M/s Awasthi Traders, Auraiya V. ITO, Bharatpur

ITA 423/AGR/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7075 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: NAVIN GARGH ADVOATE
• Keywords: Depreciation; Assessment record
• Section: 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 382/AGRA/2009 ASSTT. YEAR : 2006-07 INCOME-TAX OFFICER, VS. M/S. AWASTHI TRADERS , ETAWAH. PHAPHUND ROAD, DIBIYAPUR, AURAIYA. (PAN : AAIFA 6499 D) ITA NO. 423/AGRA/2009 ASSTT. YEAR : 2006-07 M/S. AWASTHI TRADERS, VS. INCOME-TAX OFFICER, PHAPHUND ROAD, AURAIYA. DIBIYAPUR, AURAIYA. (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI A.K. SHARMA, JR. D.R. FOR ASSESSEE : SHRI NAVIN GARGH, ADVOATE. ORDER PER P.K. BANSAL, A.M. : THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE OR DER DATED 16.06.2009. AT THE TIME OF HEARING, THE ASSESSEE DID NOT PRESS HIS APPEAL. THE REFORE, THE SAME STANDS DISMISSED AS NOT PRESSED. 2. COMING TO THE APPEAL BY THE REVENUE, THE REVENUE HAS TAKEN FOLLOWING GROUND OF APPEAL: 1. THAT THE CIT (APPEALS)-1, AGRA HAS ERRED IN LAW AND ON FACTS IN REDUCING THE PROFIT RATE FROM 8% TO 5%, WITHOUT PRO PERLY APPRECIATING THE FACTS OF THE CASE. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DERIVED INCOME FROM CIVIL CONTRACT WORK AND DECLARED GROSS PROFIT OF RS.29,36,359/- ON THE GROSS RECEIPT OF RS.3,15,36,844/- AS COMPARED TO THE GROSS PROFIT OF RS.21,13,489/- AGAINST GROSS RECEIPT OF RS.5,02,54,586/- DECLARED IN THE LAST YEAR. THE ASSESSEE WAS ASKED BY THE ASSESSING OFFIC ER TO PRODUCE COMPLETE ACCOUNT BOOKS ALONGWITH BILLS AND VOUCHERS, STOCK REGISTER, LABOU R PAYMENT REGISTER, SALARY REGISTER, ATTENDANCE REGISTER AND SIT PLAN ETC. THE ASSESSEE PRODUCED TH E CASH BOOK, LEDGER AND SOME BILL/VOUCHERS WHICH WERE INCOMPLETE AND SELF MADE AND UN-NUMBERED AND NOT ENDORSED BY THE RECIPIENTS. ULTIMATELY, AFTER GIVING THE OPPORTUNITY TO THE ASS ESSEE, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT BY INVOKING PROVISIONS OF SECTION 145(3) . THE ASSESSING OFFICER APPLIED THE RATE OF 8% AT GROSS RECEIPTS AND, THUS, ESTIMATED THE INCOM E AT RS.25,22,948/-, OUT OF WHICH HE ALLOWED DEDUCTION TO THE ASSESSEE IN RESPECT OF REMUNERATIO N, INTEREST TO PARTNERS, BANK CHARGES AND DEPRECIATION TOTALING TO RS.6,90,081/-. 4. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AN D BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THE POSITION IN RESPECT OF THE PREVIOUS T WO YEARS AS UNDER AND POINTED OUT THAT DURING THE YEAR, THE ASSESSEE HAS DISCLOSED NET PROFIT @ 2 .13% : ASSTT. YEAR GROSS PROFIT NET PROFIT BEFORE ALLOWING SALARY AND INTT. TO PARTNERS. N.P. RATE BEFORE ALLOWING SALARY & INTT. TO PARTNERS REMARKS 2004-05 40312254 399245 0.99% INCOME ASSESSED U/S. 143(3) RS.610070 (N.P. RATE 1.51%) 2005-06 50254546 631027 1.26% INCOME ASSESSED U/S. 143(3) RS.700000 (N.P. RATE 1.39%) 2006-07 31536844 671865 2.13% UNDER APPEAL 3 5. IT WAS POINTED OUT THAT IN THE ASSESSMENT YEAR 2 005-06, THE PROCEEDINGS U/S. 263 WERE STARTED AND THE INCOME-TAX OFFICER IN THE ORDER PAS SED U/S. 143(3) READ WITH SECTION 263 APPLIED 5% NET PROFIT RATE BUT THE ASSESSEE WENT IN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL DID NOT ACCEPT THE ORDER PASSED U/S. 263. THE CIT(A) ULTIMA TELY AFTER REFERRING TO THE ORDER OF THE ITAT, AGRA IN ASSESSEES CASE FOR THE ASSESSMENT YEAR 200 5-06 AGAINST THE APPEAL IN RESPECT OF THE ORDER PASSED U/S. 263 AND ALSO THE RESULTS OF THE ASSESSE E DERIVED IN THE PREVIOUS YEAR DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT RATE O F 5% SUBJECT TO THE DEDUCTION OF DEPRECIATION AND DEDUCTIONS AVAILABLE U/S. 40B IN THE FOLLOWING MANNER : I HAVE CONSIDERED THE RIVAL C9NTENTIONS. ON PERUSA L OF THE ASSESSMENT RECORDS, IT IS SEEN THAT THE AO HAS CARRIED OUT EXT ENSIVE ENQUIRIES WITH REGARD TO UNSECURED LOANS, SUNDRY CREDITORS, WAGES ETC. AND A PPARENTLY NOT DRAWN ANY ADVERSE INFERENCE THERE FROM,. WHILE INVOKING SECTI ON 145(3) OF THE ACT, THE AO HAS NOT DISPUTED THE APPELLANTS CLAIM THAT THE CON TRACTS WERE PROCURED ON COMPETITIVE RATES WHEREAS THE COST OF CONSUMABLE IT EMS AND MATERIALS HAS INCREASED DURING THE YEAR. NO JUSTIFICATION EITHER WITH REFERENCE TO THE APPELLANTS OWN CASE OR ANY OTHER COMPARABLE CASE HAS BEEN GIVE N BY THE AO FOR ADOPTING NET PROFIT RATE OF 8% OF TURNOVER. IT APPEARS THAT THE BOOK RESULTS HAVE BEEN REJECTED MAINLY SINCE ALL THE VOUCHERS WERE NOT NUM BERED AND NOT ENDORSED BY THE PAYEES. CONSIDERING THE FACTS OF THE CASE AS ALSO V ARIOUS APPELLATE DECISIONS CITED BY THE APPELLANT AND DETAILED HEREINABOVE, IT WOULD BE FAIR AND REASONABLE TO ESTIMATE INCOME AT 5% OF TURNOVER SUBJECT TO DEDUCT ION ON ACCOUNT OF REMUNERATION AND INTEREST TO PARTNERS, BANK CHARGES AND DEPRECIATION (ALLOWED BY THE AO IN THE ASSESSMENT ORDER) AND INTEREST OF RS. 3,36,038/- PAID TO THE BANK. THE AO IS DIRECTED TO RE-COMPUTE THE INCOME ACCORDI NGLY. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED, IN T HE ASSESSMENT YEAR 2004-05 AND 2005-06 IN THE ASSESSMENT PASSED U/S. 143(3), THE REVISED NET PROF IT RATE WAS 2.1% AND 1.75% WHILE DURING THE YEAR, THE ASSESSEE HAS RETURNED THE NET PROFIT BEFO RE ALLOWING SALARY AND INTEREST AT THE RATE OF 2.13%. THE CIT(A) AFTER CONSIDERING THE RESULTS OF THE ASSESSEE AND THE ORDER OF THIS TRIBUNAL 4 DATED 12.11.2006 PASSED IN RESPECT OF APPEAL FILED AGAINST THE ORDER U/S. 263, REDUCED THE ADDITION AND DIRECTED THE ASSESSING OFFICER TO COMPUTE THE N ET PROFIT @ 5% ON THE GROSS RECEIPT SUBJECT TO DEDUCTION OF DEPRECIATION AND SALARY & INTEREST ALL OWABLE TO THE PARTNERS U/S. 40B OF THE ACT. THE LEARNED DR EVEN THOUGH HAS VEHEMENTLY RELIED ON THE ORDER OF THE ASSESSING OFFICER, BUT HE COULD NOT SUBMIT ANY COMPARATIVE CASE. THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED AND THE ASSESSMENT HAS BEEN MADE IN THE MANNER PRESCRIB ED U/S. 144 OF THE ACT. SECTION 144 LAYS DOWN THAT THE ASSESSING OFFICER HAS TO DETERMINE TH E INCOME ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THE PAST RESULTS OF THE ASSESS EE, WHICH HAS DULY BEEN ACCEPTED BY THE ASSESSING OFFICER, IN OUR OPINION, ARE THE BEST EVI DENCE AND THE MATERIAL AVAILABLE ON RECORD. THE CIT(A) HAS DULY CONSIDERED THE MATERIAL AND HAS ARR IVED AT THE CONCLUSION THAT NET PROFIT OF THE ASSESSEE HAS TO BE COMPUTED @ 5% BEFORE ALLOWING DE DUCTION OF DEPRECIATION AND SALARY & INTEREST TO THE PARTNERS ALLOWABLE U/S. 40B. THE OR DER PASSED BY THE CIT(A) IN OUR OPINION, IS JUST AND REASONABLE AND THE ESTIMATE OF NET PROFIT IS ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE O RDER OF THE CIT(A) AND WE ACCORDINGLY, CONFIRM THE ORDER OF CIT(A). 7. IN THE RESULT, BOTH THE APPEALS OF REVENUE AND T HE ASSESSEE STAND DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 8.4.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8 TH APRIL, 2011 *AKS/- 5 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY