SINGHAL BUILDER CONTRACTOR, Kota V. ACIT, BHARATPUR

ITA 328/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5177 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 28-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Keywords: Depreciation
• Section: 143(3); 147; 148; 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 328/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2002-03 M/S. SINGHAL BUILDERS CONTRACTOR A-98, RANJEET NAGAR, BHARATPUR CUKE VS. THE DCIT CIRCLE- BHARATPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAPFS 9809 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 388/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2002-03 THE DCIT CIRCLE- BHARATPUR CUKE VS. M/S. SINGHAL BUILDERS CONTRACTOR A-98, RANJEET NAGAR, BHARATPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAPFS 9809 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL. CIT-. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/06/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 21 /06/2016 VKNS'K@ ORDER PER BHAGCHAND, AM BOTH THESE APPEALS ARE THE CROSS APPEALS FILED AGAI NST THE ORDER OF THE LD. CIT(A), ALWAR DATED 28-01-2013 FOR THE A SSESSMENT YEAR 2002- 03. ITA NO. 328/JP/2013 M/S. SINGHAL BUILDERS CONTRACTOR VS. DCIT, CIRCLE- BHARATPUR . 2 2.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO. 1, 2.1, 3, 4 AND 5. HENCE, T HE SAME ARE DISMISSED BEING NOT PRESSED. 3.1 NOW THE SOLITARY ISSUE OF THE ASSESSEE IN GROUN D NO. 2.2 IS THAT LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN APPLYING NET PROFIT RATE OF 10.93% AS AGAINST 12.5% MADE BY THE AO AND AS AGAINST 8.99% (AT ALL STAGES BEFORE INTEREST TO BANK AND PA RTNERS AND DEPRECIATION), DECLARED BY THE ASSESSEE . 3.2 THE REVENUE HAS RAISED THE SOLITARY ISSUE AS UN DER:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A), ALWAR WAS JUSTIFIED IN HOLDING THAT NET PROFIT RATE OF 10.93% IS APPROPRIATE IN THE CASE OF THE AS SESSEE WITHOUT GIVING PROPER JUSTIFICATION. 3.3 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A CIVIL CONTRACTOR AND RETURN OF INCOME WAS FILED ON 30-12-2002. PROCEEDIN GS WERE INITIATED U/S 147 BY ISSUE OF NOTICE U/S 148 ON 25-05-2004 AND A SSESSMENT WAS COMPLETED U/S 143(3) ON 27-02-2006 AT TOTAL INCOM E OF RS. 24,05,273/-. LATER ON, ORDER DATED 28-03-2008 U/S 263 WAS PASSED BY THE THEN LD. CIT, ALWAR SETTING ASIDE THE ASSESSMENT ORDER TO BE REFR AMED AFRESH. THE APPEAL OF THE ASSESSEE AGAINST ORDER U/S 263 HAD BE EN DISMISSED BY THE ITAT IN ITA NO. 811/JP/2008 FOR THE ASSESSMENT YEAR 2002-03 VIDE ITS ORDER DATED 27-06-2008. THE AO OBSERVED THAT NET PR OFIT RATE DECLARED BY ITA NO. 328/JP/2013 M/S. SINGHAL BUILDERS CONTRACTOR VS. DCIT, CIRCLE- BHARATPUR . 3 THE ASSESSEE IS ON LOWER SIDE AS COMPARED TO PROFIT IN THIS LINE OF BUSINESS. THE AO OBSERVED THAT IN THE ABSENCE OF BOOKS OF ACC OUNT, DOCUMENTS AND VOUCHERS, CORRECTNESS AND COMPLETENESS OF THE RETU RN WAS NOT ESTABLISHED AND THE ACCOUNTING RESULTS AS DECLARED REMAINED UNV ERIFIED. THE AO HAD NO OPTION EXCEPT TO INVOKE THE PROVISIONS OF SECTIO N 145(3) OF THE ACT AND THUS BOOKS RESULTS WERE REJECTED. THE AO HOWEVE R, OBSERVED THAT THE LD. CIT(A) VIDE HIS ORDER DATED 03-12-2004 HAD APPL IED THE NET PROFIT RATE OF 12.5% SUBJECT TO DEPRECIATION, INTEREST AND REMU NERATION TO THE PARTNERS AND INTEREST TO THIRD PARTIES IN ASSESSEE'S OWN CAS E FOR THE ASSESSMENT YEAR 2001-02. THE AO THUS OBSERVED THAT KEEPING IN VIEW THE PAST HISTORY OF THE CASE, FACTS AND CIRCUMSTANCES OF THE INSTANT CA SE AND DECISION OF THE APPELLATE AUTHORITIES INCLUDING THE TRIBUNAL IN THE CASE OF CONTRACTORS APPLIED THE NET PROFIT RATE OF 12.5% ON GROSS CONTR ACT RECEIPTS WITHOUT ANY DISTINCTION BETWEEN GOVT. CONTRACTOR RECEIPTS AND S UB-CONTRACT RECEIPTS SUBJECT TO ALLOWING INTEREST, DEPRECIATION AND INTE REST TO PARTNERS AND INTEREST TO THE THIRD PARTIES INCLUDING BANKS. 3.4 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO APPLIED THE NET PROFIT RATE OF 10.93% (S UBJECT TO INTEREST TO BANK AND PARTNERS AND DEPRECIATION) BY OBSERVING AS UNDER:- 4.3..CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED O PINION ITA NO. 328/JP/2013 M/S. SINGHAL BUILDERS CONTRACTOR VS. DCIT, CIRCLE- BHARATPUR . 4 THAT THE RATE APPLIED BY THE AO IS ON THE HIGHER SI DE CONSIDERING THE PAST HISTORY OF THE CASE OF THE APP ELLANT. TAKING THE AVERAGE OF THE RATES APPLIED/ UPHELD IN THE PAST FIVE YEARS AS MENTIONED ABOVE IN THE TABLE, IT IS H ELD THAT APPLICATION OF NET PROFIT RATE OF 10.93% (SUBJECT T O INTEREST TO BANK AND PARTNERS AND DEPRECIATION) WOULD BE APPROP RIATE TO ESTIMATE THE INCOME OF THE APPELLANT FOR A.Y. 2002- 03. THE AO IS DIRECTED TO RE-COMPUTE THE TOTAL INCOME ACCOR DINGLY BY APPLYING THE NET PROFIT RATE OF 10.93% ((SUBJECT TO INTEREST TO BANK AND PARTNERS AND DEPRECIATION) AND ALLOW NE CESSARY RELIEF TO THE APPELLANT. THE GROUND NO. 2.2 IS PART LY ALLOWED. 3.5 AGAINST THE ORDER OF THE LD. CIT(A), THE ASSESS EE AND REVENUE ARE IN APPEAL BEFORE ME FOR REDRESSAL THEIR GRIEVANCE. 3.6 THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT T HE GROSS RECEIPT OF THE ASSESSEE IS HIGHER I.E. RS. 9,29,79,349/- IN TH E IMMEDIATE ASSESSMENT YEAR AS COMPARED TO PRECEDING ASSESSMENT YEAR I.E. RS. 5,02,27,688/-. THE ASSESSEE HAS SHOWN THE GROSS PROFIT RATE OF 8.99% A ND THE AO APPLIED THE GROSS PROFIT RATE OF 12.50% WHICH WAS RESTRICTED TO 10.93% BY THE LD. CIT(A). THE LD. AR OF THE ASSESSEE HAS SUBMITTED TH AT THE LD. CIT(A) HAS NOT TAKEN INTO CONSIDERATION THE TURNOVER OF THE A SSESSEE AND THE GROSS PROFIT RATE SHOWN BY THE SHOULD REASONABLY BE CONSI DERED BY THE LOWER AUTHORITIES. THE LD. CIT(A) HAS THUS ERRED IN RESTR ICTING THE SAME TO 10.93%. 3.7 THE LD. DR RELIED ON THE ORDER OF AO. ITA NO. 328/JP/2013 M/S. SINGHAL BUILDERS CONTRACTOR VS. DCIT, CIRCLE- BHARATPUR . 5 3.8 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORD THA T THE ASSESSEE HAS SHOWN THE GROSS PROFIT RATE OF 8.99% IN THE YEAR UN DER CONSIDERATION AND THE AO HAS CONFIRMED THE SAME AT 12.50%. HOWEVER, I N FIRST APPEAL, THE GROSS PROFIT RATE WAS RESTRICTED TO 10.93% BY THE LD. CIT(A) CONSIDERING THE FOLLOWING ASSESSMENT YEARS AVERAGE NET PROFIT RATE APPLIED (SUBJECT TO INTEREST, DEPRECIATION ETC) . A.Y. GROSS RECEIPTS NP RATE APPLIED SUBJECT TO INTEREST, DEPRECIATION ETC. 2001-02 5.02 CRORES 11.2% 2000-01 2.84 CRORES 10.96 1998-99 3.17 CRORES 10% 1997-98 11.5% 1996-97 11% IT IS ALSO NOTICED THAT IN THE ASSESSMENT YEAR 2001 -02 THE ITAT HAS CONFIRMED THE GROSS PROFIT RATE OF 11.50%. IT IS AL SO OBSERVED THAT THE LD. CIT(A) HAS TAKEN THE AVERAGE GROSS PROFIT RATE OF L AST FIVE YEARS (SUPRA) WHICH COMES TO 10.93%. I FEEL THAT THE LD. CIT(A) H AS GIVEN DUE CONSIDERATION TO THE SUBMISSIONS OF BOTH THE PARTIE S AND ALLOWED RELIEF TO HIS BEST POSSIBLE EXTENT. HENCE, I FIND NO INFIRMIT Y IN THE ORDER OF THE LD. CIT(A) WHICH IS SUSTAINED. THUS THE APPEALS OF THE ASSESSEE AND REVENUE BOTH ARE DISMISSED. ITA NO. 328/JP/2013 M/S. SINGHAL BUILDERS CONTRACTOR VS. DCIT, CIRCLE- BHARATPUR . 6 4.0 IN THE RESULT, THE APPEALS OF THE ASSESSEE AND THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/06/2 016. SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21/06/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THEAPPELLANT-M/S.SINGHAL BUILDERS CONTRACTOR, BHARA TPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE- BHARATPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 328/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR