ACIT, Alwar V. RAJENDRA MITTAL CONSTRUCTION COMPANY P. LTD., Alwar

ITA 331/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5096 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 30-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Rejection of books of accounts; Corroborative evidences
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 331/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-2, ALWAR. CUKE VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. LTD., 1/81 RHB BHIWADI, TIJARA, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACCR 2774 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ C.O. NO. 17/JP/2014 ARISING OUT OF ITA NO. 331/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. LTD., 1/81 RHB BHIWADI, TIJARA, ALWAR. CUKE VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-2, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACCR 2774 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11.07.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 20/07/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THE REVENUE AND THE ASSESSEE HAS CHALLENGED THE OR DER OF LD. CIT (A), ALWAR DATED 17.02.2014 BY FILING THE APPEAL AND CROSS OBJ ECTION RESPECTIVELY. FIRST, WE TAKE UP REVENUES APPEAL IN ITA NO. 331/JP/2014 WHEREIN THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL :- 2 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS), ALWA R HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF TH E CASE IN RESTRICTING THE PROFIT ADDITION OF RS. 96,27,290/- TO RS. 30,74,814/- BY APPLYING N.P. RATE OF 5% INSTEAD OF N.P. RATE OF 8% AS APPLIED BY ASSESSING OFFICER, WITHOUT APPRECIATING THE FACT S OF THE CASE AND DISCREPANCIES POINTED OUT BY A.O. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS), ALWA R HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF TH E CASE IN DELETING THE RECEIPTS/SALES OF RS. 2,15,15,138/- MA DE BY AO ON ACCOUNT OF LESS RECEIPTS SHOWN BY THE ASSESSEE FROM VARIOUS PROJECTS IN THE BOOKS. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 143(3) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VID E ORDER DATED 4 TH MARCH, 2013. WHILE FRAMING THE ASSESSMENT, THE AO MADE ADDITION OF RS. 96,27,290/- ON ACCOUNT OF PROFIT ADDITION BY ADOPTING THE NET PROFIT @ 8% OF TOTAL CONTRACT RECEIPTS RS. 18,25,57,305/- (I.E. 1,46,04,584 49,77,294). TH E ASSESSEE AGGRIEVED BY THIS ORDER PREFERRED AN APPEAL BEFORE LD. CIT (A), WHO A FTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL. WHILE ALLOWING THE APPE AL, THE LD. CIT (A) ADOPTED THE NET PROFIT @ 5% ON THE TURNOVER DECLARED BY THE ASS ESSEE AT RS. 16,10,52,607/-. THE REVENUE AND ASSESSEE BOTH AGGRIEVED BY THE DECI SION OF THE LD. CIT (A), HAVE PREFERRED APPEAL AND CROSS OBJECTION RESPECTIVELY. 3. THE FIRST GROUND OF THE REVENUE IS WITH REGARD T O THE ADOPTION OF NET PROFIT @ 5% IN PLACE OF 8% AS ADOPTED BY THE AO. 3.1. THE LD. D/R VEHEMENTLY ARGUED THAT LD. CIT (A) WAS NOT JUSTIFIED IN REDUCING THE PROFIT. THE LD. D/R SUBMITTED THAT UNDER THE FA CTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) OUGHT TO HAVE CONFIRMED THE ADDITIO N AS MADE BY THE AO. THE LD. 3 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. D/R FURTHER SUBMITTED THAT THE AO HAS ENUMERATED TH E DISCREPANCIES IN THE BOOKS OF ACCOUNT. THE AO HAS OBSERVED THAT THE WHOLE RECEIPT S RELATED TO CONTRACT WERE NOT ACCOUNTED FOR. HE FURTHER SUBMITTED THAT IN THE CO NSTRUCTION LINE NET PROFIT TO THE EXTENT OF 12.5% AND 10% RESPECTIVELY HAS BEEN CONFI RMED BY THE HONBLE JURISDICTIONAL HIGH COURT. 3.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE OPPOSED THE SUBMISSIONS AND SUBMITTED THAT ALL THE DETAILS WERE SUPPLIED TO THE AO AND THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING THE SAME METHOD WHICH H AS BEEN ACCEPTED BY THE REVENUE. THE LD. COUNSEL SUBMITTED THAT THE AO HAS WRONGLY OBSERVED THAT ASSESSEE HAS SHOWN NET PROFIT @ 3.79% ON NET RECEIP TS. SINCE SERVICE TAX IS ALLOWED TO BE CLAIMED AS EXPENDITURE, THEREFORE, NET PROFIT PERCENTAGE OUGHT TO BE CALCULATED ON GROSS CONTRACT RECEIPTS AND NOT ON NET CONTRACT RECEIPTS. LD. COUNSEL SUBMITTED THAT ASSESSEE HAS ACTUALLY EARNED PROFIT OF RS. 49. 77 LACS ONLY FROM CONSTRUCTION BUSINESS. THUS, IF ACTUAL CONSTRUCTION PROFIT IS C ONSIDERED, THEN NET PROFIT RATE IS ONLY 3.09% AS AGAINST 3.79% SHOWN BY THE ASSESSEE. ACCO RDINGLY, AFTER CONSIDERING THE ABOVE DISCREPANCIES, AO APPLIED THE NET PROFIT RATE OF 8% ON CONTRACT RECEIPTS RESULTING INTO TRADING ADDITION OF RS. 96,27,290/-. THE LD. COUNSEL REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. IT IS SU BMITTED THAT THE LABOUR CHARGES TO WORKERS SUPPLIED BY THE SUB-CONTRACTORS IS RS. 1,11 ,94,689/-. HE SUBMITTED THAT THE LABOUR CHARGES WERE PAID AFTER DEDUCTING TAX THEREO N AND IN THIS REGARD HE DREW OUR ATTENTION TO PAGES 100-101 OF THE PAPER BOOK. THE L D. COUNSEL FURTHER SUBMITTED THAT WAGES PAID TO OWN LABOURERS AT RS. 6,36,865/-. THIS AMOUNT REPRESENTS MONTHLY WAGES PAID TO WORKERS AFTER DEDUCTING ESI AND PF. P ROPER RECORDS AND REGISTER HAS 4 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. BEEN MADE AVAILABLE BY THE ASSESSEE. HE FURTHER SU BMITTED THAT THE AO OBSERVED THAT THE RECEIPTS AS PER FORM 26AS WERE HIGHER THAN THE CONTRACT RECEIPTS SHOWN BY THE ASSESSEE IN ITS BOOKS BY RS. 2,15,15,138/-. HE SUBMITTED THAT THE TOTAL RECEIPTS DECLARED BY THE ASSESSEE ARE RS. 16.10 CRORES AND A S PER FORM 26AS IS RS.17.63 CRORES RESULTING IN VARIATION OF RS. 1.54 CRORES AN D NOT RS. 2.15 CRORES AS STATED BY THE AO. THE AO HAS NOT GIVEN CREDIT OF EXCESS RECE IPTS WHICH HAS ALREADY BEEN ACCOUNTED FOR IN THE BOOKS BUT NOT SHOWN IN FORM 26 AS. THE CHART SHOWING RECONCILIATION OF JOB WORK AS PER BOOKS OF ACCOUNTS AND AS PER FORM 26AS IS AT PAGE 79 OF PAPER BOOK. IN CONSIDERING THE RECEIPTS, AO HAS NOT CONSIDERED THE INCREASE IN STOCK IN PROGRESS OF RS. 1,65,61,100/- ON WHICH THE PARTY HAS DEDUCTED TAX AT SOURCE BUT THE SAME IS SHOWN AS STOCK IN PROCESS. THE LD. CIT (A) AFTER CONSIDERING THE RECONCILIATION OF THE AMOUNT SHOWN IN THE BOOKS AND THAT AS PER FORM 26AS ACCEPTED THE RECEIPT DECLARED BY THE ASSESSEE. THE LD. COUNSEL FURTHER SUBMITTED THAT IN SUBSEQUENT YEARS I.E. 12-13 AND 13-14 THE A O HAS ASSESSED THE INCOME OF THE ASSESSEE BY PASSING ORDER UNDER SECTION 143(3). THE NET PROFIT RATE DECLARED BY THE ASSESSEE AS WELL AS BOOKS OF ACCOUNTS HAS BEEN ACCEPTED. HE SUBMITTED THAT THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES IN TH E PRESENT CASE. THEREFORE, HE SUBMITTED THAT EVEN THE RATE ADOPTED BY THE LD. CIT (A) IS ON HIGHER SIDE AGAINST WHICH THE ASSESSEE HAS FILED CROSS OBJECTION. 3.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE LD. CIT (A) HAS REDUCED THE PROFIT RATE AT 5% BY OBSERVING AS UNDER :- 4.18. THE APPELLANT HAS SUBMITTED THAT IT HAS MAIN TAINED PROPER BOOKS OF ACCOUNTS AND BOOKS ARE DULY AUDITED U/S 44AB OF THE IT ACT. COMPLETE BOOKS OF ACCOUNTS ALONG WITH PURCHASE BILLS, CONTRACT REC EIPTS BILLS, VOUCHERS AND OTHER REGISTERS MAINTAINED BY THE ASSESSEE WERE PRO DUCED BEFORE THE AO IN 5 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. THE COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLANT IS NOT MAINTAINING PROJECT WISE DETAILS SINCE IT IS VERY EXPENSIVE AND BY LOOKING AT THE SIZE OF THE BUSINESS IT IS NOT FEASIBLE. IT IS ALSO STATED THAT THE APPELLANT IS COMPLYING WITH THE REQUIREMENTS OF ACCOUNTING STANDARD AS-7 AND TH E BOOKS OF ACCOUNTS ARE DULY AUDITED UNDER THE COMPANIES ACT, 1956. 4.19. I HAVE CONSIDERED THE MATERIAL AVAILABLE ON R ECORD AND FIND THAT ALTHOUGH COMPLETE DETAILS OF LABOUR CHARGES PAID, S UB-CONTRACTOR PAYMENTS AND SUNDRY CREDITORS HAVE BEEN FILED BUT CERTAIN C ONFIRMATIONS COULD NOT BE PRODUCED BY THE APPELLANT. HAVING GONE THROUGH THE DETAILED SUBMISSIONS FILED BY THE APPELLANT ALONG WITH A COPY OF THE JUD ICIAL DECISIONS CITED THEREIN, I HOLD THAT THE APPELLANT HAS NOT BEEN ABLE TO PLAC E ON RECORD ENOUGH MATERIAL TO JUSTIFY THE BOOK RESULTS DECLARED FOR T HE PERIOD UNDER CONSIDERATION. THUS, I HOLD THAT AO WAS JUSTIFIED I N INVOKING THE PROVISIONS OF SECTION 145(3) OF THE IT ACT. 4.20. HAVING CONSIDERED THE MATERIAL AVAILABLE ON R ECORD, NOW THE ISSUE ARISES IS WHAT SHOULD BE THE RATE OF PROFIT WHICH N EEDS TO BE APPLIED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. A NUMB ER OF JUDICIAL DECISIONS HAVE BEEN QUOTED BY THE APPELLANT AND IN CERTAIN OT HER DECISIONS IT HAS BEEN HELD THAT IN THE CASE OF A BEST JUDGMENT ASSESSMENT , THE BEST GUIDE WOULD BE THE PAST HISTORY OF THE ASSESSEE. I AGREE WITH THE SAME LOGIC AND FIND THAT THE PAST ASSESSMENTS WHICH HAVE BEEN FRAMED IN THE CASE OF THE APPELLANT ARE AS UNDER :- ASSTT. YEAR RETURNED INCOME ASSESSED INCOME REMARKS 2005 - 06 RS.768060/ - RS.971532/ - THE AO INVOKED THE PROVISION OF SECTION 145(3) AND ASSESSED THE INCOME @ 3.75% AS AGAINST 3.24% SHOWN BY THE ASSESSEE. 2006 - 07 RS.1627970/ - RS.1775607/ - THE AO INVOKED THE PROVISION OF SECTION 145(3) AND ASSESSED THE INCOME @ 4.00% AS AGAINST 3.66% SHOWN BY THE ASSESSEE. 2009 - 10 RS.9397250/ - RS.9897250 / - THE AO MADE LUMP SUM ADDITIONS OF RS.500000/- TO COVER UP THE LEAKAGE OF REVENUE, TO MEET THE END OF JUSTICE. (NP SHOWN BY THE ASSESSEE WAS @ 3.73%). THE ASSESSEE PREFERRED AN APPEAL AND RESPECTED CIT (A) FURTHER RESTRICTED THE ADDITIONS AT RS.300000/-. 6 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. 4.21. THUS, CONSIDERING THE PAST HISTORY OF THE APP ELLANT WITH REGARD TO THE PERCENTAGE OF NET PROFIT DECLARED AND ASSESSED BY T HE AO, THE AVERAGE NET PROFIT RATE (AY 2005-06 3.75%, AY 2006-07 4.0%, AY 2007-08 4.57%, AY 2008-09 5.57%, AY 2009-10 3.86% AFTER ADJUSTING ADD ITION OF RS. 3 LACS) WOULD BE 4.35%. ACCORDINGLY, CONSIDERING ALL THESE FACT ORS AND OTHER DEFICIENCIES AS NOTED ABOVE, IT WOULD BE FAIR TO AP PLY THE NET PROFIT RATE OF 5.00% TO THE TURNOVER DECLARED BY THE APPELLANT AT RS. 16,10,42,167/-. THIS WOULD RESULT IN ESTIMATED NET PROFIT OF RS. 80,52,1 08/- AS AGAINST THE NET PROFIT OF RS. 49,77,294/-. ACCORDINGLY, A TRADING A DDITION OF RS. 30,74,814/- MADE BY THE AO WOULD BE CONFIRMED AND THE APPELLANT WOULD GET A RELIEF OF RS. 65,52,476/- UNDER THIS HEAD. BESIDES THIS, THE APPELLANT WOULD BE LIABLE TO TAX ON THE INTEREST INCOME OF RS. 3,16,339/- AND OT HER INCOME OF RS. 7,03,275/- DECLARED IN THE RETURN OF INCOME FILED. THE LD. CIT (A) HAS EXAMINED IN DETAIL THE MATERIAL PLACED BEFORE HIM AND ALSO CONSIDERED THE AVERAGE RATE OF NET PROFIT RATE SHOW N FOR THE ASSESSMENT YEARS 2005- 06, 06-07, 07-08, 08-09 AND 09-10. THE LD. CIT (A) HAS CONSIDERED THE PAST HISTORY OF THE ASSESSEE AS WELL AS CONSIDERING THE MATERIAL PLACED BEFORE HIM ADOPTED THE RATE OF 5% WHICH APPEARS TO BE REASONABLE LOOKING T O THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, THIS GROUND OF THE REVENUE IS REJECTED. 4. GROUND NO. 2 IS AGAINST DELETING THE RECEIPTS/SA LES OF RS. 2,15,15,138/- MADE BY THE AO ON ACCOUNT OF LESS RECEIPTS SHOWN BY THE ASSESSEE FROM VARIOUS PROJECTS IN THE BOOKS. 4.1. THE LD. D/R SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE RECEIPTS. HE SUBM ITTED THAT THE LD. CIT (A) HAS EXCLUDED THESE RECEIPTS. 4.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. THE LD. COUNSEL SUBM ITTED THAT THE ASSESSEE HAS DULY RECONCILED THE VARIATION IN RECEIPTS. THEREFORE, TH E LD. CIT (A) WAS JUSTIFIED IN DELETING THE RECEIPTS. 7 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE CONTENTIONS OF THE ASSESSEE ARE THAT THE AO OBSERVED THAT RECEIPTS AS PER FORM 26AS WERE HIGHER THAN THE CONTRACT RECEIPT S SHOWN BY THE ASSESSEE IN ITS BOOKS BY RS. 2,15,15,138/-. IT IS TO SUBMIT THAT TH E TOTAL RECEIPTS DECLARED BY THE ASSESSEE ARE RS. 16.10 CRORES AND THAT AS PER FORM 26AS IS RS. 17.63 CRORES RESULTING IN VARIATION OF RS. 1.54 CRORES ONLY AND NOT RS. 2.15 CRORES AS STATED BY AO. THE AO WHILE MAKING THE COMPUTATION HAS NOT GIVEN C REDIT OF THE EXCESS RECEIPTS WHICH HAS ALREADY BEEN ACCOUNTED FOR IN THE BOOKS B UT NOT SHOWN IN FORM 26AS. THE CHART SHOWING RECONCILIATION OF JOB WORK AS PER BOOKS OF ACCOUNTS AND AS PER FORM 26AS IS AT PAGE 79 OF PAPER BOOK. IN CONSIDERI NG THE RECEIPT, AO HAS NOT CONSIDERED THE INCREASE IN STOCK IN PROGRESS OF RS. 1,65,61,100/- (2,20,26,000 56,98,900) ON WHICH THE PARTY HAS DEDUCTED TAX AT S OURCE BUT THE SAME IS SHOWN AS STOCK IN PROCESS. THE CIT (A) AFTER CONSIDERING THE RECONCILIATION OF THE AMOUNT SHOWN IN THE BOOKS AND THAT AS PER FORM 26AS ACCEPT ED THE RECEIPT DECLARED BY THE ASSESSEE. THE INDIVIDUAL EXPLANATION FOR SUCH VARIA TION IS AS UNDER :- (A) M/S NBCC-J&K:- THE DIFFERENCE OF RS.87,98,546/- BET WEEN THE RECEIPT AS PER BOOKS AND RECEIPT AS PER FORM 26AS IS EXPLAI NED VIDE LETTER DT. 23.01.2013 (PB 81-90) . THE DIFFERENCE IS MAINLY FOR THE REASON THAT ASSESSEE INCLUDED RS.80,30,437/- AS WORK IN PROCESS ON WHICH TAX WAS DEDUCTED BY NBCC BUT THE BILL WAS PASSED FOR PAYMEN T ON 21.10.2010. IN FACT ASSESSEE GOT THE CONTRACT AND STARTS THE WO RK IN FY 08-09 AND COMPLETED IN AY 09-10. THE TOTAL WORK DONE WAS RS.8 ,07,39,082/- WHICH IS DECLARED IN THE BOOKS OF ACCOUNTS AS UNDER :- YEAR AMOUNT 2008 - 09 RS.1,17,52,102/ - 2009 - 10 RS.6,09,56,543/ - (COMPLETE WORK WAS DONE AND LAST BILL AMOUNTING TO RS.80,30,437/- WAS RAISED DURING THE Y EAR BUT BILL WAS PASSED BY THE PARTY ON 21.10.2012, I.E AFTER 8 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. GETTING OUR ACCOUNTS AUDITED AND DEDUCTED THE TAX CONSIDERING IT IN THE YEAR 2009-10. THE SAME WAS IN CLUDED IN VALUE OF WIP ON 31.03.2010 BY THE ASSESSEE) 2010 - 11 RS.80,30,437/ - (THE ASSESSEE CONSIDERED RECEIPT BECAUSE THE SAME WAS TAKEN AS WIP IN OPENING STOCK. THERE I S NO IMPACT ON PROFIT). FROM THE SAID DETAIL, IT CAN BE NOTED THAT THE ENTI RE RECEIPT FROM THE NBCC IS ACCOUNTED FOR. IN SOME CASES NBCC HAS WRONG LY DEDUCTED TAX TWICE, ONCE AT THE TIME OF CREDITING THE BILL AND A GAIN AT THE TIME OF PAYMENT. FURTHER, ON THE AMOUNT OF RS.80,30,437/-, THE TAX WAS DEDUCTED BY NBBC DURING THE YEAR BUT THIS AMOUNT WA S SHOWN IN THE CLOSING WORK IN PROCESS BY THE ASSESSEE ON 31.03.20 10 AND RECEIPT IN FY 2010-11. AFTER CONSIDERING THE SAME, THERE DOES NOT REMAIN ANY DIFFERENCE IN THE RECEIPT DECLARED BY THE ASSESSEE AND THAT REFLECTED IN FORM 26AS. (B) M/S SHIMIZU CORPORATION:- AO OBSERVED THAT THE RECE IPTS AS PER FORM 26AS WERE SHOWN FOR RS.15,22,668/- WHEREAS RECEIPTS AS PER BOOKS WERE SHOWN FOR RS.10,61,570/- RESULTING IN LESS REC EIPTS OF RS.4,61,098/- SHOWN BY THE ASSESSEE. IT IS SUBMITTE D THAT IN THE IMMEDIATELY PREVIOUS YEAR THE ASSESSEE BOOKED RECEI PTS AT RS.1,44,40,888/- WHEREAS PARTY HAS PASSED THE BILLS OF RS.1,38,21,228/- ONLY AND REST OF THE BILLS WERE PA SSED IN THE YEAR UNDER CONSIDERATION. THUS, IN AY 2009-10 THERE WAS EXCESS BOOKING OF RECEIPTS BY RS.6,12,660/- AS COMPARED TO RECEIPTS S HOWN IN FORM 26AS. SINCE THE AMOUNT WAS ALREADY BOOKED IN THE PR EVIOUS YEAR, THE SAME CANNOT BE AGAIN SHOWN IN THE YEAR UNDER CONSID ERATION ONLY BECAUSE THE PARTY HAS DEDUCTED THE TDS ON THIS AMOU NT IN THE CURRENT FY. IN SUPPORT OF ITS CLAIM THE ASSESSEE HAS FURNIS HED THE LEDGER ACCOUNT FOR THE FY 2008-09. (C) M/S SURYA ROSHNI:- THE RECEIPTS AS PER FORM 26AS WE RE SHOWN FOR RS.3 LACS WHEREAS RECEIPTS IN BOOKS WERE SHOWN AT R S. NIL. ASSESSEE SUBMITTED THAT THE SUM WAS RECEIVED AS MOBILIZATION ADVANCE AGAINST NOIDA PROJECT. NO WORK WAS DONE IN THE RELEVANT FY AND THUS THE ASSESSEE DID NOT RECOGNIZE IT AS INCOME BECAUSE ADV ANCE IS NOT AN INCOME BUT LIABILITY OF THE ASSESSEE. ONLY BECAUSE TDS WAS DEDUCTED ON THIS AMOUNT BY THE PARTY, THE SAME CANNOT BE TRE ATED AS RECEIPT OF THE ASSESSEE. (D) M/S GRASIM INDUSTRIES, KOTPUTLI:- THE RECEIPTS AS P ER FORM 26AS WERE SHOWN FOR RS.3,19,18,453/- WHEREAS RECEIPTS AS PER BOOKS WERE SHOWN FOR RS.2,68,84,529/- RESULTING IN LESS RECEIPTS OF RS.50,33,924/- SHOWN BY THE ASSESSEE. ASSESSEE EXPLAINED THAT AMOUNT OF RS.3,19,18,453/- 9 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. INCLUDES RS.16 LACS ADVANCE AND RS.64,85,653/- BEIN G PASSING OF OLD BILLS. CERTIFICATE FROM THE PARTY IN THIS REGARD WA S FILED DURING THE COURSE OF APPELLATE PROCEEDINGS. THUS, DIFFERENCE O F RS.50,33,924/- IS DUE TO TDS DEDUCTED ON ADVANCE AND OLD BILLS PASSED DURING THIS YEAR. FURTHER, ASSESSEE HAS INCLUDED THIS AMOUNT IN THE C LOSING WIP AND THUS IT CANNOT BE SAID THAT THERE IS NO RECEIPTS BOOKED BY THE ASSESSEE. (E) M/S OMAXE CONSTRUCTION:- THE RECEIPTS AS PER FORM 2 6AS WERE SHOWN FOR RS.1,48,10,882/- WHEREAS RECEIPTS AS PER BOOKS WERE SHOWN FOR RS.1,42,76,583/- RESULTING IN LESS RECEIPTS OF RS.5 ,34,299/- SHOWN BY THE ASSESSEE. THE PARTY HAS GIVEN DETAILS THAT RECE IPTS AS PER FORM 26AS INCLUDES ADVANCE PAYMENT OF RS.6,74,488/-. FUR THER, ASSESSEE HAS INCLUDED THIS AMOUNT IN THE CLOSING WIP AND THU S IT CANNOT BE SAID THAT THERE IS NO RECEIPTS BOOKED BY THE ASSESSEE. (F) SWYAMBHU ENTERPRISES:- THE DIFFERENCE BETWEEN THE R ECEIPTS AS PER FORM 26AS AND THAT SHOWN IN THE BOOKS IS RS.4,61,13 1/-. THE DIFFERENCE IS DUE TO WORK CONTRACT TAX. THE PARTY H AS DEDUCTED TAX ON GROSS AMOUNT WHEREAS THE ASSESSEE HAS BOOKED RECEIP TS NET OF TAXES BECAUSE WCT HAS BEEN CONSIDERED AS LIABILITY. (G) M/S RADNIK EXPORTS:- THE DIFFERENCE OF RS.1,15,056/ - IN BOOK RECEIPTS AND FORM 26AS WAS ONLY DUE TO BILLS OF EARLIER YEAR S PASSED THIS YEAR BY THE PARTY. SINCE THE RECEIPT WAS CONSIDERED IN E ARLIER YEAR THERE WAS NO NEED TO INCLUDE IT AGAIN IN CURRENT YEAR. (H) KANSAI NEROLAC LTD:- THE RECEIPTS AS PER FORM 26AS WERE SHOWN FOR RS.30,06,140/- WHEREAS RECEIPTS IN BOOKS WERE SHOWN AT RS. NIL. ASSESSEE EXPLAINED THAT IN THE IMMEDIATE PREVIOUS Y EAR THE ASSESSEE HAS BOOKED RECEIPTS AT RS.3,55,19,473/- WHEREAS PAR TY HAS PASSED THE BILLS OF RS.3,25,49,165/- ONLY. THE REMAINING BILLS WERE PASSED IN THE YEAR UNDER CONSIDERATION AFTER DEDUCTING TDS. THUS, IN AY 2009-10 THERE WAS EXCESS BOOKING OF RECEIPTS BY RS.29,70,30 8/-. SINCE THE RECEIPTS WERE ALREADY BOOKED IN THE PREVIOUS YEAR, THERE IS NO REQUIREMENT TO CONSIDER THE SAME AGAIN IN THE CURRE NT FINANCIAL YEAR. THE REMAINING AMOUNT OF RS.35,832/- (RS.30,06,140 - RS.29,70,308) HAS BEEN CONSIDERED AS RECEIPT BY THE ASSESSEE AND INCLUDED IN MISCELLANEOUS RECEIPTS OF RS.1,50,93,895/-. (I) ASHOK LEYLAND LTD.:- THE DIFFERENCE OF RS.28,04,944 /- IN BOOK RECEIPTS AND FORM 26AS WAS ONLY DUE TO BILLS OF EARLIER YEAR S PASSED THIS YEAR BY THE PARTY. IN AY 09-10, ASSESSEE RECOGNIZED THE RECEIPTS AT RS.1,11,68,929/- WHEREAS THE PARTY HAS PASSED AND D EDUCTED TAX ON BILLS OF RS.70,99,079/- CAUSING DIFFERENCE OF RS.31 ,69,850/-. SINCE THE RECEIPT WAS CONSIDERED IN EARLIER YEAR THERE IS NO NEED TO INCLUDE IT AGAIN IN CURRENT YEAR. 10 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. THUS, THE RECONCILIATION OF JOB WORK AS PER THE P&L A/C AND THAT AS PER FORM 26AS CAN BE SUMMARIZED AS UNDER (PB 79) :- S.N. PARTICULARS AMOUNT RS. 1 JOB WORK AS PER P & L A.Y. 2010-11 161042167 2 ADD:- M/S ASHOKA LEYLAND LTD SHOWN JOB WORK IN A.Y. 2009-2010 VIDE TDS CERTIFICATE 2804944 3 ADD- GRASIM KOTPUTLY CONSIDERED CLOSING STOCK 5033924 4 ADD- RMCC JOB WORKED BOOKED A.Y. 09-10 3006140 5 ADD:- NBBC CONSIDERED CLOSING STOCK. 8798546 6 ADD:- OMAX LTD. CONSIDERED CLOSING STOCK 534299 7 LESS:- ONIX PROJECT PARTY NOT ISSUED TDS CERTIFICAT E -200000 8 LESS ORANGE SPA PARTY CONSIDERED A.Y. 08-09 -1928481 9 ADD:- RADNIK EXPORT JOB WORK BOOKED A.Y. 09-10 115056 10 LESS:- RESTOFLUX PARTY NOT ISSUED TDS CERTIFICATE -1880000 11 LESS:- SCAN PARTY NOT ISSUED TDS CERTIFICATE -148770 12 LESS:- SHILPY CABLE TDS CERTIFICATE NOT ISSUED -2072066 13 ADD:- SHIMIZU JOB WORK EXCESS BOOKED A.Y. 09-10. 461098 14 ADD:- SURYA, NOIDA MOBILISATION ADVANCE 300000 15 ADD:- SWYAMBHU ENTERPRISES CONSIDERED CLOSING STOCK 461131 ADD:- MISC. DIFFERENCE -632 176327356 FROM THE ABOVE, IT CAN BE NOTED THAT THE DISCREPANC IES POINTED OUT BY THE AO ARE FOR NAME SAKE ONLY. THE ASSESSEE HAS MAINTAINED CORRECT AND COMPLETE BOOKS OF ACCOUNTS FROM WHICH THE INCOME OF THE ASSE SSEE IS PROPERLY DEDUCIBLE. EVEN THE CIT(A) ACCEPTS THE SAME BUT ONLY FOR THE R EASON THAT CERTAIN CONFIRMATIONS COULD NOT BE PRODUCED, HE UPHELD THE APPLICATION OF SECTION 145(3). THIS CANNOT BE A BASIS FOR REJECTION OF BOO KS OF ACCOUNTS. THE LD. CIT (A) ON THE BASIS OF SUBMISSIONS MADE HA S GIVEN THE FINDING OF FACT IN PARA 4.9 OF HIS ORDER AS UNDER :- 4.9. FURTHER, CONSIDERING THE EXPLANATIONS GIVEN F OR THE OTHER PARTIES AS WELL, IT IS SEEN THAT RECEIPTS AMOUNTING TO RS. 60,29,951/- HAS BEEN DECLARED IN THE BOOKS OF ACCOUNTS FOR WHICH THERE I S NO CORRESPONDING ENTRY IN THE 26AS. THE TOTAL DIFFERENCE BETWEEN 26A S AND THE RECEIPTS SHOWN IN THE BOOKS WORKS OUT TO RS 1,54,85,187/- AF TER GIVING CREDIT FOR THE RECEIPTS DECLARED FOR WHICH NO CORRESPONDIN G ENTRY IS FOUND IN 11 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. 26AS. THUS, CONSIDERING ALL THESE FACTORS, I DO NOT FIND ANY REASON TO DISTURB THE QUANTUM OF TURNOVER WHICH HAS BEEN DECL ARED BY THE APPELLANT. MOREOVER, IF AN AMOUNT HAS TO BE INCLUDE D IN THE TURNOVER FOR THIS YEAR, THE SAME AMOUNT HAS EITHER TO BE EXC LUDED FROM THE TURNOVER DECLARED IN THE PRECEDING YEAR OR OF THE T URNOVER DECLARED IN THE SUCCEEDING YEAR. IN EITHER CASE, IT IS NOT GOIN G TO MATTER MUCH IN TERMS OF THE ULTIMATE RESULTS DECLARED BY THE APPEL LANT. ACCORDINGLY, I DO NOT FIND ANY REASON IN MAKING AN ADDITION OF RS. 2.15 CRORES TO THE TURNOVER OF THE APPELLANT. THUS, THE TURNOVER DECLA RED BY THE APPELLANT AT RS. 16,10,42,167/- AS PER THE BOOKS OF ACCOUNTS IS ACCEPTED AND CONSIDERED FOR THE PURPOSES OF COMPUTATION OF PROFI T. THE ABOVE FINDING OF FACT IS NOT REBUTTED BY THE RE VENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE, WE DO NOT FIND ANY R EASON TO INTERFERE IN THE ORDER OF LD. CIT (A). THE SAME IS HEREBY UPHELD. 5. NOW WE TAKE UP THE CROSS OBJECTION OF THE ASSESS EE. 6. THE FIRST GROUND OF THE ASSESSEE IS AGAINST CONF IRMING REJECTION OF BOOKS OF ACCOUNT AND APPLYING THE NET PROFIT RATIO AT 5%. 6.1. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE DEFECTS AS POINTED OUT BY THE AO ARE FACTUALLY INCORRECT. HE SUBMITTED THAT T HE DEFECTS ARE NOT SUCH THAT IT WOULD IMPACT IN DEDUCING THE PROFIT. HE SUBMITTED T HAT THE ASSESSEE HAS GIVEN ALL RELEVANT MATERIAL IN SUPPORT OF ITS CLAIM. HE FURTH ER SUBMITTED THAT IN SUBSEQUENT YEARS ALSO THE FACTS ARE IDENTICAL. THE ASSESSMENT HAS BEEN FRAMED UNDER SECTION 143(43) AND THE NET PROFIT @ 8% HAS BEEN ADOPTED. THE LD. COUNSEL SUBMITTED THAT THERE WAS NO REASON TO REJECT THE BOOKS OF ACCOUNTS AND ADOPT THE RATE HIGHER THAN DECLARED BY THE ASSESSEE. 6.2. ON THE CONTRARY, THE LD. D/R HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT AO HAS GIVEN SPECIFIC INSTANCES WHICH WOULD IMPACT ON THE PROFIT 12 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. AND, THEREFORE, HAS RIGHTLY REJECTED THE BOOKS OF A CCOUNT. HE SUBMITTED THAT THE LD. CIT (A) HAS RIGHTLY AFFIRMED THE FINDING OF THE AO. 6.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE THAT THE DEFECTS SO POINTED OUT BY THE AO ARE NOT SUCH THAT IT WOULD IMPACT ON THE PROFIT. THE ASSESSEE IS REQUIRED TO KEEP SUCH BOOKS OF ACCOUNTS AND THE VOUCHERS AND QUANTITATIVE TALLY OF STOCKS. THE CONTENTION OF TH E ASSESSEE IS THAT PROJECT-WISE DETAILS CANNOT BE MAINTAINED. IN ORDER TO PROVE TH E EXPENDITURE, THE ASSESSEE SHOULD KEEP VOUCHERS AND OTHER SUPPORTING EVIDENCES FOR SCRUTINY OF THE AO. IN THE CASE IN HAND, BOTH THE AUTHORITIES BELOW HAVE POINT ED OUT CERTAIN DEFECTS, WHICH IN OUR CONSIDERED VIEW WOULD CERTAINLY IMPACT ON THE P ROFIT. MOREOVER, THE LD. CIT (A) HAS ALSO EXAMINED THE PAST HISTORY FOR ADOPTING THE NET PROFIT. THEREFORE, THE GROUND RAISED IN THE CROSS OBJECTION AGAINST REJECTION OF BOOKS OF ACCOUNTS AS WELL AS ADOPTING THE NET PROFIT RATE @ 5% IS REASONABLE UND ER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. DURING THE COURSE OF HEARING, BOTH THE PARTIES HAVE RELIED UPON THE CASE LAWS. THE REVENUES CONTENTION IS THAT IN THE LINE OF CIVIL CONSTRUCTION, THE HONBLE JURISDICTIONAL HIGH COURT HAS AFFIRMED THE ESTIMATION OF NET PROFIT @ 12.5%. SINCE THE ESTIMATION OF PROFIT DEPENDS ON FACTS OF EACH CASE, IN THE CASE IN HAND, IN OUR CONSIDERED VIEW, THE LD. CIT (A) HAS RIGHTLY AP PLIED THE RATE OF 5% AS THE BOTH ASSESSEE AND REVENUE HAVE NOT PLACED ANY MATERIAL S UGGESTING THAT THE NET PROFIT COULD HAVE BEEN EARNED HIGHER OR LOWER THAN ESTIMAT ED BY THE LD. CIT (A). ACCORDINGLY THIS GROUND OF THE ASSESSEE IS REJECTED . 13 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. 7. GROUND NO. 2 OF THE CROSS OBJECTION IS AGAINST H OLDING THAT THE ASSESSEE WOULD BE SEPARATELY LIABLE FOR TAX ON INTEREST INCOME OF RS. 3,16,339/- AND OTHER INCOME OF RS. 7,03,275/- APART FROM THE TRADING ADDITION SUST AINED BY HIM. 7.1. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. IT IS CONTENDED BY THE LD. COUNSEL T HAT BOTH THE INTEREST PAID AND EARNED IS IN COURSE OF BUSINESS. IN NET THE INTERES T PAYMENT IS RS. 1,48,640/-. IN THE EVENT OF INTEREST RECEIVED IS TAXED SEPARATELY, INT EREST PAYMENT ALSO NEEDS TO BE ALLOWED SEPARATELY. SO FAR AS OTHER INCOME OF RS. 7 ,03,275/- IS CONCERNED, THE DETAILS ARE FURNISHED VIDE LETTER DATED 05.10.2012. THE LD. COUNSEL DREW OUR ATTENTION TO PAGE 59 OF THE PAPER BOOK, FROM THE SA ME IT CAN BE NOTED THAT ALL RELATE TO THE CONTRACT WORK OF THE ASSESSEE. THEREFORE, THESE RECEIPTS ARE PART OF THE CONTRACT RECEIPTS AND ONCE NET PROFIT RATE IS APPLI ED FOR ASSESSING THE INCOME, SUCH RECEIPTS CANNOT BE SEPARATELY ADDED TO THE INCOME. 7.2. ON THE CONTRARY, THE LD. D/R SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 7.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN THE INTEREST PAID AND EARNED IN THE COURSE OF BUSINESS IN THAT E VENT DEDUCTION ON PAYMENT OF INTEREST IS REQUIRED TO BE ALLOWED. ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE LD. CIT (A) ON THIS ACCOUNT. 7.4. IN RESPECT OF THE OTHER INCOME OF RS. 7,03,275 /-, THE LD. COUNSEL FOR THE ASSESSEE HAS DEMONSTRATED THAT IT IS PART OF THE CO NTRACT BUSINESS AND THEREFORE, ONCE THE NET PROFIT IS APPLIED FOR ASSESSING THE IN COME, SUCH RECEIPTS CANNOT BE 14 ITA NO. 331 & CO 17/JP/2014 ACIT VS. M/S. RAJENDRA MITTAL CONSTRUCTION CO. P. L TD. SEPARATELY ADDED TO THE INCOME. WHILE ACCEPTING TH E CONTENTION OF THE LD. COUNSEL, WE DIRECT THE AO TO DELETE THE ADDITION. THIS GROUN D OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D WHEREAS CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/07/2016. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 20/07/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT, CIRCLE-2, ALWAR. 2. THE RESPONDENT- M/S. RAJENDRA MITTAL CONSTRUCTIO N CO. PVT. LTD., ALWAR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 331 & CO 17/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR