DCIT, Circle - 4, Kolkata, Kolkata V. M/s. Maruti Freight Movers Ltd., Kolkata

ITA 2123/KOL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70512 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 25-11-2010
• Court: TRIBUNAL
• Department Lawyers: V A RAJU
• Assessee Lawyers: N KEDIA
• Keywords: Business income; Depreciation; Reasonable cause
• Section: 143(3)

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 2123/KOL/2010 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. MARUTI FREIGHT MOVERS LTD. CIRCLE-4, KOLKATA. (PAN: AABCM7485K) (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 11.12.2013 DATE OF PRONOUNCEMENT: 19.12.2013 FOR THE APPELLANT: SHRI V. A. RAJU, SR. DR FOR THE RESPONDENT: SHRI N. KEDIA, ADVOCATE $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-IV, KOLKATA IN APPEAL NO. 153/CIT(A)-IV/08-09 DATED 20.08.2010. ASSESSMENT W AS FRAMED BY ACIT, CIRCLE-4, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 24.12.2008. 2. AT THE OUTSET, IT IS NOTICED THAT THIS APPEAL OF REVENUE IS BARRED BY LIMITATION BY 13 DAYS AND REVENUE HAS FILED CONDONATION PETITION ALONG WI TH AFFIDAVIT. LD. SR. DR ARGUED THAT THERE IS REASONABLE CAUSE FOR THE DELAY AND THIS IS A VERY S MALL DELAY OF 13 DAYS. WHEN THIS WAS CONFRONTED TO LD. COUNSEL, HE FAIRLY CONCEDED THAT THE DELAY CAN BE CONDONED AND THE APPEAL CAN BE ADMITTED. 3. THE ISSUE IN THIS APPEAL OF REVENUE IS AGAINST T HE ORDER OF CIT(A) DELETING THE ADDITION AS ESTIMATED BY AO BY APPLYING NET PROFIT RATE AT 4 % OF THE TURNOVER. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITIONS OF RS.1,53,59,035/- CALCULAT ED ON NET PROFIT @ 4% OF TURNOVER AND DIRECTING THE A.O. TO CONSIDER THE BUSINESS INCOME AS DECLARED BY THE BOOKS OF ACCOUNT OF THE ASSESSEE SINCE THE REJECTION OF THE REMAND R EPORT BY THE LD. CIT(A) IS ARBITRARY AND DEFECTS POINTED OUT IN THE ASSESSEES ACCOUNTS AND SUBMISSIONS WERE NOT ADJUDICATED UPON. 2 ITA NO.2123/K/2010 MARUTI FREIGHT MOVERS LTD., AY:2006-07 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE IS IN THE BUSINESS OF TRA NSPORT CONTRACTOR AND MAINTAINING ITS BOOKS OF ACCOUNT AS NOTED BY AO IN HIS ASSESSMENT ORDER FRAM ED U/S. 143(3) OF THE ACT. THE ASSESSEE HAS DEDUCTED TDS ON THE FREIGHT PAYMENTS. THE ASSE SSEE HAS DECLARED NET PROFIT RATE AT 1.7530% ON THE TOTAL TURNOVER OF RS.38,49,17,863/-. THE AO ESTIMATED THE BUSINESS PROFIT AT 4% WITHOUT REJECTING BOOKS OF ACCOUNTS AND ACCORDIN GLY, MADE ADDITION OF RS.1,53,59,035/-. IT IS A FACT THAT THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT AS IS APPARENT FROM THE ASSESSMENT ORDER. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE CIT(A), THE COMPARATIVE CHART OF SIX ASSESSMENT YEARS WAS FILED AND ON THE BASIS OF THE SAME, CIT(A) NOTED THAT THE REVENUE HAD ALL ALONG BEEN ACCEPTING THE NET PROFIT PERCENTAGE AT 1.22% TO 1.75% AND IN SOME OF THE YEARS ASSESSMENT WAS FRAMED U/S. 143(3) OF T HE ACT. FURTHER, CIT(A) NOTED THAT ONCE THE BOOKS OF ACCOUNT ARE NOT REJECTED THE AO HAS NO POW ER TO APPLY OR ESTIMATE NET PROFIT RATE AND ACCORDINGLY, HE DELETED THE ADDITION. AGGRIEVED, R EVENUE CAME IN APPEAL BEFORE US. 5. WE FIND THAT THE ASSESSEE BEFORE US AS WELL AS B EFORE THE LOWER AUTHORITIES FILED COMPLETE DETAILED CHART OF NET PROFIT RATE AND TOTA L TURNOVER FROM AY 2001-02 TO 2006-07 AND THE SAME READS AS UNDER: PARTICULARS A/Y 01-02 A/Y 02-03 AY 03-04 A/Y 04-05 A/Y 05-06 A/Y 06-07 INCOME FREIGHT OTHER INCOME TOTAL 150275104 123946 150399050 154795052 243203 155038255 184685213 844110 185529323 224329122 628212 224957334 308911412 1089826 310001238 383975884 941979 384917863 EXPENSES FREIGHT OERATING EXP. INT & FIN CHG TOTAL GROSS PROFIT G.P. IN % DEPRECIATION OTHER EXPENSES PERSONNEL EXP. ADMN. EXP. REPAIRS & MAINTENANCE EXP. OTHERS TOTAL NET PROFIT N.P. IN % 104174367 30722153 774084 135670604 14728446 9.7929 2487844 2774624 7428704 196443 0.00 12887615 1840831 1.2240 110382000 29382009 43984 140203823 14834432 9.5682 2517698 3127824 7201103 2120763 0.00 13058701 1775731 1.1454 139018692 29144809 151543 16835314 17214009 9.2783 2291518 3128125 8104131 121043 0.00 13671694 3542315 1.9093 178184212 29242935 67545 207494692 17462642 7.7626 2395710 3247308 7913308 154310 0.00 13710636 3752006 1.6679 258356976 34991532 231583 293580091 16421147 5.2971 2422557 3479619 7169191 170767 0.00 13242134 3179013 1.0255 334696384 28793119 602667 364092170 20825693 5.4104 1759145 3943420 8205772 169793 0.00 14078130 6747563 1.7530 FURTHER, FROM THE ABOVE CHART IT IS CLEAR THAT THE NET PROFIT RATE DISCLOSED BY THE ASSESSEE COMPANY AND ACCEPTED BY THE REVENUE, EVEN IN SOME O F THE ASSESSMENT YEARS U/S. 143(3) OF THE ACT, WHICH IS AS UNDER: 3 ITA NO.2123/K/2010 MARUTI FREIGHT MOVERS LTD., AY:2006-07 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 1.22 1.14 1.90 1.66 1.02 1.75 EVEN OTHERWISE, REVENUE NOW BEFORE US ALSO COULD NO T POINT OUT THAT HOW THE AO HAS APPLIED NET PROFIT RATE WITHOUT REJECTING THE BOOKS OF ACCO UNT. ONCE THE BOOK RESULT IS ACCEPTED AND THE N P RATE IS PROGRESSIVE, THERE IS NO QUESTION OF AP PLICATION OF HIGHER NET PROFIT RATE. IN SUCH CIRCUMSTANCES, WE CONFIRM THE ORDER OF CIT(A) AND T HE ISSUE OF REVENUES APPEAL IS DISMISSED. 6. COMING TO THE NEXT ISSUE OF THIS APPEAL OF REVEN UE IS AS REGARDS TO THE ORDER OF CIT(A) DELETING THE ADDITION OF RS.5,45,005/- ON ACCOUNT O F FREIGHT CHARGES MENTIONED IN THE REMAND REPORT. FOR THIS, REVENUE HAS RAISED FOLLOWING GRO UND NO.2: 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) HAS ERRED IN LAW IN HOLDING THAT A.OS OBSERVATION REGARDING ESCAPEMEN T OF INCOME OF RS.5,45,005/- ON ACCOUNT OF FREIGHT CHARGE MENTIONED IN THE REMAND R EPORT IS NOT ACCEPTABLE SINCE IT WAS NOT ADDED IN THE ASSESSMENT ORDER AS A.OS OBSERVA TION SHOULD HAVE BEEN EXAMINED ON MERIT BECAUSE THE LD. CIT(A) IS EMPOWERED TO ENHANC E OR REDUCE THE QUANTUM OF ASSESSMENT MADE BY THE AO. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WHILE GOING THROUGH THE ASSESSMENT ORDER WE FOUND T HAT NO SUCH ADDITION WAS MADE BY AO IN THE ASSESSMENT ORDER QUA THE ACCOUNT OF FREIGHT CHA RGES AT RS.5,45,005/-. WHEN THIS WAS POINTED OUT TO LD. SR. DR HE STATED THAT THIS ISSUE AS RAISED BY AO DURING APPELLATE PROCEEDINGS WHEN REMAND PROCEEDINGS WERE TAKEN UP. CAN THIS BE A SUBJECT MATTER OF ASSESSMENT PARTICULARLY WHEN THE CIT(A) HAS NOT MADE ANY ADDIT ION NOR MADE ANY ENHANCEMENT QUA THAT. EVEN OTHERWISE, THE ASSESSEE HAS FILED COMPLETE REC ONCILIATION THERE IS NO SCOPE FOR MAKING ADDITION. HENCE, WE CONFIRM THE ORDER OF CIT(A) AN D THIS GROUND OF APPEAL OF REVENUE IS WITHOUT ANY BASIS AND WE DISMISS THE SAME. 8. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 9. ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH DEC., 2013. SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19TH DECEMBER, 2013 12 '3' 4 JD.(SR.P.S.) 4 ITA NO.2123/K/2010 MARUTI FREIGHT MOVERS LTD., AY:2006-07 $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT DCIT, CIRCLE-4, KOLKATA 2 ./,- / RESPONDENT M/S. MARUTI FREIGHT MOVERS LTD., MAR SHAL HOUSE, 33/1, N. S. ROAD, KOLKATA-700 001. 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .