Siba Prasad Mishra, V. ACIT, Berhampur

ITA 394/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65079 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTYDR
• Assessee Lawyers: P K MISHRA M R SARANGI ARS
• Section: 145; 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 394/CTK/2012 ( / ASSESSMENT YEAR 2008 - 09) SIBA PRASAD MISHRA, NEAR TOWN HALL, P.O./DIST. BOUDH, ODISHA PAN: ADFPM 2721 A - - - VERSUS - ASST.COMMISSIONER OF INCOME - T AX, BERHAMPUR CIRCLE, BERHAMPUR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.K. MISHRA /M.R.SARANGI, ARS / FOR THE RESPONDENT: / SHRI . S.C.MOHANTY,DR / DATE OF HEARING: 10.07.2012 / DATE OF PRONOUNCEMENT: 14.08.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THIS APPEAL BY THE ASSESSEE AGITATES THE CONFIRMATION OF THE PERCENTAGE OF INCOME ON THE BASIS OF G ROSS RECEIPTS BEING SALE OF TRACTORS, TRANSPORT CONTRACT AND CIVIL CONTRACT. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF TRADING IN TRACTOR AND SPARE PARTS, TRANSPORT AND WORKS CONTRACT . THE GROSS RECEIPT S WERE MORE THAN 40 LAKHS , THE ASSESSEE GOT HIS ACCOUNTS AUDITED SEPARATELY FOR EACH BUSINESS AS PER THE PROVISIONS OF SEC 44AB OF THE INCOME TAX ACT, 1961. IT FILED HIS RETURN OF INCOME ON 30 .09.2009 DECLARING A TOTAL INCOME OF 9,94.800 . INITIALLY THE RETURN WAS PROCES SED UNDER SECTION 143(1) AND GRANTED A REFUND OF 1,94,160. SUBSEQUENTLY THE RETURN WAS SELECTED FOR SCRUTINY UNDER CASS , AND NOTICES UNDER SECTION 143(2) AND 142(1) WERE ISSUED TO THE ASSESSEE . I.T.A.NO. 394/CTK/2012 2 DURING THE COURSE OF SCRUTINY ASSESSMENT, ON VERIFICATION OF BOOKS OF ACCOUNT, THE ASSESSING OFFICER NOT BEING SAT ISFIED, INVOKED THE PROVISIONS OF SEC . 145 OF THE INCOME TAX ACT, 1961 AND IN HER BRIEF ORDER ASSESSED A TOTAL INCOME OF 15,41,910 AS FOLLOWS: 4. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APP ELLATE AUTHORITY , WHO CONSIDERED THE CASE OF THE ASSESSING OFFICER AND CONFIRMED THE ESTIMATION OF INCOME ON THE RESPECTIVE NATURE OF BUSINESS AS MENTIONED ABOVE AND THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE INI TIATING HIS ARGUMENT SUBMITTED THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF ASSESSMENT WITHOUT EXAMINING THE FACTUAL ASPECTS AND WITHOUT GIVING ANY COGENT REASON. HE SHOULD NOT HAVE CONFIRMED THE ESTIMATION OF NET PROFIT @5% OF THE G ROSS RECEIPTS FROM TRANSPORTATION CONTRACT AGAINST THE DISCLOSED NET PROFIT OF 3.58%. SIMILARLY HE IS NOT JUSTIFIED IN CONFIRMATION OF THE ESTIMATION OF NET PROFIT @5% OF THE GROSS RECEIPTS FROM CIVIL CONTRACT AGAINST THE DISCLOSED NET PROFIT OF 3.10% WHEN THE ASSESSEE IS A SUB - CONTRACTOR AND HAD TO PAY 5% OF THE VALUE TO THE PRINCIPAL CONTRACTORS AS AGENCY CHARGES. FOR THIS PROPOSITION HE SUBMITTED THAT THE TRIBUNAL IN ANOTHER CASE ODISHA BUILDER AND ENGINEERING CONSTN. CO. V. INCOME - TAX OFFICER IN ITA N O.243 I.T.A.NO. 394/CTK/2012 3 AND 244/CTK/2010 DT.14.3.2011 (COPY FURNISHED) HAD ADJUDICATED THAT THE NET INCOME FROM TRANSPORT BUSINESS CAN BE ESTIMATED AT 3% WHICH THE ASSESSING OFFICER HAD ASSESSED AT 5%. HE POINTED OUT THAT THERE IS NO METHOD TO ESTIMATE ONCE THE BOOKS OF ACC OUNT ARE REJECTED INSOFAR AS THE REJECTION OF BOOKS HAS TO BE CATEGORICALLY MENTIONING THE REASONING FOR ESTIMATION AT A HIGHER RATE WHEN SIMILAR NATURE OF BUSINESS CANNOT RENDER MORE INCOME AS WAS CONSIDERED BY THE LEARNED CIT(A) WITHOUT ASSIGNING ANY REA SON INSOFAR AS HE HELD A VIEW THAT 3.58% WAS DECLARED IN THE IMMEDIATELY PRECEDING YEAR THEREFORE 5% IS REASONABLE AND SUSTAINED. HE PRAYED THAT IF THE TRIBUNAL COULD CONSIDER 3% REASONABLE IN THE SIMILARLY PLACED ASSESSEE THE RETURNED INCOME FROM TRANSPOR T CONTRACT SHOULD BE ESTIMATED IN THE CASE OF THE ASSESSEE FOR THE PURPOSE OF ENHANCEMENT FROM 3.58% TO 4% AT THE MAXIMUM IN THE IMPUGNED ASSESSMENT YEAR. WITH RESPECT TO THE CONFIRMATION OF 5% NET PROFIT ON CONTRACT RECEIPTS HE SUBMITTED THAT THE LEARNED CIT(A) TOOK COGNIZANCE OF MATERIAL EXTRANEOUS TO THE CONTENTION AS CAN BE PERUSED IN HIS ORDER, WHICH IS REPRODUCED BELOW. 6.3.3. I HAVE CAREFULLY CONSIDERED THE MATTER. AD MITTEDLY THE ASSESSEE IS A SUBCONTRACT OR . ON A DISCLOSED GROSS RECEIPT OF 2,02,78 ,509, THE ASSESSEE HAS SHOWN A PROFIT OF 6,29,510, WHICH COMES TO AROUND 3.10%. THE AC HAS ADOPTED THIS TURNOVER TO ESTIMATE PROFIT @ 5 % . HOWEVER, ON PERUSAL OF THE DET AILS FLIED BY THE ASSESSEE, IT I S SEE N THAT ACTUALLY THE TURNOVER OF THE ASSESSEE I S 2 ,19,97,248. THE ASSESSEE HAS DEDUCTED FR OM THIS AN AMOUNT OF 17,18,739 AND HAS DISCLOSED THE NET RECEIPT OF 2,02,78,509 IN ITS P & L. A/C. THE AMOUNT OF 17,18,739 WAS EXPLAINED BY THE LD. A/ R WAS REPRESENT ING 5% OF AGENCY CHARGE ON 2, 19,97,248 AMOUNTIN G TO 10,99,862 . THE BALANCE AMOUNT OF 6,18,877 WAS STATED TO BE A DEDU CTION TOWARDS SECURITY CHARGES. HOWEVER, NO DETAIL REGARDING THIS DEDUCTION WAS FURNISHED BY THE LD. A/ R. THUS THE ASSESSEE ON I.T.A.NO. 394/CTK/2012 4 HIS OWN HAS DEDUCTED AN AMOUNT OF 17,18,739 FROM THE GRO SS BILL AND HAS ONLY SHOWN THE NET FIGURE. THEREFORE, FOR THE PURPOSE OF ESTIMATION, THE CORRECT TURNOVER OF THE ASSESSEE SHOULD BE TAKEN AT 2,19,97,248 AND NOT 2,02,78,509 AS TAKEN BY THE AO. IF THE CORRECT TURNOVER IS CONSIDERED, THE NET PROFIT ESTIMAT ED BY THE AO FROM CIVIL CONSTRUCTION BUSINESS COMES TO 4.60% AND THIS RATE CAN NEVER BE CONSIDERED AS UNREASONABLE FOR ANY SUB - CONTRACTOR IN CIVIL CONSTRUCTION BUSINESS. IN VIEW OF THE ABOVE FACTS, I AM NOT INCLINED TO INTERFERE WITH THE INCOME DETERMINED B Y THY, AO AND THE SAME IS ACCORDINGLY SUSTAINED. THE GROUND NO.5 IS THUS DISMISSED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT EVEN IF THE ESTIMATION WAS TO BE ARITHMETICALLY CORRECT AT LEAST THE LEARNED CIT(A) SHOULD NOT ESTIMATE A PERCENTAGE ON AN INCOME WHICH INCOME WAS NEVER THE CASE OF THE ASSESSEE AS NOTED BY THE ASSESSING OFFICER. THEREFORE 4.60% HAS NO BEARING AT ALL AND HE PRAYED THAT THE AMOUNT RETURNED @3.1% SHOULD BE ACCEPTED. 7. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ASSESSING OFFICER IN HIS BRIEF ORDER HAS RIGHTLY BROUGHT ON RECORD THE REASON FOR REJECTION OF THE BOOK RESULTS U/S.145(3) AND HE HAS ESTIMATED THE INCOME IN RIGHT EARNEST WHICH HAS BEEN RIGHTLY CONFIRMED BY THE LEARNED CIT(A) AND AS SUCH NO INTERFERENCE IS CALLED FOR ON THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO FIND WITH RESPECT TO THE TRACTOR BUSINESS THE ESTIMATION 2% NP WAS FAIR AND ACCEPTABLE TO THE ASSESSEE INSOFAR AS HE HAS NOT RAISED ANY SPECIFIC GROUND I.T.A.NO. 394/CTK/2012 5 TO THAT EFFECT. THEREFORE, THE REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION RESORTED TO BY THE ASSESSING OFFICER APPEARS TO BE FAIR TO THE EXTENT THAT THE LEARNED CIT(A) SEEMS TO HAVE FURTHER ASSIGNED REASONS WHICH DO NOT APPEAR TO BE APPROPRIATE TO THE FACTS OF THE ASSESSEES CASE BROUGHT ON RECORD BY THE ASSESSING OFFICER. THE TRANSPORT BUSINESS DOES NOT RENDER INCOME @5% INSOFAR AS THE ASSESSEE HAS RETURNED 3.58% FOR THE IMPUGNED ASSESSMENT YEAR WHICH FOR ENHANCEMENT WOULD HAVE BEEN MAXIMUM AT 4% INSTEAD OF 5%. THERE IS NO BENCHMARK FOR ESTIMATION INSOFAR AS THE DEFECT NOTICED IN THE BOOKS OF ACCOUNT COULD NOT LEAD TO A FINDING OF HIGHER INCOME AS RETURNED. IN THIS VIEW OF THE MATER, THE RATE OF PROFIT AT 3.58% IS DIRECTED TO BE ENHANCED TO 4% INSTEAD OF 5% AS ASSESSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A). THIS GROUND STANDS THEREFORE, STANDS PARTLY ALLOWED. 9. HOWEVER ON THE ISSUE OF ENHANCEMENT ON THE BASIS OF CONTRACT RECEIPTS WE ARE UNABLE TO SATISFY OURSELVES TO THE FINDING OF THE LEARNED CIT(A) TO SUSTAIN ADDITION AT 5% INSOFAR AS THE LEARNED COUNSEL FOR THE ASSESSEE HAS RIGHTLY POINTED OUT THAT THE ASSESSING OFFICER HAS ESTIMATED ON 2.02 CRORES INDICATED THAT THE ASSESSEE DID NOT EARN THE DIFFERENCE OF 17,80,739 BEING THE AGENCY CHARGES AND SECURITY CHARGES RETAINED B Y THE CONTRACTEE. THE ASSESSEE HAD NOT RAISED ANY BILLS FOR THE SAME ON HAVING INCURRED THOSE EXPENSES. IN THIS VIEW OF THE MA T TER EVEN ARITHMETICALLY THE LEARNED CIT(A) ERRED IN SUSTAINING THE ADDITION BY HOLDING A VIEW THAT 4.60% IS NEAR TO 5% FOR WHICH REASONS HE SOUGHT TO CLARIFY WAS ON REJECTION OF BOOKS OF ACCOUNT WERE BONAFIDE BY THE ASSESSING OFFICER. WE ARE UNABLE TO SATISFY OURSELVES TO THIS PROPOSITION OF THE LEARNED CIT(A). THE ASSESSEE HAD RETURNED 1.30% AND IT CANNOT BE SAID THAT HE WHOLLY AND CONCLUSIVELY EARNED I.T.A.NO. 394/CTK/2012 6 THE INCOME WHICH COULD BE ESTIMATED AT 5%. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE AND EARNING RECEIPTS OF 2.02 CRORES WOULD HAVE RETURNED OF 4.6% MARGIN THEREFORE, WE ARE OF THE C ONSIDERED VIEW THAT THE INCOME RETURNED AT 3.1% IS TO BE ACCEPTED AS NO CONTROVERTING MATERIAL THEREOF HAS BEEN BROUGHT NO RECORD RELYING ON THE ITAT, CUTTACK BENCH ORDER FURNISHED BY THE LEARNED COUNSEL, THE ASSESSEE BEING A SUB - CONTRACTOR. THEREFORE, THE INCOME OF THE ASSESSEE IS DIRECTED TO BE ACCEPTED IN THIS REGARD AT 3.1% OF 2.02 CRORES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 14.08.2012 - COPY OF THE ORDER FORWAR DED TO: 1 . / THE APPELLANT : SIBA PRASAD MISHRA, NEAR TOWN HALL, P.O./DIST. BOUDH, ODISHA 2 / THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, BERHAMPUR CIRCLE, BERHAMPUR. 3 . / THE CIT, 4 . ( )/ THE CIT(A) , 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 394/CTK/2012 7 APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 8.8.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10.8.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR OR DER COMES BACK TO THE SR. P.S./P.S 14.08.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.08.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRA R FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..