Income Tax Officer-2(1), Lucknow V. M/s. D.M.Brothers, Lucknow

ITA 319/LKW/2012

• Counselvise Citation: 31923714 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO.319/LKW/2012 ASSESSMENT YEAR:2008-09 ITO 2(1) LUCKNOW V. M/S D. M. BROTHERS 51, RAM TIRTH MARG LUCKNOW PAN:AACFD7598J ( A PP ELLANT ) ( RES P ONDENT ) A PP ELLANT B Y : SMT. RANU BISWAS, D.R. RESPONDENT BY: SHRI. D. B. TANEJA, C.A. DATE OF HEARING: 04.06.2013 DATE OF PRONOU NCEMENT: 07.08.2013 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY TH E REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON A SOLITARY GROUND THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE EX TRA PROFIT ADDITION OF ` 16,76,195 WITHOUT APPRECIATING THAT THE ASSESSING OFFICER WAS COMPELLED TO ESTIMATE THE PROFIT AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE CLOSING WORK-IN-PROGRESS AS ALSO THE EXPENSES CLAIMED AND THAT THE NET PR OFIT RATE APPLIED BY THE ASSESSING OFFICER WAS REASONABLE CONS IDERING THAT THE ACT ITSELF PROVIDES FOR NET PROFIT RATE OF 8% IN SECTION 44AD. 2. THE FACTS IN DISPUTE BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR A ND HAS DECLARED NET INCOME AT ` 4,98,748.16 AFTER CLAIMING DEDUCTION ON VARIOU S EXPENSES ON GROSS RECEIPT OF ` 5,21,41,372. SINCE THE DETAILS OF CLOSING STOC K IN PROGRESS WERE NOT FURNISHED BY THE ASSESSEE DESPITE SUFF ICIENT OPPORTUNITIES, THE ASSESSING :-2-: OFFICER REJECTED THE BOOKS OF ACCOUNT. THE OTHER REASON S FOR REJECTION OF THE BOOKS OF ACCOUNT ARE THAT THE ASSESSEE HAS FILED PHOTOCOPIES OF PURCHASE MATERIAL AND NO REGISTER OF THE SAME WAS FURNISHED ALONG WITH THE BOOKS OF ACCOUNT. WHILE REJECTING THE BOOKS OF ACCOUNT, IT WAS ALSO OBSERVED BY THE ASSESSING OFFICER THAT MOST OF THE VOUCHERS ETC. FURNISHED BY THE ASSESSEE ARE ON LO OSE PAPER SHEETS. SINC E THE ACCOUNTS WERE NOT PROPERLY MAINTAINED, THE ASSESSING OF FICER REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE GROSS PROFIT RATE AT 6%, AGAINST WHICH AN APPEAL WAS FILED BEFORE THE LD. CIT(A). 3. THE LD. CIT(A) FOLLOWING THE EARLIER ORDERS OF THE TRIBUNAL ACCEPTED THE BOOK RESULT DECLARED BY THE ASSESSEE AND DELETED THE ADDITION. 4. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE ASSESSEE HAS NEIT HER PRODUCED THE DETAILS OF CLOSING STOCK AND REGISTER FOR PURCHASE OF MATE RIAL NOR MAINTAINED PROPER VOUCHERS. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY REJECT ED THE BOOKS OF ACCOUNT AND ESTIMATED THE NET PROFIT RATE AT 6% ON THE GROSS RECEIPTS. 5. THE LD. COUNSEL FOR THE ASSESSEE HA S CONTENDED THAT NO DOUBT ON ACCOUNT OF DEFICIENCY IN THE BOOKS OF ACCOUNT, THE BOOKS OF ACCOUNT CAN BE REJECTED, BUT AFTER REJECTING THE BOOKS OF ACCOUNT NET PROFIT RATE IS TO BE ESTIMATED EITHER ON THE BASIS OF THE PAST RECORD OF TH E ASSESSEE OR OTHER COMPARABLE CASE. THE ASSESSING OFFICE R HAS APPLIED THE NET PROFIT RATE OF 6% WITHOUT BRINGING AN Y COMPARABLE CASE, WHER EAS THE LD. CIT(A) HAS OBSERVED WHILE DELETING THE AD DITION THAT IN EARLIER YE ARS NET PROFIT RATE AS APPROVED BY THE APPELLATE AUTHORIT IES WAS BETWEEN 0.89% AND 3%. IN ASSESSMENT YEARS 2004-05 TO 2007-08 THE NET PROFIT RATE WAS ESTIMATED AT 3% BY THE LD. CIT(A) WHICH WAS LATER ON CONFIRMED BY THE TRIBUNAL. THE COMPARATIVE CHART FOR THE SAME IS PLACED AT PAGE 33 OF THE COMPILATION OF THE ASSESSEE. 6. HAVING GONE THROUGH THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE BOOKS OF ACCO UNT OF THE ASSESSEE WERE :-3-: REJECTED IN DIFFERENT ASSESSMENT YEARS AND NET PROFIT RATE WAS ESTIMATED. IN SOME OF THE YEARS IT WAS RATHER ESTIMATE D EVEN LESS THAN 1%, BUT DURING THE LAST FEW ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2004-05 TO 2007-08 THE NET PROFIT RATE WAS ESTIMATED AT 3% BY THE LD. CIT(A) WHICH WAS LATER ON APPROVED BY THE TRIBUNAL IN ASSE SSMENT YEAR 2004-05. FOLLOWING THE EARLIER YEARS ORDER OF THE APPELLATE AU THORITIES, THE LD. CIT(A) HAS ACCEPTED THE NET PROFIT RATE DECLARED BY THE ASSESSEE AS THE ASSE SSEE HAS DECLARED NET PROFIT RATE AT 3.07% WHICH IS MORE THAN THE RATE ESTIMATED IN THE PAST YEARS. UNDISPUTEDLY TH E ASSESSEE HAS NOT MAINTA INED PROPER BOOKS OF ACCOUNT, RELEVANT REGISTER AND THE RE QUIRED MATERIAL WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER FOR VERIFI CATION. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. BUT ONCE THE BOOKS OF ACCOUNT ARE REJECTED, THE ONLY OPTION LEFT WITH THE ASSESSING OFFICER IS TO ESTIMATE TH E INCOME OF THE ASSESSEE, BUT THE INCOME CAN ONLY BE ESTIMATED EITHER ON THE BASIS OF THE PAST RE CORDS OF THE ASSESSEE OR BY BRINGING A COMPARABLE CASE. IN THE INSTANT CASE, THE A SSESSING OFFICER HAS NOT BROUGHT ANY COMPARABLE CASE WHIL E ESTIMATING THE NET PROFIT RATE AT 6%, WHEREAS THE LD. CIT(A) WHILE ESTI MATING THE NET PROFIT RATE HAS TAKEN INTO ACCOUNT THE PAST RECORD OF THE ASSE SSEE. THEREFORE, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS PROPERLY AD JUDICATED THE ISSUE AND WE FIND NO INFIRMITY THEREIN. ACCORDINGLY WE CONFIR M THE ORDER OF THE LD . CIT(A) ON THIS ISSUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN TH E OPEN COURT ON 7.8.2013. SD/- SD/- [PRAMOD KUMAR] [S UNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:7.8.2013 JJ:0907 :-4-: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR