R.S. Builders & Engineers Ltd., Ludhiana V. ACIT, Ludhiana

ITA 280/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9199 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Reopening of assessment; Gross profit estimation; Business income; Income from undisclosed sources; Deemed to accrue or arise in india
• Section: 69C; 133A; 147; 68; 69; 148

Judgement Text

INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 280 /CHD/ 2016 ASSESSMENT YEAR : 2011 - 12 R.S. BUILDERS & ENGINEERS LTD, SCO - 19, 5 TH FLOOR, FEROZE GANDHI MARKET, LUDHIANA PAN:AAACR7883F VS. ACIT, CIRCLE - VII, LUDHIANA (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ASHWANI KUMAR, CA REVENUE BY: SH. SK MITTAL, DR DATE OF HEARING 04 /0 8 /2016 DATE OF PRONOUNCEMENT 10 /0 8 /2016 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT (A) - 3, LUDHIANA DATED 25.02.2016 FOR THE ASSESSMENT YEAR 2011 - 12. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LD. CIT - (A) - 3 LUDHIANA HAS WRONGLY UPHELD THE ACTION OF THE A.O. FOR ISSUING OF NOTICE U/S 148 BASED ON REASON RECORDED. 2. THAT THE LD. CIT - (A) - 3 LUDHIANA IS NOT JUSTIFIED IN HOLDING THAT THE REASON RECORDED ARE VALID REASONS FOR ISSUING OF NOTICE U/S 148. 3. THAT TH E LD. CIT - (A) - 3 LUDHIANA HAS WRONGLY AND INDIRECTLY HELD THAT IN CASE OF SURVEY, IF THE RETURNED INCOME FOR THE ASSESSMENT YEAR UNDER SURVEY IS LESS THAN THE DECLARED INCOME IN SURVEY PLUS INCOME OF IMMEDIATELY PRECEDING PREVIOUS YEAR, IT WILL AMOUNT TO PAGE 2 OF 10 R S BUILDERS & ENGINEERS LIMITED V ACIT ITA NO 280/CHD/2016 A Y 2011 - 12 ES CAPEMENT OF INCOME AND IN THAT CASE THE ACTION OF A.O. FOR ISSUING OF NOTICE U/S 148 IS JUSTIFIED. 4. THAT THE LD. CIT - (A) - 3 LUDHIANA HAS WRONGLY WORKED OUT THE ADDITION OF RS.4345,658/ - BASED TO LOW GROSS PROFIT RATE. 5. THAT THE LD. CIT - (A) - 3 LUDHIAN A IS NOT JUSTIFIED IN STATING THAT AS ADMITTED BY THE ASSESSEE ITSELF THAT BOOKS OF ACCOUNTS PREPARED BY IT ARE NOT CORRECT. 6. THAT THE ORDER OF THE LD. CIT - (A) - 3 LUDHIANA IS AGAINST LAW & FACTS OF THE CASE. 3 . THE ABOVE GROUNDS OF APPEAL ARE CONSISTING OF TWO SETS OF ARGUMENTS; ONE , FROM GROUND NO 1 TO 3 ARE AGAINST REOPENING OF ASSESSMENT AND SECOND, GROUND NO 4 AND 5 ARE AGAINST THE ADDITION OF RS. 4345658/ - MADE BASED ON LO W GROSS PROFIT RATE. 4 . THE BRIEF FACT OF THE CASE IS THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AS CONTRACTOR. ON 23.09.2010, A SURVEY U/S 133A WAS CARRIED OUT AND ASSESSEE SURRENDERED AN AMOUNT OF RS. 1.10 CRORE AS BUSINESS INCOME. CONSEQUENTLY , IT FILED ITS RETURN OF INCOME SHOWING INCOME OF RS. 12829250/ - INCLUDING THE SURRENDERED AMOUNT OF RS. 1.10 CRORES. THE ASSESSEE HAS DISCLOSED THE SUM INCLUDED UNDER THE HEAD OF MISCELLANEOUS INCOME SHOWN AT ANNEXURE 6 OF OTHER INCOME IN THE BALANCE SH EET OF THE COMPANY. O RIGINAL RETURN FILED WAS NOT PICKED UP FOR SCRUTINY; HOWEVER, ON 27.03.2014 NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE. THE REASONS RECORDED WERE AS UNDER: - 'THE ASSESSEE HAS FILED ITS RETURN FOR THE A.Y. 2011 - 12 DECLARING NET INCOME OF RS.1,28,29,250/ - ON 23.09.2011. SURVEY U/S 133A WAS CONDUCTED ON BUSINESS PREMISES OF THE ASSESSEE ON 23.09.2010, DURING THE COURSE OF SURVEY THE ASSESSEE SURRENDERED AN AMOUNT OF RS. 1.10 CRORE. THE UNDISCLOSED INCOME OF RS. 1.10 CRORES SURRENDERED DURIN G THE COURSE OF SURVEY WAS CREDITED TO P & L ACCOUNT. THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR THE A.Y. 2011 - 12 AT AN RETURNED INCOME RS.12829250/ - . THE ASSESSEE HAS FILED HIS INCOME FOR THE PR E CEEDING ASSESSMENT YEAR I.E. FOR 2010 - 11 AT RS. 4074040/ - AND SURRENDERED AN AMOUNT OF RUPEES 1.10 CRORES DURING THE COURSE OF SURVEY. HE SHOULD PAGE 3 OF 10 R S BUILDERS & ENGINEERS LIMITED V ACIT ITA NO 280/CHD/2016 A Y 2011 - 12 HAVE FILED HIS RETURN FOR ASSESSMENT YEAR 2011 - 12 AT RS. 15074040/ - BUT HE FILED HIS RETURN - FOR RS. 12829250/ - . IT MEANS HE HA S NOT SHOWN HIS INCOME PROPERLY AND MAKE ADJUSTMENTS AND SHOWN LESS INCOME . IT MEANS THAT THE ASSESSEE HAD SET OFF BUSINESS LOSS/EXPENSES AGAINST THE SURRENDERED INCOME . THE HON'BLE PUNJAB & HARYANA COURT IN THE CASE OF M/S KIM PHARMA (P) LT D. IN ITA NO. 106 OF 2011 (O&M)DATED 27.04.2011 HAS HELD THAT INCOME SURRENDERED DURING SURVEY IS INCOME FROM UNDISCLOSED SOURCES AND IT HAS TO BE TAXED U/S 68, 69,69A ETC. OF THE IT. ACT, 1961. HENCE, DEEMED INCOME TAXED UNDER 68, 69, 69A ETC. CANNOT BE S ET OFF AGAINST THE INCOME UNDER THE OTHER HEADS OF INCOME. 2. THEREFORE, I HAVE REASONS TO BELIEVE THAT RS.2244790/ - (15074040 - 12829250) HAS ESCAPED FROM ASSESSMENT FOR A.Y. 2011 - 12 BECAUSE OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSE ITS INCOME FULLY & TRULY. HENCE, IN VIEW OF EXPLANATION 2(B) OF SECTION 147 OF THE IT. ACT, 1961 AND FACTS STATED ABOVE, IT IS A FIT CASE FOR ISSUE OF NOTICE U/S 148. ISSUE NOTICE U/S 148 OF THE I. T. ACT, 1961 FOR THE A.Y. 2011 - 12.' [ EMPHASIS SUPPLIED BY US BY UNDERLINE] 5 . SUBSEQUENTLY, ON REQUEST THE COPIES OF THE SUCH REASONS WERE PROVIDED TO THE ASSESSEE WHICH WAS OBJECTED TO VIDE LETTER DATED 12.05.2014 AND SAME WERE DISPOSED OFF BY THE LD AO VIDE ORDER DATED 09.06.2014. 6 . WHILE RECORDING REASONS FOR REOPENING, LD. AO RECORDED THAT THE ASSESSEE HAS FILED RETURN OF INCOME OF RS. 12829250/ - FOR ASSESSMENT YEAR 201 1 - 12 . HOWEVER HE HAS TAKEN THAT FOR AY 2010 - 11 RETURN WAS FILED FOR RS. 4047040/ - AND THEREFORE SURRENDER ED AMOUNT SHOULD HAVE BEEN INCLUDED AND THE ASSESSEE SHOULD HAVE FILED HIS RETURN FOR ASSESSMENT YEAR 2011 - 12 OF RS. 15074040/ - INSTEAD OF THAT THE RETURN OF INCOME FILED OF RS. 12829250/ - . THEREFORE, THE ASSESSEE HAS NOT SHOWN HIS INCOME PROPERLY AND MADE ADJUSTMENT AND SHOWN LESSER INCOME THAN DISCLOSE D INCOME . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD PAGE 4 OF 10 R S BUILDERS & ENGINEERS LIMITED V ACIT ITA NO 280/CHD/2016 A Y 2011 - 12 AO WAS OF THE OPINION THAT NET PROFIT SHOWN BY THE ASSESSEE IS LOWER IN THE CURRENT YEAR COMPARED TO THE EARLIER YEAR S AND THEREFORE HE REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE NET PROFIT @ 3.34% ON TURNOVER OF RS. 100361625/ - FOR THE CURRENT YEAR DETERMINING THE NET PROFIT OF RS . 335278/ - . ON E ANOTHER ADDITION OF RS. 7004386/ - WAS MADE ON CHANGING THE HEAD OF THE INCOME FOR REBATE AND DISCOUNT INCOME FROM THE BUSINESS INCOME TO THE INCOME FROM OTHER SOURCES . THE LD AO FURTHER TOOK INCOME OF RS. 11646255/ - BEING MISCELLANEOUS INCOME INCLUDING THE INCOME SURRENDERED DURING THE COURSE OF SURVEY OF RS. 1.10 AS DEEMED INCOME U/S 69C OF THE INCOME TAX ACT. CONSEQUENTLY, THE TOTAL INCOME COMPUTED OF RS. 22002720/ - . AGGRIEVED BY THE ORDER OF THE LD AO , ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT(A), WHO IN TURN DIS MISSED THE GROUND OF THE APPEAL CHALLENGING REOPE NING U/S 148 OF THE ACT. HOWEVER , THE LD CIT ( A ) HAS HELD THAT REBATES AND DISCOUNT OF RS. 7004386/ - CONSIDERED BY THE AO, AS INCOME FROM OTHER SOURCES SHOULD BE CHARGED UNDER THE HEAD OF BUSINESS INCOME. FURTHER ON THE ISSUE OF ESTIMATION OF NET PROFIT RATE THE LD CIT(A) HELD THAT ADDITION MADE BY THE LD AO ON ACCOUNT OF LOWER NET PROFIT IS INCORRECT. ACCORDING TO HIM CORRECT CRITERIA SHOULD HAVE BEEN DETERMINATION OF GROSS PROFIT , THEREF ORE SHE HELD THAT GROSS PROFIT DECLARED BY THE ASSESSEE FOR TH E YEAR IS 12.37% AS COMPARED TO 16.70% DECLARED IN ASSESSMENT YEAR 2010 - 11 AND THUS THERE IS FALL OF 4.33% OF GROSS PROFIT, HENCE SHE ESTIMATED GROSS PROFIT SUBSTITUTED ADDITION OF RS. 43456 58/ - INSTEAD OF ADDITION MADE BY THE LD AO OF RS. 33352078/ - . AGGRIEVED BY THE ORDER OF LD CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 7 . THE LD AR SUBMITTED BEFORE US THAT REASONS RECORDED FOR REOPENING ARE NOT PROPER FOR THE REASONS AS UNDER AS WELL AS ON THE MERITS THAT : - PAGE 5 OF 10 R S BUILDERS & ENGINEERS LIMITED V ACIT ITA NO 280/CHD/2016 A Y 2011 - 12 I . IT SPEAKS ABOUT DISCLOSED INCOME OF ASSESSMENT YEAR 2010 - 11 OF RS. 4074040/ - WHICH SHOULD INCLUDE SURRENDERED INCOME OF RS. 1.10 CRORE DISCLOSED DURING THE COURSE OF SURVEY AND THEREFORE THE INCOME FOR THE ASSESSMENT YEAR 2011 - 12 SHOULD HAVE BEEN AT RS. 15074040/ - . HE SUBMITTED THAT RETURNED INCOME FOR ASSESSMENT YEAR 2011 - 12 IS RS. 12829250/ - AND FOR AY 2010 - 11 IS RS 4074040/ - . DATE OF SURVEY IS 23 - 09 - 2010. FOR AY 2011 - 12 RETURNED INCOME INCLUDE S THE INCOME OFFERED D URING THE COURSE OF SURVEY OF RS. 1.10 CRORE. THEREFORE THERE IS COMPLETE ACCEPTANCE OF THE SURVEY INCOME DECLARED BY THE ASSESSEE. II . HE REFERRED TO EXPLANATION 2(B) OF THE SECTION 147 OF THE ACT AND SUBMITTED THAT THERE IS NO UNDER STATEMENT OF INCOME, NO EXCESSIVE LOSS DEDUCTION / ALLOWANCE OR RELIEF HAS BEEN CLAIMED. HE THEREFORE SUBMITTED THAT THE NOTICE U/S 147 ISSUED BY THE AO IS NON - APPLICATION OF MIND AND THERE IS NO UNDERSTATEMENT. III . FURTHER , HE SUBMITTED THAT DECISION OF HONBLE BENCH OF PUNJAB AND HARYANA HIGH COURT IN CASE OF M/S. KIM PHARMA PVT. LTD DOES NOT APPLY TO THE FACTS OF THE CASE, THEREFORE HE SUBMITTED THAT REASONS STATED U/S 147 OF THE ACT DOES NOT JUSTIFY REOPENING OF THE ASSESSMENT. IV . ON THE ISSUE OF ESTIMATION OF NET PROFIT HE TOOK US TO THE ANNUAL ACCOUNTS OF THE ASSESSEE, WHEREIN IT AT PAGE 62 ANNEXURE IV TITLED AS ADMINISTRATIVE EXPENSES OF SALES TAX PAYMENT OF RS. 2853216/ - SHOWN TO HAVE BEEN DEBITED IN THE PROFIT AND LOSS ACCOUNT . THEREFORE, HE SUBMITTED THAT THIS IS AN EXCEPTIONAL ITEM AND IF THAT IS EXCLUDED AND IF THE INCOME DISCLOSED DURING THE COURSE OF SURVEY IS ALSO EXCLUDED THE NET PROFIT RATIO FOR THE YEAR SHALL BE 3.9% AND THEREFORE THERE IS NO UNDERSTATEMENT OF THE INCO ME. HE FURTHER SUBMITTED THAT THE DISCLOSURE DURING THE COURSE OF SURVEY WAS ON PAGE 6 OF 10 R S BUILDERS & ENGINEERS LIMITED V ACIT ITA NO 280/CHD/2016 A Y 2011 - 12 ACCOUNT OF BUSINESS INCOME OF THE ASSESSEE AND THEREFORE IT CANNOT BE TAKEN AS UNDISCLOSED INCOME. HE FURTHER SUBMITTED THAT DECISION IN THE CASE OF KIM PHARMA DOES NOT APPLY T O THE FACTS OF THE CASE, HE SUBMITTED THAT IN THAT CASE A SUM OF RS. 5 LAKHS FOUND IN CASH, SOURCE OF WHICH COULD NOT BE EXPLAINED BY THE ASSESSEE AND ON THAT CIRCUMSTANCES IT WAS HELD THAT SUCH INCOME IS NOT A BUSINESS INCOME OF THE ASSESSEE BUT WOULD BE TAXABLE U/S 68 AND 69 ETC. IN THE PRESENT CASE , THE DECLARATION WAS NOT BECAUSE OF ANY CASH OR OTHER DOCUMENTS ETC SEIZED THEREFORE DISCLOSURE SHALL BE CHARGED TO TAX AS BUSINESS INCOME. THEREFORE, HE SUBMITTED THAT THE REOPENING ON THE ABOVE REASON IS NOT SUSTAINABLE AND ON THE MERITS, THERE IS NO CASE FOR MAKING ANY ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. 8 . THE LD DR RELIED UPON THE PROVISION OF EXPLANATION 2 (B) OF SECTION 147 OF THE ACT AND FURTHER SUBMITTED THAT BOOKS OF ACCOUNT SHOULD NOT RELIAB LE IN VIEW OF THE DISCLOSURE MADE BY THE ASSESSEE. HE FURTHER SUBMITTED THAT THE LD AO AND LD CIT ( A) BOTH HAVE CORRECTLY DETERMINE D THE TOTAL INCOME OF THE ASSESSEE BY REJECTING THE BOOKS OF ACCOUNT. 9 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS . ON THE ISSUE OF REOPENING WE STATE THAT: - A . I T IS ADMITTED FACT THAT THE ASSESSEE DURING THE COURSE OF SURVEY HAS DISCLOSED SOME OF RS . 1.10 CRORES, WHICH IS INCLUDED IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 201 1 - 12 . SUCH SUM HAS BEEN DISCLOSED IN THE HEAD OF MISCELLANEOUS INCOME UNDER THE SCHEDULE HEAD OF OTHER INCOME AT ANNEXURE VI OF THE ANNUAL ACCOUNT OF THE COMPANY. FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAS FILED HIS RETURN OF INCOME, WHICH IS HIGHER THAN THE PAGE 7 OF 10 R S BUILDERS & ENGINEERS LIMITED V ACIT ITA NO 280/CHD/2016 A Y 2011 - 12 INCOME DISCLOSED DURING THE COURSE OF SURVEY. ASSESSEE HAS FILED HIS RETURN OF INCOME FOR RS 12829250/ - WHICH IS HIGHER THAN THE AMOUNT OF DISCLOSURE OF RS 1.10 CRORES MADE BY ASSESSEE DURING SURVEY. B . APPARENTLY IF THE NET PROFIT OF THE ASSESSEE OF RS. 12125135/ - EXCLUDED THE SUM OF RS. 1.10 CRORES DECLARED BY THE ASSESSEE, RESULTANT PROFIT WOULD BE RS. 1125135/ - . THEREFORE, STILL INCOME REMAINS POSITIVE EVEN AFTER DISCLOSURE OF INCOME DURING SURVEY ACCOUNTED FOR IN THE BOOKS, HENCE IT CANNOT BE SAID THAT THE ASSESSEE HAS C LAIMED EXCESSIVE LOSS OR EXPENSES AGAINST THE SURRENDERED INCOME. C . LD AO HAS FURTHER RECORDED THAT INCOME RETURNED OF A Y 2010 - 11 IS RS 4074040/ - AND SURRENDER WAS FOR RS 1.10 CRORES. HENCE ACCORDING TO HIM THE RETURN FOR AY 2011 - 12 SHOULD HAVE BEEN FIL ED FOR RS 15074040/ - FOR AY 20111 - 12 WHICH IS FILED FOR RS 12829250/ - . D . ASSESSEE HAS SHOWN RETURNED OF INCOME OF RS. 12829250/ - WHICH IS HIGHER THAN THE SURRENDER OF RS. 1.10 CRORES. EVEN AFTER THAT, INCOME IS SHOWN AS OTHER INCOME OR AS BUSINESS INCOME THERE IS NO EXCESSIVE TAX RELIEF , DEDUCTION OR ALLOWANCE HAS BEEN CLAIMED BY THE ASSESSEE AS PROVIDED UNDER EXPLANATION 2(B) OF SECT ION 147 OF THE ACT. E . REASONS GIVEN BY THE AO IS DEVOID OF ANY MERIT AND INCORRECT THAT A SUM OF RS. 2244790/ - HAS ESCAPED ASSESSMENT BECAUSE HE HAS COMPARED THE RETURNED INCOME FOR AY 2010 - 11 PLUS DISCLOSURE AMOUNT WITH RETURNED INCOME FOR AY 2011 - 12 FOR WORKING OUT THE ESCAPEMENT OF INCOME. F . IT IS APPARENT ON READING THE REASONS THAT LD AO IS NOT SURE IN WHICH YEAR THE INCOME OF SURVEY DISCLOSURE SHOULD HAVE BEEN PAGE 8 OF 10 R S BUILDERS & ENGINEERS LIMITED V ACIT ITA NO 280/CHD/2016 A Y 2011 - 12 INCLUDED AS HE IS INFERRING INCLUSION OF DISCLOSURE INCOME IN RETURNED INCOME OF AY 20 10 - 11. G . FURTHERMORE, THE DECISION RELIED UPON BY THE LD AO OF HONBLE PUNJAB AND HARYANA HIGH COURT I CASE OF KIM PHARMA VS. CIT 216 TAXMANN.COM 153 ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE BECAUSE IN THIS CASE THERE IS NO CLAIM OF ANY SORT OF FR OM THE ASSESSEE AGAINST THE INCOME DISCLOSED DURING THE COURSE OF SURVEY. OUT OF TOTAL INCOME OF RS. 12829250/ - SURRENDERED INCOME INCLUDED IS OF RS. 1.10 CRORES AND EVEN AFTER THAT THERE IS NO POSITIVE INCOME OF RS. 1125135/ - . 10 . THE ABOVE OBSERVATION IN REASON RECORDED BY THE LD AO DOES NOT EVEN SUSTAIN THE TEST OF PRIMA FACIE OPINION FORMED BY HIM. IN VIEW OF THIS THE REOPENING OF ASSESSMENT DOES NOT WITHSTAND THE JUDICIAL SCRUTINY . I N VIEW OF THIS THE REASONS RECORDED BY THE LD AO ARE NOT SUPPORTED BY THE FACTS OF THE CASE. THE LD CIT(A) HAS CONFIRMED THE ACTION U/S 148 OF THE ACT HOLDING THAT AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION TO BE SEEN AS THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORM A REQUISITE BELIEVE. WE ARE OF THE VIEW THAT ON THIS BASIS THE REASONS RECORDED BY THE AO FAIL. 11 . FOR THE SAKE OF COMPLETENESS OF THE ISSUES IN THE APPEAL WE ALSO DEAL THE ADDITION ON ITS MERITS. 12 . ON THE ISSUE OF MERITS OF THE ADDITION THE LD AO AS WELL THE LD CIT( A) HAS CONFIRMED THE WORKING RESULTS OF THE COMPANY WITH RESPECT TO PREVIOUS ASSESSMENT YEAR I.E. 2010 - 11. THE RELEVANT FINANCIAL RESULTS FOR THE CURRENT YEAR COMPARED WITH THE PREVIOUS YEAR ARE TABULATED AS UNDER: - PAGE 9 OF 10 R S BUILDERS & ENGINEERS LIMITED V ACIT ITA NO 280/CHD/2016 A Y 2011 - 12 SL. NO. PARTICULARS ASSESSMENT YEAR 201 1 - 12 ASSESSMENT YEAR 201 0 - 11 1. TURNOVER ( IN RS) 10 , 03 , 62 , 625 10 , 46 , 84 , 736/ - 2. NET PROFIT ( IN RS) 1 , 21 , 25 , 135 34 , 96 , 316 3 INCOME SURRENDERED DURING THE SURVEY ( IN RS) 1 10,00,000 NA 4 . AMOUNT OF SALES TAX LIABILITY BEING EXPENDITURE ITEM (IN RS) 28 , 53 , 216 NA 5 . NET PROFIT ( IN RS) 39 , 78 , 35 1 NA 6 . NET PROFIT RATIO (IN %) 3.9 3.3 13 . FROM THE ABOVE FINANCIAL RESULTS IT IS APPARENT THAT COMPARED TO THE LAST YEAR AFTER IGNORING THE SURRENDERED BUSINESS INCOME OF RS. 1.10 CRORES THE ASSESSEE HAS SHOWN BETTER NET PROFIT. FURTHER THE ASSESSEE HAS ALSO EXPLAINED THAT DURING THE YEAR IT HAS TO INCUR SUBSTANTIAL HIGHER AMOUNT OF OUTSIDE JOB WORK EXPENSES WHICH IS 71.52 LACS COMPARED TO 45.37 LACKS AND REBATE ON WORK DONE OF RS. 20 . 76 LAKS COMPARE TO 3 LAKHS AND THEREFORE THERE IS A DOWNFALL IN THE GROSS PROFIT. THE BOOKS OF ACCOUNT HAVE BEEN PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND OUTSIDE JOB WORK REBATE ON WORKS AND SALES TAX DEMAND OF THIS EXPENDITURE HAVE NOT BEEN FOUND NOT TO HAVE BEEN INCUR RED FOR THE PURPOSE OF BUSINESS. AS ASSESSEE FINANCIAL RESULTS HAVE SHOWN BETTER PERFORMANCE DURING THE YEAR COMPARED TO PREVIOUS YEAR, ON WHICH LD AO AND CIT (A) BOTH HAVE RELIED FOR MAKING ADDITION TO THE INCOME OF THE ASSESSEE IN CURRENT YEAR, NO FURTHER ADDITION IS POSSIBLE IN THE HANDS OF THE ASSESSEE DURING THE YEAR. IN VIEW OF THIS WE REVERSE OF THE FINDING OF THE LD CIT(A) IN SUBSTITUTING THE ADDITION OF RS. 4345658/ - AGAINST THE ADDITION MADE BY THE AO ON RS. 3352078/ - R EJECTING THE BOOKS OF ACCOUNT. HENCE, WE HOLD THAT THE ADDITION OF RS. 4345658/ - IS NOT SUSTAINABLE IN THE HANDS OF THE ASSESSEE. IN THE RESULT THE ASSESSEE SUCCEEDS ON THE GROUND OF REOPENING AND FOR THE PURPOSE OF PAGE 10 OF 10 R S BUILDERS & ENGINEERS LIMITED V ACIT ITA NO 280/CHD/2016 A Y 2011 - 12 COMPLETENESS ON THE MERITS TOO. THEREFOR E THE APPEAL OF THE ASSESSEE ON BOTH THE COUNTS COVERED GROUNDS 1 TO 6 OF THE APPEAL IS ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 1 0 / 08 /2016. - S D / - - S D / - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE D: 1 0 / 08 /2016 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, CHANDIGARH