Subash Chandra Padhy, Koraput V. ACIT, Berhampur

ITA 255/CTK/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0754 (ITAT-CUTTACK)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 01-07-2010
• Court: TRIBUNAL
• Department Lawyers: J KHANRADR
• Assessee Lawyers: N ANAND RAO
• Keywords: Depreciation; Application of stay

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 255/CTK/2010 STAY APPLICATION NO.27/CTK/2010 / ASSESSMENT YEAR 2007 - 08 SUBASH CHANDRA PADHY,AUROBINDA NAGAR, JEYPORE, DIST.KORAPUT PAN: AEKPP 8558C - - - VERSUS - ACIT, BER HAMPUR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI N.ANAND RAO, AR / FOR THE RESPONDENT: / SHRI J.KHANRA,DR / ORDER . . . , , SHRI K.S.S.PRA SAD RAO, JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST ORDER DT.28.4.2010 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE APPEAL RAISES TWO ISSUES NAMELY, (1) ESTIMATION OF INCOME AND (2) NON - ALLOWAN CE OF DEPRECIATION WHILE COMPUTING THE INCOME. 3. THE ASSESSEE DERIVES INCOME FROM EXECUTION OF CIVIL CONTRACT WORK S . THE ASSESSING OFFICER ON THE OBSERVATION THAT THE ASSESSEE FAILED TO PRODUCE ALL RELEVANT BOOKS OF ACCOUNT, BILLS AND VOUCHERS IN SUPPOR T OF CLAIM OF LABOUR CHARGE AND OTHER CHARGES DEBITED TO THE P & L ACCOUNT, MATERIAL PURCHASE REGISTER, LABOUR PAYMENT REGISTER, DETAILS OF CURRENT LIABILITIES ETC., BY INVOKING PROVISIONS OF SECTION 145(3) RESORTED TO ESTIMATE THE INCOME BY ADOPTING 8% OF THE GROSS CONTRACT RECEIPTS OF 1,38,30,714 . IN APPEAL, THE LEARNED CIT(A) ESTIMATED THE NET PROFIT @8% ON THE GROSS RECEIPTS MINUS VAT/SALES TAX AND ALLOWED PARTIAL RELIEF. HOWEVER, AS REGARDS CLAIM OF DEPRECIATION, THE LEARNED CIT(A) DID NOT ALLOW THE SAME. I.T.A.NO. 255/CTK/2010 STAY APPLICATION NO.27/CTK/2010 2 4. THE LEARNED AR OF THE AS SESSEE CONTENDED BEFORE US THAT ADOPTION OF NET PROFIT @8% ON THE GROSS RECEIPTS IS UNJUST, HIGH AND ARBITRARY. HE RELIED ON THE DECISION OF ITAT, CUTTACK BENCH IN THE CASE OF JAMI RAVI SHANKAR V. ACIT IN ITA NO.205/CTK/2010 DT.15.11.2010, WHEREIN THE TRI BUNAL HAS DIRECTED TO ADOPT 6% NET PROFIT ON GROSS RECEIPTS. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSING OFFICER HAS ADOPTED 8% NET PROFIT ON GROSS RECEIPTS BASED ON EARLIER YEAR WHERE IN TH E SAME RATE OF NET PROFIT HAD BEEN ADOPTED. THE ITAT, CUTTCK BENCH IN THE CASE OF JAMI RAVI SHANKAR V. ACIT (SUPRA) HAS ADOPTED 6% NET PROFIT ON GROSS RECEIPTS. IT IS NOT DISPUTED THAT IN ABSENCE OF PROPER BOOKS OF ACCOUNTS, THE BOOK RESULT CANNOT BE ACCEP TED AS CORRECT AND THE INCOME HAS TO BE ON ESTIMATION. CONSIDERING THE NATURE OF WORKS AND KEEPING IN VIEW THE VARIOUS EXPENDITURES AS REVEALED FROM THE PROFIT & LOSS ACCOUNT, COPY OF WHICH IS PLACED ON RECORD, WE CONSIDER IT REASONABLE TO ESTIMATE THE INC OME BY REDUCING THE INCOME COMPUTED BY THE LEARNED CIT(A) BY 1,00,000 ON AD HOC BASIS, WHICH WILL MEET THE ENDS OF JUSTICE AND DIRECT THE ASSESSING OFFICER TO CARRY OUT THE SAME. 6. AS REGARDS THE CLAIM OF DEPRECIATION FROM THE ESTIMATED INCOME, SINCE W E HAVE ESTIMATED THE INCOME BY MAKING ADDITION AS STATED SUPRA TO THE INCOME RETURNED BY THE ASSESSEE DEDUCTING VARIOUS EXPENSES INCLUDING DEPRECIATION, ALLOWANCE OF DEPRECIATION AGAIN FROM THE INCOME NOW ESTIMATED WOULD BE A DOUBLE DEDUCTION. THEREFORE, THE CLAIM OF THE ASSESSEE AS RAISED IN THIS REGARD IS REJECTED. THE DECISION OF ITAT,CUTTACK BENCH, RELIED ON THE ASSESSEE, IN THE CASE OF M/S.BAIDEHI CONSTRUCTIONV. ITO IN ITA NO.359/CTK/2006 AND IN THE CASE OF M/S.SUBASH CHANDRA SWAIN V. ITO IN ITA N O.235/CTK/2006 DT.19.7.2007 WHEREIN THE ITAT HAS ALLOWED DEPRECATION FROM THE INCOME ESTIMATED @8% OF THE GROSS RECEIPTS AFTER DEDUCTION OF SALES TAX, ARE NOT APPLICABLE TO THE PRESENT CASE, SINCE I.T.A.NO. 255/CTK/2010 STAY APPLICATION NO.27/CTK/2010 3 ADDITION HAS BEEN MADE TO THE INCOME RETURNED AFTER DEDUCTI ON OF VARIOUS EXPENSES INCLUDING DEPRECIATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. IN VIEW OF DECIDING THE APPEAL ITSELF, THE STAY PETITION BECOMES INFRUCTUOUS AND IS DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 14 TH MARCH, 2011 SD/ - SD/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUD ICIAL MEMBER. ( ) DATE: 14 TH MARCH, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : S UBASH CHANDRA PADHY,AUROBINDA NAGAR, JEYPORE, DIST.KORAPUT 2 / THE RESPONDENT: ACIT, BERHAMPUR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 255/CTK/2010 STAY APPLICATION NO.27/CTK/2010 4