Kailash Chand Saini, Ladwa V. ITO, Kurukshetra

ITA 32/CHANDI/2012

• Counselvise Citation: 3221514 RSA 2012
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BEN CH B BEFORE MS. SUSHMA CHOWLA, JM AND SHRI MEHAR SINGH, AM ITA NO. 32/CHD/2012 ASSESSMENT YEAR 2008-09 KAILASH CHAND SAINI V. I.T.O. WARD 2, KURUKSHETRA LADWA, KURUKSHETRA PAN: AXDPS 7007 B (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY: SHRI AKHILESH GUPTA DATE OF HEARING: 15.2.2012 DATE OF PRONOUNCEMENT: 06 .03.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE, FOR ASSE SSMENT YEAR 2008-09, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), KARNAL DATED 3.10.2011 U/S 250(6) OF THE INCOME-TAX ACT (I N SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 THE ORDER CONFIRMED BY THE LD. CIT(A) IS NULL A ND VOID AND AGAINST THE LAW OF NATURAL JUSTICE. 2. THE LD. CIT(A) ERRED IN LAW BY CONFIRMING THE IS SUE OF REJECTION OF ACCOUNT BOOKS WHICH IS PROPERLY MAINTA INED AND PRODUCED BEFORE THE LD. CIT(A) DURING PROCEEDINGS. 3. THE LD. CIT(A) WRONGLY CONFIRMED THE ORDER PASSE D BY THE AO BY APPLYING THE RATE OF 12% WHICH IS AGAIN A GAINST THE LAW AS ALL VOUCHERS ALONG WITH BOOKS OF ACCOUNT ARE PRODUCED BEFORE THE LD. CIT(A) AGAIN AND AT THE TIME OF PROC EEDINGS OF APPEAL. 4. THAT THE APPELLANT CRAVES FOR PERMISSION TO ADD, DELETE OR AMEND THE GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. GROUND NOS. 1 AND 4 ARE GENERAL IN NATURE AND HE NCE, NEED NO SEPARATE ADJUDICATION. THUS, THE SAME ARE DISMISSED . 2 3. THE FACTS OF THE CASE AS CULLED UPON FROM THE RE LEVANT RECORD ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR ENGAGED IN THE BUSINESS OF EXECUTING WORKS OF HARYANA STATE. RETURN DECLARI NG INCOME OF RS. 1,68,560/- + AGRICULTURAL INCOME OF RS. 72,000/- WA S FILED ON 11.9.2008. THE CASE WAS TAKEN IN SCRUTINY AFTER IS SUE OF NOTICE U/S 143(2) ON 25.9.2009. THE APPELLANT DECLARED NET PR OFIT AT 1.5% ON GROSS RECEIPTS OF RS. 1,76,93,167/-. DURING THE ASS ESSMENT PROCEEDINGS, THE AO EXAMINED THE BOOKS OF ACCOUNT A ND VOUCHERS PRODUCED BY THE APPELLANT AND NOTED THAT NO MUSTER ROLL WAS MAINTAINED AND RECEIPTS IN TOKEN OF PAYMENTS WERE O BTAINED WHEREON ADDRESS OF THE LABOURERS / MISTRI HAS NOT B EEN MENTIONED. FURTHER, STOCK REGISTER WAS NOT PRODUCED. IN VIEW OF THESE FACTS, THE AO PROPOSED TO REJECT THE BOOKS OF THE ASSESSEE AS PER SECTION 145(3) OF THE INCOME-TAX ACT, 1961. THE AO, FURTHE R AS PER ORDER SHEET ENTRY DATED 3.12.2010 SHOW CAUSED TO THE ASSE SSEE THAT WHEN NO VOUCHERS FOR THE LABOUR PAYMENT, MUSTER ROLL AND STOCK REGISTER HAS BEEN MAINTAINED THEN WHY THE NET PROFIT BE NOT BE ESTIMATED AT 12% OF GROSS RECEIPTS IN VIEW OF THE DECISION OF TH E HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. PRABHAT KUMAR, SIRSA AND IN THE CASE OF M/S SATPAL NAYYAR V. CIT,. THE REPLY FURNISHED BY THE ASSESSEE WAS NOT FOUND TENABLE BY THE AO AND FINALLY, BOOKS WERE REJECTED U/S 145(3) OF THE ACT AND INCOME WAS ASSESSED AT 12% OF GROSS RECEIPTS AFTER REDUCING SALES TAX AND MATERIAL SUPPLIED BY THE GOVERNMENT WHICH IS CHALLENGED. 4. THE LD. CIT(A), ON APPRECIATION OF THE FACTS OF THE CASE UPHELD THE FINDING OF THE AO, REGARDING INVOCATION OF THE PROVISIONS OF SECTION 145(3) OF THE ACT. THE LD. CIT(A) HAS GIVE N FINDING THAT EXPENSES ON RAW MATERIAL PURCHASED AND ON WAGES AS SUCH WORKS OUT TO ABOUT 78.5% OF THE TOTAL RECEIPTS BUT BOTH OF THEM ARE NOT VERIFIABLE FOR WANT OF MUSTER-ROLL AND STOCK REGIST ER. IT WAS FURTHER 3 OBSERVED BY THE LD. CIT(A) THAT SUCH EXPENSES WERE NOT VERIFIABLE FOR WANT OF REQUISITE DETAILS. THE LD. CIT(A) ALSO OBSERVED THAT THE DECLARED CLOSING STOCK AT RS. 65,700/- WAS AS AGAIN ST PURCHASE OF RAW MATERIAL OF RS. 1.06 CRORES WHICH IS NOT VERIFI ABLE FOR WANT OF ANY RECORD. THEREFORE, THE FINDINGS OF THE LD. CIT (A) ARE BASED ON FOUNDATIONAL FACTS WHICH REMAIN UN-REBUTTED, CONSEQ UENTLY, THE AO WAS NOT IN A POSITION TO COMPUTE CORRECT AND TRUE P ROFITS FROM BOOKS OF ACCOUNT. THEREFORE, REJECTION OF BOOKS OF ACCOU NT BY THE AO WAS UPHELD BY THE LD. CIT(A). WE DO NOT FIND ANY INFIR MITY IN THE FINDINGS OF THE LD. CIT(A). GROUND NO. 2 IS DISMISSED. 5. THE AO ESTIMATED THE INCOME OF THE APPELLANT BY APPLYING NET PROFIT OF 12% RELYING ON THE DECISION OF HON'BLE PU NJAB & HARYANA HIGH COURT IN THE CASE OF PRABHAT KUMAR, CONTRACTOR , SIRSA. THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO. 6. WE HAVE PERUSED THE FACT SITUATION OF THE CASE, RELEVANT RECORD AND RIVAL SUBMISSIONS. THE ASSESSEE-APPELLAN T SUBMITTED BEFORE THE LD. CIT(A) THAT RAW MATERIAL HAD BECOME COSTLIER DUE TO BAN ON MINING BY THE HON'BLE SUPREME COURT AFTER AL LOCATION OF WORK AND STATED THE SAME AS MAIN REASON FOR THE LOW PROF IT DURING THE YEAR IN QUESTION. IT WAS FURTHER STATED BY THE ASS ESSEE-APPELLANT BEFORE THE LD. CIT(A) THAT NO WORK OF THE GOVERNMEN T DEPARTMENT IS IN PROGRESS DUE TO SHORT OF RAW MATERIAL USED FOR T HE CONSTRUCTION AND REPAIR OF THE ROAD. THIS FACT IN THE PRESENT C ASE HAS NOT BEEN REBUTTED BY THE AO OR THE LD. CIT(A). THE ASSESSEE HAS RELIED ON THE CERTAIN CASE LAWS BEFORE THE LD. CIT(A). HAVIN G REGARD TO THE DIFFERENCE IN FACT SITUATION OF THE PRESENT CASE, T HE RATE OF 12% CANNOT BE APPLIED IN EACH AND EVERY CASE. THEREFOR E, TO MEET THE ENDS OF JUSTICE AND TO BE FAIR AND REASONABLE, THE AO IS DIRECTED TO 4 ADOPT 7% NET PROFIT INSTEAD OF 12%. THIS GROUND OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON .03.2012 SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNANT MEMBER CHANDIGARH, THE 06 .03.2012 SURESH COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR