Durga Prasad Tripathy, Malkanagiri V. ITO, Jeypore

ITA 42/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4413 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 20-01-2011
• Court: TRIBUNAL
• Department Lawyers: J KHANRA
• Assessee Lawyers: K C PANIGRAHI
• Keywords: Depreciation; Reasonable cause
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 042 AND 043/CTK/2011 / ASSESSMENT YEAR 2005 - 06 SRI DURGA PRASAD TRIPATHY, THOLASAHI, MALKANGIRI, DIST.MALKANGIRI PAN: ACNPT 9839 P - - - VERSUS - INCOME - TAX OFFICER, WARD 2, JEYPORE. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI K.C.PANIGRAHI, AR / FOR THE RESPONDENT: / SHRI J.KHANRA, DR / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THESE APPEALS BY THE ASSESSEE ARE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME - TAX (APPEALS) OF EVEN DT.8.11.2010 PERTAINING TO ASSESSMENT MADE U/S.144 /147 AND ORDER LEVYING PENALTY U/S.271(1)(B) OF THE INCOME - TAX ACT,1961 FOR THE AS SESSMENT YEAR 2005 - 06. 3. SO FAR AS APPEAL NO.42/CTK/2011 IS CONCERNED, THE BRIEF FACTS OF THE CASE ARE THAT ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PRODUCE ALL BOOKS OF ACCOUNT AS WELL AS BILLS, VOUCHERS ETC., THE ASSESSING OFFICER DISALLOWED ABOU T 10% OF THE TOTAL EXPENSES CLAIMED ON CONTRACT WORKS RECEIPTS. HE FURTHER MADE ADDITION OF 7,03,285 ON ACCOUNT OF DISALLOWANCE OF SUNDRY CREDITORS, ADDITION OF 33,204 BEING THE DIFFERENTIAL AMOUNT AS DISCLOSED BY THE ASSESSEE AS CONTRACT RECEIPTS AND TH E TDS CERTIFICATE GIVEN BY RMC,MALKANGIRI AND ADDITION OF 15,643 BEING THE MISCELLANEOUS DEPOSITS WITH EXECUTIVE ENGINEER, RWD , MALKANGIRI NOT SHOWN IN THE ASSET SIDE OF THE 2 BALANCE SHEET. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ADDITION OF 15,643 ON ACCOUNT OF MISC. DEPOSITS WITH THE EE, RWD, MALKANGIRI. BUT HE ESTIMATED THE INCOME ON CONTRACT WORKS @9% OF THE GROSS RECEIPTS WITHOUT FURTHER DEDUCTION OF DEPRECIATION AS AGAINST 5.64% PROFIT DISCLOSED BY THE ASSESSEE AND THUS ALLOWED PARTIAL RELIEF T O THE ASSESSEE . 2. T HE ONLY GROUND RAISED BY THE ASSESSEE IN ITA NO.42/CTK/2011 IS AGAINST THE ORDER OF THE LEARNED CIT(A) IN DETERMIONING THE INCOME AT 9% OF THE CONTRACT RECEIPTS. 3. THE LEARNED AR OF THE ASSESSEE CONTENDED THAT ITAT IN MANY CASES H AS ADOPTED THE NET PROFIT RANGING FROM 4.5% TO 5% AND THEREFORE, THE ESTIMATION OF INCOME @9% IN CASE OF THE ASSESSEE AS ADOPTED BY THE LEARNED CIT(A) IS ON HIGHER SIDE. THE LEARNED DR ON THE OTHER HAND SUBMITTED THAT THE LEARNED CIT(A) HAS ADOPTED 9% PROF IT ON THE CONCESSION MADE BY THE LEARNED AR OF THE ASSESSEE. THEREFORE, THE IMPUGNED ORDER OF THE LEARNED CIT(A) NEEDS NO INTERFERENCE. 4 . AFTER HEARING BOTH THE PARTIES AND PERUSING THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW, W E FIND FROM THE FIRST AP PELLATE ORDER THAT BEFORE THE LEARNED CIT(A) RELYING ON THE DECISION OF IN THE CASE OF T.O.ABRAHAM & CO. V. DCIT (325 ITR 201), THE LEARNED AR OF THE ASSESSEE BEFORE HIM CONSENTED FOR ADOPTING 9% OF THE GROSS CONTRACT RECEIPT AS NET INCOME FROM CONTRACT WORKS WITHOUT FURTHER DEDUCTION ON DEPRECIATION ALLOWANCE. THEREFORE, CONSIDERING THIS ASPECT OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN ESTIMATING THE PROFIT @9% ON THE GROSS RECEIPTS OF CONTRACT WORKS, AS MAD E BY THE LEARNED CIT(A) AND THUS, WE DO NOT FIND ANY 3 MERIT IN THE PRESENT APPEAL FILED BY THE ASSESSEE, AND AS SUCH, THE SAME IS HEREBY DISMISSED. 5 . NOW COMING TO ITA NO.43/CTK/2011, AFTER HEARING BOTH THE PARTIES AND GOING THROUGH THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT ON THE ALLEGATION OF NON - COMPLIANCE TO THE NOTICES U/S.143(2) AND 142(1) ISSUED ON 11.12.2007, 5.8.2008 AND 7.10.2008, THE ASSESSING OFFICER INITIATED PROCEEDINGS U/S.271(1)(B). IN RESPONSE TO SHOW CAUSE, THE ASSESSEE EXPLAINED THAT THE ASSESSEE IS EXECUTING WORKS CONTRACTS IN REMOTE PLACES OF MALKANGIRI, KORAPUT DISTRICT WHICH ARE NAXAL AREAS. BECAUSE OF TIME BOUND WORKS THE ASSESSEE IS BUSY IN COMPLETING THE WORKS. OTHERWISE THE ASSESSEE HAS TO FACE THREATS AND PROBL EMS FROM THE NAXLITIES IN EXECUTING THE WORKS IN THEIR LOCALITY. THE ASSESSEE HAD NO MALAFIDE INTENTION OR DISREGARD TOWARDS THE NOTICES ISSUED BUT FOR TIME BOUND WORKS. THE ASSESSING OFFICER DID NOT ACCEPT SUCH EXPLANATION TO BE A REASONABLE CAUSE AND THE REFORE, LEVIED PENALTY OF 10,000 U/S.271(1)(B). ON APPEAL, THE ASSESSEE REITERATED THE ABOVE EXPLANATION BEFORE THE LEARNED CIT(A), WHO HAD NOT CONSIDERED SUCH EXPLANATION BUT UPHELD THE LEVY OF PENALTY U/S.271(1)(B). NONE OF THE AUTHORITIES BELOW HAVE CONSIDERED THE ABOVE EXPLAN ATION OF THE ASSESSEE IN ITS PROPER PERCEPTIVE. IT IS NOT IMPROBABLE THAT FOR FAILURE ON THE PART OF THE PART OF THE ASSESSEE TO COMPLETE THE CONTRACT WORKS IN TIME IN A NAXALITES PRONE AREA WILL HAVE TO FACE THREATS AND PROBLEMS FROM THE NAXILITES. THERE FORE, NON - COMPLIANCE TO THE NOTICES ISSUED BY THE ASSESSING OFFICER CANNOT BE HELD TO BE INTENTIONAL OR DISREGARD TOWARDS THE NOTICES ISSUED. WE CONSIDER THE ABOVE EXPLANATION TO BE REASONABLE. IN VIEW OF THE ABOVE, WE SET ASIDE THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY OF 10,000 LEVIED U/S.271(1)(B). 4 6. IN THE RESULT, ITA NO.42/CTK/2011 IS DISMISSED AND ITA NO.43/CTK/2011 IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 13 TH MAY, 2011 S D/ - S D/ - ( . . . ) , ( K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 13 TH MAY, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : 2 / THE RESPONDENT: 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUAR D FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.