The DCIT, 1(1), Bhopal V. M/s. S.K. JAIN, Bhopal

ITA 189/IND/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99171 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA
• Keywords: Rejection of books of accounts; Depreciation; Reassessment proceedings
• Section: 40A(3); 143(3); 148

Judgement Text

DCIT VS. S.K. JAIN ITA NO. 189/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO.189/IND/2014 A.Y.2008-09 DCIT 1(1), BHOPAL ::: APPELLANT VS M/S S.K. JAIN BHOPAL ::: RESPONDENT APPELLANT BY SHRI R.A. VERMA RESPONDENT BY SHRI ASHISH GOYAL AND SHRI N.D. PATWA DATE OF HEARING 15.10.2015 DATE OF PRONOUNCEMENT 1 .11.2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATED 12.12 .2013. DCIT VS. S.K. JAIN ITA NO. 189/IND/2014 2 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTOR DOING WORK FOR CANALS, DAMS, ETC. FOR IRRIGATION DEPARTMENT OF M.P. GOVT. ORIGINAL RETURN OF INCOME WAS FILED ON 3.9.2008 DECLARING INCOME AT RS.8,51,79,410/-. THE INCOME WAS DETERMINED VIDE ORD ER U/S 143(3) ASSESSMENT RS.10,94,24,770/-. SUBSEQUENTLY THE REASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUE OF NOTICE U/S 148 OF THE ACT AND THE TAXABLE INCOME WAS DETERMINED AT RS.11,93,60,633/-. IN THIS CASE THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS BY INVOKING PROVISIONS OF SECTION 145(3) OF THE ACT AND ESTIMATED THE PROFIT @ 8% ON THE ASSESSEES OWN WORK AND 6% ON SUB-CONTRACT WORK. THE LEARNED CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE BY ESTIMATING THE NET PROFIT R ATE AT 6.25% IN VIEW OF THE DECISION OF THE HON'BLE TRIBUN AL IN THE ASSESSEES OWN CASE IN ITA NOS. 21/IND/2013 AND DCIT VS. S.K. JAIN ITA NO. 189/IND/2014 3 604/IND/2012 FOR THE ASSESSMENT YEAR 2008-09 DATED 17.4.2013. SINCE THE LEARNED CIT(A) HAS GRANTED RELIE F TO THE ASSESSEE ON THE BASIS OF THE ORDER OF THE TRIBUNAL , THEREFORE, WE FIND NO MERIT IN THIS GROUND OF THE R EVENUE AND DISMISS THE SAME. THE RELEVANT PARA OF THE ORDER OF THE LEARNED CIT(A) IS REPRODUCED HEREUNDER :- 4.4. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. FROM THE FACTS, IT IS CLEAR THAT THE ISSUE REGARDING REJECTION OF BOOKS OF ACCOUNTS BY INVOKING PROVISIONS OF SECTION 145(3) AND ESTIMATION OF NET PROFIT HAD ALREADY BEEN DECIDED BY THE HON'BLE ITAT IN THE APPEAL RELATING TO ORIGINAL ASSESSMENT U/S 143(3) IN THE CASE OF THE APPELLANT FOR A.Y.2008-09 WHICH IS UNDER CONSIDERATION. THE HON'BLE ITAT UPHELD THE DCIT VS. S.K. JAIN ITA NO. 189/IND/2014 4 ACTION OF THE A.O. REJECTING THE BOOKS OF ACCOUNTS BY INVOKING PROVISIONS OF SECTION 145(3). ACCORDINGLY, THE ACTION OF THE A.O. OF INVOKING PROVISIONS OF SECTION 145(3) IS CONFIRMED. AS REGARDS ESTIMATION OF NET PROFIT OF THE APPELLANT, AS MENTIONED ABOVE, THIS ISSUE HAS BEEN FINALLY DECIDED BY THE HON'BLE ITAT IN APPEAL AGAINST ORIGINAL ASSESSMENT IN ITA NO. 21/IND/2013 AND ITA NO.604/IND/2012 FOR A.Y. 2008-09 ORDER DATED 17.04.2013, OBSERVING AS UNDER :- 12. THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE THE SAME AS IN THE ASSESSMENT YEAR 2007-08 DECIDED BY THE TRIBUNAL EXCEPT THE FACT THAT DURING THE YEAR UNDER CONSIDERATION THERE WAS INCREASE IN TURNOVER BY 18.50 CRORE AND DCIT VS. S.K. JAIN ITA NO. 189/IND/2014 5 SLIGHT CHANGE IN THE WORK UNDERTAKEN AS MAIN CONTRACTOR AND SUB-CONTRACTOR. INCREASE IN TURNOVER CAN BE ACHIEVED BY THE ASSESSEE ONLY ON SACRIFICE OF MARGINAL RATE OF NET PROFIT. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE VIS--VIS ORDER OF THE TRIBUNAL IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2007-08 DATED 15.02.2012 HAVING SIMILAR FACTS AND GIVING DUE BENEFIT TO THE ASSESSEE FOR INCREAASE IN TURNOVER AND THE QUANTUM OF WORK UNDERTAKEN BY THE ASSESSEE AS MAIN CONTRACTOR AND AS SUB-CONTRACTOR, WE MODIFY THE NET PROFIT RATE TO 6.25% AS AGAINST PROFIT RATE OF 5.75% ESTIMATED BY CIT(A). ACCORDINGLY, ASSESSING OFFICER IS DIRECTED TO COMPUTE THE PROFIT BY APPLYING NET PROFIT RATE DCIT VS. S.K. JAIN ITA NO. 189/IND/2014 6 OF 6.25% AS AGAINST PROFIT RATE OF 5.75% ESTIMATED BY CIT(A). ACCORDINGLY ASSESSING OFFICER IS DIRECTED TO COMPUTE THE PROFIT BY APPLYING NET PROFIT RATE OF 6.25 ON THE GROSS CONTRACT RECEIPTS. WE DIRECT ACCORDINGLY. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE ITAT, THE A.O. IS DIRECTED TO COMPUTE THE NET PROFI T OF THE APPELLANT BY APPLYING NET PROFIT RATE OF 6.2 5% ON THE CONTRACT RECEIPTS. THUS, THESE GROUNDS ARE PARTLY ALLOWED. 3. GROUND NO. 2 AGAINST RELATES DELETION OF ADDITION OF RS.51,81,465/- ON ACCOUNT OF DISALLOWANCE OUT OF DEPRECIATION CLAIMED ON DUMPER AND TIPPERS. 4. WE HAVE HEARD BOTH THE SIDES. BEFORE US IT IS SUBMITTED THAT THE LEARNED CIT(A) HAS GRANTED RELIEF ON THE BASIS THAT WHEN A NET PROFIT ON THE TURNOVER IS APPLIED AFTER DCIT VS. S.K. JAIN ITA NO. 189/IND/2014 7 REJECTING THE BOOKS OF ACCOUNTS FOR ESTIMATION OF TAX ABLE INCOME THEN NO FURTHER ADDITION OF ANY EXPENDITURE OR DEDUCTION ALLOWABLE U/S 30 TO 43D OF THE ACT SHALL NOT BE ALLOWED AS ALL SUCH EXPENDITURE AND DEDUCTION DEEMED TO HAVE BEEN ALLOWED PRIOR TO ESTIMATING THE NET PROFIT RATE. SUCH VIEW HAS BEEN AFFIRMED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SMT. SANTOSH JAIN; 296 ITR 324 WHEREIN IT WAS HELD THAT WHERE THE INCOME OF THE ASSESSEE HAS BEEN COMPUTED BY APPLYING T HE GROSS PROFIT RATE, THERE IS NO NEED TO LOOK INTO THE PROVISIONS OF SECTION 40A(3) OF THE ACT AS APPLYING T HE GROSS PROFIT RATE TAKES CARE OF EXPENDITURE OTHER THAN BY WAY OF CROSS CHEQUES ALSO. SIMILAR VIEW HAS ALSO BEEN UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PURSHOTTAMLAL TAMRAKAR; 270 ITR 314 AND HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS BANWARI LAL BANSHIDHAR; 229 ITR 229. CONSIDERING THE FACTUAL AS WEL L DCIT VS. S.K. JAIN ITA NO. 189/IND/2014 8 AS LEGAL POSITION ON THIS ISSUE, WE FIND NO PERVERSIT Y IN THE ORDER OF THE LEARNED CIT(A). WE, THEREFORE, DISMISS THIS GROUND OF THE REVENUES APPEAL. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED ? PRONOUNCED IN OPEN COURT ON IST DECEMBER, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER IST DECEMBER, 2015 DN/-