ARAVALI STRUCTURES INDIA PRIVATE LIMITED, JAIPUR V. INCOME TAX OFFICER, JAIPUR

ITA 447/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6406 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Assessee Lawyers: S S SEKHAWAT
• Section: 44AD; 194C; 147; 148; 144; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 447/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 ARAVALI STRUCTURES INDIA PRIVATE LIMITED, JAIPUR CUKE VS. INCOME TAX OFFICER, WARD-2(2), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAGCA5890D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S. S. SEKHAWAT (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J. C. KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 28/06/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 06/07/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- 01, JAIPUR DATED 07.02.2018 FOR ASSESSMENT YEAR 200 9-10 WHEREIN THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF ADDITIO N MADE BY THE AO AND ESTIMATING NET PROFIT @ 25% OF THE GROSS CONTRACTUA L RECEIPTS. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE DURI NG THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS RECEIVED A SUM OF R S. 22,92,082/- ON ACCOUNT OF CONTRACT WORK AS EVIDENCED BY AND REFLECTED IN F ORM 26AS WHEREIN TDS HAS BEEN DONE U/S 194C OF THE ACT. ON PERUSAL OF DETAIL S OF FORM NO. 26AS, IT IS OBSERVED THAT THE ASSESSEE HAS RECEIVED CONTRACT RE CEIPTS FROM M/S HORIZON INFRATECH PRIVATE LIMITED, TVS INTERCONNECT SYSTEM PRIVATE LIMITED AND ATC TELECOM TOWER CORPORATION PRIVATE LIMITED. DURING T HE COURSE OF HEARING, THE AR SUBMITTED THAT THE ASSESSEE HAS EXECUTED CERTAIN CONTRACTUAL WORK RELATING ITA NO. 447/JP/2018 ARAVALI STRUCTURES INDIA PRIVATE LTD., JAIPUR VS ITO, JAIPUR 2 TO ERECTION OF TELECOM TOWERS FOR THESE COMPANIES. THE NATURE OF THE CONTRACTUAL RECEIPT IS THEREFORE NOT IN DISPUTE BEF ORE US. 3. GIVEN THAT NO RETURN OF INCOME WAS FILED EITHER U/S 139 OR PURSUANT TO NOTICE U/S 148, THE AO COMPLETED THE ASSESSMENT U/S 147 READ WITH SECTION 144 OF THE ACT WHEREIN HE ESTIMATED 25% OF THE GROS S CONTRACTUAL RECEIPTS AS NET PROFIT AND THE SAME WAS BROUGHT TO TAX IN THE H ANDS OF THE ASSESSEE. HOWEVER, WE DO NOT FIND ANY BASIS OF ESTIMATING THE NET PROFIT @ 25% BY THE ASSESSING OFFICER FOR ARRIVING AT THE TAXABLE INCOM E AT RS. 5,73,020/- IN THE HANDS OF THE ASSESSEE. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. AR SUBMITTED THAT NET PROFIT SHOULD BE ESTIMATED @ 8% INSTEAD OF 25% AS S UCH ESTIMATION IS AGAINST THE PROVISIONS OF SECTION 44AD OF THE ACT. GIVEN TH E FACT THAT NO RETURN OF INCOME WAS FILED BY THE ASSESSEE, THE LD. CIT(A) HE LD THAT THE SECTION 44AD COULD NOT BE APPLIED IN THE INSTANT CASE AND ACCORD INGLY, HE CONFIRMED THE ESTIMATION OF NET PROFIT @ 25% AND THE ADDITION SO MADE BY THE AO AT RS. 5,73,020/- WAS CONFIRMED. NOW THE ASSESSEE IS IN AP PEAL BEFORE US. 5. THE LD. AR REITERATED THE SUBMISSIONS MADE BEFO RE THE LD. CIT(A) AND SUBMITTED THAT GIVEN THE NATURE OF CONTRACTUAL RECE IPTS, REASONABLE ESTIMATION OF PROFIT SHOULD BE MADE IN THE HANDS OF THE ASSESS EE AND PROVISIONS OF SECTION 44AD PROVIDE THE BASIS FOR SUCH ESTIMATION WHERE TH E PROFIT CAN BE ESTIMATED @ 8% ON CONTRACTUAL RECEIPTS. IT WAS FURTHER SUBMI TTED THAT THE BUSINESS OF THE ASSESSEE HAS BEEN SHUT DOWN, THERE IS NO PERSON TO LOOK AFTER THE AFFAIRS OF THE COMPANY AND AS A RESULT, NO RETURN OF INCOME WA S FILED BY THE ASSESSEE. 6. THE LD. DR IS HEARD WHO HAS RELIED ON THE FINDI NGS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD DR THAT THE RE HAS BEEN COMPLETE NON- COMPLIANCE BY THE ASSESSEE BY NOT SUBMITTING THE RE TURN IN RESPONSE TO NOTICE ITA NO. 447/JP/2018 ARAVALI STRUCTURES INDIA PRIVATE LTD., JAIPUR VS ITO, JAIPUR 3 U/S 148 AND IN SUCH A SCENARIO, ESTIMATION OF NET P ROFIT BY THE AO IS REASONABLE WHICH SHOULD BE SUSTAINED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LIMITED ISSUE UNDER CONSIDERATION IS THE ESTIMATION OF NET PROFIT IN THE HANDS OF THE ASSESSEE WHICH IS ENGAGED IN TH E BUSINESS OF ERECTION OF TELECOM TOWER AND IS IN RECEIPT OF CONTRACTUAL RECE IPTS AMOUNTING TO RS. 22,92,082/- DURING THE PREVIOUS YEAR RELEVANT T O IMPUNGED ASSESSMENT YEAR. THE AO HAS NOT STATED THE BASIS FOR ESTIMATIN G AND ARRIVING AT 25% NET PROFIT ON THE GROSS CONTRACTUAL RECEIPTS. WHEREAS I F WE LOOK AT THE PROVISIONS OF SECTION 44AD, IT PROVIDES THAT IN CASE OF AN ELIGIB LE ASSESSEE ENGAGED IN AN ELIGIBLE BUSINESS, A SUM EQUAL TO 8% OF THE TOTAL T URNOVER OR GROSS RECEIPTS OF THE ASSESSEE IN THE PREVIOUS YEAR SHALL BE DEEMED T O THE PROFITS AND GAINS OF SUCH BUSINESS UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. IN ABSENCE OF ANY COMPARABLE THIRD PARTY DATA OF AN EN TITY ENGAGED IN SIMILAR LINE OF BUSINESS OR THE ASSESSEES OWN PAST HISTORY, NEC ESSARY GUIDANCE CAN BE SOUGHT FROM THE PROVISIONS OF SECTION 44AD OF THE A CT WHICH PROVIDES FOR ESTIMATING NET PROFIT @ 8%. THEREFORE, IN THE INST ANT CASE, IT WOULD BE REASONABLE TO ESTIMATE THE NET PROFIT IN THE HANDS OF THE ASSESSEE @ 8% OF THE GROSS CONTRACTUAL RECEIPTS WHILE ARRIVING AT HIS TA XABLE INCOME AND THE REMAINING ADDITION MADE BY THE AO IS HEREBY DELETED . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/07/2018. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR ITA NO. 447/JP/2018 ARAVALI STRUCTURES INDIA PRIVATE LTD., JAIPUR VS ITO, JAIPUR 4 DATED:- 06/07/2018 *GANESH KR VKNS'K DH IZFRFYFI VXZSF'KR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - ARAVALI STRUCTURES INDIA PRIVATE LIMITED, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT - ITO, WARD-2(2), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 447/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.