M/s Ganesh Ram Dokania, Patna V. JCIT-Range-1, Bhagalpur, Bhagalpur

ITA 240/PAT/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4674 (ITAT-PATNA)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 12-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY KUMAR
• Assessee Lawyers: MANISH RASTOGI
• Keywords: Rejection of books of accounts; Depreciation; Search and seizure; Opportunity of being heard
• Section: 153A; 250; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH , PATNA BEFORE SHRI CHANDRA MOHAN GARG, J M AND SHRI L .P. SAHU, AM ITA NO. 240 / PAT /20 18 ( ASSESSMENT YEAR :201 0 - 201 1 ) M/S GANESH RAM DOKANIA, FLAT NO.207, BASUDEO VIHAR APARTMENT, NAGESHWAR COLONY BORING ROAD, PATNA - 800001 VS. JCIT, RANGE - 1, BHAGALPUR PAN NO. : A A DFG 1795 P ( APPELLANT ) .. ( RESPONDENT ) AS SESSEE BY : SHRI MANISH RASTOGI , ADV REVENUE BY : SHRI ABHAY KUMA R , CITDR DATE OF HEARING : 2 7 /06/2019 DATE OF PRONOUNCEMENT : 26 /07/2019 O R D E R PER BENCH : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , BHAGALPUR , DATED 20.03.2013 FOR THE ASSESSMENT YEAR 201 0 - 201 1 ON THE FOLLOWING GROUNDS OF APPEAL : - 1 FOR THAT THE COMMISSIONER OF INCOME - TAX (APPEALS), BHAGALPUR, ['TH E CIT(A)'] ERRED ON FACTS AND IN LAW IN DISMISSING THE APPEAL FILED BY THE APPELLANT BY CONFIRMING THE ASSESSMENT ORDER PASSED BY THE JOINT COMMISSIONER OF INCOME TAX, RANGE - 1, BHAGALPUR. ('THE A.O'), ASSESSING THE APPELLANT AT AN INCOME OF RS 5,34,18,198/ - , AS AGAINST RETURNED INCOME OF RS 4,70,24,428/ - , UNDER SECTION 143(3)/144 OF THE INCOME TAX ACT, 1961, ('THE ACT'). 2 FOR THAT THE LEARNED CIT(A) HAS ERRED IN ARBITRARILY CONFIRMING THE ESTIMATION OF INCOME @7% OF THE GROSS RECEIPTS, RESULTING IN MAKING ADDITION OF RS 63,93,770/ - WHICH IS WRONG, ILLEGAL AND UNJUSTIFIED. 3 FOR THAT THE LEARNED CIT(A) HAS ERRED IN ARBITRARILY CONFIRMING THE REJECTION OF THE BOOKS OF ACCOUNTS UNDER SECTION 145(3) OF THE ACT WHICH IS WRONG, ILLEGAL AND UNJUSTIFIED. 4 FOR TH AT THE LEARNED CIT(A) HAS ERRED IN NOT GOING IN THE MERITS OF THE ADDITION MADE BY THE ASSESSING OFFICER AND HAS WRONGLY DISMISSED THE APPEAL ON FLIMSY GROUND, WHICH IS WRONG, ILLEGAL AND UNJUSTIFIED. ITA NO . 240 / PAT /201 8 2 5 FOR THAT THE LEARNED CIT(A) HAS ERRED IN NOT ALLOWIN G PROPER OPPORTUNITY OF BEING HEARD, WHICH IS WRONG, ILLEGAL AND UNJUSTIFIED. 6 THAT THE WHOLE ORDER PASSED BY THE CIT(A) IS BAD IN FACTS AND LAW. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM WITH FIVE PARTNERS AND DURING THE FINANCIAL YEAR 2009 - 2010, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS. THE ASSESSEE FILED ITS RETURN OF INCOME DECLAR ING TOTAL INCOME OF RS. 4,70,24,428/ - ON 10.02.2011 . THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. THE GROSS RECEIPTS FROM CONTRACT BUSINESS WERE DISCLOSED AT RS.88,84,13,626/ - AND SALARY PAID TO PARTNERS WAS CLAIMED AT RS.35,090/ - ONLY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE TO THE ASSESSEE AND IN RESPONSE TO THE SAME, THE ASSESSEE FILED BOOKS OF ACCOUNTS. LD. AR OF THE ASSESSEE CATEGORICALLY STATED BEFORE THE AO THAT NO STOCK REGISTER WAS MAINTAINED BY THE ASSESSEE FOR CONTRACT WORKS AND MAINTENANCE OF STOCK REGISTER IS NOT POSSIBLE CONSIDERING THE NATURE AND VOLUME OF THE BUSINESS OF THE ASSESSEE. IN AUDIT REPORT THE AUDITOR HAD ALSO MADE COMMENTS REGARDING QUANTITATIVE DETAILS OF OPENING/ CLOSING/PURCHASES DURING THE YEAR AND THE AO ASKED TO THE ASSESSEE REGARDING EXPLANATION OF OPENING WORK - IN - PROGRESS AND CLOSING WORK - IN - PROGRESS HOW HE HAS ESTABLISHED. THE AR OF THE ASSESSEE WAS UNABLE TO CLARIFY AND PRODUCE ANY BASIS FOR VALUATION OF OP ENING AND CLOSING WORK - IN - PROGRESS AND NO ANY QUANTITATIVE DETAILS OF ITA NO . 240 / PAT /201 8 3 ANY STOCK COULD BE FURNISHED BY THE ASSESSEE. THEREFORE, THE AO CONCLUDED THAT THE STOCK DISCLOSED IN THE PROFIT AND LOSS ACCOUNT HAD NO ANY BASIS. FURTHER, THE AO ASKED TO THE ASSESSEE FOR PRODUCING COMPLETE BOOKS OF ACCOUNTS AND BILLS AND VOUCHERS IN SUPPORT OF HIS CLAIM IN THE INCOME AND EXPENDITURE ACCOUNT BUT NO VOUCHERS FOR MATERIAL PURCHASED AND BASIS OF VALUATION OF STOCK WERE PRODUCED. THE AO FURTHER ISSUED NOTICE FOR VERIFICATIO N OF THE SALARY EXPENSES BUT IT WAS ALSO REMAINED UNVERIFIED. ACCORDINGLY, IN VIEW OF THE ABOVE FACTS HE CONCLUDED THAT THE TRUE PROFIT CANNOT BE ARRIVED AT FROM THE BOOKS OF ACCOUNTS PRODUCED AND SUBMITTED, THEREFORE, THE AO REJECTED THE BOOKS OF ACCOUNTS U/S.145(3) OF THE ACT AND ESTIMATED THE TOTAL INCOME OF THE ASSESSEE AND FRAMED ASSESSMENT U/S.144 OF THE ACT, 1961. THE AO ALSO CONSIDERED OTHER COMPARABLE CASE S BEFORE APPLYING 7% OF THE NET PROFIT RATE. THEREFORE, THE AO CALCULATED THE TOTAL TAXABLE IN COME AS UNDER : - GROSS RECEIPT FROM CONTRACT WORKS AS DISCLOSED : RS. 88,84,13,630 NET PROFIT ESTIMATED @7% OF GROSS RECEIPTS : RS. 6,21,88,954 DISCLOSED LESS: I) SALARY TO PARTNERS : RS.35,090/ - II) DEPRECIATION : RS.90,48,626 RS. 90,83,716 RS.5,31,05,238 ADD: OTHER INCOME RS. 03,12,960 TOTAL INCOME RS.5,34,18,198/ - DEDUCTION UNDER CHAPTER VIA NIL TOTAL TAXABLE INCOME: RS.5,34,18,198/ - 3. FEELING AGGRIEVED FROM THE ORDER OF AO, THE ASSESSEE APPEALED BEFORE THE CIT( A) . THE CIT(A) FIXED THE CASE FOR HEARING ON DIFFERENT DATES BUT NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY WRITTEN ITA NO . 240 / PAT /201 8 4 SUBMISSION WAS FILED BEFORE THE CIT(A). THEREFORE, THE CIT(A) DECIDED THE CASE ON THE BASIS OF MATERIAL FACTS AVAILABLE BEFORE HIM AN D UPHELD THE ACTION OF AO. 4. AGGRIEVED FROM THE ORDER OF CIT(A) , THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 5. LD. AR BEFORE US FILED WRITTEN SYNOPSIS WHICH READ AS UNDER : - 1. THE APPELLANT A PARTNERSHIP FIRM IS INTER - AL IA ENGAGED IN CARRYING ON THE BUSINESS OF CIVIL CONTRACTS. ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED UNDER SECTION 143(3)/144 OF THE INCOME TAX ACT, 1961, FTHE ACT'), ON 20 - 03 - 2013, AT AN INCOME OF RS 5,34,18,198/ - AS AGAINST RETURNED OF IN COME OF RS 4,70,24,428/ - , THEREBY, MAKING AN ADDITION OF RS 63,93,770/ - . 2. DURING THE COURSE OF ASSESSMENT THE BOOKS OF ACCOUNTS OF THE APPELLANT WAS REJECTED UNDER SECTION 145(3) OF THE ACT IN THE GROUND THAT THE NO STOCK REGISTER WAS MAINTAINED AND THE EX PENSES VOUCHERS WERE NOT PRODUCED AND THE INCOME FOR THE YEAR UNDER CONSIDERATION WAS ESTIMATED @7% OF THE GROSS RECEIPTS, HOWEVER, DEDUCTION OF DEPRECIATION AND SALARY TO PARTNERS WAS ALLOWED. 3. THE COMMISSIONER (APPEALS) IN THE IMPUGNED ORDER CONFIR MED THE REJECTION OF THE BOOKS OF ACCOUNTS ON THE GROUND THAT STOCK REGISTER WAS NOT MAINTAINED BY THE APPELLANT. 4. IT IS IN THIS REGARD RESPECTFULLY SUBMITTED THAT PURSUANT TO SEARCH AND SEIZURE OPERATION WAS CONDUCTED UNDER SECTION 132(1) OF THE ACT ON 01 - 08 - 2014, POST SEARCH ASSESSMENTS WERE COMPLETED UNDER SECTION 153A OF THE ACT. INCOME FOR THE YEAR UNDER CONSIDERATION WAS ESTIMATED @8% OF THE GROSS RECEIPTS AFTER REJECTING THE BOOKS OF ACCOUNTS ON THE ALLEGATION THAT THE BOOKS OF ACCOUNTS WERE NOT P RODUCED IRRESPECTIVE OF THE FACT THAT THE SAME WAS DULY PRODUCED DURING THE COURSE OF ASSESSMENT. COPY OF THE SAID ASSESSMENT ORDER PASSED UNDER SECTION 153A/144 OF THE ACT DATED 27/12/2016 PLACED AT PAGE 73 TO 75 OF THE PAPER BOOK - II, (THE PB - II'). 5. THE BOOKS OF ACCOUNTS ALONGWITH THE SUPPORTING DOCUMENTS WERE AGAIN PRODUCED BEFORE THE COMMISSIONER (APPEALS), ('THE CIT(A)') AND ALSO BEFORE THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS. AFTER VERIFICATION NO DISCREPANCY HAS BEEN POINTED OUT BY THE AS SESSING OFFICER IN THE REMAND REPORT SUBMITTED TO THE CIT(A), COPY PLACED AT PAGE 66 TO 69 OF PB - II. ITA NO . 240 / PAT /201 8 5 6. IT IS RESPECTFULLY SUBMITTED THAT THE LEARNED CIT(A) PLACING RELIANCE ON A LARGE NUMBER OF JUDICIAL PRONOUNCEMENTS HAS HELD THAT THE PROVISIONS OF SECT ION 145(3) OF THE ACT HAS WRONGLY BEEN INVOKED, AS SUCH, THE BOOKS OF ACCOUNTS HAVE WRONGLY BEEN REJECTED, REFER PAGE 15 TO 21 OF THE CIT(A) ORDER, PLACED AT PAGE 42 TO 48 OF PB - II, RELEVANT PORTION IN VERBATIM IS REPRODUCED AS UNDER; PAGE 20. 2 ND LAST PA RA OF CIT(A) ORDER; ' THESE DECISIONS LEND SUPPORT TO THE PROPOSITION THAT THE AO IS BOUND BY THE ASSESSEE'S CHOICE OF ACCOUNTING REGULARLY EMPLOYED UNLESS IT CAN BE SAID THAT THE METHOD OF ACCOUNTING FO LLOWED BY THE A S SESSEE DOES NOT REILECT THE TRUE INCO ME. THE AO AFTER A CAREFUL SCRUTINY, CAME TO THE CONCLUSION THAT THE SYSTEM OF ACCOUNTING EMPLOYED BY THE ASSESSEE IS CONSISTENT AND REGULAR AND THE AO, THEREFORE, IS NOT ENTITLED TO INTERFERE WITH THE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE, UNLESS IT IS POSSIBLE FOR HIM TO POINT OUT INHERENT DEFECTS IN THE BOOKS OF ACCOUNT AND BRING THE CASE WITHIN THE TERMS OF S. 145 OF THE I.T. ACT. IN THE LIGHT OF THE ABOVE DISCUSSION, IN THE CASE UNDER CONSIDERATION, IT IS OBSERVED THAT THE ASSESSING OFFICER H AS FAILED TO POINT OUT ANY SINGLE DEFECT AS SUCH IN THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. HE HAS ALSO FAILED TO POINT OUT ANY INHERENT DEFECT IN BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THE ASSESSING OFFICER HAS SIMPLY REJECTED THE BOOKS OF ACCOUNT ON THE BASIS THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUISITION OF PRODUCTION OF BOOKS OF ACCOUNT, THAT ALSO STANDS NEGATED IN THE COURSE OF REMAND REPORT PROCEEDINGS, THAT IN ITSELF ALONE WOULD NOT VEST HIM WITH THE POWER TO REJECT THE BOO K RESULTS SUMMARILY. ON THE CONTRARY, THE ASSESSEE HAS FURNISHED THE REASONS FOR FALL IN G.P. FORM THE ASSESSMENT ORDER ON RECORD, IT IS CLEARLY OBSERVED THAT THE AO HAS NOT EXPRESSED OR POINTED OUT ANY DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCOUNT IN QU ESTION. THE AO HAS ALSO NOT BROUGHT ON RECORD ANY MATERIAL FACT TO SUPPORT HIS CONCLUSION THAT THE BOOKS OF ACCOUNT SO MAINTAINED BY THE APPELLANT IS INCORRECT AND AS MUCH AS INCOMPLETE. THE ONLY REASON FOR REJECTION BOOKS OF ACCOUNT IS THAT THE SAME HAS N OT BEEN PRODUCED IN THE COURSE OF ASSESSMENT PROCEEDINGS BY THE APPELLANT WHICH STANDS NEGATED BY HIS OWN REPORT CALLED FOR UNDER SUB - SECTION 4 OF SECTION 250 OF THE ACT. 7. IT IS IN THIS REGARD RESPECTFULLY SUBMITTED THAT THE VIEWS OF THE CIT(A) IN RESPE CT OF THE INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT HAS BEEN UPHELD BY THIS HON'BLE TRIBUNAL IN THE APPELLANTS OWN CASE OF THE SAME ASSESSMENT YEAR UNDER ITA NO . 240 / PAT /201 8 6 CONSIDERATION IN IT(SS)AS NO. 26 TO 32/PAT/2017, DATED 09 - 03 - 2018, COPY OF THE ORDER PLACED AT PAGE 1 - 18 OF THE PB - II. 8. IN VIEW OF THE FOREGOING IT IS RESPECTFULLY SUBMITTED THAT APPLYING THE PRINCIPLES OF TELESCOPING THE REJECTION OF THE BOOKS OF ACCOUNTS MAY KINDLY BE DELETED AS IN THE SUBSEQUENT PROCEEDINGS THE REJECTION OF BOOKS OF ACCOUNT S HAS BEEN HELD TO BE UNJUSTIFIED. ESTIMATION OF INCOME (5) 7% OF THE GROSS RECEIPTS: 9. WITHOUT PREJUDICE TO THE SUBMISSION THAT THE PROVISIONS OF SECTION 145(3') OF THE ACT CANNOT BE INVOKED TO REJECT THE BOOKS OF ACCOUNTS IN ABSENCE OF ANY DEFECTS, IT IS RESPECTFULLY SUBMITTED THAT THE ASSESSING OFFICER HAS VAGUELY ESTIMATED THE NET PROFIT @ 7% OF THE GROSS RECEIPTS AND THE SAID ESTIMATION HAS NO BASIS WHICH IS FORTIFIED FORM THE FACT THAT IN THE SUBSEQUENT PROCEEDINGS AND ON THE SAME SET OF FACTS TH E INCOME HAS BEEN ESTIMATED @8% OF THE GROSS RECEIPTS. 10 . IT WOULD KINDLY BE APPRECIATED THAT LAW IN RESPECT OF BEST JUDGMENT ASSESSMENTS IS SETTLED THAT PROVIDES THAT THERE IS AN ELEMENT OF GUESSWORK IN BEST JUDGMENT ASSESSMENT BUT SUCH GUESS WORK HAS T O BE ON THE BASIS OF SOME DEFINITE MATERIAL REASONS ON RECORD. IT IS ALSO WELL SETTLED THAT IN CASES OF BEST JUDGMENT PAST RECORDS ARE THE GUIDING FACTORS. KIND ATTENTION IN THIS REGARD IS DRAWN TO THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT, DEL IVERED IN THE CASE OF SHREE AMBIKAJI RICE MILLS VS CIT, REPORTED IN 192 ITR 189, WHEREIN, IT HAS BEEN HELD THAT WHERE THE AO RESORTS TO THE BEST JUDGMENT HE HAS TO IT IS OBLIGATORY ON HIS PART TO DISCLOSE THE BASIS FOR THE SAME AND THE AO IS NOT ALLOWED TO ACT ON MERE SUSPICION, SURMISES AND CONJUNCTURES. IF NO LEGALLY ACCEPTABLE BASIS COULD BE TRACED OUT IN THE ORDER MAKING THE BEST JUDGMENT OR DETERMINING THE ESTIMATED INCOME, THEN IN LAW SUCH DETERMINATION OF INCOME CANNOT BE SUSTAINED. IT HAS FURTHER BE EN HELD BY THE HON'BLE COURT AS UNDER; '6............................. ANY PRESUMPTION OF THE NATURE ENVISAGED BY THE I TO WILL BE CONTRARY TO THE MAXIM OMNIA PRAESUMUNTUR RICE EL SOLUMNI T ER ASEO ACTS (ALL ACTS ARE PRESUMED TO HAVE BEEN RIGHTLY AND REGULAR LY DONE).' IT IS RESPECTFULLY SUBMITTED THAT KIND PERUSAL OF BOTH THE ASSESSMENT ORDER WOULD ENVISAGE THAT NO JUSTIFICATION OF ESTIMATION OF INCOME @7% OF THE GROSS RECEIPTS HAS BEEN GIVEN. 11. ATTENTION IN THIS REGARD IS FURTHER DRAWN TO THE ANOTHER RE CENT DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT, DELIVERED IN THE CASE OF PRASAD CONSTRUCTION & CO. VS C I T, REPORTED IN 2017, 388 1TR 579 (PAT HC}, WHEREIN, IT HAS BEEN HELD THAT THE PAST RECORDS OF THE ASSESSEE ARE THE GUIDING FACTOR FOR ITA NO . 240 / PAT /201 8 7 ESTIMATION OF INCOME IN BEST JUDGMENT ASSESSMENTS. TO THE SAME EFFECT ARE THE DECISIONS AS DETAILED UNDER; I. ACIT VS ID MOHD NIZAMUDDIN, REPORTED IN 2014, 65 SOT 143 (JAIPUR TRIB); II. VISHNU PRASAD MAHARWAL VS DCIT, REPORTED IN 2014, 162 TTJ 18 (JAIPUR T RIB)AND III. ITO VS KUNDANMAL SURANA, REPORTED IN 2004, 3 SOT 632 (JODH TRIB). IV. KRISHNA KUMAR SINGHANIA VS DCIT 2018 TAX PUB(DT)0200 KOL TRIB YOUR LORDSHIPS WOULD, THUS, GRATUITOUSLY BE PLEASED TO HOLD THAT THE BOOKS OF ACCOUNTS HAS WRONGLY BEEN REJECTED AND THE ESTIMATION OF INCOME HAS NO BASIS. IT IS THEREFORE HUMBLY PRAYED THAT THE APPEAL OF THE APPELLANT MAY KINDLY BE ALLOWED BY DELETING THE ADDITION CONFIRMED BY THE COMMISSIONER (APPEALS). AND FOR THIS THE APPELLANT SHALL EVER PRAY. 6. LD. AR FURTHER FILED BRIEF SYNOPSIS DATED 25.06.2019 WHICH READS AS UNDER : - 1. WITHOUT PREJUDICE TO THE SUBMISSIONS MADE EARLIER, IT IS RESPECTFULLY SUBMITTED THAT THE APPELLANT IS IN INTER ALIA ENGAGED IN CARRYING ON THE BUSINESS OF CIVIL CONTRACTORS. KIND PERUSAL OF THE ASSESSMENT ORDER PLACED AT PAGE 9 TO 11 OF THE PAPER BOOK - I FILED ALONGWITH THE APPEAL MEMO, ('THE PB - I'), WOULD ENVISAGE THAT THE APPELLANT HAD RETURNED INCOME OF RS 4.7 CRORES ON A GROSS RECEIPTS OF RS 88.84 CRORES FROM CIVIL CONTRA CT AFTER DEPRECIATION OF RS 90.48 LAKHS. 2 IN THE ASSESSMENT YEAR UNDER CONSIDERATION THE NET INCOME OF THE APPELLANT BEFORE DEPRECIATION HAS BEEN ESTIMATED @7% OF THE GROSS RECEIPTS WHICH HAS ALSO BEEN CONFIRMED BY THE COMMISSIONER (APPEALS) IN THE IMPUG NED ORDER, AS AGAINST NET INCOME OF 6.31 % OF THE GROSS RECEIPTS RETURNED BY THE APPELLANT. ATTENTION IN THIS REGARD IS DRAWN TO THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT DELIVERED IN THE CASE OF SHYAM BIHARI VS CIT, REPORTED IN 345 ITR PAGE 28 3, (HC PAT), WHEREIN, NET PROFIT OF 6% OF THE GROSS TURNOVER IN THE CASE OF THE CIVIL CONTRACTORS HAS BEEN HELD TO BE REASONABLE AND THE HON'BLE HAS FURTHER DIRECTED TO ALLOW DEPRECIATION IN TERMS OF CIRCULAR NUMBER 29 - D(XIX - 14), DATED 31 - 08 - 1965. THE SAID DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IS CONSISTENTLY BEING FOLLOWED EVEN BY THIS HON'BLE BENCH. IT IS IN THIS REGARD HUMBLY SUBMITTED THAT RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE HON'BLE NET PROFIT PERCENTAGE OF 6% OVER THE GROS S RECEIPT FROM CONTRACT WORKS IS APPLIED IN THE APPELLANT'S CASE AND DEPRECIATION IS REDUCED THEREOF THE NET ITA NO . 240 / PAT /201 8 8 PROFIT WOULD GO BELOW THE RETURNED INCOME, WORKING OF WHICH IS AS UNDER; SL.NO PARTICULARS AMOUNT(RS.) I. GROSS RECEIPTS FROM CONTRACT WORKS, PG 9 OF PB - I 888413630 II. NET PROFIT RETURNED AFTER DEPRECIATION, PG 9 OF THE PB - I 47024428 III. ADD: DEPRECIATION, PG 11 OF PB - I 9048626 IV. NET PROFIT BEFORE DEPRECIATION (II+III) 56073054 V. RETURNED NET PROFIT RATIO BEFORE DEPRECIATION [(IV/I)*100] 6.31% VI. NET PROFIT APPLYING NET PROFIT RATIO OF 6% BEFORE DEPRECIATION (I*6%) 53304818 VII. NET PROFIT @6% AFTER REDUCING DEPRECIATION (VI - III) 44256192 VIII. NET PROFIT ESTIMATED BY THE AO @7% OF THE GROSS RECEIPTS AFTER DEPRECIATION, PG 11 OF PB - I 5 3418198 YOUR LORDSHIPS WOULD, THUS, GRATUITOUSLY BE PLEASED TO HOLD THAT THE NET PROFIT PERCENTAGE OF 7% HAS WRONGLY BEEN APPLIED AND IS FIT TO BE DELETED RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT. IT IS THEREFORE AGAI N HUMBLY PRAYED THAT THE APPEAL OF THE APPELLANT MAY KINDLY BE ALLOWED BY DELETING THE ADDITION CONFIRMED BY THE COMMISSIONER (APPEALS). AND FOR THIS THE APPELLANT SHALL EVER PRAY. 7. APART FROM THE ABOVE, LD. AR FILED PAPER BOOKS WHICH ARE PLACED ON REC ORD. 8 . ON THE OTHER HAND, LD.DR RELIED ON THE ORDER OF LOWER AUTHORITIES AND SUBMITTED THAT THE AO HAS RIGHTLY APPLIED 7% OF THE NET PROFIT FROM THE GROSS RECEIPTS OF THE ASSESSEE CONSIDERING TO THE NATURE OF THE BUSINESS AND OTHER COMPARABLES ALSO. HE A LSO CONTENDED THAT THE CASE LAWS RELIED ON BY THE ASSESSEE IS NOT APPLICABLE IN THE PRESENT FACTS OF THE CASE AND HE ALSO CONTENDED THAT THE ASSESSEE HAS REFERRED TO THE CIRCULAR NO.29 - D(XIX - 14), DATED 31.08.1965 IS APPLICABLE WHERE REQUIRED PARTICULARS HA VE NOT BEEN FURNISHED. ITA NO . 240 / PAT /201 8 9 9 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE NOTICE THAT THE ASSESSEE HAS DECLARED TOTAL RETURNED INCOME AT RS.4,70,24,428/ - . THE AO DETERMINED THE NET PROFIT @ 7% OF THE GROSS RECEIPTS . DUR ING THE COURSE OF HEARING, LD. AR DREW OUR ATTENTION TO THE WRITTEN SYNOPSIS DATED 25.06.2019, WHICH IS REPRODUCED ABOVE , IN WHICH HE HAS MADE A CALCULATION OF THE NET PROFIT DECLARED BY HIM AS STATED ABOVE. ON PERUSAL OF THE ABOVE CHART, WE NOTICE THAT TH E ASSESSEE HAS DECLARED NET PROFIT AFTER DEPRECIATION AT RS.4,70,24,428/ - AND AFTER ADDING BACK TO THE DEPRECIATION I.E. NET PROFIT BEFORE THE DEPRECIATION IS 6.31% AND FURTHER IF NET PROFIT @6% IS TAKEN AS PER THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT CITED ABOVE AS RELIED ON BY THE AR OF THE ASSESSEE AND DEPRECIATION IS DEDUCTED FROM THE NET PROFIT @6%, THE PROFIT WOULD BE RS.4,42,56,192/ - , WHICH IS LESS THAN THE RETURNED INCOME SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME FILED ORIGINALLY. ON PERUSAL OF THE ORDER OF THE AO, WE FIND THAT THE AO HAS APPLIED 7% NET PROFIT OF THE GROSS RECEIPTS AND HE HAS ALSO ALLOWED DEPRECIATION FROM THE NET PROFIT, WHICH COMES TO RS.5,34,18,198/ - . CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES AND THE CASE LAWS RELIED ON BY THE AR OF THE ASSESSEE, THE REVENUE AUTHORITIES ARE DIRECTED TO ACCEPT THE RETURNED INCOME SHOWN BY THE ASSESSEE, WHICH IS MORE THAN AFTER REDUCING THE DEPRECIATION AS PER DECISION CITED BY THE LD. AR OF THE ASSESSEE. ACCORDINGLY, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. ITA NO . 240 / PAT /201 8 10 1 0 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN PURSUANCE WITH RULE 34/4 OF ITAT RULES, 1963 BY PUTTING THE COPY OF THE SAME ON NOTICE BOARD ON 26 /07/2019 AT PATNA. SD/ - ( C.M.GARG ) SD/ - ( L.P.SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER PATNA ; DATED 26 / 0 7 /201 9 PKM , S R.P.S. COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) INCOME TAX APPELLATE TRIBUNAL , PATNA 1. THE APPELLANT - . M/S GANESH RAM DOKANIA, FLAT NO.207, BASUDEO VIHAR APARTMENT, NAGESHWAR COL ONY , BORING ROAD, PATNA - 800001 2. THE RESPONDENT - JCIT, RANGE - 1, BHAGALPUR 3. THE CIT(A), 4. CIT 5. DR, ITAT, PATNA 6. GUARD FILE. //TRUE COPY//