Navneet Kumar Sharma, Kangra V. ACIT, Kangra

ITA 422/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4087 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: B M MONGA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH SMD, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 422/CHD /2017 ASSESSMENT YEAR : 2011-12 SHRI NAVNEET KUMAR SHARMA, VS. THE ACIT, CONTRACTOR, CIRCLE, C/O SHARMA FURNITURE HOUSE, PALAMPUR, GAGGAL, DISTT. KANGRA. DISTT. KANGRA. PAN NO. :AGXPS2913B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.M.MONGA & SHRI ROHIT KAURA RESPONDENT BY : SHRI MANJIT SINGH, SR.DR DATE OF HEARING : 25.06.2018 DATE OF PRONOUNCEMENT : 08.08.2018 ORDER PER DIVA SINGH THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSA ILING THE CORRECTNESS OF THE ORDER DATED 26.12.2017 OF LD. CIT(APPEA LS) PALAMPUR PERTAINING TO 2011-12 ASSESSMENT YEAR. 2. THE ASSESSEE IN THE FACTS OF THE PRESENT CASE DERIVE S INCOME FROM CONTRACT WORK CARRIED OUT ON BEHALF OF THE GOVERNMENT DEPARTMENTS. RETURN DECLARING INCOME OF RS. 25,06,830/- WAS FILED. THE ASS ESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS WAS CONFRONTED WIT H THE FOLLOWING DEFICIENCIES IN HIS BOOKS OF ACCOUNT : I) THE ASSESSEE COULD NOT FURNISH BILLS/VOUCHERS IN SU PPORT OF EXPENSES DEBITED OF RS.5,00,000/- ON 01.10.2010 AND RS.1,75,000/- ON 23 .10.2010 ON ACCOUNT OF DIESEL & PETROL EXPENSES WHICH WERE BOOKED IN THE N AME OF SH. SUSHIL KUMAR. II) EXPENSES SHOWN AS PAYABLE OF RS.17,65,988/- ON ACCOUNT OF WAGES & LABOUR CHARGES OUT OF TOTAL EXPENDITURE OF RS.60,57,800/-. THE ASSESSEE COULD NOT FURNISH VOUCHERS IN SUPPORT OF PAYMENT OF WAGES & LABOURS. III) ON PERUSAL OF MUST-ROLL THAT NEITHER SIGNATUR E AGAINST THE ATTENDANCE OF LABOURER'S MARKED IN THE MUST-ROLL NOR ANY THUMB IM PRESSIONS MARK AGAINST THEIR NAME. EVEN, THUMB IMPRESSIONS MARKED HAVE NOT BEEN VERIFIED. 2.1 AS A RESULT THEREOF, THE ASSESSEE WAS PUT TO NOTICE BY THE AO TO EXPLAIN WHY ITS BOOKS OF ACCOUNT SHOULD NOT BE REJECTED AND A NET PROFIT ITA 422/CHD/2017 A.Y. 2011-12 2 RATE BE APPLIED. THE ASSESSEE SUBMITTED THAT IN THE IMME DIATELY PRECEDING ASSESSMENT YEAR, A NET PROFIT RATE OF 8.63% HAD BEEN DECLARED AND THOUGH NP RATE IN THE YEAR UNDER CONSIDERATION OF 9 .29% WAS HIGHER, HE ACCEPTED THAT THE VOUCHERS/BILLS ETC. AT TIMES WERE LO ST DUE TO DAMPNESS ETC. RELYING UPON HIS OWN PAST HISTORY, IT WAS S UBMITTED THAT A NET PROFIT RATIO OF 10% MAY BE APPLIED. THE AO NOT CONVI NCED WITH THE EXPLANATION APPLIED NP RATE OF 12%. THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE CIT(A) UNSUCCESSFULLY. AGGRIEVED BY THE ORDE R, THE PRESENT APPEAL HAS BEEN FILED. 3. THE LD. AR INVITING ATTENTION TO PAGE 3 OF THE IMPUGNED ORDER WHEREIN WRITTEN SUBMISSIONS OF THE ASSESSEE ARE SET OUT, HIGHLIGHTED THE FACT THAT THE ESTIMATE IS WITHOUT ANY BASIS WHEREIN FOR NO STATED REASONS, THE PAST HISTORY OF THE ASSESSEE HAS BEEN IGNORED. ACC ORDINGLY, IT WAS HIS PRAYER THAT HE WOULD NOT CONTEST THE ISSUE FURTHER IF T HE N.P. RATE OF 10% IS APPLIED EVEN THOUGH IN THE YEAR UNDER CONSIDERATION, TH E N.P. OF THE ASSESSEE WAS HIGHER WHEN COMPARED WITH THE IMMEDIATE PAST. 4. THE LD. SR.DR RELIED UPON THE ORDERS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT THE ASSESSEE IN THE YEAR UNDE R CONSIDERATION FROM THE SIMILAR ACTIVITY HAS DISCLOSED THE N.P. RATE OF 9.29% WHICH IS HIGHER THAN 8.63% SHOWN IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE RELEVANT CHART RELIED UPON BY THE ASSESSEE EXTRACTED FR OM THE IMPUGNED ORDER IS REPRODUCED HEREUNDER : ASSESSMENT YEAR GROSS CONTRACT RECEIPTS NET PROFIT RATE 2007-08 6.59%(U/S 143(3)] 2009-10 4,59,47,694/- 7.15% 2010-11 1,62,78,904/- 8.63% 2011-12 2,82,16,521/- 9.29% 5.1. IT IS SEEN THAT THE TAX AUTHORITIES HAVE NOT GIVEN A NY REASON OR BASIS FOR THE APPLICATION OF NP RATE OF 12%. IN THE ABSENCE OF A NY JUSTIFICATION FOR NP RATE OF 12%, THE SAID CONCLUSION OF THE CIT(A) CAN NOT BE UPHELD. ACCORDINGLY, AFTER HEARING THE PARTIES, THE AO IS DIRECTED TO APPLY NP RATE OF 10% CONSIDERING THE PAST HISTORY AND THE DEFICIENCIES AC CEPTED BY THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. THE LD. AR INVITING ATTENTION TO THE ADDITIONAL GROUNDS SO UGHT TO BE RAISED BY THE ASSESSEE IN THE PRESENT APPEAL SUBMITTED THAT HE W OULD SEEK ITA 422/CHD/2017 A.Y. 2011-12 3 TO WITHDRAW THE REMAINING GROUNDS RAISED IN THE PRESENT APPEAL. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.08.2018. SD/- SD/- (ANNAPURNA GUPTA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT CHANDIGARH