THE ACIT., CIRCLE - 1(1), VIJAYAWADA., Vijayawada V. M/s Sri Padmavathi Transports, Jaggaiahpet

ITA 458/VIZ/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2017 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 14-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSWAMY
• Keywords: Rejection of books of accounts
• Section: 263; 144

Judgement Text

ITA NO.458/VIZAG/2012 SRI PADMAVATHI TRANSPORTS, JAGGAIAHPET 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.458/VIZAG/2012 ( / ASSESSMENT YEAR: 2006-07) ACIT , CIRCLE - 1(1) , VIJAYAWADA VS. SRI PADMAVATHI TRANSPORTS JAGGAIAHPET [PAN: A ALFS 2811G ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G. GURUSWAMY, DR / RESPONDENT BY : SHRI C. SUBRAHMANYAM, A R / DATE OF HEARING : 23.02.2016 / DATE OF PRONOUNCEMENT : 18.03.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), VIJAYAWADA DATED 31.8.2012 AND IT PERTAINS TO THE ASSESSMENT YEAR 2006-07. ITA NO.458/VIZAG/2012 SRI PADMAVATHI TRANSPORTS, JAGGAIAHPET 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM, WHICH IS ENGAGED IN THE BUSINESS OF CIVIL AND TRANSPORT CONTRACTS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 31.10.2006 DECLARING TOTAL INCOME ` 26,73,140/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S 144 O F THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') ON 30.1 2.2008 AND DETERMINED TOTAL INCOME OF ` 74,88,600/-. SUBSEQUENTLY, THE CASE WAS SUBJECT TO REVISION U/S 263 OF THE ACT AND ACCORDINGLY, THE CI T, VIJAYAWADA PASSED ORDER U/S 263 OF THE ACT ON 21.3.2011 AND SET ASIDE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT IN THE LINES OF THE DISCUSSI ONS IN HIS ORDER. ACCORDINGLY, THE ASSESSING OFFICER ISSUED NOTICE U/ S 143(2) OF THE ACT ON 28.3.2011 CALLING FOR INFORMATION. IN RESPONSE TO THE CALL NOTICES, THE ASSESSEE NEITHER APPEARED NOR SUBMITTED ANY INFORMA TION. SINCE, NO INFORMATION CAME FORWARD FROM THE ASSESSEE, THE ASS ESSING OFFICER COMPLETED THE ASSESSMENT EX-PARTE U/S 144 OF THE AC T AND DETERMINED TOTAL INCOME OF ` 1,23,56,780/-. WHILE DOING SO, THE ASSESSING OFFICE R ESTIMATED THE NET PROFIT FROM CIVIL AND TRANSPORT C ONTRACT @ 12.5% BY RELYING UPON THE JUDGEMENT OF HONBLE ITAT, HYDERAB AD IN THE CASE OF M/S. KNR CONSTRUCTIONS AND ALSO THE ITAT, DECISION IN THE CASE OF M/S. KRISHNA MOHAN CONSTRUCTIONS. ITA NO.458/VIZAG/2012 SRI PADMAVATHI TRANSPORTS, JAGGAIAHPET 3 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT CORRECT IN REJECTION OF B OOKS OF ACCOUNTS U/S 145(3)OF THE ACT AND ESTIMATION OF NET PROFIT BY AP PLYING THE JUDGEMENT OF ITAT, IN THE CASE OF M/S. KNR CONSTRUCTIONS. TH E ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING OFFICER, AT THE TIME O F COMPLETION OF ASSESSMENT U/S 144 OF THE ACT, HAS REJECTED THE BOO KS OF ACCOUNTS AND ESTIMATED 8% NET PROFIT FROM THE BUSINESS OF CIVIL CONSTRUCTION AND 8.5% NET PROFIT TOWARDS GROSS RECEIPTS FROM TRANSPORT CO NTRACT. THE ASSESSEE FURTHER SUBMITTED THAT ONCE BOOKS OF ACCOUNTS WERE REJECTED AND PROFIT WAS ESTIMATED BY APPLYING NET PROFIT RATE OF 8%, TH E SAME ASSESSING OFFICER BASED ON SUBSEQUENT JUDGEMENT OF ITAT, WHIC H WAS RENDERED AFTER THE ASSESSMENT ORDER WAS PASSED U/S 144 OF TH E ACT IS NOT CORRECT. THE JUDGEMENT OF M/S. KNR CONSTRUCTIONS RELIED UPON BY THE ASSESSING OFFICER WAS PRONOUNCED ON 30.11.2011, WHEREAS IN IT S CASE THE ORIGINAL ASSESSMENT U/S 144 OF THE ACT WAS COMPLETED ON 30.8 .2008. THEREFORE, THE ASSESSING OFFICER WAS NOT CORRECT IN APPLYING H IGHER RATE OF NET PROFIT BASED ON A SUBSEQUENT JUDGEMENT OF A HIGHER AUTHORI TY. THE ASSESSEE FURTHER SUBMITTED THAT THE CIT, IN THE REVISION ORD ER PASSED U/S 263 OF THE ACT, HAS NEVER DIRECTED ASSESSING OFFICER TO AP PLY A PARTICULAR RATE OF ITA NO.458/VIZAG/2012 SRI PADMAVATHI TRANSPORTS, JAGGAIAHPET 4 NET PROFIT. THE ASSESSING OFFICER, ON HIS OWN WITHO UT ANY BASIS, APPLIED 12.5% NET PROFIT WHICH IS NOT CORRECT. 4. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS MAD E BY THE ASSESSEE DELETED THE ADDITIONS. THE CIT(A), WHILE D OING SO, HELD THAT ONCE ASSESSING OFFICER HAS REJECTED THE BOOKS OF AC COUNTS AND ESTIMATED THE NET PROFIT AT THE TIME OF ORIGINAL ASSESSMENT U /S 144 OF THE ACT, THERE IS NO JUSTIFICATION FOR MAKING FURTHER ESTIMA TION OF INCOME ON THE SAME SET OF BOOKS WHICH WERE ALREADY REJECTED BY TH E ASSESSING OFFICER. THE CIT(A) FURTHER HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN APPLYING THE RATIOS OF THE ITAT, DECISION IN THE CA SE OF M/S. KNR CONSTRUCTIONS LTD., WHICH WAS RENDERED ON 30.11.200 9, WHEREAS THE ORIGINAL ASSESSMENT IN ASSESSEES CASE WAS COMPLETE D ON 30.12.2008. WITH THESE OBSERVATIONS, THE CIT(A) SET ASIDE THE AS SESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 144 R.W.S. 263 OF THE ACT AND RESTORED THE ASSESSMENT ORDER PASSED U/S 144 OF THE ACT DATED 30.12.2008. AGGRIEVED BY THE CIT(A) ORDER THE REVEN UE IS IN APPEAL BEFORE US. 5. THE LD. D.R. SUBMITTED THAT THE CIT(A) ERRED IN HOLDING THAT THERE WAS NO DIRECTION TO ESTIMATE THE INCOME IN THE ORDE R U/S 263 OF THE ACT PASSED BY THE CIT, WHEREAS IN THE ORDER U/S 263 OF THE ACT, THERE WAS A ITA NO.458/VIZAG/2012 SRI PADMAVATHI TRANSPORTS, JAGGAIAHPET 5 CLEAR DIRECTION TO THE ASSESSING OFFICER TO ADOPT S UCH RATE OF GROSS PROFIT AS IS APPROPRIATE IN VIEW OF THE INCOME ADMITTED BY OTHER ASSESSEES IN SIMILAR LINE OF BUSINESS. THE LD. D.R. FURTHER SUB MITTED THAT THE CIT(A) OUGHT TO HAVE CONSIDERED THE RELIANCE PLACED ON THE DECISION OF M/S. KRISHNA MOHAN CONSTRUCTIONS WHICH WAS RENDERED MUCH EARLIER TO THE DATE OF ORIGINAL ASSESSMENT ORDER U/S 144 OF THE AC T. THE LD. D.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT NOT TO HAVE DELETED THE ADDITION, AS THE ASSESSEE HAS NOT FURNISHED ANY BOO KS OF ACCOUNTS AND OTHER BILLS & VOUCHERS AT THE TIME OF ASSESSMENT PR OCEEDINGS. THE ASSESSING OFFICER, IN THE ABSENCE OF BOOKS OF ACCOU NTS HAS ESTIMATED THE NET PROFIT BASED ON A JUDGEMENT OF HIGHER AUTHORITY WHICH SHOULD BE ACCEPTED. ON THE OTHER HAND, THE LD. A.R. STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE FACTUAL MATRIX OF THE CASE IS THAT IN THIS CASE THE ASSESSMENT WAS ORIGINALLY COMPLETED U/S 144 OF THE ACT. THE ASSESS ING OFFICER, AT THE TIME OF ORIGINAL ASSESSMENT, REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AND ESTIMATED NET PROFIT. THE ASSESSING OFFICER HAS TAKEN TWO DIFFERENT RATES OF NET PROFITS FOR TWO BUSINESSES, WHEREAS HE HAD ITA NO.458/VIZAG/2012 SRI PADMAVATHI TRANSPORTS, JAGGAIAHPET 6 ADOPTED 8% NET PROFIT FROM THE BUSINESS OF CIVIL CO NSTRUCTION AND 8.5% NET PROFIT FROM THE BUSINESS OF TRANSPORT CONTRACT. SUBSEQUENTLY, THE CASE WAS SUBJECT TO REVISION BY THE CIT. CONSEQUENT TO THE REVISION PROCEEDINGS, THE ASSESSING OFFICER, HAS PASSED FRES H ASSESSMENT ORDER U/S 144 R.W.S. 263 OF THE ACT AND ESTIMATED NET PRO FIT OF 12.5% BY APPLYING THE RATIO OF THE JUDGEMENT OF ITAT, HYDERA BAD IN THE CASE OF M/S. KNR CONSTRUCTIONS. IT WAS THE CONTENTION OF T HE ASSESSEE THAT THE JUDGEMENT RENDERED BY THE ITAT, IN THE CASE OF M/S. KNR CONSTRUCTIONS WAS RENDERED ON 30.11.2009, WHEREAS THE ORIGINAL AS SESSMENT IN ITS CASE WAS COMPLETED ON 30.12.2008, THEREFORE, THE SU BSEQUENT JUDGEMENT OF HIGHER AUTHORITY CANNOT BE BASIS FOR E STIMATION OF HIGHER NET PROFIT. WE FIND FORCE IN THE ARGUMENTS OF THE A SSESSEE FOR THE REASON THAT ONCE THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS AND ADOPTED A PARTICULAR RATE OF NET PROFIT, THE SA ME ASSESSING OFFICER CANNOT ADOPT HIGHER RATE OF NET PROFIT BASED ON A S UBSEQUENT JUDGEMENT OF A HIGHER AUTHORITY. IN THE PRESENT CASE ON HAND, THE ASSESSING OFFICER HAS ADOPTED 8% AND 8.5% NET PROFIT AT THE TIME OF C OMPLETION OF FIRST ASSESSMENT U/S 144 OF THE ACT. SUBSEQUENTLY, ON SA ME SET OF FACTS AND SAME SET OF BOOKS OF ACCOUNTS, THE ASSESSING OFFICE R HAS ADOPTED 12.5% NET PROFIT WITHOUT ANY BASIS. IN OUR CONSIDERED OPI NION, SUBSEQUENT JUDGEMENT OF A HIGHER AUTHORITY CANNOT BE BASIS FOR ESTIMATION OF HIGHER ITA NO.458/VIZAG/2012 SRI PADMAVATHI TRANSPORTS, JAGGAIAHPET 7 RATE OF NET PROFIT. THEREFORE, WE ARE OF THE OPINI ON THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITIONS. WE DO NOT SEE ANY RE ASON TO INTERFERE WITH THE DECISION OF THE CIT(A). HENCE, WE INCLINED TO U PHOLD THE ORDER PASSED BY THE CIT(A) AND DISMISS THE APPEAL FILED B Y THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 TH MAR16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 18.03.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ACIT, CIRCLE-1(1), VIJAYAWAD A 2. / THE RESPONDENT M/S. SRI PADMAVATHI TRANSPORTS, D.NO.13-52, PRABHAT MANSION, JAGGAIAHPET-521 175. 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM