The ACIT, 3(1), Bhopal V. Shri Jaswant Singh Raghuvanshi, Bhopal

ITA 275/IND/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61990 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DARSHAN SINGH
• Keywords: Business income; Additional evidence; Reasonable cause; Non compliance
• Section: 44AD; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AEDPR4103A I.T.A.NO. 201 /IND/2011 A.Y. : 2008 - 09 SHRI JASWANT SINGH RAGHUVANSHI, HOUSE NO.650, NEAR POLICE COLONY, WARD NO. 9, MANDIDEEP DIST. RAISEN VS. ACIT, 3(1), BHOPAL APPELLANT RESPONDENT I.T.A.NO. 2 75 /IND/2011 A.Y. : 2008 - 09 ACIT, 3(1), BHOPAL VS. SHRI JASWANT SINGH RAGHUVANSHI, HOUSE NO.650, NEAR POLICE COLONY, WARD NO. 9, MANDIDEEP DIST. RAISEN APPELLANT RESPONDENT ASSESSEE BY : SHRI SUMIT NEMA, ADV. RESPONDENT BY : SHRI DARSHAN SINGH, CIT DR DATE OF HEARING : 24 .0 5 .2012 DATE OF : 30 . 0 5 .201 2 -: 2: - 2 PRONOUNCEMENT O R D E R PER R. C. SHARMA, A.M. THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE A ND REVENUE AGAINST THE ORDER OF CIT(A) DATED 21.06.201 1 FOR THE ASSESSMENT YEAR 2008-09. 2. GRIEVANCE OF BOTH ASSESSEE AND REVENUE PERTAIN TO APPLYING NET PROFIT RATE OF 10% ON THE CONTRACT REC EIPTS DECLARED BY THE ASSESSEE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN CIVIL CONSTRUCTION WORK. RETURN WAS FILED ON 29.9.2 010 AT AN INCOME OF RS. 17,04,329/-. THE CASE WAS SELECTED FO R SCRUTINY. A NOTICE U/S 143(2) WAS ISSUED TO ASSESSEE ALONGWIT H QUESTIONNAIRE. AS PER A.O., THE ASSESSEE DID NOT PR ODUCE BOOKS OF ACCOUNT NOR FURNISHED THE DETAILS CALLED F OR, ACCORDINGLY, ASSESSMENT WAS FRAMED U/S 144. THE ASS ESSING OFFICER WHILE FINALIZING THE ASSESSMENT HAS NOTED T HAT THE ASSESSEE CLAIMS TO DERIVE INCOME FROM CONTRACTOR SH IP BUSINESS. HOWEVER, NO PROOF OF HAVING DONE ANY CONT RACT WORK -: 3: - 3 WAS SUBMITTED BY THE ASSESSEE. THE ASSESSEE HAS NOT MAINTAINED REGULAR AND PROPER BOOKS OF ACCOUNT AND NO TAX AUDIT WAS GOT DONE BY HIM. THE ASSESSEE HAS NOT PRO DUCED ANY DETAIL OF EXPENSES, BILLS, VOUCHERS, COPY OF AG REEMENT FROM PARTIES FROM WHOM MONEY WAS RECEIVED AND NATURE OF WORK DONE. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE IN THE ABSENCE OF ANY EVIDENCE AND MATERIAL, ENTIRE AMOUNT OF CONTRACT RECEIPTS SHOWN OF RS. 3,4 0,86,575/- WAS TREATED AS INCOME. 4. CONTENTION OF ASSESSEE BEFORE THE CIT(A) WAS THAT T HERE WAS GENUINE REASONS FOR NON COMPLIANCE AND NON FURN ISHING OF DETAILS CALLED BY THE ASSESSING OFFICER. THE ASSESS EE FURNISHED ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME T AX RULES BEFORE HIM ALONGWITH A PRAYER THAT THE SAME MAY BE ADMITTED AS THERE WAS REASONABLE CAUSE FOR NON FILING THEM B EFORE THE ASSESSING OFFICER. ADDITIONAL EVIDENCE UNDER RULE 4 6A COMPRISE OF DETAILS AND COPIES OF INVOICES RAISED B Y THE ASSESSEE FOR CIVIL CONSTRUCTION WORK DONE FOR M/S. LUPIN LIMITED, WORK ORDERS ISSUED BY MOENUS TEXTILE PVT.L TD. FOR CARRYING CIVIL CONSTRUCTION WORK, WORK ORDERS ISSUE D BY -: 4: - 4 BHASKAR INDUSTRIES LIMITED ALONGWITH. THE PAPER BOO K COMPILATION CONTAINING ADDITIONAL EVIDENCES ALONGWI TH WRITTEN SUBMISSIONS FURNISHED BEFORE CIT(A) WERE FORWARDED VIDE LETTER DATED 22.2.2011 TO THE ASSESSING OFFICER FOR VERIFY ING THE CLAIMS OF THE ASSESSEE AND A REMAND REPORT DATED 6 .6.2011 WAS SUBMITTED BY THE ASSESSING OFFICER ACCORDINGLY. THE ASSESSING OFFICER IN HIS REPORT STATED THAT NEW EVI DENCES PRODUCED BY THE ASSESSEE UNDER RULE 46A OF THE INCO ME TAX RULES SHOULD NOT BE ACCEPTED. THE ASSESSING OFFICER STATED THAT THE ASSESSEE HAS SUBMITTED EVIDENCES ONLY IN A PPELLATE PROCEEDINGS AND DELIBERATELY AVOIDED THE SUBMISSION OF THE SAME DURING SCRUTINY PROCEEDINGS TO PREVENT THE ASS ESSING OFFICER FROM CONDUCTING ANY INVESTIGATION. THE ASSE SSING OFFICER REITERATED THAT SUFFICIENT OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO PRESENT HIS CASE. THE ASSESSING OFFICER MENTIONED THAT TO AVOID THE ASSESSMENT PROCEEDINGS THE ASSESS EE PRETENDED TO BE ILL AND THE ILLNESS OF THE ASSESSEE WAS INFORMED ON 20.12.2010 WHEN THE ASSESSMENT PROCEEDINGS WERE COMING TO AN END. THEREFORE, THE ASSESSING OFFICER PROCEED ED TO ASSESS -: 5: - 5 THE ENTIRE CONTRACT RECEIPT OF RS. 3,40,86,575/- AS THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. ( 2008-09). 5. BY CONSIDERING THE REMAND REPORT AND THE SUBMISSION MADE BY THE ASSESSEE, THE LD. CIT(A) HELD AS UNDER :- I HAVE GONE THROUGH THE OBSERVATIONS OF THE ASSESS ING OFFICER MADE IN THE ASSESSMENT ORDER AS WELL AS RE MAND REPORT. I HAVE ALSO CONSIDERED THE SUBMISSIONS OF THE APPELLANT. I FIND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE ASSE SSING OFFICER WAS NOT JUSTIFIED IN ASSESSING THE ENTIRE CONTRACT RECEIPTS OF RS. 3,40,86,575/- RECEIVED BY THE APPE LLANT FROM THE THREE COMPANIES, NAMELY, M/S. LUPIN LIMITE D, M/S. BHASKAR INDUSTRIES LIMITED AND M/S. MOENUS TEX TILE PVT.LTD, AS HIS TOTAL INCOME CHARGEABLE TO TAX. THE APPELLANT ON HIS PART HAS PRODUCED COPIES OF WORK O RDERS ISSUED BY THESE COMPANIES SPECIFYING THE NATURE OF CIVIL CONSTRUCTION WORK TO BE EXECUTED, COPIES OF INVOICE S RAISED BY THE APPELLANT WITH RESPECT TO CONTRACT WORK DONE , COPIES OF TDS CERTIFICATES ISSUED BY THESE THREE COMPANIES GIVING DETAILS OF PAYMENT AND JTDS U/S 194C OF THE INCOME- TAX -: 6: - 6 ACT. THE APPELLANT HAD ALSO SUBMITTED DULY SWORN AF FIDAVIT SUBMITTING THESE FACTS ON OATH. I FIND THAT THE ASS ESSING OFFICER DURING REMAND PROCEEDINGS HAS NOT BROUGHT A NY EVIDENCE TO DISPROVE THESE EVIDENCES FILED BY THE A SSESSEE APPELLANT. THEREFORE, I AM NOT INCLINED TO ACCEPT T HE ASSESSING OFFICERS CONTENTION THAT NO CONTRACT WOR K WAS CARRIED ON BY THE APPELLANT. I FIND THAT THE APPELL ANT HAS HIMSELF SUBMITTED IN HIS AFFIDAVIT THAT HE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND PROFITABILITY O F 5 % ON TOTAL CONTRACT RECEIPTS OF RS. 3,40,86,575/- WAS OFFERED AS INCOME BASED ON THE BID MADE BY THE APPELLANT FOR CONTRACT WORK AND THE NATURE OF WORK CARRIED OUT BY HIM FOR THESE THREE ABOVE MENTIONED COMPANIES. I FIND F ORCE IN THE APPELLANT'S SUBMISSION THAT ENTIRE CONTRACT REC EIPTS COULD NOT BE TREATED AS INCOME AND INCOME WOULD BE ASSESSED ONLY TO THE EXTENT OF ESTIMATED PROFITS EM BEDDED IN THE GROSS CONTRACT RECEIPTS. FOR THIS PROPOSITIO N, I RELY ON THE DECISIONS OF THE HON'BLE JURISDICTIONAL MP HIGH COURT IN THE CASE OF CIT VS. BALCHAND AJITKUMAR, 263 ITR 610 , AND THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. -: 7: - 7 PREMIER INDUSTRIES, 258 ITR 654, WHEREIN IT WAS HEL D THAT TOTAL SALES CANNOT BE REGARDED AS THE PROFIT INCOME OF THE ASSESSEE BUT ADDITION COULD BE MADE ONLY TO THE EXT ENT OF ESTIMATED PROFIT EMBEDDED IN SALES FOR WHICH NET PR OFIT RATE WAS ADOPTED. I ALSO PLACE RELIANCE IN THE CASE OF MANMOHAN SADANI VS. CIT, (2008) 304 ITR 52 (MP) WHEREIN THE HON'BLE M.P. HIGH COURT HAS AFFIRMED TH E RATIO LAID DOWN IN THE CASE OF CIT V S. BALCHAND AJIT KUM AR (SUPRA) STATING THEREBY THAT THE TOTAL UNDISCLOSED SALES CANNOT BE ADDED TO THE INCOME AND ONLY NET PROFIT R ATE HAS TO BE APPLIED. I ALSO RELY ON THE DECISION OF THE H ON'BLE KERALA HIGH COURT IN THE CASE OF SAMURAI TECHNO TRADING CO (P) LTD. VS. CIT, (2010) REPORTED IN 37 DTR (KER ) 386, WHEREIN IT WAS HELD THAT IN THE ABSENCE OF CREDIBLE BOOKS OF ACCOUNT, TRIBUNAL WAS JUSTIFIED IN ESTIMATING TH E INCOME @ 8 % OF THE TURNOVER FROM THE BUSINESS OF CIVIL WO RK BY TAKING GUIDELINES FROM SECTION 44AD OF THE INCOME T AX ACT. IN THE INSTANT CASE ALSO NO BOOKS OF ACCOUNTS, BILL S AND VOUCHERS FOR EXPENSES AND BANK STATEMENT HAS BEEN E ITHER MAINTAINED OR PRODUCED BY THE APPELLANT DURING THE -: 8: - 8 ASSESSMENT AND REMAND PROCEEDINGS. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE, IT WOULD BE APPROPRIATE AND REASONABLE TH AT INCOME OF THE APPELLANT IS COMPUTED BY ESTIMATING N ET PROFIT RATE AT 10 % ON THE GROSS CONTRACT RECEIPTS OF RS.3,40,86,575/-. THE TOTAL INCOME OF THE APPELLATE IS ESTIMATED AT RS.34,08,658/- AND IN MY OPINION THIS ESTIMATION HAS BEEN MADE JUDICIOUSLY AND WOULD MEET THE ENDS OF JUSTICE. THESE GROUNDS OF APPEAL ARE THUS D ECIDED ACCORDINGLY. 6. AGAINST THE ABOVE ORDER OF CIT(A), BOTH THE ASSESSE E AND REVENUE ARE IN FURTHER APPEAL BEFORE US. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THE ASSESSEE WAS ENGAGED IN CIVIL CONSTRUCTION WORK. ON THE CONTRACT RECEIPTS OF RS. 3.40 CRORES, THE ASSESSEE HAS DECLARED 5 % NET PROFIT, THE ASSES SING OFFICER TREATED ENTIRE CONTRACT RECEIPTS AS ASSESSEES INCO ME ON THE PLEA OF NON PRODUCTION OF BOOKS OF ACCOUNT AND DETA ILS CALLED FOR. THE CIT(A) CALLED THE REMAND REPORT FROM ASSES SING OFFICER AND AFTER CONSIDERING THE NATURE OF ASSESSEES WORK AND THE -: 9: - 9 PROVISIONS OF SECTION 44AB, THE LD. CIT(A) UPHELD T HE ADDITION BY APPLYING 10 % NET PROFIT RATE ON THE CONTRACT RE CEIPTS. THERE IS NO DISPUTE TO THE FINDINGS RECORDED BY THE LD.CI T(A) TO THE EFFECT THAT THE ASSESSEE WAS ENGAGED IN CIVIL CONST RUCTION WORK. AS PER PROVISIONS OF SECTION 44AD EVEN IF ASS ESSEE DOES NOT MAINTAIN BOOKS OF ACCOUNT WHERE THE TURNOVER IS LESS THAN RS. 40 LAKHS, MAXIMUM PROFIT WHICH CAN BE ESTIMATED IS 8 %. HOWEVER, IN THE INSTANT CASE BY CONSIDERING THE FAI LURE OF THE ASSESSEE EVEN TO MAINTAIN BOOKS OF ACCOUNT, WHERE T HE TURNOVER WAS EXCEEDING THE PRESCRIBED LIMIT, THE C IT(A) HAS ESTIMATED 10% PROFIT ON THE GROSS CONTRACT RECEIPTS . WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A), FOR APPL YING NET PROFIT OF 10 % AS AGAINST NET PROFIT OF 5% SHOWN BY THE AS SESSEE AND THE ENTIRE CONTRACT RECEIPT TREATED AS INCOME BY TH E ASSESSING OFFICER. BEFORE PARTING WITH THE MATTER, IT IS PERT INENT TO MENTION THAT THE DEPARTMENT IS AT LIBERTY TO TAKE P ROPER ACTION FOR NOT MAINTAINING THE BOOKS OF ACCOUNT AND FOR NO T GETTING THE SAME AUDITED, WHEN THE CONTRACT RECEIPTS ARE EX CEEDING PRESCRIBED LIMIT FOR WHICH THE BOOKS OF ACCOUNT ARE NOT REQUIRED TO BE AUDITED. WE DIRECT ACCORDINGLY. -: 10: - 10 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AND THE REVENUE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2012. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH MAY, 2012. CPU* 2829