M/S. GUPTA K.N. CONSTRUCTION CO., Jaipur V. DEPUTY COMMISSIONER OF INCOME TAX, Jaipur

ITA 466/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7930 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 09-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MAHLA JCIT DHK
• Keywords: Business income
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES B, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO , JM VK;DJ VIHY LA-@ ITA NO. 466/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 M/S GUPTA K.N. CONSTRUCTION CO., A-34, GANESH NAGAR, SHYOPUR ROAD, SANGANER, JAIPUR. CUKE VS. D.C.I.T., CIRCLE-7, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AADFG 4615 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. JAIN (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI A.K. MAHLA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/04/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT :22/04/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD.CIT(A)-3, JAIPUR DATED 09/02/2018 FOR THE A.Y. 2 014-15 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1 961 (IN SHORT THE ACT). 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR, DURING THE COURSE OF SCRUTINY ASSESSMENT, THE A.O. BY POINTING OUT CERTA IN MISTAKES REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND MADE ADDITION AFTER ITA 466/JP/2018_ M/S GUPTA KN CONSTRUCTION CO. VS DCIT 2 APPLYING THE NP RATE OF 11%. BY THE IMPUGNED ORDER, THE LD CIT(A) GIVEN PARTIAL RELIEF BY APPLYING NP RATE OF 7% AS AGAINST THE NP RATE OF 6.48% DECLARED BY THE ASSESSEE. AGAINST THIS ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 3. IT WAS ARGUED BY THE LD AR THAT EVEN IN EARLIER Y EARS, HIGHEST NP RATE ACCEPTED BY THE DEPARTMENT WAS AT 5.5%. THE LD AR ALSO PLACED ON RECORD A DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATE PRECEDING YEAR I.E. FOR THE A.Y. 2013-14 WHEREIN NP RATE OF 5.5% WAS APPLIED AFTER FOLLOWING THE DECISION OF HONBLE JURI SDICTIONAL HIGH COURT IN THE ASSESSEES OWN CASE PASSED IN DBIT NO. 187/2016 DATED 21/11/2017. 4. ON THE OTHER HAND, THE LD DR INVITED OUR ATTENTI ON TO THE SHORT COMINGS POINTED OUT BY THE AO & CIT(A) IN THE BOOK S OF ACCOUNT. THE LD. CIT(A) OBSERVED AT PARA 6.3 OF HIS ORDER THAT THE A SSESSEE HAD ADMITTEDLY DID NOT PRODUCE DAY TO DAY STOCK REGISTER, CONSUMPT ION REGISTER, OPENING AND CLOSING STOCK INVENTORY. THE ASSESSEE ALSO DID NOT PRODUCE PARTY WISE PURCHASE DETAILS AND NO PAYMENT REGISTER WITH RESPEC T OF LABOUR PAYMENTS SO MADE BY THE ASSESSEE. AS PER THE LD DR AFTER CON SIDERING ALL THESE FACTS, THE LD. CIT(A) HAS ALREADY GIVEN RELIEF BY R EDUCING NP RATE FROM 11% TO 7%. ITA 466/JP/2018_ M/S GUPTA KN CONSTRUCTION CO. VS DCIT 3 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND FROM THE RECORD THAT AO HAS REJECTED THE BOOKS OF ACCOUNT AFTER POI NTING OUT THE DEFECTS, AND ESTIMATED NP RATE OF 11% OF THE CONTRACT RECEIP TS IN PLACE OF 6.48% SHOWN BY ASSESSEE. BY THE IMPUGNED ORDER, AFTER CONS IDERING ALL THE ASPECTS AND THE OBSERVATION MADE BY THE A.O. WITH RE GARD TO DEFECTS IN THE BOOKS OF ACCOUNT AND THE ASSESSEES CONTENTION, THE LD. CIT(A) REDUCED THE NP RATE @ 7% AS AGAINST THE DECLARED NP RATE @ 6.48% BY THE ASSESSEE ITSELF. WE FOUND THAT IN THE IMMEDIATE LY PRECEDING YEAR I.E. A.Y. 2013-14, THE NP RATE DECLARED BY THE ASSESSEE WAS 5.95%. THE TRIBUNAL HAS APPLIED THE NP RATE OF 5.5.% BY FOLLOWI NG THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE, HOWEVER, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE ITSELF H AD SHOWN N.P. RATE @ 6.48%, AND WHEN THE ASSESSEE ITSELF HAD SHOWN N.P RA TE OF 6.48%, THERE IS NO REASON TO APPLY LOWER N.P RATE OF 5.5% AS APP LIED BY TRIBUNAL IN EARLIER YEAR CONSIDERING N.P RATE OF 5.95% APPLIED BY ASSESSEE ITSELF. DURING THE YEAR UNDER CONSIDERATION THE LD. CIT(A) AFTER CONSIDERING THE DEFECTS IN THE BOOKS OF ACCOUNT POINTED OUT BY THE A.O., HAS REASONABLE REDUCED THE NP RATE AT 7% AS AGAINST THE NP RATE OF 11% ESTIMATED BY THE A.O AND N.P RATE OF 6.48% SHOWN BY ASSESSEE ITS ELF. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) FOR AP PLYING THE NP RATE OF 7% ITA 466/JP/2018_ M/S GUPTA KN CONSTRUCTION CO. VS DCIT 4 ON THE TOTAL CONTRACT RECEIPTS SUBJECT TO DEPRECIAT ION, INTEREST TO PARTNERS AND REMUNERATIONS PAID TO THE PARTNERS. HENCE, WE UP HOLD THE ORDER OF THE LD. CIT(A) ON THIS GROUND. 6. THE NEXT GRIEVANCE OF THE ASSESSEE RELATE TO DIS ALLOWING THIRD PARTY INTEREST FROM NET PROFIT DETERMINED BY APPLYING NET PROFIT THEORY. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THIS TRIBUNA L IN ASSESSEES OWN CASE FOR THE A.Y. 2013-14 WHEREIN THIRD-PARTY INTEREST W AS ALLOWED. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE DO NOT FIND ANY JUSTIFICATION FOR NOT ALLOWING THI RD PARTY INTEREST FROM THE NET PROFIT BY APPLYING NET PROFIT THEORY. RESPE CTFULLY FOLLOWING THE SAME, WE DIRECT THE A.O. TO ALLOW THIRD PARTY INTERES T FROM THE NET PROFIT DETERMINED BY APPLYING NET PROFIT THEORY. WE DIRECT ACCORDINGLY. 8. THE NEXT ISSUE RAISED BY THE ASSESSEE WITH REGARD TO TREATMENT OF FDR INTEREST AS INCOME FROM OTHER SOURCES IN PLACE OF BUSINESS INCOME. FOR THIS PURPOSE, THE LD AR OF THE ASSESSEE HAS REL IED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF M/S CHO UDHARY & BROTHERS VS DCIT IN DBIT NO. 356/2017. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND THAT IN THE CASE OF M/S CHOUDHARY & BROTHERS, THE ASSESSEE WAS R EQUIRED TO PROVIDE ITA 466/JP/2018_ M/S GUPTA KN CONSTRUCTION CO. VS DCIT 5 BANK GUARANTEE IN RESPECT OF CIVIL CONTRACTS ALLOTT ED TO IT BY FURNISHING BANK GUARANTEE IN THE FORM OF BANK DEPOSIT. THUS, T HERE WAS A BUSINESS COMPULSION AND BY CONSIDERING THE SAME THE HONBLE HIGH COURT HELD THAT THE INTEREST INCOME WAS ASSESSABLE UNDER THE HEAD BU SINESS INCOME RATHER THAN THE INCOME FROM OTHER SOURCES. HOWEVER, THE FACTS IN THE INSTANT CASE ARE QUITE DISTINGUISHABLE IN SO FAR AS NO WHERE THE LD AR HAS POINTED OUT THAT ANY SUCH BANK GUARANTEE GIVEN BY T HE ASSESSEE IN RESPECT OF CIVIL CONTRACT SO EXECUTED DURING THE YE AR UNDER CONSIDERATION. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORD ER OF THE LD. CIT(A) FOR TREATING THE INTEREST FROM FDR AS INCOME FROM OTHER SOURCES. 10. THE OTHER GROUNDS OF THE ASSESSEES APPEAL WERE NOT PRESSED BY THE LD AR, THEREFORE, THE SAME ARE DISMISSED IN LIM INE AS NOT PRESSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 22APRIL, 2 019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22 APRIL, 2019 ITA 466/JP/2018_ M/S GUPTA KN CONSTRUCTION CO. VS DCIT 6 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S GUPTA K.N. CONSTRUCTION CO., JAI PUR. 2. IZR;FKHZ @ THE RESPONDENT- THE D.C.I.T., CIRCLE-7, 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. 466/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR