Sh. Ravi Kumar Monga, Panchkula V. Addl. CIT, Panchkula

ITA 321/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8503 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-11-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 01-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.321/CHD/2015 (ASSESSMENT YEAR : 2011-12) SH.RAVI KUMAR MONGA VS. THE ADDL.CIT, PROP. M/S VASU CONSTRUCTION CO., PANCHKULA RANGE, FLAT NO.104, GHS 102, SECTOR 20, PANCHKULA. PANCHKULA. PAN: ACDPM9518L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AGGARWAL RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 01.12.2015 DATE OF PRONOUNCEMENT : 08.02.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX (APPEALS), PANCHKULA DATED 22.1.2015 FOR ASSESSMENT YEAR 2011-12. THE APPEAL BEFORE THE CIT (APPEALS) WAS A GAINST THE ORDER OF THE ASSESSING OFFICER MADE UNDER SECTI ON 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT). 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE WORK OF CIVIL CONSTRUCTI ON AS CONTRACTOR. HE FILED HIS RETURN OF INCOME AS ON 30 .9.2011 2 DECLARING AN INCOME OF RS.70,38,010/-. THE ASSESSI NG OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS , FOUND CERTAIN DISCREPANCIES AND AFTER CONSIDERING T HE SUBMISSION OF THE ASSESSEE, REJECTED THE BOOKS OF A CCOUNT OF THE ASSESSEE AS PER PROVISIONS OF SECTION 145(3) OF THE ACT. AFTER REJECTING THE BOOKS, THE ASSESSING OFFI CER NOTED THAT THERE WAS A FALL IN THE GP AND NP RETURNED BY THE ASSESSEE AS COMPARED TO THE PREVIOUS YEAR. THE ASS ESSING OFFICER NOTED CERTAIN JUDGMENTS OF THE HON'BLE PUNJ AB & HARYANA HIGH COURT AND I.T.A.T., CHANDIGARH BENCH W HERE NP OF 10% TO 12% IS CONSIDERED TO BE JUSTIFIED. AF TER CONSIDERING THE PROFIT @ 8% OF THE GROSS RECEIPTS O F RS.18,68,73,143/- WHICH COMES TO RS.1,49,49,851/- A S AGAINST NET PROFIT OF RS.71,23,011/- RETURNED BY TH E ASSESSEE, AN ADDITION OF RS,.78,26,840/- WAS MADE. 3. BEFORE THE LEARNED CIT (APPEALS), DETAILED SUBMISSIONS WERE MADE ON THE MERITS OF THE CASE AS WELL AS AGAINST THE REJECTION OF BOOKS OF ACCOUNT. AFTE R CONSIDERING A NUMBER OF JUDICIAL PRONOUNCEMENTS, HE DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED BY THIS ORDER, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US, RAISING THE FOLLOWING GROUN DS OF APPEAL : 1. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AN D IN LAW, THE WORTHY CIT(A) THROUGH HIS ORDER DATED 22.01.2015 HAS ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF S. 250(6) OF THE INCOME TAX ACT, 1961. 3 2. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO OF REJECTING THE BOOKS OF ACCOUNTS E VEN WHEN THE BOOKS WERE NOT LIABLE TO BE REJECTED AND HENCE THE LD. AO HAS ERRED IN ASSUMING THE POWERS OF ESTIMATING THE INCOME OF THE APPELLANT AT 8% OF TURNOVER OF THE APPELLANT. 3. THAT ON FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO OF APPLYING NET PROFIT RATE OF 8% IN CIVIL CONTRACT BUSINESS OF THE APPELLANT: EVEN WHEN SUCH APPLICATION OF PROFIT RATE IS EXTREMELY HIGH, IS ARBITRARY, WITHOUT APPLICATION OF JUDICIOUS MIND AN D WITHOUT LOOKING INTO EVIDENCES AND HISTORY. 4. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION , DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE TI ME OF HEARING STATED AT THE OUTSET THAT IN VIEW OF THE LATEST JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF TELELINKS VS. CIT (2015) 377 ITR 158 (P&H) , WHEREBY THE HON'BLE COURT HAS LAID DOWN CERTAIN GUIDELINES FOR ESTIMATING THE NP RATE, THE CASE BE SENT BACK TO THE FILE OF THE ASSESSING OFFICER TO RECONS IDER THE SAME. 6. THE LEARNED D.R. DID NOT HAVE ANY OBJECTION TO SEND THE MATTER BACK TO THE ASSESSING OFFICER. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. ON PERUSAL OF THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF TELELINKS (SUPRA ), WE 4 SEE THAT THE HON'BLE COURT IN THE CONTEXT OF ESTIMA TION OF NP, HAS OBSERVED AS FOLLOWS : 10. THE DISCRETION TO DETERMINE A NET PROFIT RATE M UST NECESSARILY BE EXERCISED ON THE BASIS OF RELEVANT F ACTORS WHICH WE SHALL ENUMERATE BUT BEFORE DOING SO, WOULD CLARIFY THAT THESE FACTORS ARE NEITHER EXHAUSTIVE NO R A FINAL WORD ON RELEVANT FACTORS THAT MAY BE CONSIDERED WHILE DETERMINING THE NET PROFIT RATE. A FEW SIGNIFICANT F ACTORS ARE THE PAST TAX HISTORY OF THE ASSESSEE, IF AVAILABLE, AS SESSMENT ORDERS THAT MAY HAVE BEEN PASSED AND ACCEPTED BY TH E DEPARTMENT, THE NATURE OF THE ASSESSEES' BUSINESS, AN APPRAISAL OF THE VALUE OF THE CONTRACT, PREVAILING ECONO MIC CONDITIONS VIS-A-VIS THE ASSESSEE'S BUSINESS, THE PRIC E OF RAW MATERIAL, LABOUR ETC. THE RISE IN PRICE INDEX AS NO TIFIED BY THE CENTRAL GOVERNMENT FROM TIME TO TIME IF APPLICABLE AND IF THE ASSESSING OFFICER PROCEEDS TO RELY UPON ASSESSMENTS OF OTHER ASSESSEES ENGAGED IN SIMILAR BUSINESS TO DO SO ONLY A FTER DETERMINING POINTS OF SIMILARITY ETC. AT THIS STAGE, IT WOULD BE APPROPRIATE TO CLARIFY THAT THE WORD SIMILAR IS NOT S YNONYMOUS WITH THE WORD 'IDENTICAL'. FACTORS REFERRED TO ABOV E ARE MERELY ILLUSTRATIVE AND NOT EXHAUSTIVE OF THE CIRCUMSTANCES THAT MAY OR MAY NOT BE TAKEN INTO CONSIDERATION. 8. IN VIEW OF THE ABOVE, WE FIND IT PROPER TO SEND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICE R TO DECIDE THE ISSUE OF NP ESTIMATION IN THE BACKGROUND OF GUIDELINES GIVEN BY THE HON'BLE HIGH COURT. THE ASSESSING OFFICER CAN ALSO USE ANY OTHER YARDSTICK, WHICH HE THINKS PROPER IN CARRYING OUT SUCH EXERCISE AS T HE HON'BLE HIGH COURT ITSELF HAS CLARIFIED THAT THESE FACTORS ARE NEITHER EXHAUSTIVE NOR A FINAL WORD. NEEDLESS TO ADD 5 THAT THE ASSESSEE BE GIVEN PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF FEBRUARY, 2016. SD/- SD/- (H.L. KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 8 TH FEBRUARY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH