ITO, BHARATPUR V. SATISH CHAND POORAN CHAND, BHARATPUR

ITA 383/JPR/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7216 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Depreciation

Judgement Text

ITA 383(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 383/JP/2011 ASSTT. YEAR : 2005-06. THE INCOME-TAX OFFICER, VS. M/S. SATISH CHAND POO RAN CHAND, WARD-1, V&PO: KALSADA, TEHSIL: BAYANA, BHARATPUR. BHARATPUR. (APPELLANT) (RESPONDENT) C.O. NO. 74/JP/2011 ( ARISING OUT OF ITA NO. 383/JP/2011 ) ASSTT. YEAR : 2005-06. M/S. SATISH CHAND POORAN CHAND, VS. THE INCOME-TAX OFFICER, BHARATPUR. WARD-1, BHARATPUR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI D.K. MEENA RESPONDENT BY : NONE DATE OF HEARING : 01.11.2011. DATE OF PRONOUNCEMENT : 04.11.2011. ORDER DATE OF ORDER : 04/11/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AND CROSS OBJECTIO N BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2005-06. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE THOUGH T HE CASE WAS ADJOURNED ON THE REQUEST OF THE LD. COUNSEL OF THE ASSESSEE. THE AP PEAL IS BEING DISPOSED OFF AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A). 3. THE DEPARTMENT IS OBJECTING IN RESTRICTING THE D ISALLOWANCE FROM RS. 9,55,327/- TO RS. 50,000/- AS MADE BY THE AO OUT OF CONTRACT EXPE NSES. 4. THE ASSESSEE IS OBJECTING IN SUSTAINING THE ADDI TION OF RS. 50,000/- THROUGH ITS CROSS OBJECTION. 5. THE BRIEF FACTS DISCUSSED BY LD. CIT (A) IN PARA 4.1 ARE THAT THE ASSESSEE FIRM IS A CIVIL CONTRACTOR. BOOKS OF ACCOUNT MAINTAINED AND G ET AUDITED UNDER SECTION 44AB AND PRODUCED BEFORE THE LD. AO, WHICH WERE EXAMINED ON TEST CHECK BASIS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE FIRM UNDERTAKEN SU B CONTRACT WORK FROM M/S. RAMESHWAR PRASAD SHARMA, CONTRACTOR, BHARATPUR AND HAS SHOWN GROSS RECEIPTS AMOUNTING RS. 1,04,16,811/- ON WHICH NET PROFIT HAS BEEN DECLARED AT RS. 6,63,578/- SUBJECT TO DEPRECIATION, INTEREST AND REMUNERATION TO PARTNERS. AGAINST THE CONTRACT RECEIPTS THE ASSESSEE FIRM HAS CLAIMED TOTAL CONTRA CT EXPENSES CONSISTING OF MATERIAL, LABOUR AND EXPENSES OF WORK AMOUNTING RS. 95,53,271 /-. 5.1. THE AO HAS OBSERVED IN THE ASSESSMENT ORDER TH AT THE ASSESSEE FIRM HAS NOT FURNISHED THE HEAD-WISE/ITEM-WISE DETAILS OF CONTRA CT EXPENSES AMOUNTING TO RS. 95,53,271/- AGAINST THE TOTAL CONTRACT RECEIPTS OF RS. 1,04,16,811/- AND ALSO NOT PRODUCED BILLS/VOUCHERS FOR VERIFICATION. THE A.O. CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNT AND IN CORRECT MANNER AND ACCORDING HE MADE THE TRADING ADDITION OF RS. 9,55,327/- AFTER DISALLOWIN G THE 10% OF CONTRACT EXPENSES AMOUNTING RS. 95,53,271/-. 6. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT THE ASS ESSEE FIRM HAS EXECUTED TOTAL CONTRACT WORK FOR RS. 1,04,16,811/- BEING SUB CONTR ACT FROM M/S. RAMESHWAR PRASAD SHARMA, CONTRACTOR, BHARATPUR, AND DECLARED NET PRO FIT BEFORE INTEREST, DEPRECIATION AND INTEREST AND REMUNERATION TO PARTNERS RS. 6,63,578/ - I.E. 6.37%. THE LD. A/R SUBMITTED THAT THE ASSESSEE FIRM STARTED ITS BUSINESS BEFORE LAST YEAR AND IN THE PREVIOUS YEAR MANAGED TO COMPLETE THE LARGE WORK. THE LD. A/R CI TED THE CASE OF M/S. VIJAY BUILDERS, JAIPUR VS. ITO, JAIPUR, (2010) XLIII TAX WORLD 93. THE JAIPUR BENCH OF THE TRIBUNAL APPLIED 5% RATE OF PROFIT SUBJECT TO DEDUCTION FOR DEPRECIATION, INTEREST AND REMUNERATION TO PARTNERS AS WELL AS THIRD PARTIES AS HELD THAT CONSIDERING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BHAWAN VA PATH NI RMAN (BOHRA) & CO., 258 ITR 440 REFERRED ABOVE, WE NOTED THAT LD. CIT (A) HAS ESTIM ATED THE INCOME AT HIGHER SIDE. THEREFORE, FOLLOWING THE DECISION OF THIS VERY BENC H REFERRED ABOVE, IT WILL BE IN THE INTEREST OF JUSTICE AND PAST HISTORY OF THE CASE TH AT IF THE NET PROFIT OF 5% ON THE DECLARED TURNOVER SUBJECT TO DEDUCTION FOR DEPRECIATION, INT EREST AND REMUNERATION TO PARTNERS AS WELL AS THIRD PARTIES IS ALLOWED WHICH WILL MEET BO TH THE ENDS OF JUSTICE . ALSO THE LD. A/R SUBMITTED THAT IN THE CASE OF M/S. MURARI LAL S INGHAL, CONTRACTOR, DHOLPUR IN THE APPEAL NO. 316/07-08 VIDE ORDER DATED 26.08.2010 IN THE SIMILAR CASE TRADING ADDITION HAS BEEN RESTRICTED TO RS. 75,000/- AGAINST ADDITION OF RS. 12,53,116/-. 7. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, THE LD. CIT (A) GAVE THE FOLLOWING FINDINGS :- THE RIVAL SUBMISSIONS HAVE BEEN CONSIDERED. THE LD. A/RS SUBMISSION ARE NOT FULLY ACCEPTABLE AS THERE IS SUBSTANCE IN T HE FINDINGS AND DEFECTS POINTED OUT IN THE ASSESSMENT ORDER BY THE LD. AO. BUT AN ADDITION OF RS. 9,55,327/- ON THE GROSS RECEIPTS OF RS. 1,04,16,811 /- SEEMS TO BE ON VERY HIGHER SIDE AND UNREASONABLE. IN ORDER TO MEET THE ENDS OF JUSTICE THE SAME IS RESTRICTED AT RS. 50,000/-. THE REMAINING ADDITION OF RS. 9,05,327/- IS DELETED. THEREFORE, THE APPELLANT WIL L GET A RELIEF OF RS. 9,05,327/-. 8. THE LD. D/R HAS PLACED RELIANCE ON THE ORDER OF THE A.O. 9. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A), WE FIND THAT LD. CIT (A) HAS DECIDED THE ISSUE IN RIGHT PERSPECTIVE AS HE HA S CONSIDERED VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE BEFORE HIM AND THEREAFTER IT W AS THOUGHT PROPER THAT ADDITIONS SUSTAINED BY AO WAS NOT JUSTIFIED. ACCORDINGLY HE R ESTRICTED THE ADDITION TO RS. 50,000/-. IN OUR VIEW, THE FINDINGS OF LD. CIT (A) ARE FINDIN GS OF FACT WHICH HAVE BEEN GIVEN AFTER APPRECIATING ALL THE MATERIAL FACTS OF THE CASE. AC CORDINGLY, WE CONFIRM HIS FINDINGS. 10. IN THE RESULT, APPEAL OF THE DEPARTMENT AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04 .11.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ITO WARD-1, BHARATPUR. M/S. SATISH CHAND POORAN CHAND, BHARATPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 383(2)/JP/2011) BY ORDER, AR ITAT JAIPUR.