ACIT, Cuttack V. M/s. Pradeep Kumar Mohanty, Jajpur

ITA 165/CTK/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7555 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 15-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 15-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B N DASH
• Assessee Lawyers: S K JENA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.165 /CTK/2015 ASSESSMENT YEAR : 2010 - 2011 ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), CUTTACK VS. M/S. PRADEEP KUMAR MOHANTY, PROP. M/S. MOHANTY ASSOCIATES TOMKA, KIAJHAR, JAJPUR ROAD, JAJPUR PAN/GIR NO. AUWPM 3128 R (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI S.K.JENA, AR REVENUE BY : SHRI B.N.DASH , DR DATE OF HEARING : 1 5 /11 / 2016 DATE OF PRONOUNCEMENT : 15 /11 / 2016 O R D E R THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 19.1.2015 , FOR THE ASSESSMENT YEAR 2010 - 2011. 2. THE SOLE GROUND RAISED BY THE REVENUE READS AS UNDER: WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD FIRST APPELLATE AUTHORITY WAS JUSTIFIED IN GIVING DIRECTION TO ESTIMATE THE NET PROFIT @ 3% OF THE GROSS CONTRACT RECEIPTS OF RS.13,64,99,581/ - AS AGAINST N.P. @ 8% MADE BY THE AO IN THE IMPUGNED ASSESSMENT ORDER WITHOUT ASSIGNING ANY RELIABLE SPECIFIC REASONS TO ESTIMATE THE N.P. AT LESSER RATE, IN VIEW OF THE 2 ITA NO.165/CTK/2015 ASSESSMENT YEAR :2010 - 2011 JURISDICTIONAL HONBLE ITAT, CUTTACK BENCH, CUTTACK DECISIONS IN VARIOUS CASES ESTIMATING THE PROFIT @ 4.5% TO 5% IN SUB - CONTRACTOR CASES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT AND SUPPORTING DOCUMENTS REGARDING THE EXPENSES CLAIMED IN THE RETURN OF INCOME. THEREFORE, THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT, REJECTED THE BOOK RESULTS AND ESTIMATED THE INCOME OF THE ASSESSEE @ 8% OF THE GROSS RECEIPT S SHOWN IN FORM 26AS AT RS.6,34,30,110/ - AND ESTIMATED THE INCOME AT RS.50,74,408/ - AND ALLOWED DEPRECIATION THEREFROM AT R S.1,83,532/ . 4. ON APPEAL, LD CIT(A) OBSERVED THAT THE GROSS RECEIPTS SHOWN IN THE AUDIT REPORT AND P&L ACCOUNT WAS RS.13,64,99,581/ - . FURTHER, HE OBSERVED THAT THE ASSESSEE SUBMITTED THE SUMMARY OF TRANSPORT/CARRIAGE OF GOODS, CONTRACTUAL RECEIPTS FROM 7 NO. OF PRINCIPALS. THE ONLY TWO OUT OF CONTRACTEES, M/S. DEV CARRIERS AND MINERALS PVT LTD., AND M/S. OMM LOGISTIC EXPORTS HAVE DEDUCTED TAX AT SOURCE ON THE CONTRACT RECEIPTS. FOR THE REST OF THE PRINCIPALS, THE ASSESSEE ACTED AS TRANSPORT ARRANGER BY ARRANGING TRUCKS FOR THEM AS AN INTERMEDIARY AND ENGAGING LABOURERS FOR LOADING & UNLOADING OF THEIR GOODS. THE ASSESSEE HAS SUBMITTED THAT THE NATURE OF BUSINESS HE WAS ENGAGED IN WAS MOSTLY SUB - CONTRACT TRANSPORT WORK AND LABOUR HANDLING WHERE THE INCO ME EARNED RANGES FROM 1.5% TO 2.5% OF THE 3 ITA NO.165/CTK/2015 ASSESSMENT YEAR :2010 - 2011 GROSS RECEIPTS. FURTHER, LD CIT(A) OBSERVED THAT IT IS ONE OF ITS KIND OF CASES WHERE THE ASSESSEE HIMSELF HAD S H OWN MUCH HIGHER GROSS RECEIPTS IN THE RETURN OF INCOME, PROFIT & LOSS ACCOUNT SUPPORTED BY THE AUDIT REPORT WHERE THE ASSESSING OFFICER HAD TAKEN THE GROSS RECEIPTS TO BE MUCH LOWER FIGURE. ACCORDING TO THE ACCOUNTS OF THE ASSESSEE, THE GROSS RECEIPTS WERE AT RS.13,64,99,581/ - WHERE AS THE ASSESSING OFFICER HAS TAKEN AS RS.6,34,30,110/ - . FURTHER, HE OBS ERVED THAT THE CUTTACK BENCH OF THE TRIBUNAL IN THE CASE OF PHUL CHAND AGARWAL AND CO. ANGUL IN ITA NO.182/CTK/2005 FOR A.Y. 2001 - 02 DECIDED THAT THE BOOK RESULTS OF THE ASSESSEE CAN BE REJECTED IN THE ABSENCE OF THE CASH BOOK WHICH IS THE MOST IMPORTANT A CCOUNT OF THE TRANSACTIONS OF THE ASSESSEE. LD CIT(A) OBSERVED THAT HE AGREED WITH THE DECISION OF THE ASSESSING OFFICER THAT IN THE ABSENCE OF THE PROPER BOOKS OF ACCOUNT SUCH AS CASH BOOK AND ALL HE HAD REJECTED THE BOOK RESULTS AND ESTIMATED PROFIT FRO M THE GROSS CONTRACT. HE OBSERVED THAT FROM THE DETAILS OF THE ASSESSEE, IT IS SEEN THAT HE HAS TAKEN UP TRANSPORTATION WORK ON SUB - CONTRACT BASIS AND ALSO HAS ACTED AS TRANSPORT ARRANGER ALONGWITH VEHICLES AND ENGAGEMENT OF LABOUR. IN THIS KIND OF WORK THE PROFIT PERCENTAGE WOULD BE REASONABLY AROUND 3% OF THE GROSS RECEIPTS. THEREFORE, HE DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT @ 3% OF THE GROSS RECEIPTS. 4 ITA NO.165/CTK/2015 ASSESSMENT YEAR :2010 - 2011 5. BEFORE ME, LD AR OF THE ASSESSEE FILED A CHA R T SHOWING PROFIT PERCENTAGE ACCE PTED IN THE CASE OF THE ASSESSEE ITSELF IN THE PRECEDING ASSESSMENT YEAR 2009 - 2010 AT 1.80% AND IN THE SUBSEQUENT ASSESSMENT YEAR 2011 - 2012 AT 1.79% U/S.143(1) OF THE ACT . HE FURTHER FILED A CHART IN THE CASE OF M/S. MAHALAXMI TRANSPORT AND SUBMITTED THA T IN A.Y. 2009 - 2010, THE PROFIT PERCENTAGE ACCEPTED WAS 2.35%, IN A.Y. 2010 - 2011, THE PROFIT PERCENTAGE ACCEPTED WAS 1.84% AND IN A.Y. 2011 - 12, THE PROFIT PERCENTAGE ACCEPTED WAS 1.94%. HE SUBMITTED TH A T AS THE NATURE OF BUSINESS OF THE ASSESSEE WAS SIMIL AR TO THAT OF M/S. MAHALAXMI TRANSPORT, THEREFORE, THE ORDER OF THE LD CIT(A) ESTIMATING THE PROFIT OF THE ASSESSEE AT 3% OF THE GROSS RECEIPTS WAS JUSTIF IED AND THE ORDER OF THE LD CIT (A) SHOULD BE CONFIRMED. 6. ON THE OTHER HAND, LD D.R. RELIED ON THE OR DER OF THE ASSESSING OFFICER. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, I AM OF THE CONSIDERED VIEW THAT THE ESTIMATION OF INCOME BY THE LD CIT(A) AT 3% OF THE GROSS RECEIPTS WAS HIGHER THAN THE PROFIT PERCE NTAGE SHOWN BY THE ASSESSEE AT 1.79% IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR AND SUCCEEDING ASSESSMENT YEARS AND ACCEPTED BY THE DEPARTMENT . FURTHER THE SAME WAS ALSO COMPARABLE WITH THE NET PROFIT PERCENTAGE SHOWN BY M/S, MAHALAXMI TRANSPORT IN A.Y S . 2009 - 2010 TO 2011 - 12. HENCE, I FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE LD 5 ITA NO.165/CTK/2015 ASSESSMENT YEAR :2010 - 2011 CIT(A), WHICH IS HEREBY CONFIRMED . THUS, THE GROUND OF APPEAL OF THE REVENUE IS REJECTED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PR ONOUNCE D IN THE OPEN COURT ON 15 /11 /2016 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 15 /11 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), CUTTACK 2. THE RESPONDENT. M/S. PRADEEP KUMAR MOHANTY, PROP. M/S. MOHANTY ASSOCIATES TOMKA, KIAJHAR, JAJPUR ROAD, JAJPUR 3. THE CIT(A) CUTTACK 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//