ACIT, Corporate Circle-1(2), Bhubaneswar V. M/s. Sidhartha Engineering Limited, Bhubaneswar

ITA 332/CTK/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4315 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 25-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: D PARIDAC PARIDA
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 332 / CTK /20 1 7 ( / ASSESSMENT YEAR : 20 1 2 - 201 3 ) ACIT, CORPORATE CIRC LE - 1(2), BHUBANESWAR VS. M/S SIDHARTHA ENGINEERING LIMITED, PLOT NO.1389, GANDAMUNDA BHUBANESWAR - 751030 ./ PAN NO. : A A DCS 1603 H ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI D.K.PRADHAN, CITDR /ASSESSEE BY : SHRI D.PARIDA/C.PARIDA , AR / DATE OF HEARING : 19 / 03 /201 8 / DATE OF PRONOUNCEMENT 20 / 03 /201 8 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - 1 , BHUBANESWAR , DATED 31.05.2017 FOR THE ASSESSMENT YEAR 201 2 - 201 3 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS.87,54,592/ - MADE BY THE AO CONSIDERING REASONABLE RATE OF NET PROFIT I.E. 7.59% OF THE TURNOVER OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND HAVING REGARD TO THE FINDINGS GIV EN BY THE AO IN THE ASSESSMENT ORDER , THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ABOVE ADDITION MADE BY THE ASSESSING OFFICER. 3. THE APPELLANT CRAVES TO ALTER, AMEND OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY IN COURSE OF THE APPEAL PROCEEDINGS . 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF ELECTRICAL CONTRACTOR AND FILED RETURN OF INCOME ON 29.09.2012 WITH TOTAL INCOME OF RS. 1,51,74,221/ - . SUBSEQUENTLY THE CASE ITA NO. 332 /CTK/2017 2 WAS SELECTED FOR SCRUTINY THROUGH CASS AN D NOTICES U/S.143(2) & 142(1) WERE ISSUED TO THE ASSESSEE . IN COMPLIANCE, LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED WRITTEN SUBMISSIONS AS AND WHEN REQUIRED AND THE CASE WAS DISCUSSED. THE AO ON PERUSAL OF THE FINANCIAL STATEMENTS FOUND T HAT THE ASSESSEE HAS CONTRACTUAL RECEIPTS OF RS. 33.83 CRORES, A ND DISCLOSED GROSS PROFIT OF RS.8.39 CRORES AND A NET PROFIT OF RS.1.52 CRORES. THE GP AND NP RATES WORKED OUT TO 25.25% AND 4.5%. THE AO CONSIDERING THE TURNOVER OF EARLIER ASSESSMENT YEARS 2 009 - 2010 TO ASSESSMENT YEAR 2011 - 2012 FOUND THAT THE GROSS PROFIT AND NET PROFIT RATE HAS FALLEN AND SUBSEQUENTLY THE AO CALLED FOR THE EXPLANATION AND ALSO REQUESTED TO PRODUCE THE BOOKS OF ACCOUNTS. HOWEVER, THERE IS NO COMPLIANCE BY THE ASSESSEE. THE AO FOUND THAT THE ASSESSEE COULD NOT EXPLAIN WITH THE REASONS IN RESPECT OF CLAIM OF E XPENDITURE AND AO WORKED OUT DETAILED RESULTS ON COMPARISON WITH EARLIER YEARS INFORMATION. HENCE, CONSIDERING THE IMMEDIATE PRECEDING NET PROFIT RATIO, THE AO HAS APPLIED THE RATE @ 7.59% AS NET PROFIT AND ESTIMATED THE PROFIT AT RS.2,52,30,973/ - , WHICH IS HIGHER IN COMPARISON WITH THE RETURN OF INCOME FILED AT RS.1,51,74,221/ - AND PASSED THE ORDER U/S.143(3) OF THE ACT, DATED 27.03.2015 . 4. AGGRIEVED BY THE ORDER OF AO, TH E ASSESSEE FILED AN APPEAL WITH THE CIT(A). LD. CIT(A) CONSIDERED THE ARGUMENTS AND SUBMISSIONS MADE BY THE ASSESSEE ON THE DISPUTED ISSUE. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS IN RESPECT OF THE CLAIM S AND THE CIT(A) HAVING CONSIDERED THE FINDINGS OF AO AND ALSO THE SUBMISSIONS OF THE ASSESSEE, OBSERVED ITA NO. 332 /CTK/2017 3 THAT THE ASSESSEE HAS EXPLAINED THAT THERE WAS CERTAIN DIFFICULTIES AND ALSO DUE TO LACK OF ADEQUATE OPPORTUNITIES BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE COULD NOT BE PRODUCED BEFORE THE AO IN TH E ASSESSMENT PROCEEDINGS AND ASSESSEE IS NOW READY TO FURNISH ALL THE BOOKS OF ACCOUNTS FOR EXAMINATION AND VERIFICATION. THE ASSESSEE HAS ALSO FILED WRITTEN SUBMISSIONS REFERRED PARA 4.1 AT PAGES 4 TO 9 OF THE ORDER AND PRODUCED BOOKS OF ACCOUNTS, WHEREAS THE CIT(A) REMANDED THE MATTER TO THE AO FOR EXAMINATION OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS IN RESPECT OF THE CLAIMS. THEREAFTER THE AO FILED REMAND REPORT, WHICH IS REFERRED AT 4.2 OF THE APPELLATE ORDER. 5. FINALLY THE CIT(A) CONSIDERING THE FA CTS , SUBMISSIONS OF THE ASSESSEE AND THE COUNTER COMMENTS OF THE ASSESSEE ON THE REMAND REPORT SUBMITTED BY THE AO, IS OF THE OPINION THAT THE ASSESSEE IS A VERY OLD COMPANY EXISTING FOR MORE THAN 30 YEARS AND THE BOOKS RESULTS OF THE ASSESSEE WERE NEVER R EJECTED EARLIER . THE CIT(A) FURTHER OBSERVED THAT THE AO IN HIS ASSESSMENT ORDER HAS MENTIONED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS ALL BOOKS OF ACCOUNTS WERE PRODUCED EXCEPT STOCK REGISTER. THE ASSESSEE FILED WRITTEN SUBMISSION WITH REASON S IN RES PECT OF NOT PROVIDING STOCK REGISTER. ACCORDINGLY , THE CIT(A) DIRECTED THE AO TO ACCEPT THE BOOK RESULT S DISCLOSED BY THE ASSESSEE AND SUSTAINED THE ADDITION TO THE EXTENT OF RS.1,93,200/ - AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 6 . AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO. 332 /CTK/2017 4 7 . BEFORE US T HE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED THE STOCK REGISTER BEFORE THE AO, IN THE ASSESSMENT PROCEEDINGS. FURTHER T HE LD. DR ALSO SUBMITTED THAT THE ASSESSEE HAS DISC LOSED LOWER NET PROFIT RATES COMPARED TO EARLIER YEARS , THEREFORE, THE AO WAS JUSTIFIED IN MAKING THE ADDITION FURTHER THE CIT(A) IS NOT PROPER TO SUSTAIN THE ADDITION PARTLY AND PRAYED FOR SETTING ASIDE OF THE ORDER OF CIT(A). 8 . PER CONTRA , THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A) AND SUBMITTED THAT BOOKS OF ACCOUNTS WERE PRODUCED AND IN EARLIER YEARS THE REVENUE HAS ACCEPTED THE ASSESSEES CLAIM IN RESPECT OF NET PROFITS FOR A SSESSMENT AND PRAYED FOR DISMISSAL OF THE REVENUES APPEAL. 9 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. PRIMA FACIE , THE SOLE CRUX OF THE ISSUE IS WITH RESPECT OF ESTIMATION MADE BY THE AO IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNTS. THE LD. AR O F THE ASSESSEE SUBMITTED THAT BOOKS OF ACCOUNTS WERE SUBMITTED AND TAX AUDIT U/S. 44AB OF THE ACT WAS CONDUCTED. LD. AR EMPHASIZED AND DREW ATTENTION THAT IN THE ASSESSMENT PROCEEDINGS THE AO AT PAGE 2 OF THE ORDER HAS MADE A MENTION THAT WRITTEN SUBMISSIO NS AS AND WHEN REQUIRED WERE FILED. BOOKS OF ACCOUNTS ALONG WITH EVIDENTIAL VOUCHERS AND REGISTERS WERE PRODUCED AND EXAMINED AT LENGTH AND THE CASE WAS HEARD. TH ESE FACT S PROVE THAT THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNTS BEFORE THE AO AND ARE VERIFI ED. WE FIND THAT THE ASSESSEE IS A LIMITED COMPANY, INCORPORATED UNDER THE COMPANIES ACT, 1956 AND THE COMPLY THE PROVISIONS OF COMPANY ACT FOR FILING THE ANNUAL RETURN YEARLY . T HE AUDITED BOOKS OF ITA NO. 332 /CTK/2017 5 ACCOUNTS WERE NOT DENIED BY THE AO IN HIS REMAND REPORT AS EMPHASIZED BY THE LD AR AT PAGE 2 OF THE ORDER THAT THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNTS AND EXAMINED THE SAME. 10 . WE FOUND THAT THE CIT(A) HAS MADE A DETAILED OBSERVATION AND PROVIDED AN OPPORTUNITY TO THE ASSESSEE AND THE AO FOR COMMENTS ON REMAND REPORT. T HE AO IN THE REMAND REPORT MENTIONED THAT THE ASSESSEE HAS MAINTAINED THE BOOKS OF ACCOUNTS EXCEPT STOCK REGISTER. THE ARS CONTENTION THAT WHEN THE ASSESSEE HAS COMPLIED WITH THE DIRECTIONS OF THE AO AND THE REJECTION OF BOOK RESULTS IS BAD IN LAW. WE FOUND THERE IS STRENGTH IN THE ARGUMENTS OF THE LD. AR OF THE ASSESSEE. THE REVENUE COULD NOT COME OUT WITH ANY ERROR EXCEPT MENTIONING THAT THE BOOKS OF ACCOUNTS WERE NOT PRODUCED AND STOCK REGISTER. WE FOUND THE ASSESSEE IS A COMPANY WHIC H IS ENGAGED IN THE ELECTRICAL CONTRACT BUSINESS SINCE LAST 30 YEARS AND THE REVENUE HAS BEEN ACCEPTING ITS CLAIM CONSIDERING HIS BOOK RESULTS. WE FOUND T HE CIT(A) HAS CONSIDERED THE SUBMISSION VIS - - VIS THE EXPLANATION S OF THE ASSESSEE AND PASSED A REASON ED ORDER. ACCORDINGLY , WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT(A) AND UPHELD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF REVENUE. 11 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 / 03 /2 01 8 . SD/ - (N. S. SAINI) SD/ - ( PAVAN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 20 / 03 /201 8 . . / PKM , SENIOR PRIVATE SECRETARY ITA NO. 332 /CTK/2017 6 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - ACIT, CORPORATE CIRCLE - 1(2), BHUBANESWAR 2. / THE RESPONDENT - M/S SIDHARTHA ENGINEERING LIMITED, PLOT NO.1389, GANDAMUNDA BHUBANESWAR - 751030 3. ( ) / THE CIT(A) , 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//