A.C.I.T., Circle-3(1), Gwalior V. M/s Gyan Singh Sisodhiya, Gwalior

ITA 286/AGR/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6366 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NAVEEN GARGH
• Keywords: Depreciation; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH: AGRA BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND D R . MITHA LAL MEENA, ACCOUNTANT MEMBER I.T.A NO . 286 /AGRA/201 4 (ASSESSMENT YEAR - 2010 - 11 ) REVENUE BY SHRI WASEEM ARSHAD, SR. DR ASSESSEE BY SHRI NAVEEN GARGH, AR . ORDER PER , A. D. JAIN, JUDICIAL MEMBER : TH IS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2010 - 11 AGAINST THE CIT(A)S ACTION OF APPLYING NPR OF 6% INSTEAD OF 8.5% OF THE GROSS CONTRACT RECEIPTS OF THE ASSESSEE, AS APPLIED BY THE AO, FOR ESTIMATING THE INCOME OF THE ASSESSEE AFTER REJECTING THE BOOK RESULTS. 2. THE FACTS ARE THAT THE ASSESSEE IS A CONTRACTOR . W HILE COMPLETING THE ASSESSMENT, THE AO REJECTED THE BOOK RESULTS U/S 145(3) OF THE I.T. ACT AND ESTIMATED THE PROFIT OF THE A SSESSEE @ 8.5% OF THE GROSS RECEIPTS. THE AO , IN THE ACIT, CIRCLE - 3(1), GWALIOR. (REVENUE) V S .. M/S GYAN SINGH SISODIYA, JADERUWA KALA, PINTO PARK, GWALIOR. PAN NO. AAEFG9661K (ASSESSEE) DATE OF HEARING 1 1 . 0 4 .201 7 DATE OF PRONOUNCEMENT 27 .0 4 .201 7 I.T.A NO. 286/AGRA/2014 2 ASSESSMENT ORDER AT PAGE 2 , HAS DISCUS SED THE DEFECT S NOTICED BY HIM IN THE BOOKS OF ACCOUNT , WHICH ARE REPRODUCED AS UNDER: - 'AFTER EXAMINATION OF BOOKS OF ACCOUNTS AND DETAILS ON RECORD, VARIOUS DEFECTS WERE NOTICED. THE ASSESSEE WAS SPECIFICALLY ASKED TO EXPLAIN VIDE ORDER SHEET DATED 7.3.2013, WHICH IS REPRODUCED AS UNDER: - 1. 'CONSUMABLE EXPENSES RS.7,24,635/ - WATER FITTING CHARGES RS.7,28,193/ - VEHICLE REPAIR CHARGES RS.2,89,285/ - EXPENSES ARE NOT PROPERLY VOUCHED AND NOT SUPPORTED AT ALL BY BASIS BILL/MEMOS. 2. WAGES EXPENSES OF RS.5,63,11,526/ - WHICH WORKS OUT 35% OF GROSS RECEIPTS IS HIGHER. FURTHER NO MUSTER ROLL, WAGES REGISTER AND SITE WISE DETAILS OF WAGES ARE VERIFIABLE FROM SUPPORTING EVIDENCES AS NO MUSTER ROLL, WAGES ' REGISTER OR WAGES SHEETS WERE PRODUCED. NET PROFIT RATE BEFORE INTEREST AND SALARY PAID TO PARTNERS IS 5.85% WHICH IS VERY LOW. IN VIEW OF THE ABOVE, TRUE PROFIT CAN NOT BE ARRIVED AT ON THE BASIS OF BOOKS OF ACCOUNTS MAINTAINED AND PRODUCED FOR VERIFICATION. YOU ARE, THEREFORE, REQUESTED TO EXPLAIN AS TO WHY THE BOOKS OF ACCOUNTS SHOULD NOT BE REJECTED U/S 145(3) AND N.P SHOULD NOT BE TAKEN AT 8.5% OF GROSS RECEIPT INCLUDING INCOME CREDITED IN P&L ACCOUNT BEFORE I.T.A NO. 286 /AGRA/201 4 3 ALLOWING INTEREST AND SALARY AS PER SECTION 40(B) OF THE I. T ACT. 3. THE LD. CIT(A) HELD AS F OLLOWS: I HAVE GONE THROUGH THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS CAREFULLY. IN VIEW OF THE DEFECTS POINTED OUT BY THE A.O IN THE BOOKS OF ACCOUNTS, I AM OF THE CONSIDERED OPINION THAT THE ACTION OF THE A.O REJECTING BOOK RESULTS U/S 145(3) IS FUL LY JUSTIFIED AND IN ACCORDANCE WITH THE PROVISIONS OF THE LAW. AS FAR AS THE RATE OF PROFIT ADOPTED BY THE A.O IS CONCERNED, IT APPEARS TO BE ON HIGHER SIDE, IN VIEW OF THE FACTS THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT ARE AUDITED AND RATE OF PROFIT DE CLARED DURING THE ASSESSMENT ORDER UNDER APPEAL IS BETTER THAN THE RATE OF NET PROFIT DECLARED IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR. I HAVE ALSO GONE THROUGH THE VARIOUS JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT. AFTER TAKING INTO ACCOUNT OF AL L THE FACTS OF THE CASE AND JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT, I AM OF THE CONSIDERED OPINION THAT IT WOULD BE FAIR AND REASONABLE TO ESTIMATE THE PROFIT OF THE APPELLANT @6% OF THE GROSS RECEIPTS. ACCORDINGLY, THE A.O IS DIRECTED TO TAKE 6% OF THE GROSS RECEIPTS OF RS. 15,98,62,031/ - BEFORE ALLOWING INTEREST TO SALARY AND INTEREST OF PARTNERS AS PROFIT OF THE APPELLANT FROM CONTRACT. A FURTHER DEDUCTION FOR SALARY AND INTEREST TO PARTNERS, IF ANY, SHALL BE ALLOWED SEPARATELY. APPEAL IS PARTLY ALLOWED. I.T.A NO. 286/AGRA/2014 4 4. THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN APPLYING THE NET PROFIT RATE OF 6% INSTEAD OF 8.5% OF THE GROSS CONTRACTUAL RECEIPTS, WHICH ESTIMATION WAS CORRECTLY ARRIVED AT BY THE AO FOR ESTIMATING THE INCOME OF THE ASSESSEE AF TER DULY REJECTING THE BOOKS OF THE ASSESSEE U/S 145(3) OF THE I.T. ACT. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) HAS NOT OBSERVED T HAT THE AOS ORDER IS ARBITRAR Y; AND THAT SINCE THE LD. CIT(A) HAS U PHELD THE REJECTION OF THE BOOK RESULT S, HE ERRED IN RE FERRING TO THEM AGAIN IN ORDER TO RESTRICT THE NET PROFIT RATE. 5. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE IMPUGNED ORDER. 6. IT IS SEEN THAT THE LD. CIT(A) HAS, WHILE HOLDING THAT THE ASSESSEES RATE OF PROFIT DECLARED FOR THE YEAR UNDER CONSIDER ATION IS BETTER THAN THAT DECLARED IN THE IMMEDIATELY PRECEDING YEAR, TAKEN INTO CONSIDERATION THE FOLLOWING COMPARATIVE POSITION, AS DEPICTED IN THE CHART FILED BY THE ASSESSEE, AS REPRODUCED AT PAGE 6 OF THE IMPUGNED ORDER. SNO. A.Y. GROSS RECEIPT MISC. INCOME N.P. BEFORE SALARY & INTEREST N.P. RATE BEFORE SALARY & INTEREST INTEREST TO PARTNER SALARY TO PARTNER DEPRECIATION 1 2010 - 11 159287277 574754 9321316 5.85% 2270671 2872758 1872823 2 2009 - 10 184133020 213958 9627286 5.23% 1201797 3486400 1664190 3 2008 - 09 95429567 298982 5259951 5.51% 702603 1877848 911277 I.T.A NO. 286 /AGRA/201 4 5 7. THE ABOVE POSITION REMAINS UNDISPUTED. THUS, WHEREAS THE TURNOVER OF THE ASSESSEE HAS GONE DOWN FROM THAT OF THE IMMEDIATELY PRECEDING YEAR, THE NET PROFIT, BEFORE INTEREST AND SALARY, HAS GONE UP FROM 5.23% TO 5.85%. AS SUCH, IN OUR CONSIDERED OPINION, TH E ESTIMATION OF PROFIT @ 6% OF THE ASSESSEES GROSS PROFIT RECEIPTS IS REASONABLE, REQUIRING NO INTERFERENCE AT OUR HANDS. IT IS, ACCORDINGLY, CONFIRMED. 8. IN THE RESULT, THE APPEAL IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 27 / 0 4 / 2017 . SD/ - SD/ - ( D R . MITHA LAL MEENA) (A.D. JAIN) ACCOU N TANT MEMBER JUDICIAL MEMBER DATED 27 / 0 4 /201 7 *AKV* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR