M/s Payal Associates, Bhubaneswar V. ITO, Bhubaneswar

ITA 389/CTK/2013

• Counselvise Citation: 38922114 RSA 2013
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 03-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B R PANDA
• Keywords: Reasonable cause; Condonation of delay

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI P. K. BABNSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 389 / CTK /2013 (ASST. YEAR : 200 9 - 1 0 ) M/S. PAYAL ASSOCIATES, PLOT NO. SCR - G - 621, JANAPATH, KHARVEL NAGAR, BHUBANESWAR - 1. VS. ITO , WARD - 1(1), BHUBANESWAR. PAN NO. AAGFP 1650 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B.R. PANDA A.R. DEPARTMENT BY : SHRI ANIL SHARMA - D.R. DATE OF HEARING : 05 / 0 2 /2015 . DATE OF PRONOUNCEMENT : 0 5 / 0 2 /201 5 . O R D E R PER D.T. GARASIA , J .M THIS IS AN APPEAL BY THE ASSESS EE AGAINST THE ORDER OF LD. CIT (A) - 1 , BHUBANESWAR DATED 2 4 /0 8 /201 2 FOR THE A.Y. 2009 - 10 . 2. THE REGISTRY HAS POINTED OUT THAT THERE IS A DELAY IN FILING THIS APPEAL BY 248 DAYS . THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY ON THE GROUND THAT APPEAL WAS TO BE FILED WITHIN 60 DAYS FROM THE DATE OF ORDER. ONE OF THE PARTNER S OF TH E FIRM SHRI 2 G.C. PATTNAIK , WHO WAS LOOKING AFTER THE TAXATION MATTER S, COULD NOT FILE TH IS APPEAL WITHIN TIME AS HE WAS SUFFERING FROM ILLNESS. THE ASSESSEE HAS SUBMITTED A MEDICAL CERTIFICATE IN SUPPORT OF HIS CLAIM. 3. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT TH IS APPEAL WAS FILED BY ONE SHRI G.C. PATTNAIK, WHO WAS UNDER THE TREATMENT OF DR. SARAT KUMAR ACHARYA FOR HIS ILLNESS , THEREFORE HE WAS NOT ABLE TO MOVE FROM 15/10/2012 TO 30/06/2013 , THEREAFTER HE HAS FILED THE APPEAL. WE FIND THAT ASSESSEE HAS SHOWN A REASONABLE CAUSE FOR DELAY IN FILING THE APPEAL, HENCE WE CONDONE THE DELAY. 4 . THE FOLLOWING GROUNDS ARE RAISED BY THE ASSESSEE : 1. FOR THAT THE ORDERS OF THE FORUM BELOW ARE ARBITRARY, UNJUST IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND OUT OF THE RECEIPT SINCE 98% IS PAID TOWARDS THE LABOUR CHARGES ON THE BASIS OF COMPARABLE CHART PREPARED BY THE LEARNED A.O. IN ADDITION TO OTHER E XPENSES THAN THE PROFIT RATE SHOWN BY THE ASSESSEE IS 0.74% SHOULD HAVE BEEN ACCEPTED. 2. FOR THAT THE ORDER OF THE LD. CIT(A) IS HIGHLY EXCESSIVE, UNREASONABLE AND ABSURD IN THE FACTS OF THE CASE STATING THAT THE ESTIMATION OF THE LEARNED A. O . WAS VERY RE ASONABLE WHICH HAD NOT ATTRACTED HIS INTERFERENCE IN THE MATTER. THEREFORE, THIS OBSERVATIONS AND FINDINGS OF THE FORUMS BELOW WERE MOST ILLEGAL AND HAD DISTURBED AND CONTRAVENED THE YEAR WISE BREAK UP DRAWN BY THE LEARNED A.O. AFTER VERIFYING THE DETAILS . 3. FOR THAT HENCE, THE ORDER PASSED EXCESSIVE IS LIABLE TO THE QUASHED AND PROFIT HAS TO BE ESTIMATED DETERMINING THE INCOME SHOWN BY THE APPELLANT. 3 4. FOR THAT THERE WAS NO COMPARABLE CASE OR EXTRA CIRCUMSTANCES BROUGHT BY THE REVENUE TO ESTIMATE THE INCOME AT HIGHER RATE HENCE TO BE REDUCED. 5. SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 30/09/2009 SHOWING THE TOTAL INCOME O F RS. 3,86,910/ - . THE ASSESSEE FIRM CARRIES ON THE BUSINESS OF SUPPLYING LABOUR IN VARIOUS CONTRACT WORKS. DURING THE A.Y. 2009 - 10, THE ASSESSEE HAS SHOWN GROSS RECEIPTS OF RS. 519.08 LAC. OUT OF THIS, LABOUR CHARGES ARE PAID TO THE TUNE OF RS. 508.32 LAC. WHICH IS 97.93% OF THE CONTRACT RECEIPTS. THE ASSESSEE WAS DIRECTED TO PRODUCE THE DETAILS OF LABOUR CHARGES PAID SUCH AS PL A CE OF WORK, VOLUME OF WORK AND THE PERSONS ENGAGED FOR THE WORK ON VARIOUS DAYS . THE ASSESSEE COULD NOT PRODUCE THE DETAILS AS DEMANDED. THE ASSESSEE ENGAGES LABOUR FOR THE CONTRACT WORK EXECUTED BY OTHER CONTRACTORS, BUT HE COULD NOT TELL THE DETAILS OF WORK DONE FOR WHICH LABOUR FORCE WAS REQUIRED. THE ASSESSEE PRODUCED ONLY A REGISTER OF LABOUR SHOWING THE RECEIPTS OF WAGES BY THEM UNDER THE REVENUE STAFF . THE ASSESSEE WAS ENGAGED SUPPLYING LABOUR FOR CONTRACT WORK EXECUTED BY OTHER CONTRACTORS. THE ASSESSEE COULD NOT PRODUCE THE LABOUR - SARDARS THROUGH WHOM THE LABOURERS MIGHT HAVE BEEN ENGAGED AND PAYMENT MIGHT HAVE BEEN MADE THROUGH THEM. THEREFORE, THE ASSESSING OFFICER DID NOT RELYING THE PROFIT SHOWN BY THE ASSESSEE AND HE COMPARED THE GROSS PROFIT AND NET PROFIT 4 WITH THE A.Y S . 2006 - 07 , 2007 - 08 & 2009 - 10 . THE ASSESSING OFFICER HAS COMPUTED THE NET PROFIT @ 8% AND HE HAS COMPUTED THE PROFIT ACCORDINGLY. 6. THE MATTER WAS CARRIED TO THE LD. CIT(A) AND LD. CIT(A) HAS DISMISSED THE APPEAL . 7. DURING THE COURSE OF HEARING , LEARNED A.R. SUBMITTED THAT IN ASSESSEES OWN CASE FOR A.Y. 2008 - 09, THE MATTER WAS TRAVELLED TO TRIBUNAL AND THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO ADOPT THE NET PROFIT @ 4%, THEREFORE SAME PROFIT MAY BE ADOPTED IN THIS CASE ALSO. 8. LEARN ED DR DID NOT OBJECT WITH THE AFORESAID SUBMISSION OF THE LEARNED A.R. 9. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE IN THE A.Y. 2008 - 09, THE TRIBUNAL HAS DIRECTED TO ADOPT THE NET PROFIT @ 4% BY OBSERVING AS UNDER: - 4. WE HAVE GONE THROUGH THE ASSESSMENT ORDER, FROM WHERE WE FIND THAT THE ASSESSING OFFICER JUST AFTER REJECTING THE BOOKS OF ACCOUNTS ESTIMATED THE NET PROFIT @ 8% ON THE GROSS RECEIPTS. THE BASIS OF 5 ADOPTION O F 8% OF THE NET PROFIT HAS NOT BEEN MENTIONED BY THE ASSESSING OFFICER. HE HAS NOT EVEN MENTIONED HOW THIS RATE HAS BEEN WORKED OUT AND FROM WHERE THIS RATE HAS BEEN ADOPTED. IN THE CASE OF ASSESSEE, WE NOTED THAT THE ASSESSEE HAS RETURNED NET PROFIT 1.16% . EVEN THE REASON OF ASSESSEE THAT FOR THE EARLIER YEARS AS WELL AS SUBSEQUENT YEARS NET PROFIT HAS NOT BEEN TAKEN INTO ACCOUNT WHILE ESTI M ATING THE NET PROFIT 8%. THE ASSESSING OFFICER WAS FULLY AWARE THAT THE ASSESSEE IS ENGAGED IN THE LABOUR SUPPLY CONT RACT WORK. THEREFORE, THE ASSESSING OFFICER SHOULD HAVE COLLECTED THE INSTANCE WHICH COULD HAVE BEEN RELEVANT MATERIAL SO AS TO J USTIFY THE ESTIMATION OF INCOME 8%. SINCE THE ASSESSEE HAS NOT CHALLENGED THE REJECTION OF THE BOOKS OF ACCOUNTS BEFORE US, THE REFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, AND THE FACT T HAT THE PROVISIONS OF SECTION 4 4AD WERE NOT APPLICABLE IN THE CASE OF ASSESSEE. WHERE THE GROSS RECEIPT OF THE ASSESSEE EXCEEDS RS.40 LAKHS, WE FIND THAT NO THUMB RULE CAN BE LAID DO WN AT WHAT PERCENT OF NET PROFIT CAN BE DERIVED BY THE ASSESSEE. THE MODE OF TURNOVER WILL BE IN THE CASE OF ASSESSEE , THE PRO FIT WILL GENERALLY REDUCED. SINCE THE ASSESSEE HAS NOT APPEARED AND THE ASSESSING OFFICER HAS ALSO NOT BROUGHT MM ANY RELEVANT MATERIA L TO JUS TIFY THE ADOPTION OF RATE OF 8%, THEREFORE, IN OUR OPINION, IT WILL BE JUSTIFIED AND REASONABLE THAT THE NET PROFIT BE ESTIMATED @ 4%. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(APPEALS) AND DIRECT THE ASSESSING OFFICER TO ESTIMATE THE NET PRO FIT BY THE NET PROFIT RATE OF 4% FROM THE GROSS CONTACT RECEIPTS. 10. WE RESPECTFULLY FOLLOWING THE AFORESAID ORDER IN ASSESSEES OWN CASE IN A.Y. 2008 - 09, WE DIRECT THE ASSESSING OFFICER TO ADOPT THE NET PROFIT RATE @ 4%. 11. IN THE RESULT, APPEAL OF T HE ASSESSEE IS ALLOWED . ( ORDER PRONOUNCED IN THE OPEN COURT ON 0 5 T H FEBRUARY , 201 5 ). S D / - S D / - (P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 5 T H FEBRUARY , 201 5 . 6 VR/ - COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., CUTTACK.