Baishnab Charan Nayak, Jagatsinghpur V. ACIT, Cuttack

ITA 171/CTK/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3813 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A TIGGA
• Section: 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ( CUTTACK BENCH, CUTTACK ) BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH , JUDICIAL MEMBER I TA N O . 171 / CTK/2015 (ASSESSMENT YEAR : 20 1 0 - 1 1 ) BAISHNAB CHARAN NAYAK, VS. ACIT, CIRCLE 1 (1), HIG 38, GO URAV VIHAR, CUTTACK. PARADEEP. ( PAN : AAVPN1976F ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL MISHRA , AR REVENUE BY : SHRI A. TIGGA , DR D ATE OF HEARING : 2 7 . 0 4 .2017 DATE OF PRONOUNCEMENT : 29 . 0 5 .2017 O R D E R PER KULDIP SINGH , JUDICIAL MEMBER : THE APPELLANT, BAISHNAB CHARAN NAYAK (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 2 8 . 11 .2014 PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) , CUTTACK QUA THE ASSESSMENT YEAR 20 1 0 - 1 1 ON THE GROUNDS INTER ALIA THAT : - 1. FOR THAT THE ORDERS OF THE FORUMS BELOW ARE ILLEGAL, ARBITRARY AND EXCESSIVE JURISDICTION OF AUTHORITY AND AS SUCH LIABLE TO BE QUASHED IN ITS ENTIRETY. ITA NO . 171 / CTK ./2015 2 2. FOR THAT THE ORDER OF ASSESSMENT AS WELL AS THE CONFIRMING ORDER OF LEARNED CIT (APPEALS) ARE ILLEGAL AND NOT MAINTAINABLE IN AS MUCH AS IT DOES NOT SAY SPECIFICALLY AS TO WHETHER THE ASSESSMENT WAS COMPLETED U/S 143(3) OR 144 OF THE ACT SPECIFICALLY FOR THE REASON THAT HAD THE ASSESSMENT O RDER BEEN PASSED U/S 143(3) THE AO WOULD HAVE ACCEPTED THE BOOKS OF ACCOUNTS AND MADE SOME SPECIFIC ADDITIONS AND DISALLOWANCES BASED ON EVIDENCES, ON THE OTHER HAND, HAD THE ORDER BEEN PASSED U/S 144, AS PER THE SETTLED PRINCIPLE OF LAW THE ASSESSEE WOULD HAVE BEEN SUPPLIED WITH DRAFT ASSESSMENT ORDER BEFORE SUCH A HUGE TAX BURDEN WAS BEING PASSED ON TO IT. 3. FOR THAT THE ESTIMATION OF NET PROFIT @8% IS UNCALLED FOR AND EXCESSIVE SINCE THE APPELLANT EXECUTED THE CONTRACT WORK SINGLE - HANDEDLY AND EVEN TH OUGH IT INVOLVES CIVIL CONTRACT WORK BUT LABOUR COMPONENT IS AT A HIGHER SIDE. HENCE, THE RETURN FIGURE BEING THE HIGHEST IN COMPARISON TO THE PREVIOUS YEAR MAY KINDLY BE ACCEPTED. 4. FOR THAT THE ESTIMATION OF THE NET PROFIT @ 6% ON THE SUB - CONTRACT WOR K IS EXCESSIVE, SINCE THE SAME RECEIPT HAS BEEN TAXED IN THE HAND OF THE MAIN CONTRACTOR AND BY ESTIMATING @6% AMOUNTS TO MORE THAN 14% IN TOTO BY VIOLATING THE SETTLED LAW AND AS SUCH THE SAME MAY BE REDUCED TO 4% AS DECIDED BY THIS FORUM AND EVEN THOUGH THE LEARNED CIT{APPEAL) PERUSED AND OBSERVED THE ORDERS OF THIS HON'BLE TRIBUNAL BUT CONFIRMED WITHOUT AGITATING A SINGLE WORD IN THE ORDER AND AS SUCH THE ESTIMATION IS LIABLE TO BE REDUCED TO @4% IN THE INTEREST OF JUSTICE. 5. FOR THAT THE ESTIMATION OF THE NET PROFIT @4.5% ON THE TRANSPORT CONTRACT WORK IS ALSO EXCESSIVE AND VIOLATION OF THE ORDERS OF THIS FORUM AND OUR JURISDICTIONAL TRIBUNAL, SINCE IT WAS DECIDED IN SIMILARLY PLACED CASES THE RATE OF PROFIT IN TRANSPORT CONTRACT SHOULD BE @ 2%. HENC E THE ORDER MAY KINDLY BE MODIFIED TO THIS EFFECT. 6. FOR THAT THE ORDERS OF THE FORUMS BELOW ARE ALSO SIMILARLY ILLEGAL, SINCE THE AUTHORITIES BELOW, WHILE ESTIMATING THE NET PROFIT HAS NOT ALLOWED ENTRY TAX, VAT, ESI AND EPF, WHICH ARE ALLOWABLE EXPENS ES AS PER THE SETTLED LAW AND AS SUCH THE LEARNED AO HAS VIOLATED THE SETTLED POSITION OF LAW AND THE SAME MAY KINDLY BE ALLOWED FOR THE INTEREST OF JUSTICE. 7. FOR THAT, THE ORDER IS ALSO BAD IN LAW, SINCE THE LEARNED AO HAS NOT GIVEN CREDIT OF THE ENTI RE TDS BEING SUPPORTED WITH THE TDS CERTIFICATE, THEREBY VIOLATED THE PROVISION OF SECTION 205 OF THE INCOME TAX ACT. HENCE THE CREDIT OF ENTIRE TDS MAY KINDLY BE ALLOWED. ITA NO . 171 / CTK ./2015 3 8. FOR THAT ANY OTHER GROUNDS IS INCIDENTAL TO THE GROUNDS OF THE CASE MAY KINDLY BE PERMITTED TO URGE AT THE TIME OF HEARING OF THE CASE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : DURING THE SCRUTINY PROCEEDINGS, THE ASSESSEE WAS CALLED UPON TO PRODUCE GENERAL LEDGER, SUBSIDIARY LEDGE R AND BANK STATEMENT AND DETAILS OF EXPENDITURE AND OTHER DETAILS VIDE QUESTIONNAIRES DATED 26.11.2012, 31.10.2012 ALONG WITH NOTICES ISSUED UNDER SECTION 142 (1) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT), BUT THE LD. AR FOR THE ASSESSEE HAS ONLY P RODUCED BANK ACCOUNT COPY AND TDS CERTIFICATES. DUE TO NON - PRODUCING THE BOOKS OF ACCOUNT AND SUPPORTING DOCUMENTS, THE AO COMPLETED THE ASSESSMENT U/S 144 / 143(3) OF THE ACT BY ESTIMATING THE PROFIT OF THE ASSESSEE AS UNDER : - THE GROSS RECEIPT OF THE ASSESSEE FROM THE THREE ACTIVITIES ARE AS UNDER : - SL.NO. NATURE OF WORK GROSS RECEIPT 1. MAIN CONTRACT RS.6,44,72,659/ - 2. SUB - CONTRACT RS.4,92,81,408/ - 3. TRANSPORT CONTRACT RS.3,52,480/ - TAKING INTO CONSIDERATION OF THE ABOVE MENTIONED FACTS, THE GROSS CONTRACT RECEIPT OF RS.6,44,72,659/ - UNDER MAIN CONTRACT IS ESTIMATED @ 8% OF THE TURNOVER WHICH COMES TO RS.51,57,812.72 U/S.44AD OF THE I.T. ACT . FURTHER TAKING INTO CONSIDERATION, THE PAST RECORDS OF THE ASSESSEE AND PROFITS DECLARED BY OTHER A SSESSES IN SIMILAR CONTRACT WORK, THE GROSS ITA NO . 171 / CTK ./2015 4 CONTRACTUAL RECEIPT FROM SUB - CONTRACT IS RS.4,92,81,408/ - AND PROFIT IS ESTIMATED @ 6% OF THE TURNOVER WHICH COMES TO RS.29,56,884.48. SIMILARLY THE NET PROFIT ON TRANSPORT CONTRACT IS ESTIMATED @ 5% OF THE GROSS RECEIPT OF RS.3,52,480/ - WHICH COMES TO RS.17,624/ - . AND ASSESSED THE TOTAL INCOME AT RS.88,77,980/ - . 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING AN APPEAL BEFORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE APPEAL . FEELING AGGRIEVED, THE ASSESSEE H AS COME UP BEFORE THE TRIBUNAL BY FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE FAC TS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, ASSESSEE WHEN REPRESENTED THROUGH SHIR H.K. SAHOO, ADVOCATE/AR, DURING THE ASSESSMENT PROCEEDINGS, HAS NOT PREFERRED TO PRODUCE GENERAL LEDGER , SUBSIDIARY LEDGER AND DETAILS OF EXPENDITURE AND OTHER DETAIL S CALLED FOR BY THE AO AND RESULTANTLY, THE ASSESSMENT PROCEEDINGS WERE COMPLETED U/S 144/ 143 (3) OF THE ACT ON ESTIMATE BASIS. THE LD. AR FOR THE ASSESSEE BY RELYING UPON THE DECISIONS RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ITA NO.184/CTK/2 013 IN SUSIL KUMAR SWAIN VS. ADDL.CIT (TDS), CUTTACK DATED 22.10.2014, ITA ITA NO . 171 / CTK ./2015 5 NO.509/CTK/2012 IN NASIB SINGH VS. ITO, WARD 2, BERHAMPUR, ODISHA AND ITA 090/CTK/2011 IN S.N. KANUNGO & ASSOCIATES VS. ACIT, CIRCLE 2 (1), CUTTACK , CONTENDED THAT NET PROFIT ESTIMA TED BY THE AO IS NOT FEASIBLE IN THE BUSINESS LINE OF THE ASSESSEE. 6. SO FAR AS QUESTION OF ESTIMATING THE PROFIT FROM THE MAIN CONTRACT RECEIPT @ 8% OF THE GROSS RECEIPT U/S 44AB TO THE TUNE OF RS.51,57,812.72 IS CONCERNED, COORDINATE BENCH OF THE TRIBUN AL IN CASE OF M/S. S.N. KANUNGO & ASSOCIATES VS. ACIT (SUPRA) HAS DIRECTED THE AO TO ADOPT NET PROFIT @ 8% ON THE GROSS RECEIPT OF THE CONTRACT TO BE TAXED AND IN THIS CASE ALSO, THE AO ESTIMATED THE MAIN CONTRACT @ 8% OF THE TURNOVER AT RS.6,44,72,659/ - , TO THE TUNE OF RS.51,57,812.72. SO, WHEN THE ASSESSEE HAS NOT PREFERRED TO BRING ON RECORD ITS ACCOUNT BOOKS AND SUPPORTING DOCUMENTS , NO GROUND IS MADE OUT TO INTERFERE INTO THE FINDINGS RETURNED BY AO AND AFFIRMED BY LD. CIT (A). 7. SO F AR AS QUESTION OF ESTIMATING THE PROFIT FORM SUB - CONTRACTUAL RECEIPT @ 6% OF THE GROSS RECEIPT OF RS.4,92,81,408/ - TO THE TUNE OF RS.29,56,884.48 IS CONCERNED, COORDINATE BENCH IN SUSIL KUMAR SWAIN VS. ADDL.CIT (TDS) (SUPRA) DIRECTED THE AO TO ADOPT 4% OF THE NET PROFIT ON THE GROSS RECEIPT ON ACCOUNT OF SUB - CONTRACT WORK. SO, BY FOLLOWING THE DECISION RENDERED BY THE COORDINATE BENCH IN CASE OF SUSIL KUMAR SWAIN VS. ADDL.CIT ITA NO . 171 / CTK ./2015 6 (TDS) (SUPRA), WE DIRECT THE AO TO ADOPT 4% OF THE NET PROFIT ON GROSS RECEIPT OF RS.4,92,81,40 8/ - ON ACCOUNT OF SUB - CONTRACT WORK. 8. SO FAR AS QUESTION OF ESTIMATING THE NET PROFIT ON TRANSPORT CONTRACT @ 5% OF THE GROSS RECEIPT OF RS.3,52,480/ - IS CONCERNED, THE COORDINATE BENCH WHILE DEALING WITH THE SIMILAR ISSUE IN CASE OF NASIB SINGH VS. ITO (SUPRA) WHEREIN ASSESSMENT WAS ALSO COMPLETED U/S 144 OF THE ACT DIRECTED THE AO TO ADOPT THE NET PROFIT @ 2.5% OF THE GROSS RECEIPTS. FOLLOWING THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN NASIB SINGH VS. ITO (SUPRA) AND KEEPING IN VIEW TH E IDENTICAL FACTS THAT ASSESSEE IS ALSO A TRANSPORT CONTRACTOR, THE NET PROFIT ON TRANSPORT CONTRACT IS DIRECTED TO BE ESTIMATED AT 2.5% OF THE GROSS RECEIPTS I.E. RS.3,52,480/ - . 9. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF MAY , 201 7 . SD/ - SD/ - ( N.S. SAINI ) ( KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF MAY , 201 7 TS ITA NO . 171 / CTK ./2015 7 COPY OF THE ORDER FORWARDED TO: 1.APPELLANT - BAISHNAB CHARAN NAYAK, HIG 38, GOURAV VIHAR, PARADEEP. 2.RESPONDENT - ACIT, CIRCLE 1 (1), CUTTACK. 3.CIT 4.CIT (A) - II , BHUBANESWAR . 5.DR (ITAT), CUTTACK . 6. GUARD FILE //TRUE COPY// BY ORDER SR. PRIVATE SECRETARY , ITAT , CUTTACK