Kishore Kumar Sahoo, Sundergarh V. ITO, Sundergarh

ITA 5/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4407 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 04-01-2011
• Court: TRIBUNAL
• Department Lawyers: J KHANRA
• Assessee Lawyers: B PANDA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 05/CTK/2011 / ASSESSMENT YEAR 2005 - 06 SHRI KISHORE KUMAR SAHOO, PWD/152, RESERVE POLICE LANE, ROURKELA, DIST. SUNDERGARH. PAN: AWNPS 9356 A - - - VERSUS - I.T.O., WARD 1, R OURKELA, AT/P.O.ROURKELA, DIST. SUNDERGARH. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI B.PANDA, AR / FOR THE RESPONDENT: / SHRI J.KHANRA, DR / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.22.11.2010 FOR THE ASSESSMENT YEAR 2005 - 06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. I) FOR THAT THE ORDERS OF THE FORMS BELOW ARE MOST ARBITRARY, ILLEGAL, UNJUST AND EXCESSIVE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREFORE THE ORDERS PASSED ARE LIABLE TO BE DELETED ACCEPTING THE INCOME DISCLOSED IN THE RETURN FILED BY THE APPELLANT. II) FOR THAT THE LEARNED CIT (APPEALS) WAS TOTALLY WRONG TO INFLATE THE RATE OF PROFIT SINCE IN THE ASSESSMENT YEAR 2006 - 07 EVEN ON EXPARTE ASSESSMENT THE RATE OF PROFIT WAS ESTIMATED @4% AND THE SAME SHOULD NOT HAVE BEEN INFLATED TO 8% IN THE RELEVANT YEAR WITHOUT HAVING NO BASIS BUT RELYING ON THE MATTERS DECIDED BY THIS HONBLE ABSOLUTELY HAVING NO NEXUS WITH THE WORK I.T.A.NO. 05/CTK/2011 2 EXECUTED AND ADOPTED PROFIT @ 8% WITHOUT CONFRONTING THE ISSUES TO THE APPELLANT. HENCE, THE ORDER P ASSED BY THE LEARNED CIT (A) IS LIABLE TO BE QUASHED AND DELETED IN TOTO. III) FOR THAT FOR EXECUTION OF WORKS CONTRACT THE FORUMS BELOW SHOULD NOT HAVE ADOPTED PROFIT ON MECHANICAL MANNER WITHOUT CONSIDERING THE FACTS INVOLVED IN EXECUTION OF WORK AND FRO M THE SUBMISSION OF TRADING, PROFIT AND LOSS ACCOUNT SINCE HUGE ITEMS INVOLVED AGAINST THE PURCHASE OF RAW MATERIALS, CARRIAGE IN WARD, LABOUR WAGES, STRUCTURAL WORK ETC. INCLUDING OTHER ITEMS PURCHASED THE FORUMS BELOW SHOULD NOT HAVE WHIMSICALLY ESTIMATE D THE PROFIT 8% FORGETTING PROFIT RATE ADOPTED IN EXPARTE ORDER OF THE SUBSEQUENT YEAR 4%. HENCE THE ORDER PASSED IS LIABLE TO BE DELETED AND REDUCED. IV) FOR THAT THE LEARNED CIT (APPEALS) HAD LOST SIGHT OF OTHER SIMILAR CASES PRONOUNCED AND DECIDED BY THIS HONBLE FORUM ADOPTING THE PROFIT RATE AT 4.5% AND 5% IN THE CASE OF ONE NAVA DURGA CONSTRUCTION PVT. LTD. IN ITA NO.126/CTK/2006 FOR THE ASSESSMENT YEAR 2003 - 04 AND ONE MR. BK. ROUT IN ITA NO.85/CTK/2008 FOR THE ASSESSMENT YEAR 2004 - 05 DECIDED BY THI S HONBLE FORUM VIDE DATED 20.02.2009. THEREFORE, THE FORUMS BELOW HAD NO JUSTIFICATION TO INFLATE THE PROFIT TO 8% AS HAS BEEN SHOWN BY THE APPELLANT AT 1,42,083.40 PAISE COMES AT 0.84% . HENCE THE ORDERS PASSED ARE LIABLE TO BE QUASHED AND DELETED. COPY OF THE TRADING AND PROFIT AND LOSS ACCOUNT EXTRACTED FROM AUDIT ACCOUNT FILED HEREWITH AS ANNEXURE - 1. V) FOR THAT THE ID. CIT (APPEALS) HAD FAILED TO AP PLY HIS MIND ON THE FACTS OF THE CASE AND ALSO THE ID AD AND THEREFORE THERE WAS I.T.A.NO. 05/CTK/2011 3 NO SCOPE TO INFLATE THE PROFIT RATE IGNORING THE EXPENSES FOR EXECUTION OF WORK INCURRED. 3. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS REITERATED WHAT HE HAS PLEADED BEFORE THE DEPARTMENTAL AUTHORITIES APART FROM CONTENDING THAT THE ESTIMATION OF PROFIT RATE IN THE CASE OF THE ASSESSEE BY THE DEPARTMENTAL AUTHORITIES IS NOT IN ACCORDANCE WITH THE ESTABLISHED PRINCIPLES OF LAW AND IT IS MOST ARBITRARY AN D ON HIGHER SIDE . BOTH THE DEPARTMENTAL AUTHORITIES ARE NOT INCLINED TO APPROPRIATELY APPRECIATED THE CASE OF THE ASSESSEE ON FACTS MORE PARTICULARLY THEY DID NOT TAKE INTO ACCOUNT THE PREVIOUS HISTORY OF THE ASSESSEE IN DECLARING THE PROFIT RATE WHILE FIL ING THE RETURNS FOR THOSE YEARS. THEREFORE, HE SOUGHT FOR SETTING ASIDE THE ENHANCED RATE OF PROFIT ADOPTED BY THE DEPARTMENTAL AUTHORITIES BY ALLOWING THE APPEAL OF THE ASSESSEE. 4. CONTRARY TO THIS, THE LEARNED DR HAS ARGUED SUPPORTING THE ORDERS OF TH E DEPARTMENTAL AUTHORITIES CONTENDING THAT ALL THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE THE DEPARTMENTAL AUTHORITIES ARE FULLY CONSIDERED AND VERIFIED WITH REFERENCE TO THE BOOKS OF ACCOUNT AND PREVIOUS HISTORY OF THE ASSESSEE AND THEY ONLY WORKED OUT THE PROFIT RATE TO BE TAXED IN THE HANDS OF THE ASSESSEE. IN THAT WAY, THE IMPUGNED ORDERS OF THE DEPARTMENTAL AUTHORITIES ARE JUSTIFIED AND THEREFORE, NEED NO INTERFERENCE. HE SOUGHT FOR UPHOLDING THE SAME. 5. ON CAREFUL CONSIDERATION OF THE MATERIAL MAD E AVAILABLE TO THE TRIBUNAL THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE IS CARRYING ON THE CONTRACT WORKS WHICH ARE MOSTLY LABOUR ORIENTED AND EXPENSES WERE INCURRED ON PURCHASE OF RAW MATERIALS AND INCURRED CARRIAGE INWARDS, LABOUR C HARGES, STRUCTURAL WORKS ETC. ASSESSMENT WAS MADE U/S.144 I.T.A.NO. 05/CTK/2011 4 BY THE ASSESSING OFFICER BY RESORTING TO ESTIMATION OF PROFIT @8% ON THE GROSS CONTRACT RECEIPTS OF THE ASSESSEE. ON APPEAL BEFORE THE LEARNED CIT(A) THE SAID ORDER OF THE ASSESSING OFFICER WAS CON FIRMED. THEREFORE, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6. ON CAREFUL ANALYSIS OF THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE RIVAL SUBMISSIONS OF THE PARTIES AS WELL AS THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, IT IS FOUND THA T THE ASSESSEE HAS RECEIVED GROSS CONTRACT RECEIPTS OF 1,67,37,822.88. THE ASSESSEE HAS RETURNED NET PROFIT OF 1,42,083.00 WHICH COMES TO 0.84%. THE ASSESSING OFFICER HAS ESTIMATED THE NET PROFIT @8% BY PASSING BEST JUDGMENT ASSESSMENT U/S.144 BUT FOR SUBSEQUENT ASSESSMENT YEAR 2006 - 07 THE ASSESSEE HAD RECEI VED GROSS RECEIPTS OF 1,49,56,297. FOR THAT YEAR THE AO HAD ALSO PASSED BEST JUDGMENT ASSESSMENT ORDER U/S.144 BY ESTIMATING THE RATE OF PROFIT @4%. TO SHOW THIS, THE ASSESSEE HAS MADE AVAILABLE A COPY OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2006 - 07. ON COMPARISON OF THE ASSESSMENT ORDERS FOR THE YEAR UNDER CONSIDERATION AS WELL AS THAT OF THE ASSESSMENT YEAR 2006 - 07, IT IS FOUND THAT FOR BOTH THE YEARS QUALITY AND THE NATURE OF THE WORKS AREA THE SAME AND THE TRIBUNAL IS CONSISTENTLY FIXING PROFIT RATE OF 4.5% TO 5% ONLY ON GROSS CONTRACT RECEIPTS. SO, ONCE THE DEPARTMENT HAS ACCEPTED THE RATE OF PROFIT AT 4% ON THE GROSS CONTRACT RECEIPTS IN THE CASE OF THE SAME ASSESSEE FOR THE IMMEDIATELY FOLLOWING YEAR I.E., ASSESSMENT YEAR 2006 - 07 AND THE GROS S CONTRACT RECEIPTS IS LESS WHEN COMPARED TO THE PRESENT YEAR, DETERMINATION OF PROFIT RATE @8% FOR THE PRESENT YEAR IS FOUND TO BE ARBITRARY AND WHIMSICAL. AS THE 4% OF THE GROSS CONTRACT RECEIPTS DETERMINED FOR THE ASSESSMENT YEAR 2006 - 07 HAS BEEN ACCEPT ED BY THE DEPARTMENT AND HAS NOT TAKEN ANY FURTHER PROCEEDINGS EITHER BY THE ASSESSEE OR BY THE DEPARTMENT, IT IMPLIES THAT THE DEPARTMENT HAS ACCEPTED THE PROFIT RATE OF 4%. WHEN THE I.T.A.NO. 05/CTK/2011 5 ASSESSEE HAS LOWER GROSS CONTRACT RECEIPTS OF 1,49,56,297 IN THE ASSESSMENT YEAR 2006 - 07 WHEREAS IN THE PRESENT YEAR UNDER CONSIDERATION THE GROSS CONTRACT RECEIPTS IS 1,67,37,822 AND THE DEPARTMENT HAS NOT BEEN ABLE TO MAKE OUT ANY CHANGE IN THE BUSINESS OR INCREASE IN THE GROSS CONTRACT RECEIPTS, THERE IS NO BASIS FOR ENHANCEMENT OF THE PROFIT RATE TO 8% IN THE ASSESSMENT YEAR UNDER CONSIDERATION WHICH IS DOUBLE THE 4% THAT WAS ACCEPTED FOR THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR 2006 - 07. TAKING INTO CONSIDERATION THE TOTALITY OF THE CIRCUMSTAN CES AND THE NATURE OF THE WORK BEING SIMILAR IN BOTH THE AYS , IT IS FOUND THAT THE PROFIT RATE FOR THE ASSESSMENT YEAR MUST NECESSARILY BE ESTIMATED @4% ONLY AS WAS DONE IN THE SUBSEQUENT ASSESSMENT YEAR 2006 - 07. ACCORDINGLY, WE FOUND THE ISSUES RAISED BY THE ASSESSEE AS MERITORIOUS AND THEREFORE, WE ALLOW THE APPEAL BY DIRECTING THE ASSESSING OFFICER TO ADOPT THE PROFIT RATE AT 4% ON THE GROSS CONTRACT RECEIPTS OF 1,67,37,822 FOR THE PURPOSE OF TAXATION IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEA R UNDER CONSIDERATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 13 TH MAY, 2011 S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER. ( ) DATE: 13 TH MAY, 2011 ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 05/CTK/2011 6 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : SHRI KISHORE KUMAR SAHOO, PWD/152, RESERVE POLICE LANE, ROURKELA, DIST. SUNDERGARH. 2 / THE RESPONDENT: I.T.O., WARD 1, ROURKELA, AT/P.O.ROURKELA, DIST. SUNDERGARH. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECR ETARY