DCIT, CIR-10(2), KOLKATA, Kolkata V. M/s Skyscraper Projects Pvt. Ltd., Kolkata

ITA 2439/KOL/2019

AI Insights

The case involves the Deputy Commissioner of Income Tax (DCIT), Circle-10(2), Kolkata as the appellant and M/s Skyscraper Projects Pvt. Ltd as the respondent. The dispute arose from the reassessment order for the assessment year 2007-08, where the Assessing Officer estimated the profit from civil construction business at 8% of total turnover, leading to an addition of Rs. 11,037,447 to the income declared by the assessee. The CIT(A) had deleted this addition, which was contested by the Revenue in the Tribunal. The Tribunal, after reviewing the submissions and the method of estimation used by the Assessing Officer, reversed the CIT(A)'s decision and upheld the addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128347 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-01-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 13-11-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: FILING ANY GROUNDS OF APPEAL. UNDER THESE GIVEN FACTS
• Keywords: Question of law
• Section: 68; 148; 144; 143(1)

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘सी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA Įी संजय शमा[, ÛयाǓयक सदèय एवं Įी मनीष बोरड, लेखा सदèय के सम¢ Before Dr. Manish Borad, Accountant Member and Shri Sonjoy Sarma, Judicial Member I.T.A No.2439/Kol/2019 Assessment year: 2007-08 DCIT, Circle-10(2), Kolkata............................................................................ Appellant vs. M/s Skyscraper Projects Pvt. Ltd.......................................................... .... Respondent 53B, Townshend Road, Kolkata - 700025. [PAN: AAJCS1656G] Appearances by: Smt. Ranu Biswas, Addl. CIT, appeared on behalf of the appellant. None appeared on behalf of the Respondent. Date of concluding the hearing : January 31, 2023 Date of pronouncing the order : February 07, 2023 आदेश / ORDER मनीष बोरड, लेखा सदèय ɮवारा / Per Manish Borad, Accountant Member: This appeal filed by the Revenue pertaining to the Assessment Year (in short “AY”) 2007-08 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by Commissioner of Income Tax (Appeals)-4, Kolkata [in short ld. “CIT(A)”] dated 19.08.2019 which is arising out of the assessment order framed u/s 147/143(3) of the Act dated 30.03.2015. 2. The delay in filing of this appeal is 3 days. In the course of hearing, the Revenue was asked to give reasons for such delay and the same were duly appraised by the ld. DR and the same are found to be reasonable. We therefore, condone the delay and admit the appeal for adjudication. 3. The revenue has raised the following grounds of appeal: I.T.A No.2439/Kol/2019 Assessment year: 2007-08 M/s Skyscraper Projects Pvt. Ltd 2 “1. That the ld. CIT(A) has erred in law as well as fact by deleting the addition of Rs.1,80,49,756/- made on account of estimation of profit on civil construction business. 2. That the appellant craves to add, delete or modify any of the substantial question of law before or at the time of hearing.” 4. Brief facts of the case are that the assessee is private limited company and engaged in the business of civil construction, labour suppliers. Income of Rs.70,12,309/- declared in the return of income filed on 30.10.2008 for assessment year 2007-08. Return processed u/s 143(1) of the Act. Thereafter, notice u/s 148 of the Act was issued for reopening the assessment after duly recording the reasons. Reassessment proceedings were concluded after accepting profit of civil construction @8% based on the past records from A.Y 2010-11 to 2012-13 and as against the net profit of Rs.70,12,309/- declared by the assessee, the ld. Assessing Officer computed the income of Rs.1,80,49,756/- thereby making an addition of Rs.11037447/- on account of estimated net profit. The ld. Assessing Officer also made an addition for unsecured loan u/s 68 of the Act at Rs.2,60,000/-. Income assessed at Rs.183,07,960/-. 5. Aggrieved, assessee preferred appeal before the ld. CIT(A) and succeeded. 6. Now, the Revenue is in appeal before this Tribunal. The ld. DR vehemently argued supporting the order of the Assessing Officer. On the other hand, there is no representation on behalf of the assessee even though sufficient opportunity has been provided on multiple occasions. 7. We have heard the ld. DR and perused the records placed before us. The findings of the ld. CIT(A) deleting the addition made by the Assessing Officer on account of estimation of profit in civil I.T.A No.2439/Kol/2019 Assessment year: 2007-08 M/s Skyscraper Projects Pvt. Ltd 3 construction business carried by the assessee is in dispute before us. We notice that in the grounds of appeal, the Revenue has stated the figure of addition of Rs.1,80,49,756/-. We however find that this figure is not correct since the assessee has disclosed a total income of Rs.70,12,309/- and the Assessing Officer has estimated the profit @8% of total turnover of Rs.22.56 crores, thereby arriving at a estimated profit of Rs.180,49,756/-. Therefore, effective addition made on account of estimated net profit is only Rs.11037447/-. Now, as regards the Revenue’s grievance ld. CIT(A) erred in deleting the said addition of estimated profit made by the Assessing Officer, we notice that the ld. CIT(A) after referring to plethora of judgments allowed the assessee’s appeal observing as follows: “In the above mentioned case the books of account were available with the AO however - No comparable cases were considered, No part history of the assessee concern was considered, No defects in the books of accounts were pointed out, And profit at 8% was determined. No discussion whatsoever has been made as to the basis of profit at 8%. Therefore, the addition made is devoid of any merit and needs to be deleted. From the above, it can be seen that assessment has been completed on the basis of material which was not subject matter of reopening of the assessment. Books of accounts were not rejected and assessment has not been completed u/s. 144 as enunciated in the I. T. Act, 1961. NO basis for 8% of gross receipt as profits of the business has been given and therefore, the addition cannot be sustained, therefore, the ground is Allowed. 8. From the perusal of the above finding, we notice that the ld. CIT(A) has mentioned that the assessment has not been completed u/s 144 of the Act, the ld. Assessing Officer has not given any basis for estimating the profits, the ld. Assessing Officer has not discussed about any comparables/past history and nor has pointed out any I.T.A No.2439/Kol/2019 Assessment year: 2007-08 M/s Skyscraper Projects Pvt. Ltd 4 defect in the books. We failed to find any merit in the findings of the ld. CIT(A) since the ld. Assessing Officer has called for necessary details from the assessee and there is regular appearance of the authorized representative from assessee’s side and various details have been filed. The ld. Assessing Officer has referred to the requests made by the authorized representative of the assessee for estimating the net profit @8% which has been applied in the assessee’s case for assessment years 2010-11, 2011-12 and 2012-13. The ld. Assessing Officer keeping in mind the same yardstick referred to the submissions filed by the assessee and has computed the net profit @8%. Reopening the assessment has not been disputed by the assessee by filing any grounds of appeal. Under these given facts and circumstances of the case, we fail to find any merit in the findings of the ld. CIT(A) and the same is revered and the action of the Assessing Officer estimating net profit @8% of the total turnover of the assessee is found to be justified. The addition of Rs.11037447/- made by the Assessing Officer on account of estimated net profit is confirmed and ground no.1 raised by the Revenue for the correct amount of addition of Rs. 11037447/- is allowed. Ground No.2 is general in nature which needs no adjudication. 9. In the result, the appeal of the Revenue is allowed. Kolkata, the 7 th February, 2023. Sd/- Sd/- [संजय शमा[ /Sonjoy Sarma] [मनीष बोरड / Manish Borad] ÛयाǓयक सदèय /Judicial Member लेखा सदèय /Accountant Member Dated: 07.02.2023. RS I.T.A No.2439/Kol/2019 Assessment year: 2007-08 M/s Skyscraper Projects Pvt. Ltd 5 Copy of the order forwarded to: 1. DCIT, Circle-10(2), Kolkata 2. M/s Skyscraper Projects Pvt. Ltd 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches