A.C.I.T.. Circle-3(1), Gwalior V. M/s Osho Associates, Gwalior

ITA 389/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0577 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 9 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-01-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANUJ SHARMA
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 359/AGRA/2012 ASSTT. YEAR : 2009-10 M/S. OSHO ASSOCIATES, VS. A.C.I.T., CIRCLE-3, GANDHI ROAD, 30 SATYA DEO NAGAR, GWALIOR. GWALIOR.(PAN: AABFO 4964 C) ITA NO. 389/AGRA/2012 ASSTT. YEAR : 2009-10 A.C.I.T., CIRCLE-3, VS. M/S. OSHO ASSOCIATES, GWALIOR. GANDHI ROAD, 30 SATYA DEO NAGAR, GWALIOR. (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI RAJENDRA SHARMA & MANUJ SHARMA, ADV. RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 28.01.2013 DATE OF PRONOUNCEMENT OF ORDER : 29.01.2013 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE OR DER OF LD. CIT(A), GWALIOR DATED 14.05.2012 FOR THE ASSESSMENT YEAR 2009-10. ITA NO. 359 & 389/AGRA/2012 2 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE HAS DECLARED CONTRACTUAL RECEIPTS AT RS.12,05,58,872/-, ON WHICH THE NET PRO FIT OF RS.50,11,101/- HAS BEEN EARNED AND SHOWN. THE AO OBSERVED THAT MAJORITY OF THE EXPENSES CLAIMED TO HAVE BEEN PAID IN CASH. COMPLETE VOUCHERS HAVE NOT BEEN PRODUCED AND NOT SUBJECTED TO VERIFICATION. THE AO, THEREFORE, DOUBT ED THE ACCURACY OF THE BOOK RESULTS AND ACCORDINGLY, REJECTED THE SAME AND BY R ELYING UPON THE DECISION OF ITAT HYDERABAD BENCH, COMPUTED THE INCOME BY APPLYI NG THE PROFIT RATE OF 12.5%. HOWEVER, INTEREST PAID TO THE PARTNERS AND D EPRECIATION WAS ALLOWED AND INCOME OF THE ASSESSEE WAS DETERMINED AT RS.1,27,98 ,840/-. THE ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A) AND IT WAS SUBMITT ED THAT 12.5% GROSS PROFIT HAS BEEN APPLIED WITHOUT LOOKING INTO THE PAST HISTORY AND COMPARABLE CASES, THEREFORE, THE PROFIT RATE APPLIED IS VERY HIGH AND EXORBITANT. THE ASSESSEE FILED THE LIST OF PAST YEARS FROM ASSESSMENT YEAR 2002-03 TO 2008-09 REPRODUCED AT PAGE 2 OF THE APPELLATE ORDER, IN WHICH IT WAS SUBM ITTED THAT THE LD. CIT(A) HAS SUSTAINED THE SIMILAR ADDITION OF RS.1,00,000/- ONL Y IN SEVERAL YEARS OR THE RETURN IS ACCEPTED U/S. 143(1). IT WAS ALSO EXPLAINED THAT THERE IS A CUT THROAT COMPETITION IN THIS BUSINESS AND MAINLY THE WORK IS CONDUCTED O F VARIOUS GOVERNMENT DEPARTMENTS, THEREFORE, THE PROFIT MARGIN IS VERY L OW. THE LD. CIT(A) CONSIDERING THE MATERIAL ON RECORD FOUND THAT THE ASSESSEE MAIN TAINED BOOKS OF ACCOUNT AND TURNOVER AND PURCHASES OF THE ASSESSEE HAVE NOT BEE N DOUBTED WHICH WERE ALSO ITA NO. 359 & 389/AGRA/2012 3 PRODUCED FOR VERIFICATION AND CERTAIN EXPENSES COUL D NOT BE PROVED, BUT THERE IS NOTHING ON RECORD TO PROVE THAT EXPENSES OF THE ASS ESSEE WERE EXCESSIVE OR UNREASONABLE. THE LD. CIT(A) CONSIDERING THE PAST H ISTORY OF THE ASSESSEE, IN WHICH IN ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE HAS SHOWN NET PROFIT RATE OF 4.16% AND IN PRECEDING ASSESSMENT YEAR 2007-08 AND 2008-09, THE ASSESSEE HAS DISCLOSED NET PROFIT RATE OF 2.02% & 2.28%, DIRECTE D TO APPLY THE PROFIT RATE OF 6% AND ESTIMATED THE PROFIT AT RS.72,33,532/-. THE ASS ESSEE IS IN APPEAL AGAINST APPLYING NET PROFIT RATE OF 6% AND THE REVENUE IS I N APPEAL AGAINST ORDER OF LD. CIT(A) IN REDUCING THE PROFIT RATE FROM 12.5% TO 6% . 3. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND REFERRED TO THE ORDER OF ITAT, AGRA BENCH IN THE CASE OF THE SAME ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 IN ITA NO. 704 OF 2008 DATED 17.09.2010 IN WHICH THE CIT(A) HAS CONFIRMED THE AD DITION OF RS.1,00,000/- ON THE IDENTICAL ISSUE AND THE DEPARTMENTAL APPEAL HAS BEEN DISMISSED. THE SAME ORDER HAS BEEN FOLLOWED IN ASSESSMENT YEAR 2002-03 IN THE CASE OF THE SAME ASSESSEE IN ITA NO. 65/AGR./2006 AND THE DEPARTMENT AL APPEAL HAS BEEN DISMISSED VIDE ORDER OF THE TRIBUNAL DATED 04.02.20 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PAST HISTORY OF THE ASSESSE E SHOULD BE ACCEPTED AND THE PROFIT RATE SHOULD BE FURTHER REDUCED AND RELIED UP ON THE FOLLOWING DECISIONS : ITA NO. 359 & 389/AGRA/2012 4 (I). DECISION OF HONBLE M.P. HIGH COURT IN THE CA SE OF DINANATH DUBEY VS. CIT, 160 ITR 1, IN WHICH IT WAS HELD REJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE NOT B EING IN CONTROVERSY, APPLICATION OF THE RATE OF PROFIT IN A CCORDANCE WITH THAT APPLIED IN THE EARLIER YEARS IS REALLY A QUESTION OF FACT IN THE PRESENT CASE. AT ANY RATE, THERE IS NOTHING TO INDICATE THA T THE TRIBUNALS FINDING ON THIS POINT IS UNJUSTIFIED. (II). DECISION OF PUNJAB & HARYANA HIGH COURT IN T HE CASE OF CIT VS. PAWAN KUMR , 316 ITR 324, IN WHICH IT WAS HELD TRIBUNAL HAVING APPLIED G.P. RATE OF 10 PER CENT TO ESTIMATED SALES OF BRICKS AFTER CONSIDERING ASSESSEES PAST H ISTORY AND THE GP RATE IN SUBSEQUENT YEARS AS AGAINST 14 PER CENT APP LIED BY THE AO, FINDING OF THE TRIBUNAL IS A PURE FINDING OF FACT A ND NO SUBSTANTIAL QUESTION OF LAW ARISES FOR DETERMINATION. (III). DECISION OF RAJASTHAN HIGH COURT IN THE CAS E OF CIT VS. INANI MARBLES (P) LTD., 316 ITR 125, IN WHICH IT WAS HELD AS UNDER : ASSESSEES OWN RESULT OF IMMEDIATELY PRECEDING ASSE SSMENT YEAR AT 2.51 ER CENT HAVING BEEN ACCEPTED UPTO THE LEVEL OF TRIBUNAL, TRIBUNAL WAS JUSTIFIED IN APPLYING THE SAME GP RATE FOR THE ASSESSMENT YEAR IN QUESTION AS AGAINST 15 PER CENT APPLIED BY THE AO AND 2.30 PER CENT DECLARED BY THE ASSESSEE. ITA NO. 359 & 389/AGRA/2012 5 ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF IT AT, AGRA BENCH IN THE CASE OF THE SAME ASSESSEE IN PRECEDING ASSESSMENT YEARS REF ERRED TO ABOVE. THE ASSESSEE IS DOING THE SAME BUSINESS AS WAS DOING IN THE EARL IER YEARS. THE ASSESSEE HAS SHOWN PROFIT RATE OF 4.16% IN ASSESSMENT YEAR UNDER APPEAL, WHICH IS ALREADY EXCESSIVE AS COMPARED TO THE PRECEDING ASSESSMENT Y EARS 2007-08 AND 2008-09, IN WHICH THE ASSESSEE HAS SHOWN PROFIT RATE OF 2.02 % AND 2.28%. THE HISTORY OF THE ASSESSEE IN EARLIER YEARS IS ALSO QUOTED AT PAG E 2 OF THE APPELLATE ORDER, IN WHICH IN EARLIER YEARS, THE LD. CIT(A) MAINTAINED A DDITION OF RS.1,00,000/- ONLY ON THE SAME ISSUE AND THE TRIBUNAL DISMISSED THE DE PARTMENT APPEAL VIDE ORDER DATED 17.09.2010. SINCE THE ASSESSEE HAS SHOWN BETT ER RESULTS IN THE ASSESSMENT YEAR UNDER APPEAL AS COMPARED TO THE EARLIER YEARS AND HAS MAINTAINED THE SAME NATURE OF BUSINESS, THEREFORE, IT WOULD NOT BE APPR OPRIATE TO APPLY THE PROFIT RATE OF 6% IN ORDER TO MAKE ADDITION AGAINST THE ASSESSE E. CONSIDERING THE EARLIER HISTORY OF THE ASSESSEE AND ORDERS OF THE TRIBUNAL IN THE CASE OF SAME ASSESSEE, IT WOULD BE REASONABLE AND APPROPRIATE TO MAINTAIN ADD ITION OF RS.2,50,000/- IN ALL ON THIS ISSUE INSTEAD OF DIRECTING TO APPLY PROFIT RATE OF 6%. THE ORDERS OF THE ITA NO. 359 & 389/AGRA/2012 6 AUTHORITIES BELOW ARE, THEREFORE, MODIFIED TO THE A BOVE EXTENT. ACCORDINGLY, THE DEPARTMENTAL APPEAL IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 5. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY