M/s Anil Singh & Company, Bhopal V. The Income Tax Officer 1(2), Bhopal

ITA 448/IND/2010

• Counselvise Citation: 44822714 RSA 2010
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 07-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJ KUMAR BHATIA
• Assessee Lawyers: IN PERSON
• Keywords: Opportunity of being heard
• Section: 44AD; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 448/IND/2010 A.Y. : 2005-06 M/S.ANIL SINGH & COMPANY, ITO, 1(2), 228/9A/SAKET NAGAR, VS BHOPAL BHOPAL APPELLANT RESPONDENT PAN NO. AAGFA4291H APPELLANTS BY : ASSESSEE IN PERSON RESPONDENT BY : SHRI RAJKUMAR BHATIA, DR O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, BHOPAL, DATED 21.01.2010 FOR THE ASSE SSMENT YEAR 2005-06. DATE OF HEARING : 30 . 0 3 .2016 DATE OF PRONOUNCEMENT : 30. 0 3 .2016 M/S.ANIL SINGH & COMPANY, BHOPAL VS. ITO, 1(20, BHO PAL I.T.A.NO. 448/IND/2010 A.Y. 2005-06 2 2 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE F IRM HAD FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 28.10.2005 SHOWING NET PROFIT OF RS. 6,35,888.50 O N A TURNOVER OF RS. 1,74,58,996/-. THE PROFIT PERCENTAG E COMES TO AROUND 3.64 %. THE ASSESSEE IS A SMALL SUB-CONTRACT OR ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE GOT THEIR ACCOUNTS DULY AUDITED U/S 44AB OF INCOME-TAX ACT, 1961, BY A CHARTERED ACCOUNTANT AND REPORT OF AUDIT OR IN FORM NO.3CB AND 3CD WERE DULY ENCLOSED WITH THE RET URN OF INCOME. THE INCOME EARNED BY THE ASSESSEE FIRM DUR ING THIS YEAR AS PER AUDITED ACCOUNTS WAS AROUND 3.64% OF TH E TOTAL CONTRACTUAL RECEIPTS. THE AO WORKED OUT THE PROFIT PERCENTAGE AT 13.03 %. 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) AGREED THAT THE PERCENTAGE OF PROFIT WORKED OUT AT 13.03 % OF THE TOTAL TURNOVER WAS ON HIGHER SIDE HOLDING THAT SECTION 44AD CANNOT BE STRICTLY APPLICABLE IN THE ASSESSEE S CASE AND HE APPLIED NET PROFIT @ 7% OF THE TOTAL CONTRACT RE CEIPTS FOR ESTIMATION OF INCOME. M/S.ANIL SINGH & COMPANY, BHOPAL VS. ITO, 1(20, BHO PAL I.T.A.NO. 448/IND/2010 A.Y. 2005-06 3 3 4. THE ASSESSEE WAS PRESENT BEFORE THIS BENCH AND SUBMITTED THE WRITTEN SUBMISSION, WHICH IS ON RECOR D. THE ASSESSEE SUBMITTED THAT ALL THE EXPENSES INCURRED B Y THE FIRM WERE ON REAL BASIS AND NO MIS-APPROPRIATION OF FUND S WAS MADE BY HIM. DURING THE PREVIOUS YEAR 2004-05, THE TOTAL TURNOVER OF THE FIRM WAS RS. 65,57,324/- AND PROFIT WAS WORKED OUT AT RS. 4,43,262/-, WHICH COMES TO 6.75 OF TOTAL RECEIPTS. THE FIRM WAS WORKING ONLY FOR ONE CONTRAC TOR AND FOR ONE SITE. WHEREAS DURING THE ASSESSMENT YEAR 2005-0 6, FIRM HAD GOT A NEW CONTRACT AND NEW WORK. DURING THIS Y EAR THEY WORKED FOR TWO CONTRACTORS I.E. M/S. S.K.JAIN, BHOP AL AND M/S. CHETAK ENTERPRISES LIMITED. THE SECOND PARTY W AS NEW TO THE ASSESSEE. THEY CAPTURED THE WORK ON COMPETIT IVE RATES THAT WERE VERY LOW IN COMPARISON TO THE PREVIOUS WO RK DONE. THE ASSESSEE FIRM HAD TO CONCENTRATE ON BOTH THE SI TES AND THE NEW SITE WAS IN VERY DENSE FOREST AND TRIBAL AREA, AS A RESULT OF WHICH THE EXPENSES TO EXECUTE THE SITE WAS HIGH AS COMPARED TO LAST YEAR. THE ASSESSEE FIRM HAD DONE 166% MORE WORK AS COMPARED TO PREVIOUS YEAR 2003-04. MOREOVER, THE PR ICES OF RAW MATERIAL AND LABOUR INCREASED SUBSTANTIALLY HIG HER THAN M/S.ANIL SINGH & COMPANY, BHOPAL VS. ITO, 1(20, BHO PAL I.T.A.NO. 448/IND/2010 A.Y. 2005-06 4 4 THE PREVIOUS YEAR AND BEING NO CLAUSE OF ESCALATION IN THE CONTRACT AGREEMENT WITH THE CONTRACTOR ALL THE LOSS ES OF RISE IN PRICES HAD TO BE BORNE BY THE ASSESSEE. DUE TO WHIC H THE FIRM INCURRED LOSS IN THE BUSINESS BUT IN TOTALITY THEY EARNED A PROFIT OF 3.64 % OF THE RECEIPTS. THE PROFIT PERCEN TAGE OF THREE YEARS WAS GIVEN AS UNDER :- A.Y. TOTAL RECEIPTS PROFIT PROFIT PERCENTAGE 2004 - 05 65,57,324.00 4,43,262.20 6.75 % 2005-06 1,74,58,996.00 6,35,888.50 3.64 % 2006 - 07 2,69,19,890.00 7,75,443.00 2.88 % THE AO PASSED THE ORDER U/S 144 ON TOTAL INCOME COM PUTED AT RS. 22,75,740/-. THE PROFIT PERCENTAGE OF 13.03 % W AS DETERMINED BY THE ITO, WHICH WAS RESTRICTED TO 7 % BY THE LD. CIT(A). THE ASSESSEE SUBMITTED THAT THEY ARE STILL AGGRIEVED AND SUBMITTED THAT THE AUTHORITY FAILED TO UNDERSTA ND THE NATURE OF WORK DONE BY THE ASSESSEE AND DIFFICULTY AND CIRCUMSTANCES WHICH FORCED THEM TO MAKE ADDITIONAL EXPENDITURE IN COMPLETING THE PROJECTS. THE ASSESSE E FURTHER M/S.ANIL SINGH & COMPANY, BHOPAL VS. ITO, 1(20, BHO PAL I.T.A.NO. 448/IND/2010 A.Y. 2005-06 5 5 SUBMITTED THAT AN OPPORTUNITY MAY BE GIVEN TO REPRE SENT THEIR CASE BEFORE THE AO AND THE APPEAL MAY BE RESTORED B ACK. 5. THE LD. DR HAD NO OBJECTION IF THE APPEAL IS RESTOR ED TO THE FILE OF AO. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE HAVE GONE THROUGH THE ORDERS OF THE AUT HORITIES BELOW. WE HAVE ALSO PERUSED THE WRITTEN SUBMISSION SUBMITTED BY THE ASSESSEE. IT WOULD MEET THE ENDS OF JUSTICE IF THE MATTER IS RESTORED BACK TO THE FILE OF AO, W HO SHALL GIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND TO E XPLAIN HIS CASE PROPERLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH, 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 30 TH MARCH, 2016. M/S.ANIL SINGH & COMPANY, BHOPAL VS. ITO, 1(20, BHO PAL I.T.A.NO. 448/IND/2010 A.Y. 2005-06 6 6 CPU*