Phular Construction Pvt Ltd, Vaishali V. JCIT, Range -1, Patna

ITA 185/PAT/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2142 (ITAT-PATNA)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 03-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: INDERJEET SINGH
• Assessee Lawyers: SANJEEV KUMAR ANWAR
• Keywords: Depreciation; Question of law
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH , PATNA BEFORE SHRI CHANDRA MOHAN GARG, J M AND SHRI L .P. SAHU, AM ITA NO. 185 / PAT /20 18 ( ASSESSMENT YEAR :201 1 - 201 2 ) PHULAR CONSTRUCTION PVT. LTD., VILLAGE - PHULAR, PO: MANSURPUR, VAISHALI - 834101 VS. JT. CIT, RANGE - 1, PATNA PAN NO. : A A BCP 3599 D ( APPELLANT ) .. ( RESPONDENT ) AS SESSEE BY : SHRI SANJEEV KUMAR ANWAR , ADV REVENUE BY : SHRI INDERJEET SINGH , CITDR DATE OF HEARING : 26 /06/2019 DATE OF PRONOUNCEMENT : 26 /07/2019 O R D E R PER BENCH : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - I, PATNA, DATED 14.06.2018 FOR THE ASSESSMENT YEAR 2011 - 2012 ON THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT THE ORDERS OF THE AUTHORITIES BELOW IS BAD IN LAW AND FACT. 2. FOR THAT THE LEARNED CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF LEARNED A.O. AND UPHOLDING THE ESTIMATE OF NET PROFIT @8%. 3. FOR THAT ASSE SSMENT ORDER WAS PASSED U/S 143 (3) AND NOT U/S 144. HOWEVER THE APPELLANT AGREES TO THE JUDICIAL PRONOUNCEMENT TH AT AN HONEST AND FARE ESTIMATE OF THE INCOME SHOULD BE MADE. 4. FOR THAT CONSIDERING THE NUMBER OF ORDERS OF JURISDICTIONAL HIGH COURT AND PATNA BENCH OF ITAT, 6% OF THE GROSS RECEIPT OF THE WORK CARRIED ON BY THE APPELLANT THEMSELVES WOULD BE A REASONA BLE ESTIMATE. 5. FOR THAT OUT OF THE TOTAL RECEIPT, THE WORK OF RS. 3,98,340,090/ - HAS BEEN CARRIED OUT BY THE SUB CONTRACTOR M/S SHANTANU CONSTRUCTION. THE DETAILS AND EVIDENCES RELATED TO THE SAME WOULD BE DEMONSTRATED DURING THE COURSE OF HEARING. THE NET PROFIT FROM THIS SUB CONTRACT WORK SHOULD HAVE BEEN TAKEN AS ACTUAL. ITA NO . 185 / PAT /201 8 2 6. FOR THAT THE ESTIMATION OF PROFIT SHOULD BE REASONABLE AND IN CONSONANCE WITH THE OTHER ASSESSEES ENGAGED IN SIMILAR LINE OF BUSINESS. 7. FOR THAT OTHER GROUNDS, IF ANY, WILL BE URGED AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR ENGAGED IN CARRYING OUT THE WORK OF CONTRACT OF THE VARIOUS GOVERNMENT DEPARTMENTS. HE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.73,30,711/ - ON 30.09.2011. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED TO THE ASSESSEE FOR PRODUCTION OF BOOKS OF ACCOUNTS BUT THE ASSESSEE DID NOT PRODUCE THE BOOKS O F ACCOUNTS IN SPITE OF VARIOUS OPPORTUNITIES GIVEN TO THE ASSESSEE AND VIDE DATED 21.02.2014 THE ASSESSEE FINALLY SUBMITTED THAT IT IS NOT POSSIBLE TO PRODUCE THE BOOKS OF ACCOUNTS ON ACCOUNT OF ILLNESS OF THE ACCOUNTANT WHO IS REPORTED TO BE OUT OF STATIO N OF MEDICAL TREATMENT. ON PERUSAL OF THE AUDITED STATEMENT AVAILABLE BEFORE HIM IT WAS NOTICED THAT THE ASSESSEE HAD DONE CONTRACT WORKS AT VARIOUS GOVERNMENT DEPARTMENT. THE ASSESSEE HAS NOT COOPERATED WITH THE AO IN THE ASSESSMENT PROCEEDINGS, THEREFORE , THE AO COMPLETED THE ASSESSMENT ON THE BASIS OF FINANCIAL STATEMENTS AVAILABLE BEFORE HIM AND HE MADE ESTIMATION @8% OF THE TOTAL CONTRACTUAL RECEIPTS OF RS.17,17, 08,920/ - AFTER INCLUDING THE INTEREST ON FIXED DEPOSITS OF RS.64,15,758/ - WHICH WAS PLACED AT THE GOVERNMENT DEPARTMENT AND BY MAKING SOME ADJUSTMENTS, THE AO DETERMINED THE TOTAL TAXABLE INCOME AT RS.1,26,68,340/ - . THE PROFIT ITA NO . 185 / PAT /201 8 3 DECLARED IN THE FINANCIAL STATEMENT WERE REJECTED BY THE AO AND THE SAME WAS CONFRONTED TO THE ASSESSEE. 3. FEELING AGG RIEVED FROM THE ORDER OF AO, THE ASSESSEE APPEALED BEFORE THE CIT(A) AND THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON THE BASIS OF DOCUMENTS AVAILABLE BEFORE HIM RELYING MANY CASE LAWS. 4. FEELING AGGRIEVED FROM THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 5. IN THE GROUNDS OF APPEAL, THOUGH THE ASSESSEE HAS RAISED AS MANY AS SEVEN GROUNDS, HOWEVER, AT THE OUTSET, LD. AR ONLY AGITATED TO THE GROUND OF ESTIMATION @8% OF THE GROSS CONTRACT RECEIPT BY THE A UTHORITIES BELOW. ACCORDINGLY, THE LD. AR SUBMITTED THAT THE CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DCIT VS. M/S SALAUDDIN, RENDERED IN MISCELLANEOUS APPEAL NO. 77 OF 2010 , DATED 1 1.04.2012, THEREFORE, THE NET PROFIT SHOULD BE APPLIED @6% . LD. AR ALSO SUBMITTED PAPER BOOK CONTAINING PAGES NO.27, WHICH IS PLACED ON RECORD. 6. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSING OFFICER HA S RIGHTLY APPLIED THE NET PROFIT IN THE CONTRACT BUSINESS AND THE ASSESSEE WAS ENGAGED IN THE CIVIL CONTRACT BUSINESS WITH THE GOVERNMENT DEPARTMENTS, THEREFORE, THE ORDER OF CIT(A) SHOULD BE RESTORED. 7. AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTI RE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACT AS IS EVIDENT FROM THE ORDER OF LOWER AUTHORITIES, MAINLY ITA NO . 185 / PAT /201 8 4 WITH THE GOVERNMENT DEPARTMENTS. IN THE SIMILAR LINE OF BUSINESS, THE HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF M/S SALAUDDIN (SUPRA) HAS RESTRICTED TO THE NET PROFIT UPTO 6% AS CASES LAWS RELIED ON BY THE ASSESSEE, WHICH IS PLACED ON RECORD , WHEREIN THE HONBLE HIGH COURT HAS HELD AS UNDER : - 11 - 04 - 2012 HEARD THE PARTIES. THE ONLY GRIEVA NCE OF THE REVENUE IS THAT THE INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH SHOULD HAVE ALLOWED THE CASE OF THE APPELLANT THAT NET PROFIT SHOULD BE APPLIED AT THE RATE OF 8% AFTER TAKING INTO ACCOUNT ALL THE EXPENSES, INSTEAD OF AT THE RATE OF 6%. DETERMINA TION OF NET PROFIT FOR ANY BUSINESS IS ON THE BASIS OF ALL THE RELEVANT FACTS AND CIRCUMSTANCES AND HENCE, IT IS ONLY AN ISSUE OF FACT. IN THE FACTS OF THE CASE, NO SUBSTANTIAL QUESTION OF LAW ARISES FOR DETERMINATION BY THIS COURT. THE APPEAL IS, THEREFO RE, DISMISSED. RESPECTFULLY FOLLOWING JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S SALAUDDIN (SUPRA) , WE ALSO RESTRICT THE NET PROFIT TO 6% INSTEAD OF 8% OF GROSS RECEIPTS ESTIMATED BY THE AO AND CONFIRMED BY THE CIT(A). WE FURTH ER MAKE IT CLEAR THAT THE ASSESSEE WILL NOT GET ANY DEDUCTION REGARDING DEPRECIATION AS HAS BEEN ALLOWED BY THE AO IN HIS ORDER. ACCORDINGLY, THE ONLY ISSUE RAISED BY THE ASSESSEE BEFORE US WITH REGARD TO RESTRICTION OF ESTIMATION TO 6% RELYING ON THE JUDG MENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S SALAUDDIN (SUPRA) IS ALLOWED PARTLY AND , CONSEQUENTLY, THE APPEAL OF THE ASSESSEE IS ALSO PARTLY ALLOWED. 8 . IN THE RESULT, THE APPEAL OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO . 185 / PAT /201 8 5 ORD ER PRONOUNCED IN PURSUANCE WITH RULE 34/4 OF ITAT RULES, 1963 BY PUTTING THE COPY OF THE SAME ON NOTICE BOARD ON 26 /07/2019 AT PATNA. SD/ - ( C.M.GARG ) SD/ - ( L.P.SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER PATNA ; DATED 26 / 0 7 /201 9 PKM , S R.P.S. COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) INCOME TAX APPELLATE TRIBUNAL , PATNA 1. THE APPELLANT - . PHULAR CONSTRUCTION PVT. LTD., VILLAGE - PHULAR, PO: MANSURPUR, VAISHALI - 834101 2. THE RESPONDENT - JT. CIT, RANGE - 1, PATNA 3. THE CIT(A), 4. CIT 5. DR , ITAT, PATNA 6. GUARD FILE. //TRUE COPY//