ACIT, Muzaffarnagar V. M/s. Bhartiya Construction, Muzaffarnagar

ITA 3903/DEL/2009

• Counselvise Citation: 390320114 RSA 2009
• Duration Of Justice: 4 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Depreciation
• Section: 44AD; 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A N EW DELHI BEFORE SHRI G.D. AGARWAL , HONBLE VICE PRESIDENT AND SHRI H.S. SIDHU , JUDICIAL MEMBER ITA NO. 3903 / DEL / 20 09 ASSESSMENT YEAR S 200 6 - 0 7 ASSTT. COMMISSIONER OF INCOME TAX VS. M/S BHARTIYA CONSTRUCTION, CIRCLE - 1, 462, KHADANWALA, MUZAFFARNAGAR. MUZAFFARNAGAR. (PAN AA HFB 0846 N ) (APPELLANT) (RESPONDENT) APPELLANT BY : MS. Y. KAKKAR, D.R. RESPONDENT BY : SHRI AKA R SH GARG, C.A . ORDER PER H.S. SIDHU , J . M : 1. THE REVENUE HAS FILED PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 04 . 06 .20 09 PASSED BY THE LD. CIT(A), MUZAFFARNAGAR FOR THE A.Y. 200 6 - 0 7 . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS A CIVIL CONTRACTO R FILED ITS RETURN OF INCOME ON 31.10.2006 SHOWING INCOME AT RS.5,54,550/ - , WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON THE SAME INCOME. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY A S PER NORMS PRESCRIBED BY THE CBDT AND ACCORDINGLY THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 143(2) OF THE I.T. ACT ON 20.08.2007 , WHICH WAS DULY SERVED UPON THE ASSESSEE. THE CASE OF THE ASSESSEE WAS FIXED FOR HEARING ON 30.08.2007. IN RESPONSE TO THE SAID NOTICE, LD. AUTHORIZED REPRESENTATIVE OF THE ITA NO. 3903 /DEL/ 20 09 2 ASSESSEE ATTENDED THE PROCEEDINGS ON 30.08.2007. THE ASSESSEE WAS ASKED TO FURNISH VARIOUS INFORMATION BY THE ASSESSING OFFICER ON 06.09.2007 , BUT NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATI VE APPEARED ON 06.09.2007 OR FILE ANY REPLY TO THE QUERY RAISED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER AGAIN ISSUED THE NOTICES UNDER SECTIONS 143(2) & 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE TO THE ASSESSEE ON 30.07.2008 , FIXING THE CASE OF THE ASSESSEE FOR 26.08.2008 , BUT NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED OR FILE ANY REPLY. AGAIN THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 143(2) OF THE ACT ALONGWITH THE PENALTY NOTICE UNDER SECTION 271(1)(B) OF THE ACT ON 15 .10.2008 FIXING THE CASE OF ASSESSEE FOR 22.10.2008. THE COUNSEL FOR THE ASSESSEE ALONGWITH OTHER PARTNER OF THE ASSESSEE FIRM ATTENDED THE ASSESSMENT PROCEEDINGS AND REQUESTED FOR ADJOURNMENT AND THE ASSESSING OFFICER ADJOURNED THE CASE OF THE ASSESSEE FO R 03.11.2008, 12.11.2008, 17.11.2008 AND 28.11.2008 , BUT THE ASSESSEE DID NOT FILE ANY DOCUMENTARY EVIDENCE/ REPLY AS REQUIRED BY THE ASSESSING OFFICER. FINALLY , THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH INFORMATION AND PRODUCED BOOKS OF ACCOUNT O N 28.11.2008, WHICH WAS NOT PRODUCED BY THE ASSESSEE AND NOT FILE ANY REPLY TO THE QUERY RAISED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER AFTER GIVING PROPER NOTICE TO THE ASSESSEE COMPLETE D THE ASSESSMENT UNDER SECTION 144 OF THE ACT AND APPLY THE P ROVISION OF SECTION 145(3) OF T HE ACT I N THE CASE OF ASSESSEE AND DETERMINED THE NET PROFIT RATE OF 10% TO THE GROSS RECEIPT OF RS.1,72,18,830/ - AND ESTIMATED THE NET PROFIT FROM THE BUSINESS OF THE ASSESSEE AT ITA NO. 3903 /DEL/ 20 09 3 RS.17,21,883/ - SUBJECT TO NO DEDUCTION ON INT EREST/SALARY PAID TO THE PARTNERS OF THE FIRM AS PER PROVISION OF SECTION 184(5) OF THE ACT. SINCE THE ASSESSEE HAS FAILED TO COMPLY WITH THE VARIOUS NOTICES ISSUED FROM TIME TO TIME AND FAILED TO PROVE THE GENUINENESS OF THE FIRM. THE INTEREST INCOME OF R S.31,380/ - AS SHOWN BY THE ASSESSEE IS ALSO ADDED TO THE INCOME OF THE ASSESSEE AND HE ASSESSED THE INCOME OF ASSESSEE AT RS.17,53,263/ - . 3. AGGRIEVED BY THE ORDER DATED 28.11.2008 PASSED UNDER SECTION 144 OF THE ACT BY THE ASSESSING OFFICER , THE ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO VIDE IMPUGNED ORDER DATED 04.06.2009 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND UPHELD THE ALMOST ALL FINDINGS OF THE ASSESSING OFFICER EXCEPT TO REDUCE THE NET PROFIT FROM 10% TO 4% ON THE TO TAL TURNOVER OF RS.1,72,02,552/ - . THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER HAS FILED THE PRESENT APPEAL. 4. AT THE TIME OF HEARING, LD. D.R. RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER AND THE CONTENTION RAISED BY THE REVENUE IN THE GR OUNDS OF APPEAL. SHE FURTHER STATED THAT THE ASSESSING OFFICER AS WELL AS LD. FIRST APPELLATE AUTHORITY HAS APPLIED THE PROVISION OF SECTION 44AD OF THE ACT IN THE CASE OF THE ASSESSEE , BUT THE LD. FIRST APPELLATE AUTHORITY HAS WRONGLY ESTIMATED THE NET PR OFIT RATE AT THE RATE OF 4%, WHICH IS CONTRARY TO THE LAW AND FACTS OF THE POINT AND RELEVANT PROVISION OF LAW, THEREFORE, THE IMPUGNED ORDER MAY BE CANCELLED AND THE ORDER OF THE ASSESSING OFFICER MAY BE UPHELD. ITA NO. 3903 /DEL/ 20 09 4 5. LD. COUNSEL FOR THE ASSESSEE CONTROVERT ED THE ARGUMENT S ADVANCED BY THE LD. D.R. AND STATED THAT THE KEEPING IN VIEW OF THE ORDER OF THE ITAT, DELHI C BENCH IN THE CASE OF ITO VS. YADHU CONTRACTORS & BUILDERS (P) LTD. (2008) 4 DTR (DEL) (TRIB) 619, BENCH HAS ESTIMATED THE NET PROFIT AT THE RA TE OF 5% AFTER TAKING INTO ACCOUNT THE CONSIDERATION OF DEPRECIATION. HE FURTHER STATED THAT THE ASSESSING OFFICER HAS WRONGLY ESTIMATED THE NET PROFIT RATE OF 10% AND THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY REDUCED IT TO 4%, THEREFORE, THE APPEAL OF THE REVENUE MAY BE DISMISSED. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORD WITH US AND ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONG WITH ORDER PASSED BY THE ITAT, DELHI C BENCH IN THE CASE OF ITO VS. YADHU CONTRACT ORS & BUILDERS (P) LTD. (SUPRA). WE ARE OF THE CONSIDERED VIEW THAT THE ITAT, DELHI C BENCH ALMOST UNDER THE SIMILAR FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE, THE NET PROFIT RATE IS ESTIMATED AT THE RATE OF 5% AFTER TAKING INTO ACCOUNT THE CONSIDER ATION OF DEPRECIATION. 7. LD. COUNSEL FOR THE ASSESSEE IS ALSO AGREED THAT THE ASSESSEE WOULD BE SATISFIED IF THE 5% NET PROFIT AS HAS BEEN APPLIED BY THE ITAT, DELHI C BENCH IN THE CASE OF ITO VS. YADHU CONTRACTORS & BUILDERS (P) LTD. (SUPRA) IS APP LIED IN THE CASE OF ASSESSEE. NO DOUBT THE LD. D.R. OPPOSE THE REQUEST OF LD. COUNSEL FOR THE ASSESSEE , BUT KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE VERY OLD ASSESSMENT YEAR IN DISPUTE 2006 - 07 , WHICH IS PENDING SINCE LONG . ITA NO. 3903 /DEL/ 20 09 5 W E ARE OF THE CONSIDERED VIEW THAT THE NET PROFIT DECLARED BY THE ASSESSEE IS TOO LOW AND THE NET PROFIT APPLIED BY THE LD. FIRST APPELLATE AUTHORITY AT THE RATE OF 4% IS ALSO NOT REASONABLE . I T WOULD BE FAIR AND REASONABLE U NDER THE FACTS AND CIRCUMSTAN CES OF THE PRESENT CASE AND THE ORDER OF THE ITAT DELHI C BENCH IN THE CASE OF ITO VS. YADHU CONTRACTORS & BUILDERS (P) LTD. (SUPRA) NET PROFIT RATE AT THE RATE OF 5% , WITHOUT MAKING ANY SEPARATE ALLOWANCE FOR DEPRECIATION, WOULD MEET THE ENDS OF JUSTICE . THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE NET PROFIT AT THE RATE OF 5% WITHOUT MAKING SEPARATE ALLOWANCE FOR DEPRECIATION AND THE IMPUGNED ORDER IS MODIFIED ACCORDINGLY. 8 . IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 08 . 8 .2014 SD/ - SD/ - ( G.D. AGARWAL ) ( H.S. SIDHU ) VICE PRESIDENT JUDICIAL MEMBER DATED 08. 8 .2014 A KS* COPY OF THE OR DER FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, ASSISTANT REGISTRAR