B K P K - JV, V. I.T.O.,

ITA 176/PAT/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1182 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 17-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K MISHRA
• Assessee Lawyers: G P TULSIYAN
• Keywords: Corroborative evidences

Judgement Text

1 ITA NO. 176/PAT/2014. IN THE INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH, PATNA. BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 1 7 6/PAT/2014. ASSESSMENT YEAR : 2011 - 12. BK PK JV, THE INCOME - TAX OFFICER, SHANTI NAGAR, VS. WARD BATTIAH. BETTIAH, BIHAR. APPELLANT. RESPONDENT. APPELLANT BY : SHRI G.P. TULSIYAN. . RESPONDENT BY : SHRI R.K. MISHRA. DATE OF HEARING : 03 - 08 - 2016 DATE OF PRONOUNCEMENT : 26 TH SEPT., 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, PATNA DATED 0 5 - 08 - 2014 AND PERTAINS TO ASSESSMENT YEAR 201 1 - 1 2 . THE GROUNDS OF APPEAL READ AS UNDER : 1. THE ORDER OF THE LEARNED CIT - A PASSED IN THE ABOVE CASE IS BAD IN LAW AND NOT BASED ON MERIT AND FACTS OF THE CASE. 2. THE DISALLOWANCE OF 5% BEING RS.6,56,530/ - ON THE EARTH WORK & LABOUR CH ARGES BY AO WAS CHALLENGED BEFORE CIT - A. BUT THE LEARNED CIT - A HAD NEITHER ASKED TO PRODUCE ANY BILLS/VOUCHERS NOR A REMAND REPORT FROM THE AO WAS CALLED FOR AND AGAIN MERE ON ASSUMPTION SUSTAIN THE ADDITION MADE BY THE AO, WHICH IS TOTALLY ARBITRARY AND U NJUSTIFIED AND REQUESTED TO BE DELETED. 3. A 5% DISALLOWANCE ON ACCOUNT OF FOLLOWING EXPENDITURE BEING RS.5,15,840/ - WAS ALSO EXPLAINED TO THE LEARNED CIT(A) TO CONSIST OF EXPENSES DEBITED BY THE ASSESSEE ON ACCOUNT OF MATERIAL PURCHASE FOR EXECUTION OF WORKS CONTRACT. THE LEARNED CIT(A) APPRECIATED IT TO BE TRUE AND GENUINE, BUT CONFIRMED THIS DISALLOWANCE WITHOUT APPRECIATING THE FACTS EXAMINED. 2 ITA NO. 176/PAT/2014. 2. THE ASSESSEE IN THIS C A SE IS ENGAGED IN CIVIL CONTRACT BUSINESS. THE ASSESSING OFFICER MADE ESTIMATED DISALLOWANCE OF 5% OUT OF LABOUR CHARGES AND MATERIALS FOR WANT OF PROPER SUPPORTING EVIDENCE 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) AFFIRMED THE ACTION OF THE ASSESSING OFFICER. 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE IS AS UNDER : 1. THIS IS A CASE OF CIVIL CONTRACTOR WHOSE DECLARED INCOME WAS ENHANCED BY DISALLOWANCE OF 5% OUT OF EARTHW ORK AND 5% OUT OF OTHER DIRECT CONTRACT EXPENSES LIKE CEMENT AND BRICKS, HUMEPIPES, MACHINERY HIRE CHARGES ETC. (PAGE NO.04 OF PAPER BOOK & PAGE NO.6 OF PAPER BOOK RESPECTIVELY). 2. THE CIT(A) ALSO CONFIRMED THE ADDITION OF THE AO. 3. THIS IS AN AUDITED ACCOUNTS PREPARED ON THE BASIS OF BILLS, VOUCHERS AND OTHER DOCUMENTS MAINTAINED BY THE ASSESSEE AS HAS BEEN REPORTED BY THE AUDITOR AT PAGE NO. 10 OF PAPER BOOK. 4. THE AO HAS ALSO CONFIRMED THE PRODUCTION OF BILLS & VOUCHES AT PAGE NO. 03 OF PAPER BOOK W HICH WERE SUMMARILY DUE TO REASON THAT VOUCHERS WERE APPEARING TO BE FRESH. 5. AS REGARDS OF THE VOUCHER OF EARTH WORK THE APPELLANT HAS SUBMITTED AT PAGE NO. 3 & 4 OF PAPER BOOK THAT THE LABOUR REGISTER HAS BEEN MAINTAINED BUT NOT PRODUCED, MERELY ON THIS GROUND 5% OF THE TOTAL EXPENDITURE ON EARTH WORK RS.6,56,530/ - WAS DISALLOWED. (PAGE NO. 4 OF PAPER BOOK) 3 ITA NO. 176/PAT/2014. 6. SIMILARLY AT PAGE NO. 06 OF THE PAPER BOOK, ON THE BASIS OF INTERNAL VOUCHER AND NO STAMPS AFFIXED ON THOSE VOUCHER 5% OF THE EXPENSES WERE DISALL OWED AMOUNTING TO RS.5,15,840/ - . 7. IN BOTH THE ABOVE CASES THE AO HAS NOT POINTED OUT ANY SPECIFIC INSTANCE OR EXAMPLE BUT JUST MADE A CLANDESTINE ESTIMATE MAKING THE ASSESSED INCOME OF THE ASSESSEE AT 9.43% OF THE GTO AS AGAINST 5.16% CLAIMED BY THE ASSE SSEE AND GIVEN IN HIS ITR. 8. THIS ITAT, PATNA ITSELF IN IS MANY CASES RESTRICTED THE ESTIMATION THE INCOME OF THE CONTRACTOR TO 6% WHICH MAY KINDLY BE ALLOWED. 9. IF 6% INCOME SHALL BE 16,75,689/ - IF 7% INCOME SHALL BE 19,33,971/ - AS BY AO 26,05,620/ - WORKING OUT 9.43%. ACCORDINGLY A REQUEST FOR RESTRICTING THE ADDITION TO 1% ONLY. IF 3% IF 2.5% IF 2% IF 1% RATE 7.77% 7.3% 6.9% 6.05% 5. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER HAS RESULTED IN THE GROSS PROFIT RATIO OF MORE THAN 9%. HE SUBMITTED THAT THE ITAT PATNA BENCH IN SIMILAR CASES HAS HELD THAT 6% ESTIMATE OF PROFIT SUFFICES THE INTEREST OF JUSTICE. 6. PER CONTRA LEARNED D.R. SUBMITTED THAT THE DISALLOWANCE SHOULD BE UPHELD TO THE EXTENT IT RESULTS IN PROFIT RATIO OF 8%. 7. UPON CAREFUL CONSIDERATION I FIND THAT IT IS NOT DISPUTED THAT THE ITAT PATNA IN SIMILAR CASES HAS UPHELD ESTIMATE OF GROSS PROFIT RATIO AT THE RATE OF 6%. HENCE FOLLOWING THE PRECEDENT I HOLD THAT THE ADDITION IN THIS CASE SHOULD BE 4 ITA NO. 176/PAT/2014. LIMITED TO THE EXTENT THE GROSS PROFIT RATIO DOES NOT EXCEED 6%. THE ASSESSING OFFICER IS DIRECTED TO LIMIT THE ADDITION ACCORDINGLY. 8. IN THE RESULT THIS APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF SEPT., 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. DATED: 26 TH SEPT., 2016. COPY FORWARDED TO : 1. BK PK JV, SHANTI NAGAR, BETTIAH, BIHAR. 2. I.T.O., WARD BETTIAH. 3. C.I.T. - PATNA. 4. CIT(APPEALS) - I, PATNA. 5. D.R., ITAT, PATNA. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH, PATNA. WAKODE.