Gouranga Charan Sahoo, Cuttack V. ITO, Ward-1(1), Cuttack, Cuttack

ITA 356/CTK/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7568 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 17-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N. S SAINI, ACCOUNTANT MEMBER ITA NO.07/CTK/2014 ASSESSMENT YEAR : 2008 - 09 GOURANGA CH. SAHOO, PROP. M/S. SAHOO ENTERPRISES, AT: THORIAPADA, PO: SOMPUR, CUTTACK VS. ITO, WARD - 2(2), CUTTACK PAN/GIR NO. AGVPS 3269 C (APPELLANT ) .. ( RESPONDENT ) ITA NO.356/CTK/2014 ASSESSMENT YEAR: 2009 - 2010 GOURANGA CH. SAHOO, PROP. M/S. SAHOO ENTERPRISES, AT: THORIAPADA, PO: SOMPUR, CUTTACK VS. ITO, WARD - 1(1), CUTTACK PAN/GIR NO. (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI NATABAR PANDA REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 2 7 /10 / 2016 DATE OF PRONOUNCEMENT : 27 /10 / 2016 2 ITA NO.07/CTK/2014 ASSESSMENT YEAR :2008 - 09 ITA NO.356/CTK/2014 ASSESSMENT YEAR: 2009 - 2010 O R D E R BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF CIT(A) - CUTTACK, DATED 25.10.2013 , FOR THE ASSESSMENT YEAR 2008 - 09 AND DATED 6.6.2014 FOR THE ASSESSMENT YEAR 2009 - 2010, RESPECTIVELY . 2. THE COMMON GROUND RAISED IN BOTH THE APPEALS IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN ESTIMATING NET PROFIT @ 8% ON GROSS CONTRACT RECEIPTS OF THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT AGAINST GROSS RECEIPTS FROM WORKS CONTRACT OF RS.2,36,22,979/ - , THE ASSESSEE HAS SHOWN NET PROFIT OF RS.5,19,705/ - , WHICH WORKS OUT TO 2.20% OF GROSS RECEIPTS IN ASSESSMENT YEAR 2008 - 09. SIMILARLY, HE OBSERVED THAT FOR ASSESSMENT YEAR 2009 - 2010, AS AGAINST GROSS RECEIPTS FROM WORKS CONTRACT OF RS.3,17, 23,088/ - , THE ASSESSEE HAS SHOWN NET PROFI T OF RS.6,93,080/ - WHICH WORKS OUT TO 2.18% OF GROSS RECEIPTS. 4. THE ASSESSING OFFICER OBSERVED THAT THE PERCENTAGE OF GROSS PROFIT APPEARS TO BE VERY LOW IN COMPARISON TO GROSS PROFIT SHOWN BY THE OTHER ASSESSEE S HAVING SIMILAR NATURE OF BUSINESS. HE, THEREFORE, ESTIMATED THE INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE 3 ITA NO.07/CTK/2014 ASSESSMENT YEAR :2008 - 09 ITA NO.356/CTK/2014 ASSESSMENT YEAR: 2009 - 2010 ACT @ 8% OF GROSS RECEIPTS THEREBY DETERMINING THE INCOME OF THE ASSESSEE AT RS.18,26,836/ - AS AGAINST RETURNED NET PROFIT OF RS.5,19,705/ - IN A.Y. 2008 - 09 AND ESTIMATED THE INCOME AT RS.24,29,958/ - AS AGAINST THE RETURNED NET PROFIT OF RS.6,93,80/ - IN A.Y. 2009 - 2010. 5. BEING AGGRIEVED AGAINST THE ORDERS OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEALS BEFORE THE L D CIT(A), WHO CONFIRMED THE ACTION OF THE ASSESSING OFFICER FOR BOTH THE ASSESSMENT YEARS UNDER APPEAL. 6. BEING STILL AGGRIEVED, THE ASSESSEE HAS FILED APPEALS BEFORE THE TRIBUNAL FOR BOTH THE ASSESSMENT YEARS. 7. THE ONLY ARGUMENTS OF THE LD A.R. OF THE ASSESSEE IS THAT THE ASSESSEE IS DOING WORKS CONTRACT OF LAYING DOWN RAILWAY TRACK. HE FURTHER SUBMITTED THAT IN A.Y. 2007 - 08, NET PROFIT WAS ACCEPTED AT 1.78% U/S.143(1) OF THE ACT BY THE DEPARTMENT. FURTHER, IN A.Y. 2010 - 2011, RATE OF NET PROFIT WAS AC CEPTED AT 3.95% AND IN A.Y. 2011 - 12, THE RATE OF NET PROFIT WAS ACCEPTED AT 3.91%. IT WAS THE SUBMISSION OF THE LD A.R. OF THE ASSESSEE THAT CONSIDERING THE NET PROFIT RATE ACCEPTED IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR AND IN THE SUBSEQUENT ASSESS MENT YEARS, NET PROFIT FOR THE YEAR UNDER APPEAL MAY BE DETERMINED AT 5% OF THE GROSS CONTRACT RECEIPTS. 8. ON THE OTHER HAND, LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 4 ITA NO.07/CTK/2014 ASSESSMENT YEAR :2008 - 09 ITA NO.356/CTK/2014 ASSESSMENT YEAR: 2009 - 2010 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS ON RECORD, I FIND THAT THE ASSESSING OFFICER AFTER REJECTING THE BOOK RESULTS OF THE ASSESSEE, HAS DETERMINED THE NET PROFIT RATE AT 8% AS PRESCRIBED U/S.44AB OF THE ACT. IT IS AN UNDISPUTED FACT THAT THE TURNOVE R OF THE ASSESSEE IS MORE THAN R S.40 LAKHS AND , THEREFORE, THE RATE PRESCRIBED U/S.44AB IS NOT APPLICABLE TO THE ASSESSEE. IT IS ALSO TRITE LAW THAT AFTER REJECTION OF BOOK RESULTS OF THE ASSESSEE, THE ASSESSING OFFICER HAS TO DETERMINE THE INCOME OF THE ASSESSEE ON SOME REASONABLE BASIS. THE REASON ABLE BASIS IS THE PAST ACCEPTED RESULTS OF THE ASSESSEE. IT IS OBSERVED THAT THE RATE OF NET PROFIT AT 1.78% TO 3.95% HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE CASE OF THE ASSESSEE ITSELF. THEREFORE, CONSIDERING THE FACTS IN ITS ENTIRETY, I AM OF THE CO NSIDERED VIEW THAT THERE IS FORCE IN THE ARGUMENTS OF LD A.R. OF THE ASSESSEE THAT NET PROFIT FOR THE YEAR UNDER CONSIDERATION SHOULD BE ESTIMATE AT 5% OF THE CONTRACT RECEIPTS. I ORDER ACCORDINGLY. THUS, THE GROUND OF APPEAL TAKEN BY THE ASSESSEE FOR BO TH THE ASSESSMENT YEARS IS PARTLY ALLOWED. 10. IN ASSESSMENT YEAR 2009 - 2010, THE ASSESSEE HAS ALSO RAISED GROUND NO.5 OF THE APPEAL WHICH READS AS UNDER: FOR THAT THE LD CIT(A) WHILE PASSING THE ORDER FAILED TO ALLOW THE BANK INTEREST @ 3,65,351.54, BANK CHARGES @ RS.6270/ - AND 5 ITA NO.07/CTK/2014 ASSESSMENT YEAR :2008 - 09 ITA NO.356/CTK/2014 ASSESSMENT YEAR: 2009 - 2010 OTHER ALLOWABLE EXPENSES IN THE INTEREST OF NATURAL JUSTICE, HENCE, THE ORDER PASSED IS LIABLE TO BE QUASHED. 11. AT THE TIME O F HEARING, NO SERIOUS ARGUMENTS WERE ADVANCED ON THIS GROUND OF APPEAL AND, THEREFORE, THE SAME IS DISMISSED. 12. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 27 /10 /2016 IN THE PRESENCE OF PARTIES. SD/ - ( N. S SAINI ) A CCOUNTANT MEMBER CUTTACK; DATED 27 /10 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : GOURANGA CH. SAHOO, PROP. M/S. SAHOO ENTERPRISES, AT: THORIAPADA, PO: SOMPUR, CUTTACK 2. THE RESPONDENT. ITO, WARD - 2(2), CUTTACK 3. THE CIT(A) CUTTACK 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY// 6 ITA NO.07/CTK/2014 ASSESSMENT YEAR :2008 - 09 ITA NO.356/CTK/2014 ASSESSMENT YEAR: 2009 - 2010 DATE INITIAL 1. DRAFT DICTATED ON 27 / 10/16 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 27 / 10/16 (DICTATION PAD HAS BEEN ENCLOSED ALONG WITH ORIGINAL FILE) SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER A M 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS /PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE H.C. 9. DATE ON WHICH FILE GOES TO THE SR. PS 10. DATE OF DISPATCH OF ORDER.