Karnail Singh, Hoshiarpur V. Commissioner of Income Tax, Jalandhar

ITA 247/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0495 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J K PASSI
• Keywords: Opportunity of being heard
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO. 247(ASR)/2015 ASSESSMENT YEAR: 2007-08 SH. KARNAIL SINGH, GOVT. CONTRACTOR, VILL.TOE, P.O:-GHOGRA, TEH. DASUYA, DIST:- HOSHIARPUR. PAN:ABPPS3920F VS. JCIT, HOSHIARPUR CIRCLE, HOSHIARPUR. (APPELLANT) (RESPONDENT) I.T.A NO. 248(ASR)/2015 ASSESSMENT YEAR: 2008-09 SH. KARNAIL SINGH, GOVT. CONTRACTOR, VILL.TOE, P.O:-GHOGRA, TEH. DASUYA, DIST:- HOSHIARPUR. PAN:ABPPS3920F VS. ITO, DASUYA, DIST:- HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. J.K.PASSI (ADV.) RESPONDENT BY: SH. UMESH TAKYAR (DR.) DATE OF HEARING: 30.05.2016 DATE OF PRONO UNCEMENT:15.07.2016 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEAL FILED BY ASSESSEE AGAINST SEPARATE ORDERS OF LEARNED CIT(A), BOTH DATED 20.04.2015 FOR ASST. YEA RS: 2007-08 & 2008- 09 RESPECTIVLEY. ITA NOS.247 & 248 (ASR)/2 015 ASST. YEARS: 2007-08 & 20 08-09 2 2. THE ASSESSEE HAS RAISED SIMILAR GROUNDS OF APPEA L IN THESE APPEALS AND THESE WERE HEARD TOGETHER, THEREFORE, FOR THE S AKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. 3. THE ASSESSEE IS MAINLY AGGRIEVED WITH THE ACTION OF LEARNED CIT(A) BY WHICH HE HAD CONFIRMED APPLICATION OF RATE OF 12 % ON GROSS RECEIPTS FOR DETERMINATION OF HIS NET INCOME WHICH THE ASSES SING OFFICER HAD MADE AGAINST THE DECLARATION PROFIT @ 5% ON GROSS R ECEIPTS. 4. THE BRIEF FACTS OF THE CASES AS NOTED IN ASSESSM ENT ORDER ARE THAT THE ASSESSEE IS A GOVT. CONTRACTOR AND IS ENGAGED I N THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE WHILE FILING THE RETURN OF INCOME DECLARED THE PROFIT @ 5% OF GROSS RECEIPTS. THE ASSESSMENT OF TH E ASSESSEE WAS REOPENED BY RECORDING THE REASONS THAT ASSESSEE HAD DECLARED NET PROFIT @ 5% WHEREAS THE TURN OVER THE ASSESSEE WAS MORE TH AN RS.40 LACS AND THEREFORE, ASSESSEE WAS REQUIRED TO MAINTAIN BOOKS OF ACCOUNT AND GET AUDITED THESE ACCOUNTS. IN THE REASONS RECORDED, IT WAS FURTHER MENTIONED THAT ASSESSEE HAD NEITHER MAINTAINED BOOK S OF ACCOUNT NOR FILED RETURN OF INCOME IN ACCORDANCE WITH PROVISION S OF SEC. 44AD WHERE THE NET PROFIT IS CALCULATED @ 8% OF GROSS RECEIPTS . IN VIEW OF THE ABOVE THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED AFTER APPLYING 12% NET PROFIT RATE. THE ASSESSING OFFICER APPLIED 12% NET PROFIT RATE IN VIEW OF THE HONBLE PUNJAB & HARYANA HIGH COURT JUDGMENT IN THE CASE OF CIT VS. M/S PARBHAT KUMAR CONTRACTOR, REPORTED AT (2010 ) ITR 323 ITR 675 ITA NOS.247 & 248 (ASR)/2 015 ASST. YEARS: 2007-08 & 20 08-09 3 IN ITA 293/2008. THE ASSESSING OFFICER ALSO FOLLOWE D THE HONBLE CHANDIGARH BENCH DECISION OF ITAT IN THE CASE OF M/ S ESS ESS BUILDERS PVT. LTD. IN ITA NO.707/CHNDI/1997 FOR ASST. YEAR 1 993-94. 5. AGGRIEVED WITH THE ORDERS, THE ASSESSEE FILED AP PEALS BEFORE LEARNED CIT(A), WHO ALSO UPHELD THE ACTION OF ASSESSING OFF ICER AND THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE CASE OF M/S PARBHAT KUMAR CONTRACTOR (SUPRA) DECIDED BY HONBLE PUNJAB AND HARYANA HIGH COURT IS NOT APPLICABLE TO THE ASSESSE ES CASE BECAUSE IN THAT CASE THE ASSESSEE WAS MAINTAINING REGULAR BOOK S OF ACCOUNTS AND NET PROFIT WAS ASSESSED @ 12% AFTER DISALLOWANCE OF WAGES & SALARIES FOR LACK OF EVIDENCE AND AFTER REJECTING THE BOOK RESUL TS. THE LEARNED AR FURTHER SUBMITTED THAT THERE WAS NO MATERIAL AVAILA BLE WITH THE ASSESSING OFFICER FOR APPLICATION OF RATE OF 12% TO THE GROSS RECEIPTS. 7. THE LEARNED DR, ON THE OTHER HAND, HEAVILY PLACE D HIS RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS AN UN DISPUTED FACT THAT ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNT AND OFFE RED 5% OF GROSS RECEIPT AS NET PROFIT. IT IS ALSO AN UNDISPUTED FAC T THAT THE TURN OVER OF THE ASSESSEE IN THESE TWO YEARS IS MORE THAN RS.40 LACS, THEREFORE, ITA NOS.247 & 248 (ASR)/2 015 ASST. YEARS: 2007-08 & 20 08-09 4 ASSESSEE WAS REQUIRED TO MAINTAIN BOOKS OF ACCOUNT AND GET THOSE AUDIT AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT. H OWEVER, THE ASSESSEE DID NOT COMPLY WITH THESE PROVISIONS, THEREFORE, AS SESSING OFFICER APPLIED A NET PROFIT RATE OF 12% OF GROSS RECEIPTS TO ESTIM ATE THE INCOME OF ASSESSEE WITHOUT COMPARING PAST HISTORY OF ASSESSEE AND WITHOUT COMPARING SIMILARITIES BETWEEN THE ASSESSEE AND CAS E LAWS RELIED UPON BY HIM. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF TELELINKS VS. CIT, BATHINDA (ITA NO.269 OF 2014) HA S HELD THAT IN THE CASE OF CIVIL CONTRACTORS, WHERE THE BOOKS OF ACCOU NT HAS BEEN REJECTED THE NET PROFIT OF THE ASSESSEE CANNOT BE ESTIMATED ARBITRARILY AND IT HAS TO BE ESTIMATED ON THE BASIS OF CERTAIN CRITERIA. THE HONBLE COURT HAS LAID DOWN THE FOLLOWING CRITERIA FOR DETERMINATION OF NE T INCOME FROM BUSINESS OF A CONTRACTOR. (I) PAST TAX HISTORY OF THE ASSESSEE. (II) ASSESSMENT ORDERS PASSED BY AND ACCEPTED BY TH E DEPARTMENT. (III) THE NATURE OF ASSESSEES BUSINESS. (IV) AN APPRAISAL OF THE VALUE OF THE CONTRACT. (V) PREVAILING ECONOMIC CONDITIONS VIS-A VIS THE AS SESEES BUSINESS. (VI) THE PRICE OF RAW MATERIAL AND LABOURS ETC. (VII) THE RISE IN PRICE INDEX AS NOTIFIED BY THE CE NTRAL GOVERNMENT FROM TIME TO TIME. (VIII) ASSESSMENTS OF OTHER ASSESSEE ENGAGED IN SIM ILAR BUSINESS. THEREFORE, IN VIEW OF THE ABOVE, WE DEEM IT APPROP RIATE TO REMIT THESE CASES TO THE OFFICE OF ASSESSING OFFICER, WHO SHOUL D ASSESS THE INCOME AS NEAR AS POSSIBLE TO THE ACTUAL KEEPING IN VIEW THE ABOVE FACTORS AS LAID ITA NOS.247 & 248 (ASR)/2 015 ASST. YEARS: 2007-08 & 20 08-09 5 DOWN BY HONBLE PUNJAB & HARYANA HIGH COURT. NEEDLE SS TO SAY THAT ASSESSEE WILL BE PROVIDED SUFFICIENT OPPORTUNITY OF BEING HEARD. 9. IN VIEW OF THE ABOVE, THE APPEALS FILED BY ASSES SEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 .07. 2016 SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:15.07.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER