Punit Kumar Jain, Patna V. I.T.O., Patna

ITA 240/PAT/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1021 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 22-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARCHANA PRASAD JR S C
• Assessee Lawyers: D V PATHY
• Section: 147

Judgement Text

, PATNA IN THE INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH, PATNA . . . , , BEFORE SHRI A.D. JAIN (JM) AND SHRI SANJAY ARORA (AM) ./ I.T. A. NO. 240 /PAT/201 3 ( / ASSESSMENT YEARS: 200 9 - 1 0) PINTU KR. JAIN, PROP. PARAS ENTERPRISES, 10, JADISH LOK APARTMENT, BORING CANAL ROAD, PATNA. / VS. IT O WARD - 5(4) , PATNA . ./ ./ PAN/GIR NO. : A HFPJ3385B ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI D. V. PATHY , ADV. / RESPONDENT BY : S MT. ARCHANA PRASAD , J R.S.C. / DATE OF HEARING : 2 2 /4/2015 / DATE OF PRONOUNCEMENT : 28 / 5 /2015 / O R D E R PER SANJAY ARORA, AM: THIS IS AN A PPEAL BY THE ASSESSEE ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - DHANBAD (CIT(A) FOR SHORT) DATED 13.09.2013, PARTL Y ALLOWING ITS APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) R/W S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2009 - 10 VIDE ORDER DATED 14.12.2011. 2 ITA NO. 240/PAT/2013 (A.Y. 2009 - 10) PINTU KR. JAIN, PROP. VS. ITO 2. THE APPEAL RAISES SEVERAL GROUNDS . H OWEVER, DURING THE COURSE OF HEARING THE LD. AUTHORIZED REPRESENTATIVE (AR) CHOSE NOT TO PRESS GROUNDS , OTHER THAN GROUNDS 6 AND 7, MAKING H IS PLEADINGS WITH REFERENCE TO THE SAID GROUNDS, REPRODUCED AS UNDER: 6. FOR THAT THE L D. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED I N CONFIRMING THE APPLICATION FOR NET PROFIT RATE OF 10% OF THE GROSS SUPPLIES NOTWITHSTANDING THE FACT THAT UNDER THE DISASTER MANAGEMENT ACT, 2005, IT IS THE AUTHORITY EXERCISING POWER UNDER THE SAID ACT WHO IS COMPETENT TO EVALUATE BOTH THE QUANTITY AND THE QUALITY OF THE SUPPLIES MADE AND FURTHER THAN IN VIEW OF THE SECTION 50 OF THE SAID ACT, A CERTIFICATE OF SUPPLY BY ITSELF WERE DEEMED TO BE A VALID DOCUMENT OR VOUCHER FOR THE PURPOSE OF ACCOUNTING OF EMERGENCY PROCUREMENT OF SUCH PROVISIONS OR MATERI ALS. 7 FOR THAT IN ANY VIEW OF THE MATTER, THE ORDER OF THE L D. COMMISSIONER OF INCOME TAX (APPEALS) IN THE CONFIRMATION OF THE GROSS PROFIT RATES AT ANY RATE IS EXCESSIVE PARTICULARLY IN VIEW OF SUPPLY OF MATERIALS AT A RATE LESSER THAN THE DGS&D RATE S THAT TOO WITHOUT REASON. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN UNDERTAKING SUPPLY WORK TO THE OFFICE OF THE DISTRICT MAGISTRATE (DM), ARARIA AND KATIHAR. HE FILED HIS RETURN OF INCOME FOR THE YEAR AT AN INCOME O F RS. 6,85,330/ - , ON A GROSS RECEIPT OF RS.196.25 LACS, WHICH WORKS TO 3.49 % . HE WAS , HOWEVER, UNABLE TO PRODUCE ANY VOUCHER/INVOICE IN RESPECT OF THE PURCHASE OF GOODS SUPPLIED DURING THE YEAR; RATHER, ADMITTING, VIDE STATEMENT U/S.131 OF THE ACT, TO BE N OT IN POS SESSION OF EVEN A SINGLE INVOICE FOR PURCHASE OF POLYTHENE SHEET S , STATED TO HAVE BEEN THE ONLY ITEM SUPPLIED DURING THE RELEVANT YEAR. THE ASSESSING OFFICER (A.O.) , IN THE ABSENCE OF ANY MATERIAL TO ENABLE THE ASSESSMENT OF INCOME, PARTICULARLY C ONSIDERING THE PECULIAR NATURE OF THE ASSESSEES TRADE, ESTIMATED THE SAME AT 10% OF THE GROSS RECEIPT, RELYING FOR THE PURPOSE ON THE DECISION IN THE CASE OF T.O. ABRAHAM & CO. VS. DY. CIT [2010] 325 ITR 201 (KER). IN APPEAL, IT WAS CONTENDED THAT THE ENT IRE SUPPLIES, WHICH WERE AT 1 , 76,798 KG. OF POLYTHENE SHEETS, WERE MADE TO DM, A RARIA (DISASTER MANAGEMENT S ECTION). THE TENDER WAS AWA RD ED AT A COMPETITIVE RATE OF RS.111 KG. , AS AGAINST THE DGS & D RATE OF 3 ITA NO. 240/PAT/2013 (A.Y. 2009 - 10) PINTU KR. JAIN, PROP. VS. ITO RS.112/32 PER KG . THE LD. CIT(A) DID NOT FIND ANYT HING WRONG IN EITHER THE REJECTION OF THE ASSESSEES TRADING RESULTS IN THE ABSENCE OF HIS PRODUCING THE BOOKS B EFORE THE A.O., WHICH POSITION IN FACT CONTINUED BEFORE HIM AS WELL, NOR IN HIS ESTIMATION OF THE ASSESSEES INCOME AT 10% (OR SALES) , INVOKING SECTION 145(3) OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. THE CASE OF THE ASSESSEE BEFORE US REMAIN ED THE SAME, WHILE THE LD. DEPARTMENTAL REPRESENTATIVE (D R ) WOULD RELY ON THE ORDERS BY THE AUTHORITIES BELOW. THE ONLY ARGUMENT, THEREFORE, THAT THE ASSESSEE RAISES TOWARD THE EXCESSIV ENESS OF THE NET PROFIT RATE , APPLIED A T 10% (OF SALES), IS THE COMPETITIVENESS OF THE SALE RATE , AND FOR WHICH HE ALLUDES TO THE SUPPLY RATE AS WELL AS THE DGS& D RATE, WITH THE ASSESSEE BEING PROTECTED BY THE PROVISIONS OF THE D ISASTER MANAGEMENT ACT, 2005, SO THAT THE CERTIFICATE ISSUED U/S.50 THEREOF WOULD BE A CONCLUSIVE PROOF OF THE QUANTITY AND QUALITY OF THE SUPPLIES MADE. WE ARE UNABLE TO SEE AS TO HOW THAT WOULD MAKE ANY DIFFERENCE TO THE MERITS OF THE CASE . THE ASSESSEE HAS , FIRSTLY , NOT FURNISHED THE CERTIFICATE U/S.50 NOR ANY OTHER DOCUMENT ESTABLISHING THE RATE/S AT WHICH THE SUPPLIES WERE MADE , OR TO EVIDENCE THE DGS & D RATE/S OBTAININ G DURING THE RELEVANT PERIOD. EVEN ASSUMING THE RATES SPECIFIED TO BE CORRECT, IN - AS - MUCH AS THE REVENUE HA S NOT DOUBTED THE SAME, SO THAT WE COULD RESTORE THE MATTER BACK FOR VERIFICATION OF THE ASSESSEES CLAIM, WHAT PURPOSE, ONE MAY ASK, WOULD THAT SERV E ? INCOME ARISES AS A RESULT OF A POSITIVE DIFFERENCE BETWEEN THE OUTPUT RATE (AVERAGE) , STATED TO BE AT RS.111 PER KG. , AND THE INPUT (PURCHASE ) COST, AGAIN AS OBTAINING AT AN AVERAGE FOR THE YEAR. THERE IS NOTHING BROUGHT ON RECORD TO SHOW AS TO WHAT WAS THE GOING RATE OF THE POLYTHENE SHEETS ( OF THE QUALITY SUPPLIED ) AT THE RELEVANT TIME. THERE IS EVEN NO INDICATI ON OF THE GROSS PROFIT DISCLOSED BY THE OTHER SUPPLIERS OF SUCH GOODS TO THE GOVERNMENT (I.E., AT DGS & D RATE /S ), AS WELL AS QUA THE INDIRECT, A DMINISTRATIVE EXPENDITURE INCURRED, IN - AS - MUCH AS THESE ARE THE DETERMINANTS OF NET INCOME. EVEN THE GROSS PROFIT RATE EARNED BY THE ASSESSEE HAS NOT BEEN DISCLOSED. THE DIFFERENCE BETWEEN 4 ITA NO. 240/PAT/2013 (A.Y. 2009 - 10) PINTU KR. JAIN, PROP. VS. ITO THE CONTRACTED AND THE DGS&D RATE , AS STATED, IS EVEN OTHERWISE TOO MEAGER TO BE OF ANY CONSEQUENCE . TRUE, T HE SUPPLIES ARE MADE ON A N EMERGENT BASIS . THE SAME ARE , YET , ONLY BY PURCHASING THE GOODS FROM THE MARKET , OR PERHAPS EVEN BY GETTING THE SAME FABRICATED FROM A MANUFACTURER. IT IS, THUS, DIFFICULT TO S AY AS TO WH Y THE DOCUMENTS ARISING IN THE C OURSE OF TRADE WERE NOT SO , OR NOT MAINTAINED . THE SAME COULD WELL BE IN THE COURSE OF I NTE R - STATE TRADE, AS WHERE A LARGE SUPPLIE R IS BASED OUTSIDE THE STATE , WHO COULD THOUGH SUPPLY THE GOODS AT A COMPETITIVE RATE O N A SHO RT NOTICE. TR ADE , WH ETHER INTER OR INTRA STATE, ENTAILS TAXES , SO THAT THE NON - MAINTENANCE OF ANY DOCUMENTS OR BOOKS OF ACCOUNT, IS ITSELF INCOMPREHENSIBLE. NO GROUND FOR CONSIDERING THE ESTIMATION OF INCOME AT 10% A S EXCESSIVE STAND S ALSO FURNISHED AT ANY STAGE. ON THE CONTRARY, THE PROXIMITY OF THE SUPPLY RATE AND THE DGS&D RATE, AS FUR NISHED BY THE ASSESSEE, UNDERSCORES THE REASONABILITY OF THE AWARDED RATE AND, CONSEQUENTLY, OF A NORMATIVE RATE OF PROFIT. THE SAME, RATHER, SHOWS THAT OTHER THAN THE SUPP LIES BEING MADE ON A SHORT NOTICE, THE NATURE OF THE ASSESSEES TRADE IS NOT MUCH DIFFERENT FROM THAT OF ANY OTHER REGULAR TRADER, SUPPLYING GOODS ON A CONTRACTUAL BASIS. WE , IN VIEW OF THE FOREGOING , FIND NO REASON FOR DISTURBING THE A.O.S ESTIMAT E , WHIC H CAN BE SAID TO BE REASONABLE UNDER THE CIRCUMSTANCES . WE HAVE IN SO DECIDING ALSO BORNE IN MIND THE DECISION BY THE APEX COURT IN THE CASE OF BRIJ BHUSHAN L AL PARDHUMAN KUMAR V. CIT [1978] 115 ITR 524 (SC) , WHEREIN A FLAT RATE OF (10%) OF THE RELEVANT RE CEIPT WAS UPHELD, EMPHASIZING EXERCISE OF J UDICIAL DISCRIMINATION AND A REASONABLE NEXUS OF THE ESTIMATE WITH THE AVAILABLE MATERIAL AND CIRCUMSTANCES OF THE CASE, AS WELL AS THE DECISION IN T.O. ABRAHAM & CO. (SUPRA) , WHERE, AGAIN, A RATE OF 10% WAS, UND ER SIMILAR CIR CUMSTANCES AS TO NON - PRODUCTION OF BOOKS OF ACCOUNT, CONSIDERED PROPER BY THE TRIBUNAL , AND UPHELD BY THE HONBLE COURT. WE DECIDE ACCORDINGLY. 5 ITA NO. 240/PAT/2013 (A.Y. 2009 - 10) PINTU KR. JAIN, PROP. VS. ITO 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED BY LISTING THE RESULT ON THE NOTICE BOARD OF THE BENCH UNDER RULE 34 ( 4 ) OF THE APPELLATE TRIBUNAL RULES, 1963. SD/ - SD/ - ( A. D. JAIN ) ( S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER DATED : 28 .05.2015 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - PATNA 5. , , / DR, ITAT, PATNA 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, PATNA