The Asstt. Commissioner of Income-tax, Srinagar V. M/s. Gulzar Ahmed Sheikh, Kashmir

ITA 377/ASR/2012

• Counselvise Citation: 37720914 RSA 2012
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-11-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Keywords: Rejection of books of accounts; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.377(ASR)/2012 ASSESSMENT YEAR:2009-2010 PAN :AAEFG4717G ASSTT. COMMR. OF INCOME TAX, VS. M/S. GULZAR AHMED SEHIKH, CIRCLE-3, SRINAGAR. SHOPIAN, PULWAMA, KASHMIR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. AMRIK CHAND, DR RESPONDENT BY:NONE DATE OF HEARING:19/11/2012 DATE OF PRONOUNCEMENT:22/11/2012 ORDER PER BENCH ; THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER OF THE CIT(A), JAMMU, DATED 09.07.2012 RELATING TO ASSESSM ENT YEAR 2009-2010 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DIRECTING THE AO TO ADOPT NET PROFIT RATE OF 7% OF THE TOTAL RECEIPTS INSTEAD OF 10% APPLIED BY THE AO WHE N THE BOOKS OF ACCOUNT WERE NOT PRODUCED AND REJECTED U/S 145(3 ) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DIRECTING THE AO TO ADOPT NET PROFIT RATE OF 7% OF THE ITA NO.377(ASR)/2012 2 TOTAL RECEIPTS INSTEAD OF 10% APPLIED BY THE AO IN VIEW OF THE DECISION OF HONBLE ITAT CHANDIGARH A BENCH IN TH E CASE OF M/S. SHIVAM CONSTRUCTION CO. AND AFFIRMED BY THE HO NBLE HIGH COURT OF PUNJAB & HARYANA IN THEIR ORDER IN IT A NO. 183 OF 2007 DATED 14.05.2007. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DIRECTING THE AO TO ADOPT NET PROFIT RATE OF 7% OF THE TOTAL RECEIPTS INSTEAD OF 10% APPLIED BY THE AO WHE N THE JURISDICTIONAL BENCH OF ITAT AMRITSAR BENCH IN THE CASE OF M/S. POOJA CONSTRUCTION CO; REPORTED IN ITA NO.750( ASR)/1992 HAD HELD THAT THE APPLICATION OF NET PROFIT RATE OF 10% ON GROSS RECEIPTS IS PROPER. THE SAID ORDER OF THE JURISDICT IONAL ITAT HAS BEEN CONFIRMED BY THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN THEIR ORDER IN ITA NO.166 OF 1999 DATED 10.09.2010. 4. THE APPLICANT CRAVES TO AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 2. NOTICE OF HEARING WAS ISSUED TO THE ASSESSEE ON THE ADDRESS GIVEN BY THE APPELLANT, BUT INSPITE OF THE SAME, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED NOR FILED ANY APPLICATION F OR ADJOURNMENT OF THE CASE. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESS EE IS NOT INTERESTED TO PROSECUTE THE MATTER IN DISPUTED AND AS SUCH WE PRO CEED TO DECIDE THE ISSUE EX-PARTE AFTER HEARING THE LD. DR. 3. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVA NT RECORDS AVAILABLE WITH US. WE ARE OF THE CONSIDERED VIEW THAT THE A O HAS ADOPTED THE NET PROFIT RATE OF 10% BUT THE LD. CIT(A) HAS REDUCED T HE SAME TO 7% OF THE TOTAL RECEIPTS BY APPLYING THE PROVISIONS OF SECTION 145( 3) OF THE ACT. THE ITA NO.377(ASR)/2012 3 ASSESSEE IS A CIVIL CONTRACTOR AND ALSO DEALS IN SALE OF PETROLEUM PRODUCTS AND ALSO IN TRANSPORT BUSINESS. WE HAVE GONE THROUG H THE ORDER PASSED BY THE LD. CIT(A) AND FOUND THAT THE LD. CIT(A) HAS PASSED A WELL REASONED ORDER. THE RELEVANT FINDINGS OF THE LD. CIT(A) GIVEN IN PA RA 6 & 7 ARE REPRODUCED AS UNDER: 6. GROUND NO.2 RELATES TO NON PROVIDING OF SUFFICIENT OPPORTUNITY OF BEING HEARD BY THE A.O. FROM THE ASSESSMENT ORDE R, IT IS CLEAR THAT A NUMBER OF OPPORTUNITIES WERE GRANTED TO THE ASSES SEE BUT NOT PRIMARY BILLS/VOUCHERS WERE PRODUCED. BOOKS OF ACCO UNTS WERE ALSO NOT PRODUCED. IN RESPECT OF WAGES RELATING TO CONTR ACTS NO DETAILS WERE FILED. IN VIEW OF THE ABOVE, THE GROUND NO.2 I S DISMISSED. CONSIDERING THE FAILURE OF ASSESSEE IN PRODUCING TH E DETAILS AS NOTED ABOVE AND ALSO NON-PRODUCTION OF BOOKS OF ACCOUNTS, THE REJECTION OF BOOKS OF ACCOUNTS U/S 145(3) OF I.T. ACT BY THE AO, CANNOT BE FAULTED WITH. GROUND NO.3 ALSO STANDS DISMISSED. 7. GROUND NO.4 IS REGARDING APPLICATION OF NET PROF IT RATE IN RESPECT OF CONTRACT BUSINESS. IT IS FOUND THAT THE RELIANCE OF A.O. ON THE CASE OF M/S. SHIVAM CONSTRUCTIONS AS ABOVE IS N OT FULLY APPLICABLE AS IN THAT CASE THE APPLICATION OF NET PROFIT RATE OF 10% ATTAINED FINALITY IN AN EARLIER ASSESSMENT YEAR AND THE SAME WAS HELD TO BE APPLICABLE BY THE HONBLE ITAT AND ALSO CONFIRMED B Y HONBLE HIGH COURT OF PUNJAB & HARYANA. THE MOST APPROPRIATE WAY TO ARRIVE AT A REASONABLE AND FAIR NET PROFIT RATE IS TO BE COMPA RISON WITH ASSESSEES IN SIMILAR BUSINESS AND IN SIMILAR LOCATION. THE C OMPARATIVE NET PROFIT CHART FROM ASSESSMENT YEAR 2005-06 TO 2009-2 010 IN THE CASE OF ASSESSEE ITSELF IS ALSO NOT ENTIRELY RELEVANT AS TH E NP RATE SHOWN IN THESE YEARS RANGES FROM 0.25% TO 1.15%. THE VOLATI LITY AS WELL AS THE EXTREMELY LOW PROFIT RATE MISTAKES THE COMPARISON W ITH ASSESSEES OWN CASE FOR EARLIER YEARS NOT TENABLE. THE ONLY CA SES OPERATING IN SAME LINE OF BUSINESS AND IN SIMILAR AREA OF LOCATI ON HAVING REGARD TO THE TOTAL TURNOVER WOULD BE COMPARABLE CASES IN VIE W OF THE FACTS AND CIRCUMSTANCES DISCUSSED AS ABOVE. THE ARGUMENT OF A SSESSEE THAT A PROFIT MARGIN OF 10% IS ALLOWED AS PER TENDER DOCUM ENTS ALSO HAS SOME FORCE. IN THE CASE OF CONSTRUCTION ENGINEERS, SRINAGAR, ITA NO.266/ASR/2010, HONBLE ITAT, AMRITSAR IN ITS FIND ING HAS DIRECTED TO APPLY A NET PROFIT RATE OF 6.5% SUBJECT TO NO OT HER DISALLOWANCE. ITA NO.377(ASR)/2012 4 THE ONLY DIFFERENCE IN FACTS OF THIS CASE AND THAT OF M/S. CONSTRUCTION ENGINEERS IS THAT THE ASSESSEE FIRM HAS A MUCH LOWE R TURNOVER. KEEPING IN VIEW ALL THE FACTORS, IN TOTALITY, I FIN D IT WOULD BE MOST REASONABLE AND FAIR IF A NET PROFIT RATE OF 7% IS A PPLIED TO THE TURNOVER OF RS.3,79,93,987/-. 4. KEEPING IN VIEW THE AFORESAID DISCUSSIONS, WE AR E OF THE CONSIDERED VIEW THAT THE LD. FIRST APPELLATE AUTHORITY HAS RIG HTLY ADJUDICATED THE ISSUE IN DISPUTE AND APPLIED NET PROFIT RATE OF 7% BY RESPEC TFULLY FOLLOWING THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF CONST RUCTION ENGINEERS, SRINAGAR, ITA NO.266(ASR)/2010. THEREFORE, WE ARE O F THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORD ER PASSED BY THE LD. FIRST APPELLATE AUTHORITY AND THE PRESENT APPEAL FILED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND NOVEMBER, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22ND NOVEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. GULZAR AHMED SHEIKH, KASHMIR. 2. THE ACIT, CIRCLE-3, SRINAGAR. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER