Nandlal H.Tahiliani , Nagpur V. Income Tax Officer Ward -8(2), Nagpur

ITA 173/NAG/2010

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3024 (ITAT-NAGPUR)
• Duration Of Justice: 8 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 16-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI; JOHN VIKRAM
• Assessee Lawyers: SURESH TOLANI
• Keywords: TDS
• Section: 44AD; 6

Judgement Text

- 1 - ITA 173/NAG/2010 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 173/NAG/2010 (ASST. YEAR: 2005-06) NANDLAL H TAHILIANI APPELLANT 309-A, JARIPATKA NAGPUR. PAN : AAFPT8417K VS ITO, WARD 8(2), RESPONDENT NAGPUR. APPELLANT BY : SHRI MANOJ G MORYANI & SHRI SURESH TOLANI (ADV) RESPONDENT BY : SHRI DR. MILIND BHUSARI (DR ) & SHRI JOHN VIKRAM, JCIT DATE OF HEARING: 17/10/2012 DATE OF ORDER : 30/11/2012 O R D E R PER D. T. GARASIA JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER OF CIT (A) II, NAGPUR, DT. 13/09/2010. 2 THE EFFECTIVE GROUND IN THIS APPEAL WHICH READS AS UNDER: - 1. THE ORDER PASSED IS ILLEGAL, INVALID AND BAD IN LAW. 2. THE LEARNED CIT(A) ERRED IN SUSTAINING ADDITION OF RS. 1,42,242/- ADDITION SUSTAINED ARE UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. - 2 - ITA 173/NAG/2010 3. THE LEARNED CIT(A) EARED IN NOT ACCEPTING SUB- CONTRACT OF THE ASSESSEE AT RS. 24,52,267/- 4. THE LEARNED CIT(A) ERRANT NOT CONSIDERING SUB-CONTRACT AGREEMENT SHOWN IN THE RETURN OF INCOME. 3. THE SHORT FACTS OF THE CASE ARE AS UNDER: - THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 31/03/2006 DETERMINING NET TAXABLE INCOME AT RS. 1,32,680/-. THE ASSESSEE HAS SHOWN GROSS CONTRACT RECEIPT AT RS. 33,65,240/-. THE ASSESSEE DOING BUSINESS OF EXECUTION OF GOVERNMENT CIVIL CONTRACT, IT WAS SUBMITTED THAT CONTRACT WORTH RS. 9,12,773/- WAS DONE BY THE ASSESSEE AND THE BALANCE CONTRACT WORTH RS. 24,52,467/- WAS DONE BY THE SUB- CONTRACTOR. ON THE CONTRACT WORK DONE BY THE ASSESSEE AMOUNTING TO RS. 9,12,773/- THE ASSESSEE HAS DECLARED NET PROFIT AT RS. 73,022/- @ 8% AS PER SECTION 44AD AND THE REMAINING WORK 24,52,467/- GIVEN BY THE ASSESSEE UNDER SUB CONTRACT 4. MATTER CARRIED TO CIT (A) AND CIT (A) HAS CONFIRMED THE ACTION OF AO 5. ISSUE NUMBER 1 & 2: - BOTH THE GROUNDS ARE INTERRELATED THEREFORE THIS APPEAL IS DECIDED ACCORDINGLY. 6. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS RECEIVED THE CONTRACT RECEIPT AT RS. 3365240/-. THE ASSESSEE DOING THE BUSINESS OF EXECUTION OF GOVERNMENT CIVIL CONTRACT. THE ASSESSEE HAS DONE THE CONTRACT WORK RS. 912773/- AND BALANCE CONTRACT WORK OF RS. 2452467/- WAS DONE BY SUB CONTRACTOR. THE ASSESSEE HAS SUBMITTED THE COPY OF AGREEMENT FOR - 3 - ITA 173/NAG/2010 SUB CONTRACT WITH SHRI RADHYESHYAM WHICH IS ON PAGE NO. 5 TO 7, COPY OF AGREEMENT FOR SUB CONTRACT WITH SHRI PAWAN WHICH IS ON PAGE NO. 8 TO 10 AND COPY OF AGREEMENT FOR SUB CONTRACT WITH SHRI VIJAY WHICH IS ON PAGE NO 11 TO 13. THE ASSESSEE HAS SUBMITTED THE COPY OF AGREEMENT OF SUBCONTRACT. THE AO AND CIT (A) HAVE WITHOUT GOING INTO MERITS OF THIS CASE AND DECIDED THE MATTER. 7. LD. AR SUBMITTED THAT ASSESSEE IS A CIVIL CONTRACTOR; THE ASSESSEE HAS GROSS CONTRACT RECEIPT AT RS. 3365240/- THE ASSESSEE IS IN BUSINESS OF EXECUTION OF GOVERNMENT CIVIL CONTRACT. THE ASSESSEE HAS DONE THE CONTRACT WORK OF RS. 912773/- AND BALANCE WORK WAS CARRIED OUT BY SUB CONTRACT OF RS. 2452467/-. THE ASSESSEE HAS GIVEN THE SUB CONTRACT OF RS. 2452467/- THEREFORE SECTION 44AD IS NOT APPLICABLE. ON THE OTHER HAND LD. DR RELIED UPON THE ORDER OF LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT CIT (A) HAS GIVEN THE FINDING THAT ASSESSEE IS ENGAGED IN BUSINESS OF CIVIL CONSTRUCTION AND TURNOVER OF THE ASSESSEE BELOW 40,00000/-. THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNTS THEREFORE AS PER SUB SECTION 6 OF SECTION 44AD THE ASSESSEE CAN CLAIM LOWER PROFIT OTHER THAN PRESCRIBED RATE @ 8% ONLY IF ASSESSEE MAINTAIN BOOKS OF ACCOUNTS AS PER PROVISION SECTION 44AA AND GETS ITS ACCOUNTS AUDITED AS PER PROVISIONS OF SECTION 44AB OF I. T. ACT. SINCE THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS THE CIT (A) HAS ADOPTED THE RATE OF 8% BY OBSERVING AS UNDER: - A.O HAS POINTED OUT IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS GROSS CONTRACT RECEIPTS OF RS.33,65,240/- AND, THEREFORE, THE PROVISIONS OF SECTION 44AD ARE ATTRACTED AND PROFIT @ 8% ON THE ENTIRE CONTRACT AMOUNTS HAS TO BE ADOPTED . HOWEVER, THE APPELLANT, ON ITS - 4 - ITA 173/NAG/2010 PART, HAS SEGREGATED THE AMOUNTS INTO CONTRACT DONE BY THE APPELLANT OF RS.9,12,773/- AND SUB CONTRACT AWARDED OF RS.24,52,467/-. ON THE SUB CONTRACT AMOUNT OF RS.24,52,467/-, THE APPELLANT HAS ADOPTED THE AMOUNTS OF TDS RE COVERED @ 2% AS INCOME. THE RATIONAL BEHIND THIS METHOD IS NOT CLEAR. THE PROVISION OF SECTION 44AD ARE ATTRACTED FOR THE ENTIRE CONTRACT RECEIPTS. THE APPELLANT HAS VOLUNTARILY OPTED FOR THE PROVISIONS OF SECTION 44AD FOR THE AMOUNT OF RS. 9,12,773/-. SINCE THE PROVISIONS OF SECTION 44AD ARE DEEMING PROVISIONS, THEY WILL HAVE TO BE ADOPTED WHEREVER THE TURNOVER/GROSS RECEIPTS OF THE ASSESSEE WHO IS ENGAGED IN BUSINESS OF CIVIL CONSTRUCTION IS BELOW RS. 40 LACS. IT IS ALSO SEEN THAT THE PROVISIONS OF SUBSECTION (6) OF SECTION 44 AD BY WHICH THE APPELLANT CAN CLAIM LOWER PROFITS OTHER THAN PRESCRIBED RATE OF 8% ARE APPLICABLE ONLY IF THE ASSESSEE MAINTAINS BOOKS OF ACCOUNTS AS PER THE PROVISIONS OF SECTION 44AA AND GETS ACCOUNTS AUDITED AS PER THE PROVISIONS OF SECTION 44 AB OF THE I. T. ACT. SINCE THE APPELLANT DOES NOT FALL WITHIN THIS EXCEPTION, AO WAS CORRECT IN ADOPTING THE PROFIT @8% OF THE GROSS RECEIPT. 9. THE CIT (A) HAS GIVEN THE REASONED ORDER AND ASSESSEE COULD NOT BRING ANY MATERIAL CONTRARY TO THE FINDING OF CIT (A) THEREFORE, WE DISMISS THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. JUDGMENT PRONOUNCED IN OPEN COURT ON 30/11/2012. SD/- SD/- (P. K. BANSAL) (D. T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PANAJI - 5 - ITA 173/NAG/2010 DATED: - 30.11.2012 *NANU* COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT, NAGPUR 4. CIT(A), NAGPUR 5. D.R 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR I.T.A.T., NAGPUR BENCH, NAGPUR.