SANT KUMAR SHARMA, BILASPUR(CG) V. ACIT-1(1), BILASPUR(CG)

ITA 40/BIL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0222 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 27-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Presumptive income; Depreciation
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

ITA NO . 40 / BLPR /201 3 ASSESSMEN T Y EAR: 200 6 - 07 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, SMC , RAIPUR [CORAM : PRAMOD KUMAR AM ] ITA NO . 40 / BLPR /201 3 AS SESSMENT Y EAR : 200 6 - 0 7 SANT KUMAR SHARMA .APPELLANT VINOBA NAGAR, BILASPUR (C.G.) [P AN: A C U P S 5343 Q ] VS. ASSTT. COMMISSIONER OF INCOME TAX 1 (1) , BILASPUR (C.G.) ...... . RESPONDENT APPEARANCES BY: RIEHA KHATRI , FOR THE A PPELLANT SHITAL VERMA , F OR THE RE SPONDENT DATE OF CONCLUDING THE HEARING : 2 2 .06.2016 DATE OF PRONOUNCING THE ORDER : 21 .09.2016 O R D E R 1. BY WAY OF TH IS APPEAL, THE A SSESS EE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 20.07.2012, PASSED BY THE LEARNED CIT (A), BILASPUR (C.G.), IN THE MATTER OF ASSESSMENT UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 FOR ASSESSMENT YEAR 20 06 - 07. THE REVISED GROUNDS OF APPEAL, AS FILED BEFORE ME ON 17.6.2016, ARE AS FOLLOWS: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS, IN ESTIMATING THE NP @ 6% WITHOUT GIVING ANY BASIS AND WITHOUT CONS IDERING ACCEPTED PAST HISTORY OF THE CASE. 2. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS, IN SUSTAINING THE ADDITION OF RS 1,32,101 ON ACCOUNT OF EXCISE DUTY RECOVERY FROM THE PRINCIPAL SE RAILWAYS, WHICH IS ALREADY INCLUDED IN THE COST OF RAW MATERIAL DEBITED IN THE BOOKS OF ACCOUNTS, WHEN ONCE THE ITA NO . 40 / BLPR /201 3 ASSESSMEN T Y EAR: 200 6 - 07 PAGE 2 OF 3 BOOKS OF ACCOUNTS ARE REJECTED THE AO CANNOT RELY UPON THE SAME BOOKS OF ACCOUNTS TO MAKE FURTHER ADDITIONS. 3. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE DEDUCTION OF DEPRECIATION OF RS 1,17,910 DEDUCTIBLE IN ORDINARY COURSE OF ASSESSMENT EVEN WHEN THE PROFIT IS ESTIMATING BY REJECTING THE BOOKS OF ACCOUNTS . 2. THE ASSESSEE BEFORE ME IS A CONTRACTOR. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN A GROSS PROFIT OF 11.48% AND NET PROFIT OF 3.16% RESPECTIVELY. AS THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS FOR VERIFICATION, THE ASSESSING OFFICER ADOPTED THE NET PROFIT OF 10%. THE REASONING ADOPTED WA S THIS. IN THE PRECEDING YEARS, THE ASSESSEE HIMSELF HAD ADOPTED 8% PROFIT UNDER SECTION 44 AD, AND, AS THE TURNOVER HAS PROGRESSED TO 1,45,80,276 IN THE CURRENT YEAR, THE OVERHEADS MUST HAVE COME DOWN CONSIDERABLY, GIVING THE ASSESSEE AN EDGE OF AT LEAST 2% IN PROFITS. THE NET PROFIT WAS THUS ADOPTED @ 10% AND INCOME WAS COMPUTED AT RS 14,58,027. A FURTHER ADDITION OF RS 1,32,101 FOR EXCISE DUTY RECOVERY FROM RAILWAYS, ON THE BASIS OF ENTRIES IN THE PROFIT AND LOSS ACCOUNT. THE INCOME OF THE ASSESSEE WAS T HUS ASSESSE AT RS 15,90,130. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). IN APPEAL, LEARNED CIT(A) HAS RESTRICTED THE ADDITION ON THE BASIS OF 6% NET PROFITS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 3. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 4. I HAVE NOTED THAT IN THE PRESENT CASE, THE ASSESSEE HAD PARTIALLY COMPLIED WITH THE REQUISITIONS DURIN G THE ASSESSMENT PROCEEDINGS INASMUCH AS ALL THE DETAILS AND BREAK UP OF EXPENSES ETC WERE FURNISHED BEFORE THE ASSESSING OFFICER. YET, THE ITA NO . 40 / BLPR /201 3 ASSESSMEN T Y EAR: 200 6 - 07 PAGE 3 OF 3 ASSESSING OFFICER PROCEEDED TO ESTIMATE THE PROFITS @ 10% ON THE BASIS WHICH IS SIMPLY UNSUSTAINABLE IN LAW. THE FAC T THAT THE ASSESSEE HAD SHOWN 8% PROFIT UNDER PRESUMPTIVE TAXATION IN THE IMMEDIATELY PRECEDING YEAR IS WHOLLY IRRELEVANT AND THEN THE ASSESSING OFFICER TAKES THIS RATE EVEN HIGHER BY ESTIMATING THE FURTHER SAVINGS ON ACCOUNT OF OPERATIONS OF SCALE AT 2%. IN APPEAL, THE CIT(A) HAS ADOPTED THE PROFIT AT 6% BUT THEN THERE IS NO SPECIFIC MATERIAL TO SUPPORT THIS ESTIMATION EITHER. BEARING IN MIND THIS DISCUSSION, AS ALSO THE FACT THAT THERE WAS PARTIAL AND SUBSTANTIAL COMPLIANCE BEFORE THE ASSESSING OFFICER, I CONSIDER IT APPROPRIATE TO ESTIMATE THE NET PROFIT @ 5% WHICH THE ASSESSEE HIMSELF HAS ACCEPTED BEFORE THE CIT(A). AS THE PROFIT IS BEING ESTIMATED, THERE IS NO OCCASION FOR FURTHER ADDITION OF RS 1,32,101 BEING EXCISE DUTY RECOVERY FROM RAILWAY AS THE SA ME IS INTEGRAL PART OF THE BUSINESS OPERATIONS. THAT SEPARATE ADDITION MUST STAND DELETED. AS REGARDS THE CLAIM OF DEPRECIATION OF RS 1,17,910, THE ASSESSING OFFICER SHALL EXAMINE THE SAME ON MERITS AND ALLOW THE DEPRECIATION, IF FOUND TO BE ADMISSIBLE, FR OM THE ESTIMATED PROFIT. 5. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED UNDER RULE 34(4) OF THE APPELLATE TRIBUNAL RULES 1963 TODAY ON 21 ST D AY OF SEPTEMBER, 2016 . SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 21 ST DAY OF SEPTEMBER , 2016 . PBN/* COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLAT E TRIBUNAL RAIPUR BENCH, RAIPUR