A) DI RECTED THE AO TO ASSESS THE INCOME AT 3 ITA NO. 1591/KOL/2012 M/S. ROAD (INDIA) INTERNATIONAL AY 2004-05 RS.33,87,009/- PLUS THE ADDITION OF INTEREST ON FDR IS TO BE CONFIRMED. FROM THE ORDER OF THE AO IT IS NOT CLEAR HOW THE FUEL EXPENSES ON EST IMATE BASIS IS ADDED AND MOREOVER, THE BOGUS SUNDRY CREDITOR IS ALSO ADDED WITHOUT ANY BAS IS. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAS RIGHTLY DIRECTED THE AO TO APPLY NET PROFIT RATE @ 6% AND WE UPHOLD THE SAME. APPEAL OF REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.11.2 015 SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20TH NOVEMBER, 2015 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ACIT, CIRCLE-2, JALPAIGURI 2 RESPONDENT M/S. ROAD (INDIA) INTERNATIONAL, MOHAN BATI, RAIGANJ, DIST. UTTAR DINAJPUR-733134. 3 . THE CIT(A), JALPAIGURI 4. 5. CIT JALPAIGURI DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .