M/s. Bhavani Construction Co., Mehsana V. The Dy.CIT.,Mehsana Circle, Mehsana

ITA 2241/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60398 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 20-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: MUKESH M PATEL
• Keywords: Depreciation

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.C.GUPTA VICE-PRESIDENT(AZ) AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER APPEAL(S) SL. NO(S). ITA NO(S) ASSESSMENT YEAR(S) APPELLANT (S) RESPONDENT(S) 1. 2241/AHD/2009 2006-07 M/S.BHAVANI CONSTRUCTION CO. 9, VASUNDHARA SOCIETY VISNAGAR ROAD MEHSANA PAN : AABFB 8178 R DCIT MEHSANA CIRCLE MEHASANA 2. 2194/AHD/2009 2006-07 REVENUE ASSESSEE 3. 1056/AHD/2010 2006-07 REVENUE ASSESSEE ASSESSEE BY : SHRI MUKESH M.PATEL, A.R. REVENUE BY : SHRI RAHULKUMAR SR.D.R. / / / / DATE OF HEARING : 07/05/2012 !'# / DATE OF PRONOUNCEMENT : 1.6.12 $% / O R D E R PER SHRI G.C.GUPTA, VICE PRESIDENT (AZ): THESE APPEALS BY THE ASSESSEE AND THE REVENUE FOR THE ASST.YEAR 2006-07 ARE DIRECTED AGAINST THE ORDERS OF THE LEAR NED CIT(APPEALS)- GANDHINAGAR DATED 02/04/2009 (FOR ITA NOS.2241&2194 /AHD/09) AND DATED 14/01/2010 (FOR ITA NO.1056/AHD/10). THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. [A] ITA NO.2241/AHD/2009 (ASSESSEES APPEAL) 2. THE ONLY ISSUE IN THE GROUNDS OF APPEAL OF THE A SSESSEE IS REGARDING THE VALIDITY OF THE ORDER OF THE ASSESSING OFFICER AND OF CIT(APPEALS) IN ITA NOS.2241/AHD/09 (ASSESSEES APPEAL) 2194 & 1056/AHD/2010 (REVENUES APPEALS) M/S.BHAVANI CONSTRUCTION CO. VS. DCIT ASST.YEAR - - 2 - REJECTING THE ACCOUNTS OF THE ASSESSEE U/S.145 OF T HE I.T.ACT AND APPLYING A FLAT RATE OF NET PROFIT TO THE GROSS RECEIPT OF THE ASSESSEE. 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE IS A GOVERNMENT CONTRACTOR AND NO DEFECT FOR REJECTION O F BOOKS OF ACCOUNT COULD BE POINTED OUT BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE MAIN REASON FOR REJECTION OF ACCOUNTS WAS THE FALL IN GROSS PROFIT DURING THE RELEVANT YEAR, WHICH COULD NOT BE A VALID GROUN D FOR REJECTION OF THE ACCOUNTS OF THE ASSESSEE. HE RELIED ON THE DECISI ON OF ITAT MUMBAI BENCH A IN THE CASE OF NARENDRA MAFATLAL MEHTA VS. ITO 59 TTJ 165 (BOM.) IN SUPPORT OF HIS ARGUMENT. HE SUBMITTED TH AT THE OTHER SO-CALLED REASON FOR REJECTION OF ACCOUNTS OF THE ASSESSEE WA S THAT THE ASSESSEE COULD NOT RECONCILE THE TDS FIGURES AS PER CERTIFIC ATE AND AS PER ASSESSEES BOOKS OF ACCOUNT. HE REFERRED TO PAGE N O.12 OF THE COMPILATION FILED BY THE ASSESSEE, WHEREIN THE ASSE SSING OFFICER HAS ACCEPTED THE RECONCILIATION OF TDS FIGURES, AFTER T HE ISSUE WAS REFERRED BY THE LEARNED CIT(APPEALS) DURING THE COURSE OF AP PELLATE PROCEEDINGS. HE SUBMITTED THAT THE SUB-LETTING OF CONTRACT WAS N EVER IN DOUBT AND THE SUB-CONTRACTORS ARE NOT RELATED TO THE ASSESSEE. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPO SED THE ARGUMENT OF THE LD.COUNSEL FOR THE ASSESSEE. HE RE FERRED TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER IN SUPPORT OF THE C ASE OF REVENUE. HE REFERRED TO PARAS 2.3 ONWARDS OF THE LEARNED CIT(AP PEALS), WHEREIN SOME REASONS FOR THE REJECTION OF ACCOUNTS OF THE A SSESSEE AND DIRECTING THE ASSESSING OFFICER TO RE-COMPUTE THE NET PROFIT @ 4% OF THE TURNOVER ITA NOS.2241/AHD/09 (ASSESSEES APPEAL) 2194 & 1056/AHD/2010 (REVENUES APPEALS) M/S.BHAVANI CONSTRUCTION CO. VS. DCIT ASST.YEAR - - 3 - OF THE ASSESSEE WAS MADE. HE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE LEARNED CIT(APPEALS). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE ASSESSING OFFICER AND THE LEARNED CIT(APPEAL S). WE FIND THAT THE FACTS OF THE CASE DO NOT JUSTIFY THE REJECTION OF A CCOUNTS OF THE ASSESSEE IN THIS CASE. MERELY BECAUSE THERE WAS A FALL IN NET PROFIT RATE, THERE IS NO REASON TO REJECT THE BOOKS OF ACCOUNT OF THE ASSESS EE. THE CASE LAW CITED BY THE LD.COUNSEL FOR THE ASSESSEE SUPPORTS THE CAS E OF THE ASSESSEE. THE DIFFERENCE IN TDS FIGURES AS PER CERTIFICATES AND A S PER BOOKS OF ACCOUNT HAVE BEEN RECONCILED BY THE ASSESSEE AND THE RECONC ILIATION HAS BEEN ACCEPTED AS CORRECT BY THE ASSESSING OFFICER VIDE H IS ORDER DATED 17/06/2009 GIVING EFFECT TO THE ORDER OF THE LEARNE D CIT(APPEALS). IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS S UB-LETTED THE CONTRACT TO ITS SISTER-CONCERN OR RELATED PARTIES AND THE FA CT OF SUB-LETTING OF CONTRACT IS NOT IN DOUBT. THE LEARNED CIT(APPEALS) HAS RECORDED THAT SOME OF THE REASONS IDENTIFIED BY THE ASSESSING OFF ICER FOR THE FALL IN PROFIT DO NOT SEEM TO BE JUSTIFIED. HE HAS FURTHER RECORDED IN THE APPELLATE ORDER THAT THE VALUE OF CONTRACT SUB-LET WAS KNOWN TO THE SUB- CONTRACTOR AND HE WAS TO EXECUTE IT INDEPENDENTLY A ND THE APPELLANT HAD TO DO NOTHING WITH THE OPERATIONAL PART AND MOBILIZ ATION OF RESOURCES OF SPENDING OF MONIES OF THE SUB-CONTRACTOR. WE FIND THAT THE ASSESSEE HAS FILED THE COPIES OF THE ASSESSMENT ORDER FOR THE EA RLIER AS WELL AS SUBSEQUENT ASSESSMENT YEARS IN THE CASE OF THE ASSE SSEE, WHEREIN IN SCRUTINY ASSESSMENT FRAMED U/S.143(3) OF THE I.T.AC T THE TRADING RESULTS DECLARED BY THE ASSESSEE WAS ACCEPTED BY THE DEPART MENT. IN THE ITA NOS.2241/AHD/09 (ASSESSEES APPEAL) 2194 & 1056/AHD/2010 (REVENUES APPEALS) M/S.BHAVANI CONSTRUCTION CO. VS. DCIT ASST.YEAR - - 4 - SUBSEQUENT ASST.YEAR 2007-08, NET PROFIT (BEFORE DE PRECIATION) AT 2.94% WAS ACCEPTED AS AGAINST THE NET PROFIT RATE (BEFORE DEPRECIATION) AT 3.37% FOR THE RELEVANT ASST.YEAR 2006-07. UNDER THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT NO CASE FOR REJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE COULD BE MADE OUT BY THE DEPARTMENT AND, A CCORDINGLY, GROUND NOS.1 TO 3 OF THE APPEAL OF THE ASSESSEE ARE ALLOWE D AND THE TRADING ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. [B] ITA NO.2194/AHD/2009 (REVENUES APPEAL) 5. THE ONLY EFFECTIVE GROUND IS AS UNDER:- 1. THE LD.CIT(A) WAS NOT JUSTIFIED IN DIRECTING TO TAKE THE NET PROFIT @ 4% ON THE DECLARED RECEIPTS OF RS.4,29,47, 624/-. 5.1. WE HAVE HEARD THE PARTIES. THE ISSUE OF NET P ROFIT RATE APPLIED @ 4% ON THE TURNOVER OF THE ASSESSEE IS COVERED IN FA VOUR OF THE ASSESSEE WITH OUR DECISION IN THE ABOVE PARAGRAPHS OF THIS O RDER WHILE DISPOSING OF ASSESSEES APPEAL FOR ASSESSMENT YEAR 2006-07, WHER EIN HELD THAT THE REJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE WAS N OT VALID AND, ACCORDINGLY, THERE IS NO MERIT IN THE GROUND OF APP EAL OF THE REVENUE, WHICH IS ACCORDINGLY DISMISSED. [C] ITA NO.1056/AHD/2010 {[PENALTY U/S.271(1)(C)] (REVE NUES APPEAL)} 6. WE HAVE HEARD THE PARTIES. THE ONLY ISSUE IS RE GARDING VALIDITY OF PENALTY AGAINST U/S.271(1)(C) OF THE I.T.ACT ON THE TRADING ADDITION MADE BY THE REVENUE BY REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN VIEW OF OUR DECISION, AS DETAILED IN THE ABOVE PARA GRAPHS WHILE DISPOSING ITA NOS.2241/AHD/09 (ASSESSEES APPEAL) 2194 & 1056/AHD/2010 (REVENUES APPEALS) M/S.BHAVANI CONSTRUCTION CO. VS. DCIT ASST.YEAR - - 5 - OF THE ASSESSEES APPEAL FOR THE RELEVANT ASST.YEAR 2006-07, WHEREIN HELD THAT THE REJECTION OF BOOKS OF ACCOUNT BY THE DEPAR TMENT WAS NOT VALID, WE HOLD THAT PENALTY U/S.271(1)(C) OF THE I.T.ACT O N ACCOUNT OF TRADING ADDITION COULD NOT BE IMPOSED ON THE ASSESSEE AND, ACCORDINGLY, THERE BEING NO MERIT IN THE GROUND OF APPEAL OF THE REVEN UE, THE SAME IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. SD/- SD/- (A. MOHAN ALANKAMONY) ( G. C. GUPTA ) ACCOUNTANT MEMBER VICE PRESID ENT (AZ) AHMEDABAD; DATED 01/ 06 /2012 &.., .../ T.C. NAIR, SR. PS $% () *$)# $% () *$)# $% () *$)# $% () *$)#/ COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT 2. (-+, / THE RESPONDENT. 3. .. / / CONCERNED CIT 4. /() / THE CIT(A)-GANDHINAGAR 5. )23 ( , , / DR, ITAT, AHMEDABAD 6. 345 6 / GUARD FILE. $% $% $% $% / BY ORDER, -) ( //TRUE COPY// 7 77 7/ // / .8 .8 .8 .8 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD