M/s. Anasuya Construction Company, V. Additional Commissioner of Income-tax,

ITA 1595/PUN/2014

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9237 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-07-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 18-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 44AD; 143(3); 142(1); 201; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 1 595 /PUN/201 4 / ASSESSMENT YEAR : 201 1 - 12 M/S. ANUSAYA CONSTRUCTION COMPANY OF PARLI VAIJNATH, PIN : 431515 DISTT. - BEED PAN : AALFM2684B ....... / APPELLANT / V/S. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 2, AURANGABAD / RESPONDENT ASSESSEE BY : S HRI M.K. KULKARNI REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 1 3 - 09 - 2019 / DATE OF PRONOUNCEMENT : 19 - 09 - 2019 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 02 - 07 - 2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) , AURANGABAD FOR ASSESSMENT YEAR 201 1 - 12. 2. THE ASSESSEE THROUGH THE ADDITIONAL GROUND HAS CHALLENGED THE JURISDICTION OF ASSESSING OFFICER IN TERMS OF SECTION 120(4)(B) OF THE ACT. 2 ITA NO.1595/PUN/2014, A.Y. 2011 - 12 THE CASE OF THE ASS ESSEE IS THAT THE JURISDICTION WAS NOT PROPERLY ASSIGNED IN TERMS OF PROVISIONS IN AS MUCH AS IT REFERS TO THE ASSESSING OFFICER. WE DO NOT FIND ANY SUBSTANCE IN THE ARGUMENT OF LD. AR FOR THE OBVIOUS REASON THAT THE DEFINITION OF (ASSESSING OFFICER) GIVE N U/S. 2(7A) OF THE ACT INCLUDES ADDITIONAL COMMISSIONER AS WELL. FURTHER, THE LD. D R HAS PLACED ON RECORD A COPY OF THE ORDER PASSED U/S. 127 OF THE ACT TRANSFERRING THE JURISDICTION BY LD. CIT(A) FROM ONE ASSESSING OFFICER TO ANOTHER ASSESSING OFFICER. RELIANCE OF LD. AR ON THE TRIBUNAL DECISION IN THE CASE OF M/S. TATA SONS LTD. VS. ACIT REPORTED IN (2017) 162 ITD 450 (MUM.) IS MISPLACED IN AS MUCH AS IN TH AT CASE THE PROCEEDINGS WERE INITIATED BY THE ACIT BUT WERE TAKEN OVER IN THE MIDDLE OF PROCEEDIN GS BY ADDL. CIT WITHOUT THERE BEING ANY VALID TRANSFER OF JURISDICTION FROM ACIT TO ADDITIONAL CIT. ON THE CONTRARY, WE ARE CONFRONTED WITH THE SITUATION IN WHICH THE CIT(A), AURANGABAD HAS SPECIFICALLY PASSED ORDER U/S. 127 OF THE ACT TRANSFERRING JURISD ICTION OF THE ASSESSEE FROM ACIT, CIRCLE - 2, AURANGABAD TO ADDITIONAL CIT, RANGE - 2, AURANGABAD. THE ADDITIONAL GROUNDS THUS, RAISED ARE DISMISSED. 3. ON MERITS , THE ONLY ISSUE IS TO BE DECIDED AS TO WHETHER THE COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED IN RESTRICTING THE ADDITION TO THE EXTENT OF RS.52,91,970/ - AS AGAINST RS.72,37,436/ - MADE ON ACCOUNT OF ESTIMATION OF NET PROFIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4 . HEARD BOTH PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECORDS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE CONDUCTS ITS BUSINESS UNDER THE NAME AND 3 ITA NO.1595/PUN/2014, A.Y. 2011 - 12 STYLE OF M/S. ANUSAYA CONSTRUCTION COMPANY, B EED. THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,62,17,334/ - . NOTICE U/S. 143(2) AND 142(1) OF THE ACT WAS ISSUED. IN RESPONSE TO SUCH NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATT ENDED FROM TIME TO TIME AND FURNISHE D WRITTEN SUBMISSIONS IN SUPPORT OF ITS CONTENTIONS. 5. ON PERUSAL OF DETAILS FILED BY THE ASSESSEE , THE ASSESSING OFFICER IN ORDER TO VERIFY CORRECTNESS OF PROFIT SHOWN AND GENUINENESS OF EXPENSES ASKED FOR VARIOUS DETAILS SUCH AS BILLS, VOUCHERS, MONT H WISE PURCHASES, ETC. ACCORDING TO THE ASSESSING OFFICER THAT THE AUTHORIZED REPRESENTATIVE OF ASSESSEE ACCEPTED THE DISCREPANCIES IN THE ACCOUNTS AND EXPRESSED THEIR INABILITY TO FURNISH ANY REASONABLE EXPLANATION. CONSIDERING THE SAME THE ASSESSING OF FICER REJECTED THE BOOKS OF ACCOUNT IN TERMS OF SECTION 145(3) OF THE ACT AND ESTIMATED NET PROFIT OF RS.2,33,99,820/ - @ 10% OF TOTAL TURNOVER OF RS.23,39,98,199/ - . THEREBY , THE ASSESSING OFFICER ADDED FURTHER AN AMOUNT OF RS.72,37,336/ - (RS.2,33,99,820 - RS.1,61,62,484) TO THE TOTAL INCOME OF THE ASSESSEE VIDE THIS ORDER DATED 27 - 02 - 2014 PASSED U/S. 143(3) OF THE ACT. 6. IN CHALLENGE, BEFORE THE CIT (APPEALS) IN FIRST APPELLATE PROCEEDINGS THE ASSESSEE VEHEMENTLY ARGUED THAT THE ADDITION MADE BY THE ASSESSING OFFICER BY ESTIMATING THE NET PROFIT IS NOT MAINTAINABLE. F URTHER CONTENDED THAT THE INTEREST AND REMUNERATION TO THE PARTNERS TO BE CONSIDERED IN TERMS OF PROVISO TO SUB - SECTION (2) OF SECTION 44AD OF THE ACT. THE C IT (APPEALS) CONSIDERING THE SUBMISSIONS OF ASSESSING OFFICER RESTRICTED THE ADDITION TO RS.52,91,970/ - BY ACCEPTING INTEREST OF RS.14,45,466/ - AND REMUNERATION TO PARTNERS RS.5,00,000/ - AND DELETED AN AMOUNT OF 4 ITA NO.1595/PUN/2014, A.Y. 2011 - 12 RS.19,45,466/ - . BEFORE US ADMITTEDLY THERE WAS NO APPEAL BY THE RESPOND ENT REVENUE QUESTIONING THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS.19,45,466/ - AS IT WAS SUBMITTED BY THE LD. DR, SHRI SUDHENDU DAS THAT THE RESPONDENT REVENUE DID NOT FILE APPEAL AS IT WAS COVERED BY THE THEN CBDT CI RCULAR BEING BELOW TAX EFFECT. 7. SHRI M.K. KULKARNI, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BY MISTAKE THE AUTHORIZED REPRESENTATIVE ADMITTED DISCREPANCIES IN ACCOUNTS OF ASSESSEE . IN ACTUAL FACT THERE WAS NO DISCREPANCIES IN THE ACCOUNT S OF THE ASSESSEE AND BY MISTAKE THE ASSESSEE ASKED TO ADOPT NET PROFIT @ 10%. HE ARGUED THAT THE ESTIMATION OF NET PROFIT IS EXCESSIVE AND PRAYED TO RESTRICT THE NET PROFIT AS SHOWN BY THE ASSESSEE @ 6.91% OF TOTAL TURNOVER AND PRAYED TO ALLOW GROUNDS RA ISED BY THE ASSESSEE. 8. GOING ON THE RELEVANT MATERIAL ON RECORD , IT IS SEEN THAT THE ASSESSEE DID NOT MAINTAIN PROPER BOOKS OF ACCOUNT FOR THE REASONS STATED IN PAGE 2 OF THE ASSESSMENT ORDER. WHEN THIS ASPECT WAS CONFRONTED TO THE ASSESSEE, IT AGREE D WITH THE SAID DISCREPANCIES THROUGH THE ORDER SHEET DATED 25 - 02 - 2014, WHICH HAS BEEN RE PRODUCED VERBATIM ON PAGES 12 AND 13 OF THE IMPUGNED ORDER, THAT THE ASSESSEE AGREED FOR THE ESTIMATION OF NET PROFIT @ 10%. IT IS ON THAT BASIS THE ASSESSING OFFICER ESTIMATED NET PROFIT @ 10% ON THE TOTAL TURNOVER AND MADE ADDITION OF RS.72,37,336/ - . I T WAS CONTENDED BEFORE THE LD. CIT(A) THAT THE NET PROFIT @ 10% WAS AGREED BEFORE THE DEDUCTION OF INTEREST AND REMUNERATION TO PARTNERS. THE LD. CIT(A) IN ALL FAIRNESS ACCEPTED THE ASSESSEES CONTENTIONS AND TREATED NET PROFIT @ 10% BEFORE CLAIM FOR INTE REST AND REMUNERATION TO PARTNERS TOTALING RS.19,45,466, THEREBY REDUCING THE ADDITION FROM RS.72,37,436/ - 5 ITA NO.1595/PUN/2014, A.Y. 2011 - 12 TO RS.52,91,970/ - . ON PERUSAL OF THE ABOVE FACTUAL NARRATION, IT IS EVIDENT THAT WHEN THE BOOKS OF ACCOUNT WERE NOT PROPERLY MAINTAINED BY THE ASSES SEE AND SAME FACT WAS CONFRONTED, THE ASSESSEE AGREED FOR APPLICATION OF NET PROFIT @ 10% AND THE LD. CIT(A) REDUCING SUCH NET PROFIT BY THE AMOUNT OF SALARY INTEREST TO THE PARTNERS, THERE IS NO INFIRMITY WHATSOEVER IN THE IMPUGNED ORDER ON THIS SCORE. W E UPHOLD THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH SEPTEMBER, 2019. SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 19 TH SEPTEMBER, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) , AURANGABAD 4. THE COMMISSIONER OF INCOME TAX , AURANGABAD 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE