ACIT, Sangrur V. M/s Ram Kumar Govt. Contractor, Sangrur

ITA 32/CHANDI/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8365 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 20-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: B B BANSAL
• Keywords: Depreciation
• Section: 145

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 32/CHD/2016 ASSESSMENT YEAR: 2012-13 THE ACIT, CIRCLE, VS. M/S RAM KUMAR, SANGRUR, GOVT. CONTRACTOR, SANGRUR, PAN NO. AAEFR7094R (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S.K.MITTAL RESPONDENT BY : SH. B.B. BANSAL DATE OF HEARING : 22.03.2016 DATE OF PRONOUNCEMENT : 22 .03.2016 . ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), PATIALA DATED 24.11.2015 RELATING TO ASSESSMENT YE AR 2012-13. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN REDUCING THE NET PROFIT RATE OF 10% APPLIED BY THE ASSESSING OFFICER TO 7.5% EVEN WHILE UPHOLDING THE REJECTION OF THE BOOK RESULT U/S 145( 3). 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN RELYING UPON THE TRADI NG RESULTS OF EARLIER YEAR TO ESTIMATE THE NET PROFIT, IGNORING THE FACT THAT EACH YEAR HAS TO BE ASSESSED ON 2 ITS MERITS WHICH HAS BEEN DONE BY THE ASSESSING OFF ICER, THEREFORE, THE PREVIOUS ASSESSMENT RESULTS CANNOT B E RELIED UPON TO ESTIMATE THE PROFITS IN THE CURRENT ASSESSMENT YEAR. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN FOLLOWING THE DECISION IN THE CASE OF M/S HARBHAJAN SINGH & CO. SANGRUR PARTICULARLY WHEN THE ISSUE HAS NOT ATTAINED ITS FI NALITY. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A CIVIL CONTRACTOR. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE ASSESSING OFFICER NOTICED A NUMBER OF DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAD NOT MAINTAINED ANY PURCHASE / STOC K REGISTER FOR MATERIALS SUCH AS SAND STONE, SPARE PARTS, CONCRETE, BITUMEN, BRICKS, CEMENT, ELECTRICAL GOODS, CHEMICALS AND MANY OTHER MATERIALS. THE ASS ESSEE FAILED TO PRODUCE STOCK REGISTER. THE ASSESSEE ALSO FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE REGARDING DAILY CONSUMPTION OF DIFFERENT I TEMS AND PURCHASES THEREOF. NO PURCHASE REGISTER WAS MAINTAINED. IT IS ALSO STATED THAT DIESEL WAS BEING DIRECTLY PURCHASED FROM THE PETROL PUMPS AUTHORIZED BY THE ASSESSEE, WHENEVER REQUIRED. FURTHER, THE ASSESSING OFFICER NOTED THAT NO DOCUMENTARY EVIDENCE WAS SUBMITTED REGARDING AUTHOR IZATION OF PETROL PUMPS FOR PROVIDING DIESEL DIRECTLY TO THE VEHICLES AND ALSO NO DOCUMENTARY EVIDENCE REGARDING CONSUMPTION OF DIESEL ETC WAS FU RNISHED. THE ASSESSEE HAD ALSO NOT MAINTAINED MEASUREMENT BOOKS AS THE AS SESSEE WAS ENGAGED IN THE BRIDGE WORK. AS PER THE ASSESSING OFFICER, THE ASSESSEE WAS ENGAGED IN CIVIL WORK AND EARTH FILLING WORK AND, THEREFORE, M ESURMENET BOOKS WERE REQUIRED TO BE MAINTAINED. HOWEVER, THE ASSESSEE DI D NOT MAINTAIN THE MEASUREMENT BOOKS AS STATED BY THE ASSESSING OFFICE R. THE ASSESSEE ALSO DID NOT MAINTAIN MUSTER ROLL. THE ASSESSING OFFICER FUR THER NOTED THAT THE ASSESSEE HAD CONSUMED HUGE MATERIAL IN THE CONSTRUC TION WORK AND THEREFORE, 3 CONSUMPTION REGISTER WAS REQUIRED TO BE MAINTAINED IN ORDER TO VERIFY THE CONSUMPTION OF STOCK OF RAW MATERIAL USED IN THE WO RK AND ALSO THE STOCK LEFT WITH THE ASSESSEE AT THE END OF THE EACH DAY. THE ASSESSEE FAILED TO FURNISH THE NAMES AND ADDRESS OF THE TRUCK OWNERS T O WHOM PAYMENT WERE MADE OF PURCHASE OF VARIOUS ITEMS. IN VIEW OF THE A BOVE DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE ASSESSING OFFICER R EJECTED THE BOOK RESULTS U/S 145 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AND COMPUTED PROFIT BY APPLYING PROFIT RATE OF 10% ON THE GROSS RECEIPT S AND COMPUTED THE INCOME ACCORDINGLY. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 1,84,91,010/-. 4. ON APPEAL, THE CIT(A) UPHELD THE FINDINGS OF THE ASSESSING OFFICER WITH REGARD TO THE REJECTION OF BOOKS OF ACCOUNT. H OWEVER, CONSIDERING THE PROFIT RATE ESTIMATED IN ASSESSMENT YEAR 2011-12 IN ASSESSEES CASE, THE CIT(A) REDUCED THE NET PROFIT RATE FROM 10% TO 7.5% AND DIRECTED THE ASSESSING OFFICER TO COMPUTE THE INCOME OF THE ASSE SSEE ACCORDINGLY. 5. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, WE FIND THAT ISSUE IS SQUARELY COVERED BY THE DECISION OF THIS B ENCH OF THE TRIBUNAL DATED 16.2.2015 IN ASSESSEES CASE IN ITA NO. 1082/CHD/20 14 AND ITA NO. 1055/CHD/2014 RELATING TO ASSESSMENT YEAR 2011-12. WHILE DECIDING A SIMILAR ISSUE, THE TRIBUNAL HELD AS UNDER:- 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS GIVEN VARIOUS REASONS FOR REJECTION OF BOOKS OF ACCOUNT. THE ASS ESSEE IS NOT IN APPEAL AGAINST THE REJECTION OF BOOKS OF ACCOUNT 4 BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARN ED CIT (APPEALS). THEREFORE, IT STANDS ESTABLISHED O N RECORD THAT THE ASSESSEES BOOKS OF ACCOUNT WERE NO T RELIABLE AND AS SUCH, NO OPTION WAS LEFT WITH THE AUTHORITIES BELOW EXCEPT TO ESTIMATE THE PROFIT OF THE ASSESSEE. SIMILARLY, THE REVENUE MERELY CONTENDED THAT FOR GRANT OF DEPRECIATION THE LEARNED CIT (APPEALS) SHOULD NOT FOLLOW THE DECISION OF THE TRIBUNAL IN T HE CASE OF HARBHAJAN SINGH & CO. (SUPRA) BECAUSE IT HA S BEEN CHALLENGED IN HIGH COURT. MERELY BECAUSE THE APPEAL OF THE DEPARTMENT IS PENDING IN HIGH COURT I S NO GROUND TO CHALLENGE THE DECISION OF THE TRIBUNAL TH E LEARNED CIT (APPEALS) WAS BOUND TO FOLLOW THE DECIS ION OF THE TRIBUNAL UNLESS IT IS REVERSED. THE ONLY Q UESTION LEFT IN BOTH THE CROSS APPEALS IS THE ESTIMATE OF T HE PROFIT BY APPLYING PROFIT RATE OF 7.5%. THE LEARNED CIT (APPEALS) CONSIDERED THE HISTORY OF THE ASSESSEE IN WHICH THE PROFIT WAS ESTIMATED LAST YEAR BY APPLYING PROF IT RATE OF 6.5% AND ACCORDINGLY APPLIED THE PROFIT RATE OF 7.5%. THE I.T.A.T. CHANDIGARH BENCH RECENTLY IN THE CASE OF ASHOK KUMAR IN ITA NO.340/CHD/2014 AND C.O.NO.24/CHD/2014 VIDE ORDER DATED 6.2.2014 CONSIDERED THE FACTS OF THE CASE AND THE DECISION O F HON'BLE HIGH COURT RELIED UPON BY THE LEARNED D.R F OR THE REVENUE DIRECTED TO APPLY NET PROFIT RATE OF 8% . SINCE IT IS A CASE OF FIRM, THEREFORE, THE ASSESSIN G OFFICER HAS ALLOWED STATUTORY DEDUCTION WHICH COULD NOT BE SUBJECT MATTER IN CHALLENGE BEFORE THE TRIBUNAL. FURTHER THE ASSESSEE HAS NOT RECONCILED THE RECEIPT S BEFORE THE CIT (APPEALS) AS WELL AS BEFORE US. THEREFORE, NO FURTHER INTERFERENCE IS CALLED FOR I N THE ESTIMATE OF TOTAL RECEIPTS. THE ASSESSEES APPEAL THUS WOULD HAVE NO MERIT AND IS LIABLE TO BE DISMISSED. SIMILARLY, THE LEARNED CIT (APPEALS) CONSIDERING TH E HISTORY OF THE ASSESSEE IN WHICH LOWER PROFIT RATE HAVE BEEN APPLIED BY THE ASSESSING OFFICER IN PRECEDING YEAR 2010-11 HAVE ALREADY APPLIED THE PROFIT RATE OF 7.5 % FOR THE PURPOSE OF ESTIMATING THE PROFIT OF THE ASSESSE E. 5 THEREFORE, THE DEPARTMENTAL APPEAL WOULD HAVE ALSO NO MERIT AND IS LIABLE TO BE DISMISSED. IN VIEW OF T HE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN BOTH THE CROSS APPEALS. THEREFORE, BOTH THE CROSS APPEALS A RE ACCORDINGLY, DISMISSED. 6. AT THE TIME OF HEARING OF THE APPEAL, BOTH THE P ARTIES ADMITTED THAT THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THAT OF AS SESSMENT YEAR 2011-12. THE RIVAL CONTENTIONS ARE ALSO SIMILAR. RESPECTFULLY FO LLOWING THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF CIT(A) AND ACCORDINGLY WE UPHOLD THE IMPUGNED ORDER . 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.03.2016 SD/- SD/- (ANNAPURNA MEHROTRA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 22 ND MARCH, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR