Sai Construction, Angul V. The ACIT, Bhubaneswar

ITA 219/CTK/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86441 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RABIN CHOUDHURI
• Assessee Lawyers: D K SHETH
• Section: 44AD; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK BEFORE S/SHRI P.K.BANSAL (AM) AND D.T.GARASIA (JM) I.T.A. NO. 219/CTK/2014 ASSESSMENT YEAR:2009-2010 SAI CONSTRUCTION, BRAHMAN SASAN, AT/PO: TALCHER, DIST: ANGUL-759 100 PA NO.AAVFS 0645 N VS ACIT, CIRCLE - 1(1), BHUBANESWAR. APPELLANT RESPONDENT FOR THE APPELLANT: SHRI D.K.SHETH FOR THE RESPONDENT: SHRI RABIN CHOUDHURI DATE OF HEARING: 05/02/2015 DATE OF PRONOUNCEMENT: 3 / 3 /2015 ORDER PER P.K.BANSAL, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER DATED 23.9.2013 OF LD CIT(A), BERHAMPUR, CAMP: BHUBANESWAR FOR THE ASSESSMENT YEA R 2009-2010. 2. THE EFFECTIVE GROUNDS OF APPEAL RAISED BY THE AS SESSEE ARE AS UNDER: 1. FOR THAT UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE ESTIMATE OF NET PROFIT (BEFORE SALARY & INTEREST TO THE PARTNERS) A S ESTIMATED AT 8%, IS ARBITRARILY HIGH AND EXCESSIVE. THE BOOKS RESULT AS SHOWN BEIN G REASONABLE, SHOULD HAVE BEEN ACCEPTED. 2. FOR THAT THE APPELLANT HAVING DISCLOSED A NET PR OFIT (BEFORE SALARY & INTEREST TO THE PARTNERS) AT 6.31% SHOULD HAVE BEEN TREATED AS REASONABLE AND, ACCORDINGLY, SHOULD HAVE BEEN ACCEPTED IN VIEW OF THE ORDER OF T HE HONBLE ITAT CUTTACK BENCH IN ITA NO.550/CTK/2012 IN THE APPELLANTS OWN CASE. 2 I.T.A. NO. 219/CTK/2014 ASSESSMENT YEAR:2009-2010 3. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES T O ESTIMATION OF PROFIT BY THE ASSESSING OFFICER. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER (AO) NOTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS. THE AS SESSEE SUBMITTED ITS RETURN OF INCOME ALONGWITH THE COPY OF AUDITED ACCOUNTS. WHEN THE A SSESSING OFFICER ASKED FOR PRODUCTION OF BOOKS OF ACCOUNT, BILLS AND VOUCHERS FOR VERIFICATI ON, THE ASSESSEE DID NOT FURNISH THE SAME. THEREFORE, THE AO REJECTED THE BOOKS OF ACCOUNT AND COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, BY ESTIMATING THE PROFIT @ 8% ON THE GROSS TURNOVER BEFORE SALARY AND INTEREST TO PARTNERS, WHILE, THE ASSESSEE HAS SHOWN NET PROFIT AT 6.31% OF ITS TURNOVER. 5. BEFORE US, LD A.R. RELIED ON THE ORDER OF THE TR IBUNAL IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO.550/CTK/2012 ORDE R DATED 14.12.2012, IN WHICH, THE TRIBUNAL HAS DIRECTED TO ESTIMATE THE PROFIT @ 6%. LD D.R. ON THE OTHER HAND CONTENDED THAT THE DECISION OF THE TRIBUNAL IS NOT APPLICABLE IN T HE CASE OF THE ASSESSEE AS IN THIS CASE, THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT. THE FA CTS INVOLVED IN ASSESSMENT YEAR 2008-09 WERE TOTALLY DIFFERENT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE ORDERS OF THE TAX AUTHORITIES ALONGWITH THE ORDER OF THE TRIBUNAL REL IED ON BY THE ASSESSEE. WE NOTED THAT UNDER PARA-5 OF THE ORDER, THE TRIBUNAL HAS GIVEN A FINDI NG THAT THE AO HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT OR IN THE A UDITED FINANCIAL STATEMENTS SUBMITTED BY THE ASSESSEE. IN THE CASE BEFORE US, WE NOTED THAT THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT . UNTIL AND UNLESS THE ASSESSEE PRODUCED TH E BOOKS OF ACCOUNT, IN OUR OPINION, HOW THE DEFECT CAN BE POINTED OUT BY THE REVENUE AUTHORITIE S. THE CASE BEFORE US IS ONE IN WHICH THE 3 I.T.A. NO. 219/CTK/2014 ASSESSMENT YEAR:2009-2010 ASSESSEE HAS TOTALLY AVOIDED THE PRODUCTION OF BOOK S OF ACCOUNT. UNDER SECTION 142(1)((II) OF THE ACT, THE AO IS EMPOWERED TO ASK THE ASSESSEE TO PRODUCE BOOKS OF ACCOUNT. MERELY, THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS PREPARED BY C. A, DOES NOT MEAN THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND FOUND THAT THE AO HAS SPECIFICALLY ASKED THE ASSESSEE TO PRODUCE B OOKS OF ACCOUNT BUT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT. UNDER THESE FACTS, W E DO NOT AGREE WITH THE FINDINGS GIVEN BY THE EARLIER BENCH OF THE TRIBUNAL IN THE CASE OF TH E ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. SPECIFIC DEFECT CAN BE POINTED OUT BY THE AO, IF TH E BOOKS OF ACCOUNT ARE PRODUCED. ONCE THE BOOKS OF ACCOUNT ARE NOT PRODUCED, IT IS INFERRED T HAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. SO FAR AS THE ESTIMATION OF PROF IT IS CONCERNED, WE NOTED THAT IN THE PRECEDING ASSESSMENT YEAR, THE NET PROFIT RETURNED BY THE ASSESSEE BEFORE SALARY AND INTEREST WAS 5.3%. WHILE DURING THE IMPUGNED ASSESSMENT YEA R, AS CLAIMED BY THE ASSESSEE, THE ASSESSEE HAS RETURNED NET PROFIT @ 6.13%. THE TRIB UNAL IN THE EARLIER YEAR ALSO DID NOT ACCEPT THE RETURNED PROFIT BUT ESTIMATED THE PROFIT BY INC REASING THE PROFIT RETURNED BY THE ASSESSEE @ 5.3% TO 6%. EVEN IF WE TAKE ESTIMATION AS PER THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE DT.14.12.2012, THE PROFIT IN THE CASE OF THE ASSESSEE HAS TO BE ESTIMATED HIGHER THAN THE PROFIT AS HAS BEEN RETURNED BY THE ASSESSEE. WE MAY MENTION HERE THAT THE CASE IS RELATING TO ASSESSMENT YEAR 2009-2010 AND THE PROVI SIONS OF SECTION 44AD ARE NOT STRICTLY APPLICABLE TO THE ASSESSEE AS THE TURNOVER OF THE A SSESSEE IS MUCH BELOW RS.40 LAKHS. THEREFORE, THIS DECISION SHALL NOT BE TAKEN AS COMP ARATIVE INSTANCE BECAUSE THE TURNOVER DERIVED BY THE ASSESSEE IS WITHIN THE LIMIT AS PRES CRIBED UNDER SECTION 44AD OF THE ACT. WE, ACCORDINGLY, RESPECTFULLY FOLLOWING THE ORDER OF TH E TRIBUNAL, WE DIRECT THE AO TO ESTIMATE THE NET PROFIT @ 7% BEFORE ALLOWING SALARY AND INTEREST TO PARTNERS. 4 I.T.A. NO. 219/CTK/2014 ASSESSMENT YEAR:2009-2010 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN PURSUANCE WITH RULE 34(4) BY PU TTING THE COPY OF THE SAME ON NOTICE BOARD ON 3/3/2015. SD/- SD/- (D.T.GARASIA) (P.K.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, PANAJI 3 / 3 /2015 B.K.PARIDA, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT: SAI CONSTRUCTION, BRAHMAN SASAN, AT/ PO: TALCHER, DIST: ANGUL-759 100 1. THE RESPONDENT: ACIT, CIRCLE-1(1), BHUBANESWAR 2. THE CIT, BHUBANESWAR 3. THE CIT(A), CONCERNED 4. DR, CUTTACK BENCH 5. GUARD FILE. TRUE COPY// BY ORDER ASST. REGISTRAR, ITAT, CUTTACK