M/s BJCL- Brite (J.V), New Delhi V. DCIT, New Delhi

ITA 182/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3803 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Assessment record; TDS
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER & SHRI B.K. HALDAR, ACCOUNTANT MEMBER ITA NO. 182/DEL/2011 ASSESSMENT YEAR: 2007-08 BJCL- BRITE (J.V), VS. DCIT, BB-13, CIRCLE 38(1), GREATER KAILASH ENCLAVE-II, ROOM NO. 234A, NEW DELHI. C.R. BUILDING, AAAAB5062A NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.S. SINGHVI, CA RESPONDENT BY : MS. MONA MOHANTY, SR. D R ORDER PER I.P. BANSAL, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A) DATED 13.10.2010 FOR A.Y. 2007-08. GROUNDS OF APPEAL READ AS UNDER: - 1(I) THAT ON THE FACTS AN CIRCUMSTANCES OF THE CA SE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING ESTIMATION OF NET PROFI T AT 5% OF GROSS RECEIPT APPLIED BY THE ASSESSING OFFICER IN A N ILLEGAL AND ARBITRARY MANNER. (II) THAT DECLARED NET PROFIT IS ONE THE BASIS OF AUDITE D BOOKS OF ACCOUNTS AND THERE IS NO CASE OF ESTIMATION OF NET PROFIT IN DISREGARD TO TRADING RESULTS SUPPORTED BY BOOKS OF ACCOUNTS. ITA NO. 182/D/2011 2 (III) THAT IT IS NOT THE CASE OF THE AO THAT PROVISIONS O F SEC. 145 ARE APPLICABLE AND AS SUCH THE ESTIMATION OF NET PR OFIT IN DISREGARD TO BOOKS OF ACCOUNTS IS NOT LEGALLY SUSTA INABLE. (IV) THAT THE LOWER AUTHORITIES HAVE WRONGLY AND INCORRE CTLY MADE REFERENCE TO THE OTHER CASES HAVING RATE OF PR OFIT TO THE EXTENT OF 5-7% WITHOUT PROVIDING THE DETAILS OF SUC H REFERENCE. (V) THAT THE BOOKS OF ACCOUNTS AND OTHER RECORD WERE PR ODUCED FOR VERIFICATION BY THE AO AND IN FACT THE ASSESSEE HAS FURNISHED COMPLETE DETAILS IN SUPPORT OF TRADING RE SULTS AND AS SUCH THE ESTIMATION OF NET PROFIT AT 5% IS HIGHL Y ARBITRARY AND EVEN AGAINST PAST HISTORY OF THE CASE. 2. THAT ESTIMATION OF NET PROFIT IS ON MECHANICAL BASI S AND WITHOUT PROPER OPPORTUNITY AND APPRECIATION OF FACTS AND DE TAILS PLACED ON RECORD. 3. THAT THE ORDERS OF THE LOWER AUTHORITIES ARE NOT JU STIFIED ON FACTS AND SAME ARE BAD IN LAW. 2. THE ASSESSEE IN THE PRESENT CASE IS ENGAGED IN T HE BUSINESS OF CIVIL CONTRACTORS AND IS CONSTITUTED BY TWO MEMBERS HAVING CIVIL CONTRACTORS BACKGROUND NAMELY M/S B.R. ARORA & ASSO CIATES PVT. LTD. HAVING 40% SHARE OF PROFIT AND M/S BHOLLA SING H JAI PRAKASH & COMPANY PVT. LTD. HAVING 60% SHARE OF PROFIT. IT W AS AWARDED WITH WORK CONTRACT NAMELY BALANCE WORK OF EIGHT LANING OF KM. 16.5 TO 29.3 (CIVIL PACKAGE NO. NS-18/DL-BAL) OF NH-1 BY N ATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI). DURING THE YEAR UNDER ITA NO. 182/D/2011 3 CONSIDERATION THE GROSS RECEIPTS OF THE ASSESSEE FR OM SUCH CONTRACT ARE 30,02,67,674/-. THE AO REQUIRED THE ASSESSEE T O SUPPORT ITS ACCOUNTS BY PRODUCING THE ACCOUNT BOOKS AND RELEVAN T VOUCHERS AND IT IS OBSERVED BY THE AO IN THE ASSESSMENT ORDER TH AT THE BOOKS OF ACCOUNT AND OTHER DETAILS WERE NOT PRODUCED BY THE ASSESSEE AND THE INCOME RETURNED BY THE ASSESSEE FOR A SUM OF RS. 14 ,45,093/-IS VERY LOW AS COMPARED TO THE SIMILAR WORK CONDUCTED BY SO ME OTHER CONTRACTORS WHICH WAS WITHIN THE RANGE OF 5% TO 7% OF THE GROSS TURNOVER. IN THIS MANNER, LD. AO, IN THE CIRCUMSTA NCES, HAS ASSESSED THE INCOME OF THE ASSESSEE @ 5% OF THE GROSS TURNOV ER AND HAS ASSESSED THE INCOME OF THE ASSESSEE AT A SUM OF RS. 1,50,13,384/- IN PLACE OF RETURNED INCOME OF RS. 14,45,093/-. BEFOR E CIT(A), IT WAS SUBMITTED THAT LOW INCOME RETURNED BY THE ASSESSEE WAS ON ACCOUNT OF PAYMENTS MAINLY MADE TO THE SUB-CONTRACTORS WHO ALSO HAVE BEEN ASSESSED AT A MAJOR INCOME AND THUS, THE SAME HAD E FFECTED THE NET PROFIT OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT ASSESSEE HAS BEEN MAINTAINING THE REGULAR BOOKS OF ACCOUNT AS IS EVID ENT FROM THE AUDITED REPORT SUBMITTED IN THAT REGARD. THE ACCOUN T BOOKS WERE ALSO PRODUCED BEFORE THE AO FOR EXAMINATION OF THE SAME BUT THEY WERE NEVER EXAMINED BY THE AO. IT WAS ALSO CLAIMED THAT IN THE EARLIER YEARS THE ASSESSEE HAS BEEN ASSESSED AT ALMOST RETU RNED INCOME AND BOOKS RESULT OF THE ASSESSEE WERE NEVER DISTURBED. IN THIS MANNER, IT ITA NO. 182/D/2011 4 WAS CLAIMED THAT AO HAS WRONGLY APPLIED 5% RATE TO ASSESS THE INCOME OF THE ASSESSEE. LD. CIT(A) HAS NOT ACCEPTE D SUCH CLAIM OF THE ASSESSEE AS ACCORDING TO HIM, THE AO HAS CLEARL Y OBSERVED THAT ASSESSEE HAS NEVER PRODUCED BOOKS OF ACCOUNTS AND V OUCHERS FOR EXAMINATION AND NO STOCK REGISTER WAS PRODUCED. CO PY OF TENDER FILED WITH NHAI WAS ALSO NOT PRODUCED. THEREFORE, LD. CIT(A) HAS OBSERVED THAT AN ADVERSE INFERENCE COULD BE DRAWN A ND THE AO HAS GIVEN DETAILED REASONS FOR MAKING THE ADDITION WHIC H HAVE NOT BEEN FACTUALLY REBUTTED BY THE ASSESSEE AND ASSESSEE HAS ALSO NOT FILED NECESSARY MATERIAL IN SUPPORT OF HIS SUBMISSIONS. I N THIS MANNER, LD. CIT(A) HAS UPHELD THE ADDITION. THE ASSESSEE IS AG GRIEVED, HENCE IN APPEAL. 3. AFTER NARRATING THE FACTS, IT WAS POINTED OUT BY LD. AR THAT AS PER SUBMISSIONS MADE BY THE ASSESSEE BEFORE CIT(A), THE BOOKS OF ACCOUNT WERE PRODUCED BUT THEY WERE NEVER EXAMINED BY THE AO. HE SUBMITTED THAT THE ACCOUNTS SUBMITTED BY THE ASS ESSEE IN THE RETURNED OF INCOME ARE SUPPORTED BY THE AUDITED REP ORT AND BOOKS OF ACCOUNTS AND OTHER VOUCHERS ARE PROPERLY MAINTAINED BY THE ASSESSEE. HE TOOK US THROUGH THE RELEVANT PAGES OF THE PAPER BOOK AND REFERRING TO PAGE 11 OF THE PAPER BOOK, WHERE THE A SSESSEE HAS SUBMITTED INCOME AND EXPENDITURE ACCOUNT, WHEREIN A GAINST THE ITA NO. 182/D/2011 5 GROSS RECEIPTS OF RS. 30,02,67,674/- A SUM OF RS. 2 3,17,39,143/- HAS BEEN SHOWN TO BE INCURRED ON PAYMENTS MADE TO SUB-C ONTRACTORS. HE SUBMITTED THAT MAJOR PORTION OF THE GROSS RECEIPTS HAS BEEN GIVEN TO THE SUB-CONTRACTORS WHICH ARE THE CONSTITUENT OF JO INT VENTURE OF THE ASSESSEE AND THEY HAVE ALSO BEEN ASSESSED AT A VERY HIGH INCOME. FOR EXAMPLE, HE REFERRED TO PAGE 12 WHERE COPY OF A CKNOWLEDGMENT OF INCOME TAX RETURN IN THE CASE OF M/S B.R. ARORA AND ASSOCIATE PVT. LTD. FOR A.Y. 2007-08 IS SUBMITTED, WHEREIN RE TURNED OF RS. 3,00,96,582/- HAS BEEN FILED. HE SUBMITTED THAT AS SESSEE HAS DEDUCTED TAX UPON EACH OF THE PAYMENTS MADE TO THEM AND LIST OF THESE TDS PAYMENTS IS PLACED AT PAGES 13 TO 34 OF T HE PAPER BOOK. HE SUBMITTED THAT IT HAS BEEN THE CASE OF THE ASSES SEE THAT BOOKS ACCOUNT ARE MAINTAINED AND THEY WERE PRODUCED BEFOR E AO BUT AO DID NOT EXAMINED THE SAME. THEREFORE, HE PLEADED T HAT THE ASSESSEE HAS NO OBJECTION IF THE MATTER IS RESTORED BACK TO THE FILE OF AO TO SATISFY THE REQUIREMENT OF PRODUCTION OF BOOKS AND EXAMINATION THEREOF. 4. ALTERNATIVELY, HE SUBMITTED THAT ASSOCIATE CONCE RN OF THE ASSESSEE NAMELY M/S BRIGHT BHARAT (CONSORTIUM) WAS ALSO ASSESSED BY THE AO BY ESTIMATING 5% OF THE GROSS RECEIPTS AN D CIT(A) HAD UPHELD THE ADDITION MADE BY THE AO AND TRIBUNAL VID E ITS ORDER ITA NO. 182/D/2011 6 DATED 29 TH APRIL, 2011 HAD APPLIED THE RATE OF 1% OF THE GROS S RECEIPTS UNDER SIMILAR FACTS AND CIRCUMSTANCES. HE HAS PRODUCED BEFORE US COPY OF THE AFOREMENTIONED DECISION OF TR IBUNAL WHICH IS IN ITA NO. 3221/DEL/2010 FOR A.Y. 2007-08 IN THE CA SE OF M/S BRIGHT BHARAT (CONSORTIUM) VS. ITO. THEREFORE, HE SUBMITTED THAT THE SAME RATE MAY BE ADOPTED FOR MAKING ASSESSMENT IN THE CASE OF THE ASSESSEE. 5. ON THE OTHER HAND, LD. DR RELYING UPON THE ORDER OF AO AND CIT(A) PLEADED THAT ASSESSEE HAS NEVER PRODUCED THE BOOKS OF ACCOUNT AND RELATED VOUCHERS TO SUBSTANTIATE THE EN TRIES MADE IN THE BOOKS AND, THEREFORE, LD. CIT(A) HAS RIGHTLY UPHELD THE ADDITION MADE BY THE AO AND THE ORDER OF CIT(A) SHOULD BE UP HELD. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THOUGH IT HAS BEEN THE SUBMISSION OF THE ASSESSEE BEFORE LD. CIT(A) THAT T HE BOOKS OF ACCOUNT AND RELATED VOUCHERS WERE PRODUCED BUT THEY WERE NOT EXAMINED BY THE AO BUT THAT CONTENTION HAS NOT BEEN SUPPORTED BY THE ASSESSEE BY ANY MATERIAL PRODUCED ON RECORD FRO M WHICH IT COULD BE SEEN THAT THE BOOKS OF ACCOUNTS WERE ACTUALLY PR ODUCED BY THE ASSESSEE BEFORE THE AO. IF IT IS THE CASE OF THE A SSESSEE THAT THE RATE ITA NO. 182/D/2011 7 APPLIED BY THE AO AT 5% IS EXCESSIVE ON THE GROUND THAT MAJOR PAYMENTS HAVE BEEN MADE TO THE CONSTITUENTS OF THE JOINT VENTURE WHO HAVE ALSO BEEN ASSESSED AT A LARGER INCOME, THE SUITABLE RELIEF HAS ALREADY BEEN GIVEN BY THE AO WHEN HE HAS ARRIVE D AT THE ESTIMATE OF 5% OF THE PROFIT. HOWEVER, IF IT IS THE CASE OF THE ASSESSEE THAT IT HAS MAINTAINED REGULAR BOOKS OF ACCOUNT AND CAN SUPPORT ITS CASE WITH THE HELP OF THOSE BOOKS OF ACCOUNT, IN TH AT CASE THE CLAIM OF THE ASSESSEE HAS TO BE EXAMINED AND VERIFIED. T HOUGH, LD. CIT(A) HAS RELIED UPON THE OBSERVATIONS OF THE AO THAT BOO KS OF ACCOUNTS WERE NOT PRODUCED BUT HE HAS NOT EXAMINED THIS FACT FROM THE ASSESSMENT RECORD AS ASSESSEE HAD CLEARLY STATED BE FORE HIM THAT BOOKS OF ACCOUNTS WERE PRODUCED BUT WERE NOT EXAMIN ED BY THE AO. IN VIEW OF THESE CIRCUMSTANCES, WE CONSIDER IT JUST AND PROPER TO RESTORE THIS ISSUE TO THE FILE OF AO FOR MAKING DEN OVO ASSESSMENT AND IN THIS MANNER THE ASSESSEE WILL GET THE OPPORT UNITY OF PRODUCING THE BOOKS OF ACCOUNT AND RELEVANT VOUCHERS AND AO W ILL ALSO HAVE THE OPPORTUNITY OF MAKING EXAMINATION AND VERIFICAT ION OF THE CLAIM OF THE ASSESSEE. WE, THEREFORE, RESTORE THE ISSUE RAISED BY THE ASSESSEE IN THE PRESENT APPEAL TO THE FILE OF AO. THE ASSESSEE WILL PRODUCE THE BOOKS OF ACCOUNT BEFORE THE AO AND RELE VANT VOUCHERS WHICH ARE REQUIRED BY THE AO TO DETERMINE THE INCOM E OF THE ITA NO. 182/D/2011 8 ASSESSEE AND AFTER EXAMINING THOSE BOOKS AND VOUCHE RS THE AO WILL RE-DETERMINE THE INCOME OF THE ASSESSEE AS PER PROV ISIONS OF LAW. 7. NOW COMING TO THE SUBMISSION OF THE LD. AR THAT RELYING UPON THE AFOREMENTIONED DECISION OF TRIBUNAL DATED 29.4. 2011 IN THE CASE OF M/S BRIGHT BHARAT (CONSORTIUM) VS. ITO (SUPRA), THE ASSESSMENT COULD BE MADE @1% OF THE GROSS RECEIPTS, WE FOUND T HAT THE FACTS IN THAT CASE ARE DIFFERENT AND EACH CASE HAS TO BE DET ERMINED ON ITS OWN FACTS. IT WAS SEEN THAT THE SAID RATE OF 1% WAS DE TERMINE ON THE BASIS OF HISTORY OF THAT CASE AND IN THE PRESENT CASE THO UGH ASSESSEE HAS MENTIONED THAT IT HAS BEEN ASSESSED AT INCOME RETUR NED BY IT IN THE EARLIER YEARS BUT IT HAS NOT BEEN SHOWN THAT WHAT W ERE THE RECEIPTS OF THE ASSESSEE AND HOW MUCH NET PROFIT RATE OR LOSS W AS DECLARED THEREON. IN THE SAID CASE THE ASSESSEE WAS ASSESSE D AT A LOSS OF RS. 12,04,246/- AS AGAINST GROSS RECEIPTS OF RS. 2,42,1 2,144/- BY WAY OF AN ASSESSMENT FRAMED U/S 143(3) OF THE ACT. THIS I S NOT THE POSITION HERE THAT ASSESSEE HAS EVER SHOWN LOSS AND THAT WAS ACCEPTED BY THE DEPARTMENT BY WAY OF AN ASSESSMENT FRAMED U/S 143(3 ) OF THE ACT. THE ASSESSEE IN THAT CASE WAS ASSESSED AT A LOSS FO R IMMEDIATE PRECEDING ASSESSMENT YEAR I.E. FOR A.Y. 2006-07. T HEREFORE, THE SAID CASE IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. ITA NO. 182/D/2011 9 8. IN OUR VIEW OF ABOVE DISCUSSION, THE APPEAL FILE D BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. 9. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES IN THE MANNER AFORESAID. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 17.6.2011 SD/- SD/- (B.K. HALDAR) (I.P. BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17.6.11 *KAVITA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR