ACIT, Jaipur V. SHRI RADHA KISHAN BENIWAL, Jaipur

ITA 317/JPR/2012

• Counselvise Citation: 31723114 RSA 2012
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 02-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Keywords: Business income; Depreciation

Judgement Text

ITA NO. 317//JP/2012 ACIT VS. SHRI RADHA KISHAN BENIWAL, JAIPUR 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 317/JP/2012 ASSESSMENT YEARS : 2007-08 PAN : AGMPB 3815 A THE ACIT VS. SHRI RADHA KISHAN BENIWAL CIRCLE- 3 M/S. RADDHAKISHAN (PWD CONT.) JAIPUR STAR RESIDENCY, VAISHALI NAGAR JAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI D.C. SHARMA ASSESSEE BY : SHRI P.C. PARWAL DATE OF HEARING: 25-08-2014 DATE OF PRONOUNCEMENT: 17-10-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST T HE ORDER OF THE LD. CIT(A)- 1, JAIPUR DATED 27-01-2012 FOR THE ASSE SSMENT YEAR 2007-08 WHEREIN THE SOLITARY GROUND OF THE REVENUE IS AS UN DER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELE TING THE ADDITION MADE BY THE AO. 2.1 THE LD. DR CONTENDS THAT THE ABOVE RELIEF HAS B EEN GIVEN BY THE LD. CIT(A) IN RESPECT OF FOLLOWING GROUND RAISED BEFOR E THE LD. CIT(A). ITA NO. 317//JP/2012 ACIT VS. SHRI RADHA KISHAN BENIWAL, JAIPUR 2 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. AO ERRED IN ESTIMATING THE TOTAL INCOME OF THE ASSE SSEE AT RS. 1,03,58,547/- IN PARA 5 OF THE ORDER. 2.2 THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE AS UNDER:- 5. I HAVE CAREFULLY PERUSED THE ORDER OF THE AO A ND THE SUBMISSIONS OF THE A.R. AND FIND MERIT IN THE S UBMISSIONS OF THE A.R. IN SO FAR AS THAT THE CASE OF THE ASSESSEE IS COVERED BY THE DIRECTIONS OF THE HON'BLE ITAT IN HIS CASE IN ASSESSMENT YEAR 2066-07. IF THE INCOME OF THE ASSESSEE IS CALC ULATED AS PER THESE DIRECTIONS THEN IT IS LESSER THAN WHAT HAS BE EN DECLARED BY THE ASSESSEE AT RS. 62,46,071/-. ALTERNATIVELY, IF THE ASSESSEE IS ALLOWED HIS LEGITIMATE CLAIM OF DEPRECIATION, FINAN CIAL EXPENSES AND SALES TAX AS PER THE JUDICIAL PRONOUNCEMENT OF THE HON'BLE H.C. IN THE CASE OF CIT VS. BHAWAN PATH NIRMAN (BOH RA) & CO. 258 ITR 440 (RAJ.) AND CIT VS. JAIN CONSTRUCTION CO . 245 ITR 527 (RAJ.) , THE INCOME ARRIVED WOULD STILL BE LES SER THAN THAT DECLARED BY THE ASSESSEE. IN VIEW OF THE DEFECTS PO INTED OUT BY THE AO IN THE MAINTENANCE OF ACCOUNTS OF THE ASSESS EE AND THE FACT THAT THESE PERSISTED AS IN THE PREVIOUS ASSESS MENT YEAR WHICH HAS BEEN ADJUDICATED UPON BY THE HON'BLE ITA T IN THE CASE OF THE ASSESSEE , THE REJECTION OF BOOKS OF AC COUNT OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145( 3) IS UPHELD. HOWEVER, THE IMPUGNED ADDITION ON ESTIMATED BASIS I S DELETED AS PER DISCUSSION ABOVE. 2.3 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE AO. 2.4 THE LD. AR OF THE ASSESSEE DURING THE COURSE OF HEARING CONTENDS THAT AS APPARENT FROM THE ORDER OF THE LD. CIT(A), THE R ELIEF HAS BEEN EXTENDED BY THE LD. CIT(A) TO THE ASSESSEE BY FOLLOWING THE IT AT, JODHPUR JUDGEMENT DATED 09-07-2012 IN ASSESSEE'S OWN CASE WHEREIN THE BENCH HAS OBSERVED AS UNDER:- ITA NO. 317//JP/2012 ACIT VS. SHRI RADHA KISHAN BENIWAL, JAIPUR 3 6. ON GOING THROUGH THE ABOVE SAID TABLE, IT IS CLE AR THAT THE ASSESSEE HAS QUOTED BELOW THE BSR RATES IN THE TENDERS FROM MINIMUM 5.66% TO 23.66%. THEREFORE, ON AN AVERAGE T HE ASSESSEE HAS QUOTED ABOVE 15% BELOW THE BSR RATES. TAKING AL L THESE PECULIAR CIRCUMSTANCES, PREVAILING FOR THE PERIOD U NDER CONSIDERATION, WHICH WERE NOT CONTROVERTED EITHER B Y THE ASSESSING OFFICER OR BY THE LEARNED CIT(A) BRINGING ON RECORD ANY MATERIAL WHATSOEVER. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE RATES FIXED BY THE LEARNED CIT(A) IS ALSO ON HIGHER SIDE. MORE SO, WHEN IT IS ESTABLISHE D BY THE ASSESSEE THAT HIS GROSS CONTRACT RECEIPTS FOR THE PERIOD UND ER CONSIDERATION INCREASED BY 300% TO THAT OF FOR THE ASSESSMENT YEA R 2005-06. THUS, IN THE ABSENCE OF ANY CONTRA MATERIAL MADE OUT BY T HE DEPARTMENTAL AUTHORITIES, THE STATISTICS GIVEN BY THE ASSESSEE A RE TO BE ACCEPTED IN VIEW OF THE PECULIAR CIRCUMSTANCES THAT WERE MADE O UT BY THE ASSESSEE BEFORE THE DEPARTMENTAL AUTHORITIES. ACCOR DINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE PROFIT RATE TO BE TAXE D IN THE HANDS OF THE ASSESSEE FOR THE PERIOD UNDER CONSIDERATION IS FIXED AT A REASONABLE RATE OF 8% ON NET CONTRACT RECEIPTS OF R S. 6,98,05,911(13,02,01,119, MINUS BITUMEN RS. 5,10,97 ,765 AND SUB- CONTRACTS RS. 92,97,443) SUBJECT TO DEPRECIATION OF RS. 11,55,967/- AND SALES TAX PAID AT RS. 19,53,016/- DURING THE YE AR UNDER CONSIDERATION. ACCORDINGLY, THE ISSUE NUMBER 3 IS H EREBY ALLOWED. THIS FINDING IS GIVEN BASING ON PECULIAR CIRCUMSTAN CES DETAILED SUPRA AND HENCE IT WILL BE NOT HAVE ANY EFFECT OF B INDING PRECEDENCE. 7. NOW COMING TO THE FOURTH ISSUE OF INTEREST ON FD R AND NSCS IS CONCERNED, NOWHERE IT WAS CONTROVERTED BY T HE DEPARTMENT AUTHORITIES BY MEANS OF MATERIAL ON RECORD THAT THE SE FDRS AND ITA NO. 317//JP/2012 ACIT VS. SHRI RADHA KISHAN BENIWAL, JAIPUR 4 NSCS ARE DIRECTLY LINKED TO THE CONTRACT WORKS THAT WERE EXECUTED BY THE ASSESSEE DURING THE PERIOD UNDER CONSIDERATION. THESE FDRS AND NSCS ARE PAYMENTS MADE BY THE ASSESSEE IN PURSUANCE OF TENDER PUBLICATIONS ISSUED BY THE GOVERNMENT WHEREIN IT WA S SPECIFICALLY STARTED THAT THE ASSESSEE HAS TO GIVE FDRS AND NSCS IN SUPPORT OF HIS TENDERS TO BE CONSIDERED FOR ACCEPTANCE. THEREF ORE, THESE FDRS AND NSCS ARE DIRECTLY CONNECTED TO THE BUSINESS CAR RIED ON BY THE ASSESSEE. THEREBY, THE INTEREST DERIVED THEREFROM I S ARISING OUT OF BUSINESS CARRIED ON BY THE ASSESSEE. ACCORDINGLY, T HE SAID INTEREST IS TO BE TAKEN AS BUSINESS INCOME OF THE ASSESSEE ONLY AND NOT TO BE CONSIDERED AS INCOME FROM OTHER SOURCES AS WAS HE LD IN THE CASE OF HODAL SINGH AND GIRI RAJ SINGH & CO. IN ITA NO. 36/ JU/2007 OF THIS BENCH OF THE TRIBUNAL. IN VIEW OF ESTIMATION O F PROFIT BASING THE PECULIAR CIRCUMSTANCES STATED SUPRA AND FINDING THA T INTEREST EARNED ON FDRS AND NSCS IS TO BE TREATED AS BUSINESS INCOM E ONLY, THE PROFIT RATE FIXED HEREIN HAS ALREADY TAKEN CARE OF AND ACCORDINGLY NO SEPARATE ADDITION OF THIS AMOUNT IS NEEDED. AS RIGHTLY OBSERVED BY THE LD. CIT(A), IF THE INCOM E OF THE ASSESSEE IS RE- COMPUTED ON THE BASIS OF FORMULA PROVIDED BY ITAT THEN THE TAXABLE INCOME OF THE ASSESSEE WILL BE LESS THAN THE RETURN ED INCOME. CONSEQUENTLY, THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A ). 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. THE ASSESSEE IS A CONTRACTOR AND THE BOOKS OF ACCOUNT OF THE ITA NO. 317//JP/2012 ACIT VS. SHRI RADHA KISHAN BENIWAL, JAIPUR 5 ASSESSEE ARE REJECTED. IN THESE CIRCUMSTANCES, IF T HE ESTIMATION OF INCOME FORMULA AS LAID DOWN BY ITAT IN ASSESSEE'S OWN CASE IN PROCEEDING YEAR IS APPLIED THEN THE RESULTANT INCOME WILL BE LESS THAN THE RETURNED INCOME OF THE ASSESSEE. IN VIEW THEREOF, WE UPHOLD THE ORDER OF T HE LD. CIT(A). THUS THE APPEAL OF THE REVENUE IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 17- 10-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 17 TH OCT 2014 *MISHRA COPY FORWARDED TO:- 1. SHRI RADHA KISHAN BENIWAL, , JAIPUR 2. THE ACIT, CIRCLE- 3, JAIPUR 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO. 317/JP/2012) AR ITAT, JAIPUR