Dy. Commissioner of Income Tax, GONDA V. Smt. Manju Lata Singh, Basti

ITA 283/LKW/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4699 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 44AD

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.283/LKW/2015 ASSESSMENT YEAR:2010-2011 DY.C.I.T., CIRCLE-GONDA. VS. SMT. MANJU LATA SINGH, PROP. M/S SINGH ENTERPRISES, GANDHI NAGAR, BASTI. PAN:BHCPS9514H (APPELLANT) (RESPONDENT) C.O.NO.44/LKW/2015 (IN ITA NO.283/LKW/2015) ASSESSMENT YEAR:2010-2011 DY.C.I.T., CIRCLE-GONDA. VS SMT. MANJU LATA SINGH, PROP. M/S SINGH ENTERPRISES, GANDHI NAGAR, BASTI. PAN:BHCPS9514H (RESPONDENT) (OBJECTOR) REVENUE BY SHRI AMIT NIGAM, D.R. ASSESSEE BY NONE DATE OF HEARING 18 / 01 /201 6 DATE OF PRONOUNCEMENT 19/02/2016 O R D E R PER A. K. GARODIA, A.M. THIS APPEAL IS FILED BY THE REVENUE AND THE C.O. IS FILED BY THE ASSESSEE WHICH ARE DIRECTED AGAINST THE ORDER OF LE ARNED CIT(A), FAIZABAD DATED 02/02/2015 FOR ASSESSMENT YEAR 2010-2011. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: 1. THE LD. CIT(A), FAIZABAD HAS ERRED IN LAW AND O N FACTS BY DIRECTING THE AO TO ESTIMATE THE NET PROFIT AT 2 RS.51,59,292/- @7% AS AGAINST 8% APPLIED BY THE AO ON THE GROSS CONTRACT RECEIPTS OF RS.7,37,04,175/- RELYING ON THE PAST HISTORY OF ASSESSEE'S OWN CASE IGNORING THE FACT THAT HE HIMSELF HAS CONFIRMED THE STAND OF THE AO FOR REJECTION OF BOOKS OF ACCOUNT IN TERM S OF PROVISIONS OF SECTION 145(3) OF I.T. ACT AND THE AO HAD RIGHTLY ESTIMATED THE NET PROFIT 8% OF THE GROSS CO NTRACT RECEIPTS. 2. THE LD. CIT(A), FAIZABAD HAS ERRED IN LAW AND ON FACTS BY DELETING THE ADDITION OF RS.35,70,000/- OUT OF RS.43,20,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SECURITIES AND INTEREST ON SECURITIES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT FURNISH ANY DETAILS OF THE SOURCE OF THE SAID INVES TMENT IN SECURITIES. 3. THE LD. C1T(A), FAIZABAD HAS ERRED IN LAW AND ON FACTS BY DELETING THE ADDITION OF RS.35,70,000/- OUT OF RS.43,20,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SECURITIES AND INTEREST ON SECURITIES DESPITE THE FACT THAT THE SECURITIES WERE NOT SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE SAME HAS BEEN DISCUSSED IN DETAILS IN THE ASSESSMENT ORDER. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS CROSS OBJECTION: 1. ON FACTS, IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A), FAIZABAD IS NOT JUSTIFIED IN SU STAINING THE ADDITION OF 7% NET PROFIT ON THE DISCLOSED RECE IPTS AS AGAINST 8% APPLIED BY THE ASSESSING OFFICER. 2. THE LEARNED CIT(A) IS NOT JUSTIFIED IN SUSTAININ G THE ADDITION OF RS.7.50 AS AGAINST RS.40 LAKHS MADE BY THE ASSESSING OFFICER ON SUSPICION AND SURMISES. 3. THE LEARNED CIT(A) IS NOT JUSTIFIED IN SUSTAININ G THE CHARGING OF INTEREST AS PER LAW AS WRITTEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, WHICH IS AGAINST THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT 3 IN THE CASE OF CIT AND ANOTHER VS. OSWAL EXPORTS [2 014] 369 ITR 630 (ALL). 4. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE A PPOINTED DATE OF HEARING IN SPITE OF NOTICE BUT THE WRITTEN SUBMISSI ONS OF LEARNED A. R. OF THE ASSESSEE ARE AVAILABLE ON RECORD AND THEREFORE, THIS APPEAL OF THE ASSESSEE WAS HEARD EX-PARTE QUA THE ASSESSEE AND WI LL BE DECIDED AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF LEARNED A. R . OF THE ASSESSEE AVAILABLE ON RECORD. 5. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSES SMENT ORDER. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D. R. OF THE REVENUE AND ALSO CONSIDERED THE WRITTEN SUBMISSIONS OF LEARNED A. R. OF THE ASSESSEE AVAILABLE ON RECORD. AS PER GROUND NO . 1 OF REVENUES APPEAL, THE GRIEVANCE OF THE REVENUE IS REGARDING R EDUCTION IN NET PROFIT RATE APPLIED BY THE ASSESSING OFFICER @ 8% TO 7% BY CIT(A) AND AS PER GROUND NO. 1 OF THE CROSS OBJECTION, THE GRIEVANCE OF THE ASSESSEE IS REGARDING SUSTAINING OF PART ADDITION BY ADOPTING T HE RATE OF 7% NET PROFIT. AS PER THE WRITTEN SUBMISSIONS OF LEARNED A. R. OF THE ASSESSEE AVAILABLE ON RECORD, IT IS SEEN THAT THESE ARE MERE REITERATI ON OF THE VARIOUS ARGUMENTS RAISED BEFORE CIT(A). THE CIT(A) HAS DEC IDED THIS ISSUE ON THE BASIS THAT AS PER THE TRIBUNAL ORDER RENDERED IN TH E CASE OF M/S GUPTA CONSTRUCTIONS IN I.T.A. NO.574/LKW/05 DATED 10/03/2 006, THE TRIBUNAL HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN ES TIMATING THE PROFIT AT 7% OF THE TURNOVER. HE HAS REFERRED TO VARIOUS OTHER TRIBUNAL ORDERS ALSO WHEREIN THE TRIBUNAL HAS UPHELD ADOPTION OF HIGHER RATE OF NET PROFIT BEING 7.5% IN ONE CASE AND 9.6% IN ANOTHER CASE. BUT AFT ER CONSIDERING THE TOTALITY OF FACTS AND VARIOUS JUDGMENTS, IT WAS HEL D BY CIT(A) THAT IN THE FACTS OF THE PRESENT CASE, ADOPTION OF 7% OF NET PR OFIT IS REASONABLE. IN THE PRESENT YEAR, THE ASSESSEE HAS REPORTED NET PRO FIT RATE OF 1.81% 4 WHEREAS THE SAME WAS REPORTED BY THE ASSESSEE AT 3. 53% IN ASSESSMENT YEAR 2007-08 AS PER COMPARATIVE CHART REPRODUCED BY CIT(A) IN PARA 4 OF HIS ORDER. WE ALSO FIND THAT IT IS NOTED BY THE AS SESSING OFFICER ON PAGE NO. 2 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NEITHER PRODUCED BOOKS OF ACCOUNTS NOR PRODUCED VOUCHERS FOR EXPENSE S FOR VERIFICATION. IN THE CASE OF A CONTRACTOR WHERE TURNOVER IS BELOW RS .40 LACS, SECTION 44AD PRESCRIBES RATE OF 8% FOR ESTIMATING THE INCOME OF SUCH AN ASSESSEE. IN THE PRESENT CASE, THE TURNOVER IS RS.737.04 LACS AN D THEREFORE, IN OUR CONSIDERED OPINION, THE NET PROFIT RATE ADOPTED BY THE ASSESSING OFFICER AT 8% IS NOT JUSTIFIED BECAUSE THE RATE OF 8% IS PRESC RIBED IN A CASE OF LOW TURNOVER BELOW RS.40 LACS AND GENERALLY, IN CASE OF HIGH TURNOVER, THE NET PROFIT RATE IS A BIT LOWER. CONSIDERING THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO. 1 OF REVENUES APPEAL AND GROUND NO. 1 OF THE CROSS OBJECTION ARE REJECTED. 7. AS PER GROUND NO. 2 AND 3 OF THE REVENUES APPEA L, THE GRIEVANCE OF THE REVENUE IS THAT CIT(A) HAS ERRED IN DELETING TH E ADDITION OF RS.35.70 LACS OUT OF ADDITION MADE BY THE ASSESSING OFFICER OF RS.43.20 LACS ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SECURITIES AND INTEREST ON SECURITIES. AS PER GROUND NO. 2 OF THE ASSESSEES CROSS OBJECTI ON, THE ASSESSEE IS AGGRIEVED WITH THE ORDER OF CIT(A) AS PER WHICH HE HAS SUSTAINED THE PART ADDITION OF RS.7.50 LACS OUT OF ADDITION MADE BY TH E ASSESSING OFFICER OF RS.43.20 LACS. IN THIS REGARD, WE FIND THAT THIS I SSUE WAS DECIDED BY CIT(A) ON THE BASIS THAT THE ASSESSING OFFICER HAS MADE THE ADDITION WITHOUT BRINGING ANY MATERIAL ON RECORD. HE HAS AL SO OBSERVED THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY FROM URB AN CO-OPERATIVE BANK LIMITED WHO HAVE ACTED AS GUARANTOR OF THE ASSESSEE . THEREAFTER HE HAS OBSERVED IN PARA 5.3 OF HIS ORDER THAT NSCS AND FDR S OF RS.7.50 LAC WHICH 5 WERE GIVEN AS GUARANTEE ARE NOT REFLECTED IN THE BA LANCE SHEET OF THE ASSESSEE AS ON 31/03/2010. HE UPHELD THE ADDITION OF RS.7.50 LAC BEING NSCS AND FDRS GIVEN BY THE ASSESSEE AS SECURITY AN D HAVE NOT BEEN RECORDED IN THE BALANCE SHEET. IN THE WRITTEN SUBM ISSIONS OF THE ASSESSEE, THERE IS NO EXPLANATION REGARDING THE SOURCE OF THE SE NSCS & FDRS OF RS.7.50 LAC. UNDER THESE FACTS, WE ARE OF THE CONS IDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LEARNED CIT(A) ON THIS ISSUE ALSO. ACCORDINGLY, GROUND NO. 2 & 3 OF THE REVENUE AS WEL L AS GROUND NO. 2 OF THE CROSS OBJECTION OF THE ASSESSEE ARE REJECTED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A . K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:19/02/2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REG ISTRAR