ACIT Corporate, Cochin V. M/s. Silpa Projects & Infrastructure(India) P. Ltd, Cochin

ITA 258/COCH/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8539 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 09-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2015
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: C B M WARRIER

Judgement Text

ITA NOS. 224&258/COCH/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE.K, JM ITA NO.224/COCH/2015 (ASST YEAR :2010-11 ) M/S. SILPA PROJECTS & INFRASTRUCTURES (INDIA) PVT. LTD., 3 RD FLOOR, NORTH AVENUE, PARAMARA ROAD, KOCHI-682 018. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4(1), KOCHI. ( ASSESSEE APPELLANT) VS (REVENUE -RESPONDENT) ITA NO.258/COCH/2015 (ASST YEAR :2010-11 ) THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4(1), KOCHI. M/S. SILPA PROJECTS & INFRASTRUCTURES (INDIA) PVT. LTD., 3 RD FLOOR, NORTH AVENUE, PARAMARA ROAD, KOCHI-682 018. ( REVENUE APPELLANT) VS (ASSESSEE -RESPONDENT) PAN NO. AALCS 1733L ASSESSEE BY SHRI C.B.M. WARRIER, CA REVENUE BY SHRI A. DHANARAJ, SR. DR DATE OF HEARING 09/06/2016 DATE OF PRONOUNCEMENT 10/06/2016 ORDER PER BENCH: THESE CROSS APPEALS OF THE ASSESSEE AND THE R EVENUE ARISE FROM THE ORDER OF THE LD. CIT(A)-I, KOCHI DATED 12/02/2015 FOR THE AS SESSMENT YEAR 2010-11. ITA NOS. 224&258/COCH/2015 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL:- . 1. THE ASSESSMENT FOR THE YEAR 2010-11 IS COMPLETED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4(1), COCHIN AFT ER MAKING AN ADDITION OF RS.1,75,00,000/- TO THE RETURNED INCOME AND THE COM MISSIONER OF INCOME TAX (APPEALS)HAS REDUCED THE ADDITION OF RS.39,83,347/- . 2. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS GON E WRONG IN ESTIMATING THE ADDITION TO THE GROSS PROFIT AT 0.44% ON RS.90, 53,06,364/- INSTEAD OF RS.59,45,76,475/- WHICH IS THE REAL TURNOVER OF THE APPELLANT FOR THE ASSESSMENT YEAR. FOR THE ABOVE REASONS AND THE OTHER ARGUMENTS THOSE MAY BE PUT FORWARD AT THE TIME OF APPEAL HEARING, THE APPELLANT MAY REQUE ST TO CANCEL THE ADDITION OF RS.39,83,347/- TO THE INCOME RETURNED. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- . 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS)-I, KOCHI, IN APPEAL NO. I.T.A. 11/R-4/EKM/CIT(A)-I/2013-14 DT. 12-02-20 15 IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, FACTS AND CIRCUMSTANCES OF THE CASE. 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS RIGHT IN RESTRICTING THE ADDITION TO RS.39,83,347/- OBSERVIN G THAT, THE AVERAGE PERCENTAGE GP COULD BE MOST RELIABLE TOOL FOR COMPA RING THE PROFIT WHERE AS THE CIT(A) ALSO ACCEPTED THAT THE NET PROFIT COULD BE ESTIMATED, AS THERE WAS NO SUPPORTING BILLS AND VOUCHERS? THE LEARNED CIT( A) SHOULD HAVE OBSERVED THE FACT THAT THE TOTAL INCOME ESTIMATED BY THE ASS ESSING OFFICER IS ABOUT 6% OF THE GROSS TURN OVER WHICH IS FAIRLY REASONABLE AND THEREFORE UPHELD THE ADDITION. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE COMMISSIONER OF INC OME TAX(APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORE D. ITA NOS. 224&258/COCH/2015 3 4. THE BRIEF FACTS OF THE CASE IN THE ASSESSEES APPEAL ARE THAT THE ASSESSEE- COMPANY RECEIVED A CONTRACT AND FOR WANT OF PRODUCT ION OF EVIDENCES WITH REGARD TO THE VARIOUS EXPENSES, THE ASSESSING OFFIC ER INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT AND ESTIMATED THE ADDITIO N AT THE RATE OF 6% OF THE TURN OVER. 5. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT( A) AND AFTER CONSIDERING THE SUBMISSIONS AND EXPLANATIONS GIVEN BY THE ASSESSEE CONCLUDED THAT THE ESTIMATION SHOULD BE MADE ON THE BASIS OF GROSS PRO FIT ON THE BASIS OF AVERAGE PERCENTAGE FOR THE ASSESSMENT YEARS 2009-10, 2010-1 1 AND 2011-12 WHICH WAS 16.94% AS COMPARED TO 16.50% DECLARED BY THE ASSESS EE AND ACCORDINGLY, HE SUSTAINED 0.44% APPLIED TO THE GROSS TURNOVER OF RS .90,53,06,363/- WHICH WORKS OUT TO RS.39,83,347/-. THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL B EFORE US AGAINST THE ORDER OF THE LD. CIT(A). 6. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT T HERE IS NO DISPUTE TO THE INVOKING THE PROVISIONS OF SECTION 145(3) OF THE AC T. THE ONLY DISPUTE IS WITH REGARD TO THE ESTIMATION AND THE LD. COUNSEL FOR TH E ASSESSEE HAS SUBMITTED CERTAIN ITEMS ON WHICH NO PROFIT ELEMENT IS INVOLVE D WHICH ARE TO THE TUNE OF RS.31,07,29,889/ WHICH INCLUDES THE FOLLOWING:- GOA VAT 3,95,726.00 KERALA VAT 1,1 2,17,821.00 ITA NOS. 224&258/COCH/2015 4 COST OF SHUTTERING MATERIALS 5,05,85,544.0 0 COST OF MATERIAL 24,39,4 0,964.00 SITE RUNNING EXPENSES 6,75,85 1.00 ELECTRICITY CHARGES 4,5 7,832.00 WATER CHARGE 6,0 9,000.00 INSURANCE 10,59,000.00 LABOUR CESS 16 ,41,186.00 LOADING AND UNLOADING 1,46,965.0 0 31,07,29,889.00 THEREFORE THE SAID AMOUNT OF RS.31,07,29,889/- SHOU LD BE EXCLUDED FROM THE GROSS TURN OVER OF RS.90,53,06,363/- WHILE MAKING T HE ESTIMATION OF INCOME. 7. THE LD. AR, SHRI C.B.M. WARRIER, CA ARGUED FUR THER WITH REGARD TO THE ESTIMATION MADE BY THE ASSESSING OFFICER, I.E., THE RATE OF 6% ON THE TURN OVER IS WITHOUT ANY BASIS AND NO BASIS OF WHATSOEVER KIND H AS BEEN BROUGHT ON RECORD AND THEREFORE, THE ESTIMATION MADE BY THE ASSESSING OFFICER IS MERELY ON THE BASIS OF SURMISES AND CONJECTURES AND CANNOT BE UPH ELD. 8. THE LD. DR ON THE OTHER HAND RELIED UPON THE O RDER OF THE ASSESSING OFFICER. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. AT THE OUTSET, THE INVOKING OF PROVISIONS OF SECTION 1 45(3) OF THE ACT IS NOT IN DISPUTE. THEREFORE, THE ONLY QUESTION BEFORE US IS WITH REGA RD TO THE ESTIMATION OF THE INCOME. AS REGARDS THE ESTIMATION MADE BY THE ASSES SING OFFICER AT THE RATE OF 6% ON THE TURNOVER, NO BASIS OF WHATSOEVER KIND HAS BEEN PROVIDED BY THE ITA NOS. 224&258/COCH/2015 5 ASSESSING OFFICER AND THE SAME IS MADE ON THE BASIS OF SURMISES AND CONJECTURES AND CANNOT BE UPHELD. ACCORDINGLY, REVENUES APPEA L IS DISMISSED. 10. HOWEVER, THE LD CIT(A) HAS DISCARDED THE SAID ESTIMATION MADE BY THE ASSESSING OFFICER AND HAS GONE INTO ESTIMATION OF T HE INCOME OF THE ASSESSEE ON THE BASIS OF AVERAGE GROSS PROFIT OF THREE YEARS AS UNDER:- ASST. YEAR GROSS TURNOVER GROSS PROFIT % OF G.P. AVERAGE %AGE 2009-10 62,34,40,558 11,43,65,379 18.34% 2010-11 90,53,06,363 14,99,85,294 16.5% 16.94% 2011-12 80,38,25,083 12,81,03,397 16% OUT OF THE AVERAGE GROSS PROFIT OF 16.94%, IF THE G ROSS PROFIT DECLARED BY THE ASSESSEE AT 16.50% IS REDUCED, THE DIFFERENCE COMES TO 0.44% WHICH HAS BEEN DIRECTED BY THE LD. CIT(A) TO ADOPT ON THE TOTAL TU RNOVER. WHILE ESTIMATING THE INCOME, THE LD. CIT(A) HAS COMMITTED AN ERROR THAT COST OF MATERIAL AMOUNTING TO RS.24,39,40,964 AND THE COST OF SHUTTERING MATER IALS AT RS.5,05,85,544/-, KERALA VAT AT RS.1,12,17,821/-, GOA VAT AT RS.3,95,726/- AND OTHER EXPENSES WHERE NO PROFIT ELEMENT HAS BEEN INVOLVED, WERE NOT EXCLUDED WHICH TOTALS TO RS.31,07,29,889/-. THEREFORE, THE SAID AMOUNT OF R S.31,07,29,889/- INCLUDED IN THE TURNOVER, HAS TO BE ESSENTIALLY EXCLUDED WHILE ESTI MATING THE INCOME AND ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO A PPLY THE GROSS PROFIT RATE OF 0.44% AFTER EXCLUDING THE SAID TURNOVER OF RS.31,07 ,29,889/- AT RS.59,45,76,475/-. IT ITA NOS. 224&258/COCH/2015 6 IS ORDERED ACCORDINGLY. THUS, ASSESSEE GETS THE PA RT RELIEF AND APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10-0 6-2016 SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : COCHIN DATED: 10TH JUNE , 2016 GJ COPY TO: 1. M/S. SILPA PROJECTS & INFRASTRUCTURES (INDIA) PV T. LTD., 3 RD FLOOR, NORTH AVENUE, PARAMARA ROAD, KOCHI-682 018. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4 (1), KOCHI. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, KOCHI . 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. THE DR/ITAT, COCHIN BENCH. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN ITA NOS. 224&258/COCH/2015 7