DY. C.I.T. 1(1), RAIPUR (CG) V. SHRI RAJESH MAKHIJANI, KAWARDHA (C.G.)

ITA 355/BIL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8999 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 14-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SHITAL VERMA
• Keywords: Unexplained cash credit; Depreciation
• Section: 142(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.355/RPR/2014 ASSESSMENT YEAR : 2010-2011 DCIT, 1(1), RAIPUR VS. SHRI RAJESH MAKHIJANI, SHANTIDEEP COLONY, NAVEEN ROAD, KAWARDH PAN/GIR NO.ADWPM 3488 R (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : MRS SHITAL VERMA, DR DATE OF HEARING : 16/01/ 2018 DATE OF PRONOUNCEMENT : 17/01/ 2018 O R D E R PER PAVAN KUMAR GADALE, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE O RDER OF THE CIT(A)- RAIPUR, DATED 30.9.2014 FOR THE ASSESSMENT YEAR 2010 -2011. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDE R: WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CI(A) HAS ERRED IN RESTRICTING THE ADDITION TO RS.1,69, 908/- OUT OF DISALLOWANCE MADE BY THE AO ON ACCOUNT OF EXPENSES INCURRE D ON PURCHASE OF MATERIALS, LABOUR CHARGES, TRANSPORTATION CHARGES, ETC THEREBY GIVING RELIEF OF RS.55,53,733/-. 2. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CI(A) HAS ERRED IN DELETING THE ADDITION OF RS.1 8,95,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S .68 OF THE I.T.ACT, 1961 SPECIALLY WHEN THE LD CIT(A) HAS DI SMISSED THE 2 ITA NO.355/RPR/2014 ASSESSMENT YEAR : 2010-2011 GROUND RELATED IN MAKING OF ASSESSMENT U/S.144 OF THE I. T.ACT, 1961. 3. BRIEFLY STATED THE RELEVANT FACTS ARE THAT THE ASSESSEE DERIVES INCOME FROM EXECUTION OF CIVIL CONTRACT WORKS. THE ASSESSEE FILED RETURN OF INCOME ON 18.3.2011 SHOWING TOTAL INCOME AT RS.13,72,490/-. THE CASE WAS SELECTED FOR SCRUTINY. NOTICES 143(2) AND 142(1) WERE I SSUED TO THE ASSESSEE TO ATTEND THE HEARING AND PRODUCE BOOKS OF ACCOUNT . HOWEVER, THE ASSESSEE FAILED TO APPEAR BEFORE THE ASSESSING OFFICER AND P RODUCE BOOKS OF ACCOUNT. ON THE BASIS OF DOCUMENTS FILED BY THE ASSESSEE L IKE TAX AUDIT REPORT, AUDITED FINANCIAL STATEMENT AND COPY OF SOME LE DGERS, THE ASSESSING OFFICER COMPETED ASSESSMENT U/S.144 OF THE ACT ASSESSING THE I NCOME AT RS.89,91,131/- AFTER MAKING DISALLOWANCES OUT OF EXPENS ES AGGREGATING TO RS.57,23,641/- ON ADHOC BASIS AND RS.18,95,000/- AS UNSECU RED LOANS. 4. THE ASSESSING OFFICER OBSERVED THAT SINCE THE ASSESSEE HAS N OT PRODUCED BOOKS OF ACCOUNT, HE DISALLOWED 10% OF THE FOLL OWING EXPENSES: 1. PURCHASE EXP. OF MATERIAL : RS.20,,69,418/- 2. LABOUR CHARGES : RS.18,36,151/- 3. TRANSPORTATION ETC. CHARGES : RS.17,28,961/- HE ALSO DISALLOWED DEPRECIATION @ 100% AND ADDED RS.89, 061/-, AGGREGATING TO TOTAL DISALLOWANCE AT RS.57,23,641/-. THE ASSESSING OFFICER 3 ITA NO.355/RPR/2014 ASSESSMENT YEAR : 2010-2011 ALSO OBSERVED THAT THE ASSESSEE HAD SHOWN PROFIT AT 3.12% WHILE IN OTHER COMPARABLE CASES; THE NET PROFIT WAS SHOWN AT 6.69% AND 6 %. 5. ON APPEAL, THE CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. HE FURTHER OBSERVED THAT DURING THE REMAND PROCEEDINGS, THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT CALLED FOR, WHICH PROV ES THAT THE ASSESSING OFFICER HAS AVOIDED TO VERIFY THE CORRECTNESS AND CO MPLETENESS OF THE CLAIM AND OPINED THAT THE EXPENSES ARE NOT VERIFI ABLE. THE CIT(A) FOLLOWING THE DECISION OF THE RAIPUR BENCH OF THE TRI BUNAL IN THE CASE OF C.M MAKHIJA N ITA NO.568/NAG/2008, WHEREIN, THE NP WAS E STIMATED BY THE ASSESSING OFFICER AT 5% WHILE IT WAS REDUCED BY THE CIT(A ) TO 4.3% AND THE TRIBUNAL DIRECTED TO ADOPT NET PROFIT AT 3.5% AND D IRECTED THE ASSESSING OFFICER TO APPLY NET PROFIT AT 3.5% OF THE TOTAL RECE IPTS AFTER CONSIDERING DEDUCTIONS INCLUDING DEPRECIATION AND ADD THE DIFFEREN CE TO THE RETURNED INCOME AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 6. LD D.R. SUBMITTED THAT THE ASSESSING OFFICER HAS MADE E STIMATION OF EXPENDITURE WHEREAS THE CIT(A) HAS ERRED IN RESTRICTIN G THE ADDITION IN RESPECT OF ADDITION ON PERCENTAGE BASIS. 7. WE HAVE HEARD THE SUBMISSIONS OF LD D.R., PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE FIN D THE ASSESSING OFFICER HAS MADE ASSESSMENT U/S.144 OF THE ACT AND MADE DISALLOWANCE AT 10% OF 4 ITA NO.355/RPR/2014 ASSESSMENT YEAR : 2010-2011 THE TOTAL RECEIPTS, RELYING ON TAX AUDIT REPORT AND COPIES OF SOME ALLEGED ACCOUNTS. THE CIT(A) HAS REPORTED THAT DURING REMAND P ROCEEDINGS, THE BOOKS OF ACCOUNT WERE NOT CALLED FOR VERIFICATION. THE CIT(A) FURTHER OBSERVED THAT THE NET PROFIT SHOWN BY THE ASSESSEE APPEAR S TO BE LOW. THE CIT(A) RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF CM MAKHIJA (SUPRA) AND DIRECTED THE ASSESSING OFFICER TO APPLY NET PR OFIT AT 3.5% OF THE TOTAL RECEIPTS AND DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. BEFORE US, LD D.R. COULD NOT POINT OUT ANY SPECIFIC MIST AKE IN THE ORDER OF THE CIT(A). AS THE CIT(A) HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN THE CASE OF CM MAKHIJA (SUPRA) TO ADOPT THE NET PROFIT RATE A T 3.5%, WHICH IS HIGHER THAN THE NET PROFIT SHOWN BY THE ASSESSEE, WE FIND NO GO OD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HER EBY CONFIRMED. GROUND NO.1 OF APPEAL IS DISMISSED. 8. WITH REGARDS TO GROUND NO.2 OF APPEAL, WE HAVE HE ARD LD D.R. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RECEIVED RS.18, 95,000/- FROM FOUR PERSONS AS LOANS. SINCE THE ASSESSEE HAS FAILED T O SUBSTANTIATE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENU INENESS OF TRANSACTION, THE ASSESSING OFFICER DISALLOWED THE SAME. 9. THE CIT(A) OBSERVED THAT THE ASSESSEE HAS FURNISHED COMP ETE POSTAL ADDRESS AND PAN PARTICULARS OF THE CREDITORS AND ADDRESS O F THE CREDITORS TO 5 ITA NO.355/RPR/2014 ASSESSMENT YEAR : 2010-2011 THE ASSESSING OFFICERS WITH WHOM THE CREDITORS ARE ASSESSED TO TAX. THEREFORE, HE DELETED THE ADDITION MADE BY THE ASSESSIN G OFFICER. 10. LD D.R, RELYING ON THE DECISIONS IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. DEVI PRASAD VISHWANATH PRASAD [1969] 72 ITR 194 ( SC) AND GROVER FABRICS (INDIA) P. LTD. VS. COMMISSIONER OF INCOM E-TAX [2011] 332 ITR 312 (P&H) SUBMITTED THAT THERE IS NO BAR FOR ADD ITION U/S 68 AND A TRADING ADDITION FOR THE SAME YEAR. 11. WE FIND THAT THE ASSESSEE HAS FURNISHED THE DETAILS OF THE INCOME TAX RETURNS ALONGWITH PAN. IT HAS ALSO BEEN INFORMED THAT THE LENDERS HAVE GIVEN CONFIRMATION. THEREFORE, THE ASSESSEE HAS COMPLIED W ITH THE CONDITIONS PRESCRIBED IN THE PROVISIONS OF SEC. 68 OF ITA CT. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, ESPECIALLY WHEN NO ADVERSE REMARKS IS ON RECORD, WE FIND NO REASON TO REVERSE THE FINDINGS OF THE LD CIT(A). HENCE, WE REJECT THE GROUND OF APPEAL TAKEN BY THE REVENUE. 12. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON 17 /01/2018. SD/- SD/- (N.S SAINI) ( PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIALMEMBER RAIPUR; DATED 17 /01/2018 6 ITA NO.355/RPR/2014 ASSESSMENT YEAR : 2010-2011 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, RAIPUR 1. THE APPELLANT : DCIT, 1(1), RAIPUR 2. THE RESPONDENT. SHRI RAJESH MAKHIJANI, SHANTIDEEP COLONY, NAVEEN ROAD, KAWARDH 3. THE CIT(A)- RAIPUR 4. PR.CIT- RAIPUR 5. DR, ITAT, RAIPUR 6. GUARD FILE. //TRUE COPY//