ACIT, NAGAUR V. Smt. Pappu Devi Lamrod, NAGAUR

ITA 18/JODH/2014

• Counselvise Citation: 1823314 RSA 2014
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 18/JU/2014 ASSESSMENT YEAR: 2009-10 THE A.C.I.T VS. SMT. PAPPU DEVI LAMROD CIRCLE C/O SHRI SATYAPRAKASH LAMROD NAGAUR KHADWASRON KA BAAS VILLAGE KUCHERA, DISTRICT NAGAUR PAN NO. ALPPD 6193 F (APPELLANT) (RESPONDENT) CO NO. 07/JU /2014 A/O ITA NO. 18/JU/2014 ASSESSMENT YEAR: 2009-10 SMT. PAPPU DEVI LAMROD VS. THE A.C.I.T C/O SHRI SATYAPRAKASH LAMROD CIRCLE KHADWASRON KA BAAS NAGAUR VILLAGE KUCHERA, DISTRICT NAGAUR PAN NO. ALPPD 6193 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANDEEP JHANWAR DEPARTMENT BY : SHRI N.A. JOSHI, DR DATE OF HEARING : 10.06.2014 DATE OF PRONOUNCEMENT : 12.06.2014 2 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL BY THE REVENUE AND CROSS OBJECTION [CO] BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A), BIKANER DATED 21.10.2013 PERTAINING TO A.Y 2009-201 0. 2. THE SOLE GROUND RAISED IN THIS APPEAL IS AGAINST THE DELETION OF TRADING ADDITION OF RS. 10,96,250/-. THE ASSESSEE H AS FILED A CROSS OBJECTION FOR SUSTAINING THE TRADING ADDITION TO TH E EXTENT OF RS. 3, 01,460/-. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN TH BUSINESS OF CONTRACTOR-SHIP OF DRILLING WORK ETC. D URING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SHOWN A NET PROFIT O F RS. 7,94,789/- ON THE GROSS RECEIPTS OF RS. 2,74,06,248/- GIVING NET PROFIT RATE OF 2.90%. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD. AO POINTED OUT CERTAIN DEFECTS I.E. NO STOCK REGISTER WAS MAINTAIN ED FOR DIESEL, SPARE PARTS ETC., MOST OF EXPENSES VOUCHER WERE HANDMADE, NO SIGNATURES WERE THERE ON MOST OF THE VOUCHERS, LABOUR REGISTER / ATTENDANCE REGISTER/ PAYMENT REGISTER WAS NOT MAINTAINED, LOG BOOK FOR VEHICLE 3 AND MACHINERY ETC. WERE NOT MAINTAIN. THE LD. AO AC CORDINGLY APPLIED PROVISIONS OF SEC. 145(3) AND REJECTED THE BOOKS OF ACCOUNTS. HE ESTIMATED THE NET PROFIT OF THE ASSESSEE BY APPLYIN G N.P. RATE OF 8% AND MADE ADDITION OF RS. 13,97,710/-. IN FIRST APPE AL, THE CIT (APPEAL) SUSTAIN THE APPLICATION OF SEC. 145(3) MENTIONING A BSENCE OF SATISFACTORY EXPLANATION. HE HOWEVER ESTIMATED THE NET PROFIT BY APPLYING N.P. RATE OF 4% AND ACCORDINGLY ALLOWED A RELIEF OF RS. 10, 96,250/- & SUSTAINED THE BALANCE ADDITION OF RS. 3, 01,460/-. 3.1 BEFORE US THE LD. D.R. SUBMITTED THAT THE RELIE F ALLOWED IS NOT JUSTIFIED AND 8% N.P. RATE IS GENERALLY FOUND APPRO PRIATE IN THE CASE OF CONTRACTOR. HE RELIED ON THE FINDINGS GIVEN BY THE A.O. AND ASSERTED THAT THE ADDITION MADE BY HIM SHOULD BE RESTORED. 3.2 ON THE OTHER HAND THE LD. A.R. HAS SUBMITTED TH AT IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER APP RAISED THE ENTIRE RECORD INCLUDING TAX AUDIT REPORT, LEDGER PRINTOUT OF CONTRACT RECEIPTS, COPY OF WAGES ACCOUNT MAINTAINED BY THE ASSESSEE, C OPY OF SALARY ACCOUNT MAINTAINED BY THE ASSESSEE, EXPENSES DETAIL S ALONGWITH EVIDENCES, CONFIRMATION OF UNSECURED LOANS, COPIES OF BANK STATEMENTS OF BANK ACCOUNT MAINTAINED BY THE ASSESSEE, COPIES OF STATEMENT OF 4 SUNDRY CREDITORS AND SUNDRY DEBTORS, COPY OF CAPITA L ACCOUNT OF ASSESSEE. HE SUBMITTED THAT CONTRACTS EXECUTED BY T HE ASSESSEE ARE RELATING TO DRILLING WORK AND THE SAME CANNOT BE CO MPARED WITH CIVIL CONSTRUCTION CONTRACT. IN THE DRILLING CONTRACTS HE AVY CONSUMPTION OF DRILL BITS, ROODS, DIESEL, SPARE PARTS ETC. IS INVO LVED AND THE MARGINS AVAILABLE IN THE BUSINESS ARE QUIET LOW AS COMPARED TO NORMAL WORK CONTRACTS ALLOTTED IN THE MARKET. HE FURTHER SUBMIT TED THAT THE LD. AO DID NOT POINT ANY SPECIFIC DEFECT FOR REJECTION OF BOOKS OF ACCOUNTS BUT JUST MADE STEREOTYPE REMARKS. HE DREW OUR ATTENTION TOWARDS HIS SUBMISSIONS MADE BEFORE THE CIT(A) IN PARA D WRIT TEN SUBMISSIONS AT PAGE W3 TO W5 OF THE PAPER BOOK, WHEREIN THE DETAIL ED REASONS WERE GIVEN AS TO WHY THE EACH AND EVERY REASONS GIVEN BY THE AO FOR REJECTION OF BOOKS OF ACCOUNTS WERE NOT RELEVANT AN D SUFFICIENT FOR APPLICATION OF PROVISION OF SECTION 145(3) OF THE A CT. HE SUBMITTED THAT THE CIT (A) HAS NOT GIVEN ANY REASON AS TO WHY ALL THESE SPECIFIC SUBMISSIONS BY THE ASSESSEE ARE NOT APPROPRIATE OR NOT SATISFACTORY TO ASSAIL THE REJECTION OF BOOKS OF ACCOUNTS ON ACCOUN T OF REASONS GIVEN BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE BOO KS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED AND NO DEFECT HAS BEEN FOU ND BY THE AUDITOR. ACCORDING TO HIM, IN SUCH CIRCUMSTANCES THE REJECTI ON OF BOOKS OF ACCOUNTS BY THE ASSESSING OFFICER WITHOUT POINTING OUT ANY SPECIFIC 5 DEFECT WAS NOT JUSTIFIED AT ALL. HE ACCORDINGLY REQ UESTED FOR DELETING OF ENTIRE ADDITION. HE ALSO PLACED RELIANCE ON FOLLOWI NG DECISIONS:- I) HONBLE ALLAHABAD HIGH COURT JUDGMENT IN CASE OF COMMISSIONER OF INCOME TAX VERSUS M/S MAHADEV FLEET PVT. LTD. [2013 (9) TMI 744] II) HONBLE RAJASTHAN HIGH COURT JUDGMENT IN CASE OF CIT VS. GOTAN LIME KHANIJ UDYOG [2001 (7) TMI 19, 256 ITR 2 43] III) ACIT VS. SHRI AMOL AGARWAL (ITAT-JODHPUR) [ITA N O. 391/JODH/201] IV) ITO VS. BHAGIRATH KASWAN CONTRACTOR [2013 (8) TM I 444, ITAT JODHPUR] V) CIT, UDAIPUR VS. INANI MARBLES (P) LTD. [2008 (8) TMI 126, HIGH COURT RAJASTHAN] VI) ASST. CIT VS. SHRI VIJAY KUMAR AGGARWAL [2013 (7) TMI 41, ITAT-DELHI] 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. BOTH THE PAR TIES HAVE REITERATED THEIR EARLIER ARGUMENTS. WE FOUND THAT T HE A.O. MENTIONED CERTAIN DEFECTS IN THE BOOKS OF ACCOUNTS BUT DID NOT PINPOINTED ANY SPECIFIC DOCUMENT/ACCOUNTING ENTRY O R ANY LEDGER ACCOUNT OR VOUCHER WHICH IS NOT APPROPRIATE LOOKING AT THE NATURE OF ASSESSEES BUSINESS AND SIZE/VOLUME OF HER OPERATIO NS. HE ALSO DID NOT 6 POINT OUT THAT HOW THOSE DEFECTS SHALL EFFECT THE C OMPUTATION OF INCOME. THE ASSESSEE SPECIFICALLY SUBMITTED BEFORE THE CIT(A) THAT SHE PURCHASED ALL THE CONSUMABLE ITEMS AS AND WHEN THEY ARE REQUIRED MATERIAL IS DIRECTLY ISSUED FOR CONSUMPTION AND AS SUCH THERE IS NO ACCUMULATION OF ANY STORE ITEMS AND THEREFORE MAINT ENANCE OF STOCK REGISTER IS NOT NECESSARY. IT WAS ALSO SPECIFICALLY SUBMITTED THAT THE ENTIRE WAGES/SALARY PAYMENTS ARE DULY SUPPORTED BY VOUCHERS AND THE TOTAL PAYMENT UNDER THIS HEAD IS RS. 4,83,720/- ONL Y AND THEREFORE MISTROLL ETC. IS NOT REQUIRED TO BE MAINTAINED. LIK EWISE HE HAS ASSAILED BEFORE THE CIT(A), EACH AND EVERY DEFECT POINTED OU T BY THE ASSESSING OFFICER. WE FIND THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED AND THE AUDITORS HAVE GIVES AN OPINION THAT THE FIN ANCIAL STATEMENTS PREPARED ON THE BASIS OF BOOKS OF ACCOUNTS GIVES A TRUE AND FAIR PICTURE OF PROFIT SHOWN BY THE ASSESSEE. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THE APPLICATION OF SEC. 145(3) OF THE ACT B Y MENTIONING THAT NO SATISFACTORY EXPLANATION HAS BEEN GIVEN BY THE ASSE SSEE AS TO DEFECTS POINTED OUT BY THE AO. IN OUR OPINION THE EXPLANATI ONS AS GIVEN IN SUBMISSIONS BEFORE THE CIT(A) WERE APPROPRIATE SO A S TO ASSAIL THE BASELESS FINDINGS OF THE AO. WE ALSO FIND THAT THE N.P. RATE OF 2.90% DECLARED BY THE ASSESSEE IS HIGHER THAN THE PRECEDI NG YEARS N.P. RATE 7 OF 2.75%. LOOKING TO THE OVERALL FACTS AND CIRCUMST ANCES OF THE CASE, WE ARE OF THE OPINION THAT NO TRADING ADDITIONS SHO ULD BE SUSTAINED IN THIS CASE. WE ACCORDINGLY REJECT THE DEPARTMENTAL A PPEAL AND ALLOW THE CROSS OBJECTION FILED BY THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12 TH JUNE, 2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 TH JUNE, 2014 VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR