Smt. Manorama Sharma, UDAIPUR V. DCIT, UDAIPUR

ITA 405/JODH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82982 (ITAT-JODHPUR)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JEWELLERY WERE FOUND
• Keywords: Rejection of books of accounts; Depreciation; Search and seizure; Rule of consistency; Revised return
• Section: 44AD; 143(3); 153A; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA , JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 405 / JU/ 20 1 4 ASSESSMENT YEAR: 200 7 - 0 8 SMT. MANORAMA SHARMA VS. THE DY. C.I.T PROP. M/S SHAR MA BUILDERS & CENTRAL CIRCLE - 1 DEVELOPERS, 25, ROOP NAGAR UDAIPUR SECTOR3, HIRAN MAGRI UDAIPUR PAN NO. A OZPS 0595 M (APPELLANT) (RESPONDENT) A SSESSEE B Y : SHRI AMIT KOTHARI DEPARTMENT B Y : SHRI O.P. MEENA , DR DATE OF H EARING : 2 2 . 0 9 .201 4 DATE OF PRONOUNCEMENT : 24 . 0 9 . 201 4 ORDER PER HARI OM MARATHA , J .M. TH IS APPEAL BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE CIT (A), CENTRAL, JAIPUR , DATED 04 . 0 6 .20 1 4 PERTAINING TO A.Y 20 0 7 - 0 8 . 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE SMT. MANORAMA SHARMA IS THE PROPRIETOR OF M/S SHARMA BUILDERS AND DEVELOPERS WHO IS PURSUING THE BUSINESS OF CIVIL CONSTRUCTION CONTRACTOR. SEARCH AND SEIZURE PROCEEDINGS WERE CARRIED OUT U/S 132 OF THE INCOME - TAX A CT, 1961 ['THE ACT' FOR SHORT] AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 23.04.2008 DURING WHICH CERTAIN INCRIMINATING EVIDENCE INCLUDING CASH AND JEWELLERY WERE FOUND AND IMPOUNDED AS PER ANNEXURE ATTACHED TO THE PANCHNAMA DATED 23.4.2008. CONSEQUEN TLY , A NOTICE U/S 153A OF THE ACT WAS ISSUED TO HER ON 22.8.2008. IN RESPONSE THEREOF, THE ASSESSEE FILED HER ROI DECLARING INCOME OF RS. 3,62,930/ - ON 24.11.2009. THE ASSESSEE HAS DISCLOSED INCOME OF RS. 30,000/ - ON ACCOUNT OF VINAYAK BUILD DEV, OF RS. 2201/ - ON ACCOUNT OF INTEREST ON TDS AND OF RS. 31,370/ - ON ACCOUNT OF SALES TAX. FINALLY, ASSESSMENT HAS BEEN COMPLETED U/S 143(3) R.W.S 153A ON 20.12.2012 AT A TOTAL TAXABLE INCOME OF RS. 7,86,340/ - . THE A.O HAS MADE TRADING ADDITION OF RS. 4,23,410/ - AFTER REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT BY ADOPTING N.P. RATE OF 8% AS AGAINST N.P. RATE OF 3.74% DISCLOSED BY THE ASSESSEE. 3 2.2 AGGRIEVED, THE ASSESSEE FILED APPEAL AND THE LD. CIT(A) INSTEAD, HAS ENHANCED THE TAXABLE INCOME BY ENHANCIN G THE TRADING ADDITION TO RS. 26,12,153/ - FROM RS. 4,23,410/ - . THE ASSESSEE IS FURTHER AGGRIEVED AND HAS FILED THIS SECOND APPEAL BY RAISING THE FOLLOWING GROUNDS: 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS), CENTRAL, JAIPUR HAS ERRED IN UPHOLDING REJECTION BOOKS OF ACCOUNTS U/S 145(3) OF I.T. ACT. THE REJECTION OF BOOKS U/S 145(3) IS BAD IN LAW AND LIABLE TO BE QUASHED. 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL, JAIPUR HAS FURTHER ERRED IN ENHANCING INCOME FROM RS. 4,23,400/ - TO 26,12,153/ - . THE INCOME ENHANCED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL, JAIPUR IS WITHOUT CONSIDERING SUBMISSION, BASELESS, BAD IN LAW AND LIABLE TO BE DELETED. 3. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL, JAIPUR HAS FURTHER ERRED IN NOT ALLOWING RELIEF CLAIMED ON APPLICATION OF ESTIMATED N.P. RATE @ 8 % MAKING ADDITION OF RS. 4,23,410/ - ., PARTICULARLY WHEN THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL, JAIPUR HAS ALLOWED THE SAME THE ON SAME GROUND IN A.Y. 2003 - 2004 TO 2006 - 2007. THEREFORE THE ADDITION CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX' 4 (APPEAL S), CENTRAL, JAIPUR IS BAD IN LAW & LIABLE TO BE DELETED. 4. THE APPELLANT CARVES TO ADD, AMEND, ALTER OR MODIFY ANY OF THE GROUND OF APPEAL. 5. AN APPROPRIATE COST MAY BE AWARDED TO ASSESSEE. 2.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD IN THE LIGHT OF THE OBTAINING FACTS OF THE CASE. BOTH THE PARTIES HAVE REITERATED THEIR STAND TAKEN BEFORE THE LD. CIT(A). GROUND NO. 1 WAS NOT PRESSED BY THE LD. A.R SHRI AMIT KOTHARI, C.A. DURING HEARING AND HAS MADE A NOTING TO THAT EFFECT IN THE FIRST FOLDER OF THE APPEAL. THEREFORE, GROUND NO. 1 OF THIS APPEAL STANDS DISMISSED AS NOT PRESSED OR WITHDRAWN. 2.4 GROUND NOS. 2 AND 3 ARE IN RELATION TO THE ENHANCED TRADING ADDITION. THE FACTS APROPOS THIS ISSUE ARE THAT THE LD. CIT(A) HAS FOUND THE ADOPTING OF N.P. RATE OF 8% [SIC] G.P. RATE WRITTEN BY THE LD. CIT(A) IN PARA 4.4 OF HIS ORDER. AS PER THE SEIZED RECORD ANNEXURE A - 1 TO ANNEXURE A - 5 THE ASSESSEE HAS UNDERTAKEN CONSTRUCTION WORK IN M/S VINAYAK BUILD DEV. 5 PVT. LTD. AGAINST RECEIPT OF RS. 2,19,54,236/ - HAS BEEN DISCLOSED IN HER BOOKS OF ACCOUNT. A STATEMENT U/S 131 OF THE ACT OF SHRI SHANKAR LAL SANKHLA, THE DIRECTOR OF VINAYAK BUILD DEV WAS RECORDED ON 22.5.2008 WHEREIN HE HAS ADMITTED THAT ACTUAL PA YMENT IN THIS REGARD WAS MADE OF RS. 2,4,566,389/ - . THAT IS WHY THE LD. CIT(A) MADE A SPECIFIC QUERY AS TO WHY THE DIFFERENTIAL AMOUNT OF RS. 26.12.153/ - HAS NOT BEEN DECLARED TO THE DEPARTMENT. WHEN NO EXPLANATION WAS FIELD THE IMPUGNED ADDITION WAS MAD E. 2.5 THE SUBMISSION OF THE LD. A.R THROUGH WRITTEN SUBMISSIONS READS AS UNDER: 1. T HERE WAS SEARCH IN THE CASE OF THE APPELLANT ON 23.4.2008 AND PROCEEDINGS U/S 153A WERE TAKEN UP FOR A.Y. 2003 - 04 TO 2009 - 10. 2. TRADING ADDITION ON IDENTICAL FACTS AND CIRCU MSTANCES WERE MADE FOR A.Y. 2003 - 04 TO 2009 - 10. 3. IN APPEAL FOR A.Y. 2003 - 04 TO A.Y. 2007 - 08 THERE WAS TRADING ADDITION BY REJECTION OF BOOKS OF ACCOUNTS ON SAME GROUNDS AND APPLICATION OF NET PROFIT RATE OF 8% BY THE ID. 6 A.O. 4. IN FIRST APPEAL FOR A.Y. 2003 - 04 TO A.Y. 2006 - 07, APPEALS WERE DECIDED BY CIT(A) IN WHICH NET PROFIT RATE OF 6.5% APPLIED. NEITHER THE ASSESSEE NOR THE DEPARTMENT HAD FILED ANY APPEAL AGAINST SUCH ORDER. 5. THE POSITION OF PAST ASSESSMENTS AND INCOME ASSESSED IS AS UNDER 6. IN APPEALS FOR A.Y. 2003 - 04 TO A.Y. 2006 - 07, WHICH ARE FINAL NOW, THE ID. CIT(A) HAD ESTIMATED THE INCOME BY APPLYING NET PROFIT RATE OF 6.5% A.Y. GROSS RECEI PTS NET PROFIT (AFTER DEPRECIATION AS SHOWN BY ASSESSEE) N.P NP% PROFIT COMPUTED BY AO APPLYING 8% ADDITION MADE BY AO 03 - 04 65,16,786 3,54,928 5.44 5,21,343 1,66,415 04 - 05 44,25,862 2,74,069 6.F.9 3,54,069 80,000 05 - 06 71,58,880 3,8 2,911 5.34 5,72,.710 1,89,799 06 - 07 1,83,81,517 4,94,693 2.69 14,70,521 9,75,828 07 - 08 99,27,685 3,70,805 3.74 7,94,215 4,23,410 7 7. THE BOOKS OF ACCOUNTS FOR ALL THE YEARS WERE DULY COMPLETED, AND WHATEVER ADDITIONAL INCOME WAS TO BE INCLUDED THE SAME WAS DULY INCLUDED IN THE INCOME OF THE ASSESSEE. 8. THE CONTRACT FR OM VINAYAK BUILDDEV PVT. LTD. AND VINAYAK BUILDERS WERE GIVEN IN 2001 - 02 AND THE RATES WERE VERY COMPETITIVE. THE HIGH RISE IN PRICES, DEPLETED THE ENTIRE PROFITS 9. THE APPELLANT PRAYED THAT DEPRECIATION CLAIM SHOULD BE SEPARATELY ALLOWED IN VIEW OF DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V. JAIN CONSTRUCTION CO. REPORTED IN 245 ITR 527 (RAJ), BUT SUCH PLEA WAS NOT ACCEPTED. 10. THE PROVISIONS OF SEC. 44AD ARE NOT APPLICABLE IN VIEW OF JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SH RI RAM JHANWAR LAI V. ITO REPORTED IN 321 ITR 400. 11. ENHANCEMENT IN IN COME MADE BY ID. CIT(A) WAS NOT JUSTIFIED EVEN IN VIEW OF THE PAST HISTORY IN THE CASE OF THE ASSESSEE. RULE OF CONSISTENCY ALSO DEMANDS THAT NO SUCH ENHANCEMENT WAS REQUIRED TO BE M ADE. THE ADDITIONAL INCOME HAD ALREADY BEEN OFFERED BY THE APPELLANT IN REVISED RETURN U/S 153A. A.Y. NET PROFIT (AFTER DEPRECIATION) PROFIT COMPUTED BY AO APPLYING 8% PROFIT COMPUTED BY CIT(A) APPLYING 6.5 % RELIEF BY ID. CIT(A) 2003 - 04 3,54,928 5,21,343 68,663 97,752 2004 - 05 2,74,069 3,54,069 13,612 66,388 2005 - 06 3,82,911 5,7 2,710 82,416 1,07,383 2006 - 07 4,94,693 14,70,521 7,00,105 2,75,723 8 11. THE APPELLANT THEREFORE PRAYS THAT ADDITION MADE MAY BE DELETED. ALTERNATIVELY, THE NET PROFIT RATE AS APPLIED IN THE EARLIER YEARS UNDER SIMILAR FACTS MAY B E APPLIED . 2.6 THE ABOVE SUBMISSIONS SEEM TO JUSTIFY THE CLAIM OF THE ASSESSEE. WHEN IN OTHER A.Y. N.P. RATE OF 6.5% HAS BEEN APPLIED AND ACCEPTED, THE SAME RATE HAS TO BE ADOPTED IN THIS YEAR AS WELL. ACCORDINGLY, WE DIRECT THAT THE N.P. RATE OF 6.5% HAS TO BE ADOPTED IN THIS YEAR TOO. THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED TO THAT EXTENT. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRON OUNCED IN THE COURT ON 24 TH SEPTEMBER , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEM B ER DATED : 24 TH SEPTEMBER , 201 4 VL/ - 9 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT( A) 5. THE DR SENIOR PRIVATE SECRETARY ITAT, JODHPUR