Shri Sanjay R .Heda, Nagpur V. Joint Commissioner of Income Tax Range -8, Nagpur

ITA 265/NAG/2012

• Counselvise Citation: 26523914 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 06-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Opportunity of being heard
• Section: 80C; 143(3); 234B; 80G

Judgement Text

, , ( - ), IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENC H, (E-COURT), MUMBAI . . , !' , #$% , $& '( BEFORE SHRI H L KARWA, PRESIDENT, & SHRI RAJENDRA, AM ./ITA NOS.265, 266 & 267/NAG/2012 ( ) * / ASSESSMENT YEARS: 2006-07, 2007-08 & 2008-09) SANJAY R HEDA, BHANGADIA HOUSE, NEAR GETWEL HOSPITAL, DHANTOLI, NAGPUR- 440010 PAN : AADPH7109J VS. THE JCIT RANGE - 8, NAGPUR ( +, /APPELLANT) ( -.+, / RESPONDENT) APPELLANT BY : MR. K P DEWANI RESPONDENT BY : MR. NARENDRA KANE DATE OF HEARING : 22.01.2014 DATE OF PRONOUNCEMENT : 22.01.2014 '$/ / O R D E R PER H L KARWA, PRESIDENT : THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST SEPARATE ORDERS OF THE CIT(A)-II, NAGPUR, ALL DATED 05.03.2012, REL ATING TO A.YS. 2006-07, 2007-08 AND 2008-09. 2. WE WILL FIRST TAKE UP APPEAL IN ITA NO. 265/NAG/ 2012 RELATING TO A.Y. 2006- 07 . THE FIRST FOUR GROUNDS RAISED BY THE ASSESSEE RE AD AS UNDER: 1. THE LEARNED A.O. ERRED IN ESTIMATING INCOME AT 14% AND THEREBY MAKING ADDITION OF RS.41,55,402/- IN THE CA SE OF ASSESSEE. 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF A.O. MAKING ADDITION OF RS.41,55,402/- ON ESTIMATE BASIS . 2 ITA NO.265, 266 & 267/NAG/2012 AY:2006-07, 2007-08 & 2008-09 3. THE ADDITION MADE BY A.O. AT RS.41,55,402/- IS U NJUSTIFIED, UNWARRANTED AND EXCESSIVE. 4. THE ORDER PASSED BY A.O. U/S. 143(3) OF THE INCO ME TAX ACT, 1961 IS ILLEGAL INVALID AND BAD IN LAW. THE ASSESSEE IS CARRYING ON BUSINESS AS CONTRACTOR AND DURING THE YEAR UNDER CONSIDERATION EXECUTED CONTRACT WORK OF VIDARBH IRR IGATION DEVELOPMENT CORPORATION. THE ASSESSEE FILED HIS RETURN OF INCO ME DECLARING TOTAL INCOME AT RS.39,36,944/- ON CONTRACT AMOUNTS RECEIVED AGGREGA TING TO RS.9,77,59,267/-. THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ESTIMATING PROFIT @14% OF THE AMOUNTS RECEIVED THEREBY MAKING AN ADDITION OF RS.80,44,602/-. OUT OF THIS ADDITION, THE ASSESSEE IS NOT CONTESTING THE ADDITI ON TO THE EXTENT OF RS.38,89,200/-. HOWEVER, THE ASSESSEE HAS DISPUTED THE INCOME ESTIMATED @14% RESULTING IN ADDITION OF RS.41,55,402/-. 3. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION OF RS.41,55,402/- AND, HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE ASSESS EE BELONGS TO THE BHANGADIYA GROUP. WE FIND THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THIS BENCH OF THE TRIBUNAL IN THE CASE OF SHRI MITE SH G BHANGADIYA & ORS (ASSESSEE BELONGING TO THE SAME GROUP) IN ITA NO. 2 68, 269 & 285/NAG/2012 RELATING TO A.YS. 2006-07, 2008-09 AND 2007-08. TH E TRIBUNAL VIDE ITS COMMON ORDER DATED 03.04.2013 DIRECTED THE ASSESSING OFFIC ER TO ADOPT THE RATE OF NET PROFIT @12% OBSERVING AS UNDER: 7. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE DESERVES TO SU CCEED IN HIS APPEAL IN PART. WE NOTED FOR THE YEAR UNDER CONSIDE RATION I.E. FOR ASSESSMENT YEAR 2006-07, THE ASSESSEES NP RATE COM ES TO 12.87%, FOR ASSESSMENT YEAR 2007-08, THE ASSESSEES NP RATE COMES TO 10.69% AND FOR ASSESSMENT YEAR 2008-09, THE ASSESSE ES NP RATE COMES TO 10.53%, RESPECTIVELY. WE ALSO NOTED THAT I F THE NP RATE OF ALL THE CONCERNS ARE TAKEN INTO CONSIDERATION, THEN IT IS SEEN THAT ALL THE ASSESSEES HAVE SHOWN GOVERNMENT RECEIPT AT RS.258,55,37,850/- AND INCOME ON THESE CONTRACTS HA VE BEEN SHOWN BY THESE ASSESSEE AT RS.16,49,57,111/- WHICH GIVES A NP RATE OF 6.38%. THE ASSESSEE HAS OFFERED ADDITIONAL INCOME D ECLARED DURING 3 ITA NO.265, 266 & 267/NAG/2012 AY:2006-07, 2007-08 & 2008-09 THE SURVEY AT RS.11,03,85,877/-, WHICH GIVES A NP R ATE OF 4.27% AND THE TOTAL NP RATE IN ALL THESE CONCERNS COMES T O 10.65%. OF COURSE, THE ADDITIONAL INCOME OF RS.11 CRORE OR ODD WAS SEGREGATED PROPORTIONATELY ON THE BASIS OF CONTRACT RECEIPTS I N THE HANDS OF EACH CONCERN. IN CASE OF M/S MAHENDRA CONSTRUCTION & M.G. BHANGADIA (JV), THE NP RATE COMES TO 13.84% I.E. FO R ASSESSMENT YEAR 2007-08 AND THIS RATE HAS BEEN ADOPTED BY THE AO AND HAS APPLIED THE NP RATE OF 14% IN ALL THE YEARS IN CASE OF ALL THESE ASSESSEES ON WHOM A SURVEY WAS CONDUCTED. IN OUR VI EW, THIS APPROACH OF THE AO WAS NOT CORRECT APPROACH. IN CAS E OF M.G.BHANGADIYA, THE NP RATE OF THREE YEARS COME TO 9.87%, WHEREAS IN CASE OF OTHER ASSESSEES I.E. SANJAY HED A, M/S MAHENDRA CONSTRUCTION & M.G. BHANGADIYA (JV), THE NP RATE CO MES TO 9.50% AND IN CASE OF M/S MAHENDRA CONSTRUCTION & M.G. BHA NGADIYA (JV), THE AVERAGE NP RATE OF THREE YEARS COMES TO 11.28% AND IN CASE OF M/S KIRTIKUMAR BHANGADIYA, THE NP RATE COMES TO 8.7 2% AND IN CASE OF M.G.BHANGADIYA AND M/S MAHENDRA CONSTRUCTION & M .G. BHANGADIYA (JV), THE NP RATE COMES TO 6.12%. IN CAS E OF M.G.BHANGADIYA AND S.S.PATIL & M.G.BHANGADIYA, THE NP OF THREE YEARS COMES TO 11.55%. AS STATED ABOVE, THE AVERAGE NP RATE OF ALL THE ASSESSEES FOR ALL THE THREE YEARS COMES TO 10.6 5%. THEREFORE, IN OUR VIEW, A RATIONAL APPROACH SHOULD HAVE BEEN ADOP TED BY THE AO OR BY THE LEARNED CIT(A). FOR ONE CASE I.E. M/S MAH ENDRA CONSTRUCTION & M.G. BHANGADIA (JV), THE NP RATE WAS 13.84% AND IF THIS RATE IS APPLIED IN ALL OTHER CASES, WHICH IN O UR VIEW, IS NOT JUSTIFIED. HOWEVER, THERE IS ALSO NO DISPUTE THAT T HERE WERE SO MANY DISCREPANCIES IN MAINTAINING VOUCHERS, BILLS, SUB C ONTRACTS ACCOUNTS AND OTHER HEADS, WHICH WERE NOT VERIFIABLE, THEREF ORE, THE ASSESSEE AND HIS GROUP CAME FORWARD TO OFFER AN ADDITIONAL I NCOME OF RS.11 CRORE AND THE SAME HAS ALSO OFFERED AND DUE TAX HAS BEEN PAID. SINCE AS STATED ABOVE, THERE ARE CERTAIN DISCREPANC IES, WE ARE OF THE VIEW, THAT IF NP RATE OF 12% IS ADOPTED INSTEAD OF 14%, THAT WILL MEET THE END OF JUSTICE. WE MADE IT CLEAR THAT WHER E NP RATE SHOWN BY THE ASSESSEE IN ANY YEAR IS MORE THAN 12%, THEN THE MORE NP RATE SHOWN BY THE ASSESSEE HAS TO BE TAKEN AS ASSES SEE HAS DECLARED HIMSELF AND IN OTHER YEARS WHERE NP RATE S HOWN BY THE ASSESSEE IS LOWER THAN 12%, THEN 12% NP RATE HAS TO BE TAKEN. THE AO WILL RECOMPUTE THE INCOME ACCORDINGLY. FOR THE S AKE OF CLARIFICATION, IN CASE OF ASSESSEE FOR ASSESSMENT Y EAR 2006-07, THE NP RATE COMES TO 12.87% AFTER SHOWING THE ADDITIONA L INCOME, THEREFORE, THE INCOME SHOWN BY THE ASSESSEE HAS TO BE ACCEPTED. HOWEVER, FOR ASSESSMENT YEARS 2007-08 & 2008-09, TH E NP RATE SHOWN BY THE ASSESSEE AFTER ADDITIONAL INCOME COMES TO 10.69% AND 10.53%. THE AO WILL ADOPT THE RATE OF 12% AND W ILL COMPUTE THE INCOME ACCORDINGLY. 4 ITA NO.265, 266 & 267/NAG/2012 AY:2006-07, 2007-08 & 2008-09 6. FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FAC TS OF THE CASE OF SHRI MITESH G BHANGADIYA (SUPRA) AND, THEREFORE, WE DIRECT THE ASSESSING OFFICER TO FOLLOW THE DIRECTIONS AND GUIDELINES GIVEN IN THE ORDER OF THE TRIBUNAL (SUPRA) AND RE- COMPUTE THE INCOME IN THIS CASE ACCORDINGLY. THESE GROUNDS OF APPEAL ARE ALLOWED PARTLY. 7. GROUND NO.5 READS AS UNDER: 5. THE ASSESSMENT FRAMED IS BARRED BY LIMITATION AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND. ACCORDINGLY, WE DISMISS THIS GROUND AS NOT PRESSED. 8. GROUND NO.6 RELATES TO INTEREST U/S. 234B AND 23 4C OF THE I.T ACT, 1961. THIS GROUND BEING CONSEQUENTIAL IN NATURE, WE DIREC T THE ASSESSING OFFICER TO GIVE CONSEQUENTIAL RELIEF TO THE ASSESSEE IN ACCORDANCE WITH LAW. 9. IN THE RESULT, THE APPEAL (ITA NO. 265/NAG/2012) IS ALLOWED PARTLY AS INDICATED ABOVE. 10. ITA NO.266/NAG/2012 FOR A.Y. 2007-08. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS: 1. THE LEARNED A.O. ERRED IN ESTIMATING INCOME AT 14% AND THEREBY MAKING ADDITION OF RS.66,93,195/- IN THE CA SE OF ASSESSEE. 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF A.O. MAKING ADDITION OF RS.66,93,195/- ON ESTIMATE BASIS . 3. THE ADDITION MADE BY A.O. AT RS.66,93,195/- IS U NJUSTIFIED, UNWARRANTED AND EXCESSIVE. 4. THE ASSESSEE DENIES LIABILITY TO BE ASSESSED TO INTEREST U/S. 234B AND 234C OF I.T.ACT, 1961. WITHOUT PREJUDICE THE LEVY OF INTEREST U/S. 234B AND 234C IS UNJUSTIFIED, UNWARRA NTED AND EXCESSIVE. AS REGARDS GROUND NOS. 1 TO 3, THE FINDINGS GIVEN O N IDENTICAL ISSUE IN ITA NO. 265/NAG/2012 SHALL APPLY WITH EQUAL FORCE. THESE G ROUNDS ARE ALLOWED PARTLY. 5 ITA NO.265, 266 & 267/NAG/2012 AY:2006-07, 2007-08 & 2008-09 11. GROUND NO.4 BEING CONSEQUENTIAL IN NATURE, WE D IRECT THE ASSESSING OFFICER TO GIVE CONSEQUENTIAL RELIEF TO THE ASSESSEE IN ACC ORDANCE WITH LAW. 12. IN THE RESULT, THE APPEAL (ITA NO. 266/NAG/2012 ) IS ALLOWED PARTLY AS INDICATED ABOVE. 13. ITA NO.267/NAG/2012 FOR A.Y. 2008-09. GROUND NOS. 1 TO 3 READ AS UNDER: 1. THE LEARNED A.O. ERRED IN ESTIMATING INCOME AT 14% AND THEREBY MAKING ADDITION OF RS.21,68,321/- IN THE CA SE OF ASSESSEE. 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF A.O. MAKING ADDITION OF RS.21,68,321/- ON ESTIMATE BASIS . 3. THE ADDITION MADE BY A.O. AT RS.21,68,321/- IS U NJUSTIFIED, UNWARRANTED AND EXCESSIVE. THE FINDINGS GIVEN BY US ON IDENTICAL ISSUE IN ITA NO 265 & 266/NAG/12 (SUPRA), SHALL APPLY TO THIS APPEAL ALSO. ACCORDINGLY, THES E GROUNDS ARE PARTLY ALLOWED. 14. GROUND NOS. 4 AND 5 READ AS UNDER: 4. THE LEARNED CIT(A) OUGHT TO HAVE DIRECTED TO GR ANT DEDUCTION U/S. 80G AND 80C OF INCOME TAX ACT, 1961. 5. THE LEARNED CIT(A) ERRED IN NOT DIRECTING TO ALL OW DEDUCTION U/S. 80G AND 80C AS CLAIMED IN THE RETURN OF INCOME . AT THE VERY OUTSET, SHRI K P DEWANI THE LEARNED COU NSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE AUTHORITIES BELOW HAVE NOT CONSIDERED AND DECIDED THE ISSUE DESPITE THE CLAIM MADE BY THE ASSESSEE. IT I S TRUE THAT THERE IS NO DISCUSSION WITH RESPECT TO THIS ISSUE IN THE ORDERS OF THE LOWER AUTHORITIES. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE AS SESSING OFFICER WITH A DIRECTION TO CONSIDER AND DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NOS. 4 & 5 ARE ALLOWED FOR STATISTICAL PURP OSES. 6 ITA NO.265, 266 & 267/NAG/2012 AY:2006-07, 2007-08 & 2008-09 15. GROUND NO.6 RELATES TO INTEREST U/S. 234B AND 2 34C OF THE I.T.ACT, 1961. THIS BEING CONSEQUENTIAL IN NATURE, WE DIRECT THE A SSESSING OFFICER TO GIVE CONSEQUENTIAL RELIEF TO THE ASSESSEE IN ACCORDANCE WITH LAW. 16. IN THE RESULT, THE APPEAL (ITA NO. 267/NAG/2012 ) IS ALLOWED PARTLY AS INDICATED ABOVE. ORDER PRONOUNCED IN THE E-COURT ON THIS 22 ND DAY OF JANUARY, 2014. SD/- SD/- (RAJENDRA) (H L KARWA) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DT : 22 ND JANUARY, 2014 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T, CONCERNED 4. THE CIT (A)-CONCERNED 5. THE DR, NAGPUR BENCH BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI