Ram Phal Khasa, Rohtak V. ITO, Rohtak

ITA 3401/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52487 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 08-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 12-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 3401/DEL/2010 ASSESSMENT YEAR: 2007-08 RAM PHAL KHASA, VS. ITO, PROP. M/S HORIJAN CONSTRUCTION WARD-2, CO., 81, MANSAROVER COLONY, ROHTAK. ROHTAK. AJWPK4302L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GUPTA, ADV. RESPONDENT BY : SMT. PRATIMA KAUSHIK ORDER PER C.L. SETHI, J.M. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 20.04.2010 PASSED BY LD. CIT(A) IN THE MATTER OF AN ASSESSMENT MADE U/S 143(3) OF THE INCOME TAX ACT, 1 961 (THE ACT) BY THE ASSESSING OFFICER FOR THE A.Y. 2007-08. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REV OLVE AROUND THE ISSUE REGARDING ESTIMATING THE NET PROFI T FROM CONTRACT WORKS BY APPLYING 12% ON TOTAL TURNOVER OF THE ASSESSEE. ITA NO. 3401/D/2010 2 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 4. THE ASSESSEE FILED HIS RETURN OF INCOME DECLARIN G TOTAL INCOME AT RS. 2,51,932/-. THE CASE WAS SELECTED FO R SCRUTINY AND NOTICE U/S 143(2) WERE ISSUED AND SERVED UPON T HE ASSESSEE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ISSUED A SHOW CAUSE NOTICE AS TO WHY THE ASSESSMENT SHOULD NOT BE COMPUTED BY APPLYING NET PROFIT RATE OF 12% ON GROSS RECEIPTS IN VIEW OF THE JUDGMENT OF THE HONBLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF M/S PRABHAT KUMAR , CONTRACTOR SIRSA, IN ITA NO. 293 OF 2008 DATED 14.1 1.2008. THE ASSESSEE APPEARED BEFORE THE AO AND FILED COPY OF BANK ACCOUNT. THE ASSESSEE DID NOT PRODUCE BOOKS OF ACC OUNTS BEFORE THE AO. THE ASSESSEE IS ENGAGED IN CIVIL CO NSTRUCTION. THE ASSESSEE HAD SHOWN GROSS RECEIPTS OF RS. 75,82, 520/-. THE ASSESSEE DECLARED PROFIT, WHICH WAS WORKED OUT TO 2.47% ON GROSS RECEIPT OF RS. 75,82,520/-. SINCE, BOOKS OF ACCOUNTS WERE NOT PRODUCED BY THE ASSESSEE, THE AO REJECTED THE BOOKS U/S 145 AND ESTIMATED THE INCOME FROM CONTRAC T WORK BY APPLYING 12% ON THE GROSS RECEIPT AMOUNTING TO R S. ITA NO. 3401/D/2010 3 82,31,181/-. THE AO RELIED UPON THE AFORESAID DECI SION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S PRABHAT KUMAR, CONTRACTOR SIRSA (SUPRA). THE AO TH US, DETERMINED THE INCOME FROM CONTRACT AT RS. 9,87,741 /-. 5. ON AN APPEAL, LD. CIT(A) CONFIRMED THE AOS ADDI TION FOR THE SIMILAR REASON GIVEN BY THE AO. 6. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 7. IT IS NOT IN DISPUTE THAT THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT BEFORE THE AO. THE AO WAS, TH EREFORE, JUSTIFIED IN ESTIMATING THE PROFIT FROM CONTRACT WO RKS. THE ASSESSEE HAS EXECUTED THE CIVIL CONTRACT WORK AT LE H, LADAKH, WHERE NET PROFIT WOULD CERTAINLY BE LOW DUE TO THE DIFFICULT WORKING CONDITIONS. THE NATURE OF THE CONTRACT IN THE CASE OF PRABHAT KUMAR, CONTRACTOR SIRSA CASE HAS NOT BEEN D ISCUSSED BY THE AO IN THE ORDER AND IT IS NOT CLEAR AS TO WH ETHER FACTS IN THE CASE OF SH. PRABHAT KUMAR, CONTRACTOR SIRSA WER E IDENTICAL OR NOT. HAVING REGARD TO THE NATURE OF T HE WORK EXECUTED AT LEH & LADAKH, WE FIND THAT IF THE RATE OF 8% IS APPLIED, IT WOULD MEET THE ENDS OF JUSTICE AND CORR ECT INCOME ITA NO. 3401/D/2010 4 OF THE ASSESSEE MAY BE ASSESSED. IT IS MENTIONED H ERE THAT IN THE CASE OF CONTRACTOR HAVING TURNOVER BELOW RS. 40 LAKH, RATE OF NET PROFIT OF 8% IS PROVIDED IN THE ACT. IT IS ALSO WELL SETTLED THAT WHEN TURNOVER INCREASES, MARGIN OF PROFIT USUA LLY GOES DOWN. HOWEVER, THE ASSESSEE HAS NOT BEEN ABLE TO F URNISH ANY DETAILS TO SUPPORT THE PROFIT OF 2.47% DECLARED IN THE RETURN. WE, THEREFORE, ESTIMATE THE NET PROFIT FRO M CONTRACT WORK AT 8% ON GROSS RECEIPTS OF RS. 82,31,181/-. T HE AO SHALL GIVE THE RELIEF ACCORDINGLY. THE AO SHALL MODIFY T HE ASSESSMENT ORDER BY DETERMINING THE NET PROFIT FROM CONTRACT WORKS @ 8% ON GROSS RECEIPTS OF RS. 82,31,181/-. W E ORDER ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 9. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2011. SD/- SD/- (SHAMIM YAHYA) (C.L. SETH I) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12.8.11 *KAVITA COPY FORWARDED TO: - ITA NO. 3401/D/2010 5 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR