Makhan Murari Nayak, Jagatsinghpur V. ITO, Paradeep

ITA 418/CTK/2013

• Counselvise Citation: 41822114 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 15-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 147

Judgement Text

1 ITA NO. 418/CTK/2013 ASSESSMENT YEAR :2008-09 , , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK B ENCH, CUTTACK , . . , BEFORE SHRI SUNIL KUMAR YADAV, JM & SHRI B.P.JAIN, AM ./ ITA NO. 418/CTK/2013 ( ! ! ! ! / ASSESSMENT YEAR :2008-09) MAKHAN MURARI NAYAK, AT: PETEIPUR, PO: ALASUDHA, DIST: JAGATSINGHPUR. VS. INCOME TAX OFFICER, WARD-1, PARADEEP. ' ./ # ./ PAN/GIR NO. ADMPN 0246 Q ( '$ / APPELLANT ) .. ( %&'$ / RESPONDENT ) ( * * * * /ASSESSEE BY : SHRI NATABAR PANDA * * * * /REVENUE BY : SHRI K.K.NATH + ( / DATE OF HEARING : 21 ST MAY, 2015 -.! ( / DATE OF PRONOUNCEMENT 26 TH MAY,2015 / / / / / O R D E R PER B.P.JAIN(AM) THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD CIT(A), CUTTACK DATED 29.4.2013 FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. FOR THAT THE ORDERS OF THE FORUMS BELOW ARE ILL EGAL, ARBITRARY, UNJUST AND EXCESSIVE IN THE FACTS AND CIRCUMSTANCES OF THE CAS E. 2. FOR THAT THE LD AO AS WELL AS THE LD CIT (A) HAS NOT AFFORDED REASONABLE OPPORTUNITY OF HEARING TO THE APPELLANT BUT PASSED THE ORDER ASSUMING THE GROSS CONTRACT RECEIPTS OF THE APPELLANT AT RS.1,49 ,64,652/- IN PLACE OF RS.1,30,94,860/- RETURNED BY HIM, HENCE THE ORDER P ASSED IS LIABLE TO BE QUASHED. 2 ITA NO. 418/CTK/2013 ASSESSMENT YEAR :2008-09 3. FOR THAT THE M.D. IS GENERALLY DEDUCTED FROM THE GROSS CONTRACT RECEIPTS AND AFTER COMPLETION OF THE PARTICULAR JOB THE SAME IS RETURNED TO THE APPELLANT, WHICH DOES NOT CONSTITUTE GROSS CONTRACT RECEIPTS AGAIN. IF THE DIFFERENTIAL AMOUNT AT RS.18,69,792/- IS GAIN ADDED TO THE GROSS CONTRACT RECEIPTS OF THE APPELLANT, IT WOULD AMOUNT TO DOUBL E TAXATION. SINCE THE FORUMS BELOW DID NOT APPLY THEIR JUDICIAL MIND TO A RRIVE AT THE ACTUAL GROSS CONTRACT RECEIPTS FIGURE, THE ORDERS PASSED ARE LIA BLE TO BE QUASHED. 4. FOR THAT THE ESTIMATION OF NET PROFIT BY THE LD CIT(A) @ 8% OF THE GROSS CONTRACT RECEIPTS IS HIGHLY EXCESSIVE, ARBITRARY, A ND ILLEGAL, HENCE THE ORDER PASSED IS LIABLE TO BE QUASHED. 5. FOR THAT THE RETURNED INCOME OF THE APPELLANT IS TO BE ACCEPTED IN TOTO AND THE INCOME DETERMINED BY THE FORUMS BELOW IS LI ABLE TO BE REDUCED. 3. THE LD COUNSEL FOR THE ASSESSEE HAS PLACED ON RE CORD A WRITTEN SUBMISSION IN WHICH HE HAS AGITATED THE LEGAL ISSUE THAT NOTICE U/S.148 AND THE ASSESSMENT FRAMED UNDER SECTION 147 IS BAD IN LAW. HE HAS SUBMITTED FORM NO.16A TO SHOW THAT THE GROSS AMOUNT OF THE CONTRACT IS DIFFERENT AS SUBMITTED EA RLIER BEFORE BOTH THE AUTHORITIES BELOW. THE LEGAL GROUND IS TAKEN IN THE FORM OF WRITTEN SU BMISSION WITHOUT ANY APPLICATION FOR ADMISSION OF THE ADDITIONAL GROUND AND LD COUNSELS SUBMISSION OF FORM 16 AS REGARDS THE GROSS OF AMOUNT OF CONTRACT IS ALSO WITHOUT ANY APPLICATION FOR ADMISSION OF FRESH EVIDENCE AND IN FACT, THE ITAT HAS NOT CALLED FOR S UCH FRESH EVIDENCE. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE SUBMISSION OF THE ASSESSEE IN THESE REGARDS IS REJECTED. 4. IN THE GROUNDS OF APPEAL TAKEN, AS REPRODUCED HE REINABOVE, THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CONTRACTOR AND DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED COPIES OF THE M ATERIALS, LABOUR CHARGES, TRUCK HIRE CHARGES WITHOUT ANY BOOKS OF ACCOUNT AND SUPPORTING VOUCHERS. THE LD A.R. WAS ASKED 3 ITA NO. 418/CTK/2013 ASSESSMENT YEAR :2008-09 TO PRODUCE BOOKS OF ACCOUNT AND VOUCHERS TIME AND A GAIN BUT THE SAME WERE NOT PRODUCED. RATHER, IT WAS INTIMATED TO THE LD A.R. OF THE ASSESSEE THAT THE DETAILS FURNISHED ARE NOT IN PROPER ORDER AND IN ABSENCE OF PROPER BOOKS OF ACCOUNT AND SUPPORTING VOUCHERS, PROFIT IS TO BE ESTIMATED. AC CORDINGLY, THE AO HAD NO ALTERNATIVE BUT TO COMPLETE ASSESSMENT EXPARTE AND COMPUTED THE INCOME ON ESTIMATION BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE AC T. THE ASSESSING OFFICER ESTIMATED THE NET PROFIT @ 10% ON GROSS RECEIPTS OF RS.1,49,6 4,652/-. THE LD CIT(A) RELYING UPON THE DECISIONS OF VARIOUS COURTS OF LAW ESTIMATED TH E NET PROFIT AT 8% ON THE SAID GROSS RECEIPTS NET OF DEPRECIATION. 5. THE LD COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE HAD DECLARED THE NET PROFIT RATE AT 4.10% IN THE PRECEDING YEAR AND 6.36 % AND 5.75% IN THE FOLLOWING YEARS AND IT WAS STATED THAT THE ASSESSMENT FOR THE PRECE DING YEARS AND THE FOLLOWING YEARS ARE MADE U/S.143(1). THEREFORE, HE PRAYED TO ESTIM ATE THE INCOME AT 4.10%. HE RELIED UPON THE DECISION OF THE ITAT CUTTACK BENCH IN THE CASE OF SRI LAXMINARAYAN MALLICK VS ITO IN ITA NO.283/CTK/2012 FOR ASSESSMENT YEAR 2007 -08 ORDER DATED 31.8.2012, WHERE THE NET PROFIT RATE OF 6% HAS BEEN APPLIED. 6. ON THE OTHER HAND, THE LD D.R. RELIED UPON THE O RDER OF THE LD CIT(A).. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE REJECTION OF BOOKS OF ACCOUNT BY INVOKI NG THE PROVISIONS OF SECTION 145(3) OF THE ACT, THE SAME HAS NOT BEEN AGITATED BY THE ASSE SSEE IN HIS GROUNDS OF APPEAL. THEREFORE, NOW THE QUESTION LEFT BEFORE US FOR CONS IDERATION IS THE ESTIMATION OF INCOME. 4 ITA NO. 418/CTK/2013 ASSESSMENT YEAR :2008-09 THE AO HAS ESTIMATED THE NET PROFIT AT 10% ON GROSS RECEIPTS, WHICH IN FACT, IS WITHOUT ANY BASIS AND WITHOUT REFERRING TO PAST RESULTS OR RELIANCE OF ANY AUTHORITIES, WHERE THE LD CIT(A), IN FACT, HAS RELIED UPON MANY AUTHORITIES A ND HAS REDUCED THE NET PROFIT RATE BY ESTIMATING THE SAME AT 8% OF GROSS RECEIPTS MENTION ED HEREINABOVE. AS REGARDS THE SUBMISSIONS MADE BEFORE US BY THE LD COUNSEL FOR TH E ASSESSEE WITH REGARD TO NET PROFIT RATE FOR THE EARLIER YEARS AND FOLLOWING YEARS, THE ASSESSING AUTHORITY DID NOT HAVE ANY OCCASION TO EXAMINE THE BOOKS OF ACCOUNT AND, THERE FORE, IN THE ABSENCE OF ASSESSMENT U/S.143(3), THE NET PROFIT DECLARED CANNOT BE A GUI DING FACTOR. IN THE CIRCUMSTANCES AND FACTS OF THE CASE AS REGARDS TO THE DECISION IN THE CASE OF SHRI LAXMINARAYAAN MALLIK (SUPRA) RELIED UPON BY THE LD A.R, THE LD A.R. HAS NOT BROUGHT TO OUR NOTICE THAT THE FACTS IN THAT CASE ARE IDENTICAL TO THE FACTS OF THE PRES ENT CASE. HOWEVER, KEEPING INTO CONSIDERATION THE ARGUMENTS MADE BY THE ASSESSEE AN D RELIANCE MADE BY THE LD CIT(A) OF DECISIONS OF VARIOUS COURTS OF LAW AND FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, IT WILL BE PROPER AND IN THE INTEREST OF JUSTICE IF T HE AO APPLIES NET PROFIT RATE AT 7% ON THE GROSS RECEIPTS AS MENTIONED HEREINABOVE. WE ORDER ACCORDINGLY. THEREFORE, THE ORDERS OF BOTH THE LOWER AUTHORITIES ARE MODIFIED AS INDIC ATED ABOVE. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 / 05/2015. SD/- SD/- ( ) (SUNIL KUMAR YADAV) ( . . ) (B.P.JAIN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 26 /05/2015 B.K.PARIDA, SRPS 111111111111 11 5 ITA NO. 418/CTK/2013 ASSESSMENT YEAR :2008-09 / / / / %( %( %( %( 3!( 3!( 3!( 3!( / COPY OF THE ORDER FORWARDED TO : / / / / / BY ORDER, 4 44 4 / 5 5 5 5 (ASSTT. REGISTRAR) , / ITAT, CUTTACK 1. '$ / THE APPELLANT : MAKHAN MURARI NAYAK, AT: PETEIPUR, PO: ALASUDHA, DIST: JAGATSINGHPUR. 2. %&'$ / THE RESPONDENT. INCOME TAX OFFICER, WARD-1, PARADEEP. 3. 6 ( ) / THE CIT(A), CUTTACK 4. 6 / CIT , CUTTACK 5. 7 %( , , + / DR, ITAT, CUTTACK 6. 9 :+ / GUARD FILE. &( %( //TRUE COPY//