Mayuree Builders, Ganjam V. ITO, Berhampur

ITA 255/CTK/2013

• Counselvise Citation: 25522114 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 16-11-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 18-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHOVAN KRISHNA SAHU
• Assessee Lawyers: A K PADHI
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK B ENCH, CUTTACK , . . , BEFORE SHRI SUNIL KUMAR YADAV, JM & SHRI B.P.JAIN, AM ./ ITA NO.255 /CTK/2013 ( ! ! ! ! / ASSESSMENT YEAR :2005-06) MAYUREE BUILDERS, GIRIJA SQUARE, BERHAMPUR VS. INCOME TAX OFFICER, WARD NO.-2, AAYAKAR BHAVAN, AMBAPUA, BERHAMPUR. ' ./ # ./ PAN/GIR NO. AAIFM 2760 P ( '$ / APPELLANT ) .. ( %&'$ / RESPONDENT ) ( * * * * /ASSESSEE BY : SHRI A.K.PADHI * * * * /REVENUE BY : SHRI SHOVAN KRISHNA SAHU + ( / DATE OF HEARING : 20 TH MAY, 2015 -.! ( / DATE OF PRONOUNCEMENT 22 ND MAY,2015 / / / / / O R D E R PER B.P.JAIN (AM) THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD CIT(A), BERHAMPUR DATED 16.1.2013 FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE ESTIMATION OF NET PROFIT @ 6% ON RS.2, 54,46,937/- EFFECTIVE WORKS EXECUTED (I.E. OPENING BUILDING WORK IN PROGR ESS, SALES AND CLOSING WORK IN PROGRESS) AMOUNTING TO RESULTING TO RS.15,2 6,816/- IS ARBITRARY, UNJUSTIFIED AND UNCALLED FOR TO THE PARTICULAR FACT S AND CIRCUMSTANCES OF THE CASE. 2. THAT THE DISALLOWANCE OF DEPRECIATION OF RS.1,99 ,841/- AND EXPENSES OF RS.13,49,159/- CLAIMED IN THE AUDITED PROFIT AND LO SS ACCOUNT FOR THE 2 . ITA NO.255 /CTK/2013 ASSESSMENT YEAR :2005-06 PREVIOUS YEAR RELATING TO THE ASSESSMENT YEAR 2005- 06 IS UNJUSTIFIED AND UNCALLED FOR TO THE PARTICULARS FACTS AND CIRCUMSTA NCES OF THE CASE. 3. THAT LD CIT(A) IS NOT JUSTIFIED WITHOUT FOLLOWIN G THE ITAT ORDER BEARING NO.ITA NO.241 TO 243/CTK/2012 RELATING TO THE ASSES SMENT YEAR 2006-07 TO 20008-09 OF THE SAME APPELLANT CASE WHICH IS SQU ARELY APPLICABLE TO THIS ASSESSMENT YEAR 2005-06 ALSO. 3. THE ASSESSEE HAS ALSO TAKEN ADDITIONAL GROUND AS UNDER: THAT THE REJECTION OF BOOKS OF ACCOUNT BY THE AO I N THE ABSENCE OF PROPER LABOUR ATTENDANCE REGISTER AND LOG BOOK FOR RUNNING A MOTOR CAR BY INVOKING PROVISIONS OF SECTION 145(3) OF THE I.T.AC T, IS ILLEGAL, ARBITRARY AND UNJUSTIFIED IN LAW WITHOUT CONTRARY TO THE EVIDENC ES TO THE PARTICULAR FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE BRIEF FACTS RELATING TO ALL THE GROUNDS OF A PPEAL INCLUDING ADDITIONAL GROUND ARE NOTED BY THE ASSESSING OFFICER, WHICH IS REPROD UCED HEREUNDER FOR THE SAKE OF CONVENIENCE: AS IN EARLIER YEARS, THE ASSESSEE CONSTRUCTED HOUS ES FOR PRIVATE PARTIES FOR A CONSIDERATION ON PLOTS OF LAND OWNED BY SUCH PRIVAT E PARTIES. IN THE COURSE OF EXAMINATION OF ACCOUNT, IT TRANSPIRED THAT NO SEPAR ATE ACCOUNT IN RESPECT OF EXPENDITURE FOR CONSTRUCTION FOR PRIVATE PARTIES AN D EXPENDITURE INCURRED FOR DEVELOPMENT OF LAND OWNED BY THE ASSESSEE HAVE BEEN MAINTAINED. FROM THE CONSOLIDATED EXPENDITURE ACCOUNT, A PORTION OF THE EXPENDITURE DEBITED TO THE LAND DEVELOPMENT ACCOUNT AND BUILDING CONSTRUCTION ACCOUNT THROUGH JOURNAL ENTRY. THE HUGE EXPENDITURE OF LABOUR PAYMENT DOES NOT SUPPORT BY A LABOUR ATTENDANCE REGISTER AND LABOUR PAYMENT REGISTER MAI NTAINED SYSTEMATICALLY. IN OTHER WORDS, NO SYSTEMATIC LABOUR PAYMENT REGISTER HAS BEEN MAINTAINED. DEPRECIATION CLAIMED INCLUDES RS.1,56,296/- FOR MOT OR CAR. DURING THE YEAR, THE ASSESSEE ADDED TWO INDIGO CARS COSTING RS.10,47,920 /- TAKING THE OPENING 3 . ITA NO.255 /CTK/2013 ASSESSMENT YEAR :2005-06 BALANCE OF RS.2,10,361/- ON VEHICLE ACCOUNT THE TOT AL COST WAS RS.13,52,541/- ON WHICH DEPRECIATION AT RS.1,56,290/- CALCULATED AND DEBITED TO THE PROFIT AND LOSS ACCOUNT. NO LONG BOOK HAS BEEN MAINTAINED IN RESPE CT OF VEHICLES. AS A RESULT, THE VEHICLES SUED FOR THE PURPOSE OF BUSINESS REMAI NS UNVERIFIED. IN VIEW OF THE ABOVE, THE BOOKS RESULT SHOWN IN RESPECT OF CONTRAC T WORK FOR CONSTRUCTION OF BUILDING FOR PRIVATE PARTIES IS NOT ACCEPTED. IN T HIS CASE, THE ITAT HAS ADOPTED NET PROFIT @ 6% FOR THE ASSESSMENT YEAR 2000-2001 I N CASE OF REJECTION OF BOOKS OF ACCOUNT. THE FACTS OF THIS CASE FOR THIS YEAR R EMAINS IDENTICAL TO THAT OF ASSESSMENT YEAR 2000-2001. THEREFORE, A NET PROFIT OF 6% IS ESTIMATED ON THE VALUE OF CONTRACT WORKS EXECUTED DURING THE YEAR. AS PER PROFIT AND LOSS ACCOUNT, VALUE OF BUILDING HANDED OVER AND CLOSING WORK IN P ROGRESS WAS RS.3,11,45,335/. THE OPENING WORK IN PROGRESS WAS RS.56,98,398/-. T HUS, THE EFFECTIVE WORK EXECUTED DURING THE YEAR COMES TO RS.2,54,46,937/-. NET PROFIT @ 6% THEREON COMES TO RS.15,26,816/-. 5. THE LD CIT (A) VIDE PARA 4.3 OF HIS ORDER CONFIR MED THE ACTION OF THE ASSESSING OFFICER. 6. THE LD COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE HAS MAINTAINED PROPER BOOKS OF ACCOUNT AND LEDGER ACCOUNT AND, THEREFORE, THE LD CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO. 7. ON THE OTHER HAND, THE LD D.R. RELIED ON THE ORD ERS OF AUTHORITIES BELOW. 4 . ITA NO.255 /CTK/2013 ASSESSMENT YEAR :2005-06 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD CIT(A) THAT THE SPE CIFIC OBSERVATIONS OF THE AO REGARDING NON-MAINTENANCE OF LABOUR ATTENDANCE REGISTER AND L ABOUR PAYMENT REGISTER HAVE NOT BEEN CONTROVERTED BY THE LD A.R. FURTHER, THE DEFE CTS NOTICED IN ASSESSMENT YEAR 2000- 2001 REGARDING NON-MAINTENANCE OF PROPER STOCK REGI STER, THE QUANTITATIVE OF PURCHASE ISSUE AND CLOSING STOCK CONTINUED DURING THE YEAR B ECAUSE THE LD A.R HAS NOT CONTROVERTED THE FINDING OF THE AO THAT THE FACTS I N THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL TO ASSESSMENT YEAR 2000-2001. NO SUCH RE GISTER OR BOOKS HAVE BEEN PRODUCED BEFORE THE LD CIT(A), WHICH SHOULD INDICA TE THAT THE DEFECTS NOTICED IN THE ASSESSMENT YEAR 2000-2001, WHICH PERSUADED THE ITAT TO REJECT THE BOOKS AND ESTIMATE PROFIT, NO LONGER CONTINUE IN THE ASSESSM ENT YEAR 2005-06. IN THE ORDER DATED 14.9.2012, OVERTURNING THE DECISION OF THE LD CIT( A) CONFIRMING THE REJECTION OF BOOKS AND ESTIMATION OF PROFIT @ 8%, THE ITAT DIRECTED FO R ADOPTION A PROFIT RATE OF 8% ON WORK IN PROGRESS WHICH IN FACT IS VALUED AT COST AND DOE S NOT HAVE ANY PROFIT ELEMENT. IN CONTRAST, THE TURNOVER ADOPTED BY THE AO DURING THE YEAR INCLUDES NOT THE WORK IN PROGRESS BUT THE CONTRACT VALUE I.E. THE SALE VALUE OF BUILDING HANDED OVER AMOUNTING TO RS.1,56,47,290/- AND CONTRACT VALUE OF THE COLLEGE BUILDING AMOUNTING TO RS.71,10,000/-. THUS THE PROFIT IN THE INSTANT CASE HAS BEEN ESTIMA TED NOT ON THE COST INCURRED BY THE ASSESSEE BUT ON THE SALES TURNOVER. IN VIEW OF THE SAME, SINCE THE FACTS AS STATED ABOVE ARE IDENTICAL TO THE ASSESSMENT YEAR 2000-200 1, THE RATIO OF THE DECISION OF THE ITAT FOR THAT YEAR WHICH AS HAS BEEN RELIED UPON BY THE AO AND, ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A), W HO HAS RIGHTLY UPHELD THE ACTION OF THE AO REJECTING BOOKS OF ACCOUNT AND ESTIMATING THE PR OFIT AT 6% ON THE ADJUSTED TURNOVER 5 . ITA NO.255 /CTK/2013 ASSESSMENT YEAR :2005-06 OF THE ASSESSEE. ACCORDINGLY, ALL THE GROUNDS OF A PPEAL RAISED BY THE ASSESSEE ARE REJECTED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND /05/2015. SD/- SD/- ( ) (SUNIL KUMAR YADAV) ( . . ) (B.P.JAIN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 22 ND /05/2015 % . . /PKM, . / PS / / / / %( %( %( %( 2!( 2!( 2!( 2!( / COPY OF THE ORDER FORWARDED TO : / / / / / BY ORDER, 3 33 3 / 4 4 4 4 (ASSTT. REGISTRAR) , / ITAT, CUTTACK 1. '$ / THE APPELLANT : MAYUREE BUILDERS, GIRIJA SQUARE, BERHAMPUR 2. %&'$ / THE RESPONDENT.: INCOME TAX OFFICER, WARD NO.-2, AAYAKAR BHAVAN, AMBAPUA, BERHAMPUR 3. 5 ( ) / THE CIT(A), BERHAMPUR 4. 5 / CIT , BHUBANESWAR 5. 6 %( , , + / DR, ITAT, CUTTACK 6. 8 9+ / GUARD FILE. &( %( //TRUE COPY//