ACIT, Patiala V. Sh. Jangir Singh Malhi, Patiala

ITA 498/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77185 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.498 /CHD/2013 ASSESSMENT YEAR : 2009-10 THE A.C.I.T., VS. SH.JANGIR SINGH MALHI, CIRCLE PATIALA. PROP.M/S PEC ENGINEERS, D-20, INDL. FOCAL POINT, PATIALA. PAN: AEEPM0117L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S.NAGAR, DR RESPONDENT BY : SHRI AMAN PARTI DATE OF HEARING : 24.06.2014 DATE OF PRONOUNCEMENT : 15.07.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX(APPEALS), PATIALA DATED 28.02.2013 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN RESTRICTING THE ADDITION OF RS.30,91,689/- MADE BY THE AO BY APPLYING NET PROFIT RATE OF 12% OF GROSS RECEIPTS AFTER REJECTIN G THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT, BY APPLYING THE NET PROFIT R ATE OF 5%. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN REDUCING THE NET PROFIT RATE TO 5% EVEN THOUGH THE ASSESSEE HAS FAILED TO FILE THE DETAILS OF STOCK/REGISTER, IN THE ABSENCE OF WHICH, TRADING RESULTS SHOWN WERE NOT VERIFIABLE AND CANNOT BE RELIED UPON . 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN 2 REDUCING THE NET PROFIT RATE TO 5% AND HOLDING THAT THE AO HAD NOT POINTED OUT ANY DISCREPANCY IN PURCHASES AND SALES -AND MOS T OF THE EXPENSES, EVEN WHILE HOLDING HIMSELF THAT THE BOOKS OF ACCOUNTS WE RE NOT RELIABLE. 4. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET AS IDE AND THAT OF THE AO RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DISPOSED OF. 3. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE ESTIAMTION OF NET PROFIT RATE ON THE GROSS RECEIPTS DECLARED BY T HE ASSESSEE. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSING OFFICER NOTED CERTAIN DISCREPANCIES IN THE ACCOUNTS OF THE ASSESSEE AND ALSO IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSE E HAD SHOWN TWO ITEMS OF INCOME I.E. CONTRACT RECEIPTS AND SALES SEPARATE LY IN THE AUDIT REPORT BUT HAD CLAIMED EXPENSES IN THE CONSOLIDATED MANNER . THE ASSESSEE HAD NOT MAINTAINED ANY STOCK REGISTER, NOR FILED ANY QU ANTITATIVE DETAILS DURING THE ASSESSMENT PROCEEDINGS. THE REPLY OF T HE ASSESSEE IS INCORPORATED UNDER PARA 2.1 AT PAGES 5 TO 8 OF THE ASSESSMENT ORDER. HOWEVER, THE ASSESSING OFFICER DID NOT FIND FAVOUR WITH THE CLARIFICATION GIVEN BY THE ASSESSEE ESPECIALLY THE PLEAS TAKEN BY THE ASSESSEE REGARDING THE CONTRACT RECEIPTS AND SALE RECEIPTS. IN VIEW THEREOF, THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED UNDE R SECTION 145(3) OF THE ACT AND NET PROFIT OF 12% WAS APPLIED TO THE GR OSS RECEIPTS TO DETERMINE THE INCOME OF THE ASSESSEE RESULTING IN A DDITION OF RS.30,91,689/-. 5. THE CIT (APPEALS) UPHELD THE REJECTION OF BOOKS OF ACCOUNT BUT CONSIDERED THE PREVIOUS YEARS RESULT AS THE BASIS FOR ESTIMATING THE INCOME IN THE HANDS OF THE ASSESSEE. DURING THE P RECEDING YEAR THE NET PROFIT DECLARED BY THE ASSESSEE WAS 4.4% AND THE CI T (APPEALS) DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT AT 5% AS AGAINST 3.5% DECLARED BY THE ASSESSEE. 3 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT (APPEALS). SHRI AMAN PARTI APPEARED FOR THE ASSESSEE AND SHRI J.S.NAGAR PUT IN APPEARANCE ON BEHALF OF THE REVENUE AND PUT FORWAR D THEIR CONTENTIONS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS NOT IN APPEAL AGAINST THE REJECTION OF BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AND IN VIEW THEREOF, WE U PHOLD THE REJECTION OF BOOKS OF ACCOUNT. ONCE THE BOOKS OF ACCOUNT HAVE BEEN REJECTED THEN THE NEXT COURSE IS TO ESTIMATE THE INCOME IN THE HA NDS OF THE ASSESSEE BY APPLYING SUITABLE NET PROFIT RATE. THE ASSESSEE D URING THE YEAR UNDER CONSIDERATION HAD DECLARED NET PROFIT RATE OF 3.5% AS AGAINST 4.4.% DECLARED IN THE PRECEDING YEAR. THE ASSESSING OFF ICER WHILE COMPLETING THE ASSESSMENT HAD APPLIED RATE OF 12% WHICH WAS RE DUCED TO 5% BY THE CIT (APPEALS). IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE NET PROFIT RATE OF 8% BE APPLIED TO DETERM INE THE INCOME IN THE HANDS OF THE ASSESSEE AS THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTOR. IN VIEW THEREOF, THE GROUNDS OF APPEA L RAISED BY THE REVENUE ARE PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JULY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15 TH JULY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 4