DCIT, BIKANER V. M/s. Moti Ram Arjun Ram & Co., BIKANER

ITA 50/JODH/2013

• Counselvise Citation: 5023314 RSA 2013
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: S L HARSH
• Keywords: Depreciation; Condonation of delay

Judgement Text

[1] IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N. K. SAINI, ACCOUNTANT MEMBER I.T.A. NO.50/JODH/2013 ASSESSMENT YEAR:2009-10 THE D.C.I.T., VS. M/S MOTI RAM ARJUN RAM & CO., CIRCLE-2, NEAR NARENDRA BHAWAN, GANDHI BIKANER. COLONY, LALGARH, BIKANER. PAN: AACFM9175G (APPELLANT) (RESPONDENT) C.O. NO.14/JODH/2013 (IN I.T.A. NO.50/JODH/2013) ASSESSMENT YEAR:2009-10 M/S MOTI RAM ARJUN RAM & CO., VS. THE D.C.I.T., NEAR NARENDRA BHAWAN, GANDHI CIRCLE-2, COLONY, LALGARH, BIKANER. BIKANER. PAN: AACFM9175G (OBJECTOR) (RESPONDENT) REVENUE BY : SHRI G. R. KOKANI, D.R. ASSESSEE BY : SHRI S.L. HARSH DATE OF HEARING : 02/08/2013 DATE OF PRONOUNCEMENT : 02/08/2013 ORDER PER BENCH: THE APPEAL BY THE DEPARTMENT AND THE CROSS OBJECTI ON BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 23/11 /2012 OF LEARNED CIT(A)- BIKANER. THE REGISTRY HAS POINTED OUT THAT THE APP EAL IS BARRED BY LIMITATION BY 14 DAYS. THE A.O. FURNISHED AN APPLICATION DATED 05/6/2013 FOR CONDONATION OF DELAY STATING THEREIN AS UNDER:- [2] IN THIS CASE, APPELLATE ORDER OF CIT(A), BIKANER W AS RECEIVED IN CIT OFFICE ON 11/12/2012 AS CERTIFIED BY THE CIT, BIKAN ER IN AUTHORIZATION MEMO TO FILE APPEAL VIDE ORDER NO. JC/CLOSING STOCK /02/2012- 13/5127 DATED 04/02/2013 [COPY ENCLOSED], AS PER WH ICH LIMITATION FOR FILING APPEAL WAS 04/2/2013. IN THIS CASE, APPEAL H AS BEEN FILED BY UNDERSIGNED (AS APPELLANT) ON 04/2/2013 AND THE SAM E HAS BEEN RECEIVED IN YOUR OFFICE ON 05/2/2013 AS MENTIONED I N THE ACKNOWLEDGEMENT CUM NOTICE. THUS, THE APPEAL IN THI S CASE IS FILED WITHIN TIME I.E. WITHIN 60 DAYS FROM THE DATE OF RE CEIPT OF APPELLATE ORDER BY THE CIT. 2. DURING THE COURSE OF HEARING THE LEARNED D.R. REIT ERATED THE CONTENTS OF THE AFORESAID APPLICATION AND THE LEARNED COUNSEL F OR THE ASSESSEE COULD NOT CONTROVERT THE SAME. CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE CONTENTS OF THE AFORESAID APPLICATION, THE APPEAL I S ADMITTED FOR HEARING. 3. THE ONLY GROUND RAISED IN THE DEPARTMENTAL APPEA L READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DIRECTING TO APPLY N.P. (NET PROFIT) RATE OF 8% SUBJECT TO CLAIM OF DEPRECIATION , INTEREST AND REMUNERATION TO PARTNERS AGAINST NP RATE APPLIE D BY THE ASSESSING OFFICER OF 10%, IN SPITE OF THE FACT THAT IN A.Y. 2003-04 IN ASSESSEES OWN CASE NP RATE OF 11.30% H AS BEEN CONFIRMED BY HON'BLE ITAT VIDE ORDER NO. 31/JDPR/2007 DATED 14/03/2008. 4. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE FILED ITS E-RETURN OF INCOME ON 29/9/2009 DECLARING AN INCOME OF RS. 39,1 2,140/-. THE CASE WAS SELECTED FOR SCRUTINY. THE A.O. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, POINTED OUT THAT FOLLOWING DEFECTS IN BOOKS OF ACCO UNTS:- 1. THE ASSESSEE HAS NOT MAINTAINED STOCK REGISTER A ND DAY TO DAY RECORD FOR CONSUMPTION OF MATERIALS. 2. THE ASSESSEE NEITHER HAS MAINTAINED LABOUR ATTEN DANCE REGISTER/MUSTER ROLL NOR COMPLETE VOUCHERS IN RESPE CT OF LABOUR PAYMENT. [3] 3. EXPENSES CLAIMED UNDER THE VARIOUS HEADS OF TRAD ING AND P&L ACCOUNT ARE NOT FULLY SUPPORTED BY COMPLETE VOUCHER S, THEREFORE, NOT FULLY VERIFIABLE AS CLAIMED BY THE ASSESSEE. 4. OPENING AND CLOSING BALANCE OF WORK IN PROGRESS IS NOT SUPPORTED BY DOCUMENTARY EVIDENCE. VALUATION OF WIP IS MADE ON ESTIMATED BASIS. 5. SOME OF EXPENSES ARE PARTLY VOUCHED AND SOME ARE SUPPORTED BY INTERNAL VOUCHERS WHICH ARE NOT FULLY VERIFIABLE . THE A.O. DID NOT FIND MERIT IN THE SUBMISSIONS OF T HE ASSESSEE AND REJECTED THE BOOKS OF ACCOUNT BY INVOKING THE PROVI SIONS OF SECTION 145(3) OF THE ACT. THE A.O. POINTED OUT THAT IN THIS CASE, TH E NET PROFIT RATE AFTER APPRECIATION WORKED OUT TO 5.31% ONLY, WHICH WAS LO WER THAN 8% RATE APPLICABLE IN THE CASE OF SMALL CONTRACTORS. THE A. O. CONSIDERED IT REASONABLE AND LOGICAL TO APPLY NET PROFIT RATE OF 10% SUBJECT TO DEDUCTION ON ACCOUNT OF REMUNERATION OF THE PARTNERS AND DEPRECIATION. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER OUG HT TO HAVE CONSIDERED THE HIGHER NET PROFIT RATE DECLARED BY THE ASSESSEE AS COMPARED TO THE LAST YEAR WHILE MAKING THE DECISION. IT WAS FURTHER STATED TH AT NET PROFIT RATIO OF 5.8% WAS JUSTIFIED IN THE CASES OF CONTRACTORS LIKE THAT OF THE ASSESSEE ON THE BASIS OF SEVERAL JUDICIAL DECISIONS. IT WAS POINTED OUT T HAT THE ASSESSEE HAD DISCLOSED NET PROFIT RATE OF 6.67% AS COMPARED TO 6 % IN IMMEDIATELY PRECEDING YEAR. 6. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE, OBSERVED THAT THE GROUNDS ON WHICH THE ASSESSING OF FICER REJECTED THE BOOKS OF ACCOUNT, COULD NOT BE FULLY CONTROVERTED BY THE ASSESSEE, THEREFORE, [4] REJECTION OF BOOKS OF ACCOUNT BY THE ASSESSING OFFI CER WAS HELD TO BE JUSTIFIED. HE FURTHER OBSERVED THAT AFTER REJECTING THE BOOKS OF ACCOUNTS, THE BEST GUIDE FOR ESTIMATION OF THE TRADING RESULTS IS EITHER PAS T HISTORY OF THE ASSESSEE OR ANY OTHER AVAILABLE CASE AND THAT THE PAST HISTORY OF THE ASSESSEE TAKES PREFERENCE OVER A COMPARABLE CASE. THE LEARNED CIT (A) POINTED OUT THAT THE ASSESSEE HAD SHOWN NET PROFIT RATE OF 7.21% IN THE ASSESSMENT YEAR 2007-08 AND 6% IN THE ASSESSMENT YEAR 2008-09 WHILE N.P. RA TE OF THE CURRENT YEAR WAS ONLY 6.67%. THE LEARNED CIT(A) CONSIDERED THAT THE DEFECT NOTICE IN THE BOOKS OF ACCOUNT WAS SERIOUS ENOUGH BUT THE ESTIMAT ION OF THE N.P. RATE BY ASSESSING OFFICER AT 10% WAS ON HIGHER SIDE. THE LE ARNED CIT(A) WAS OF THE VIEW THAT IT COULD NOT BE MORE APPROPRIATE AND REAS ONABLE TO APPLY N.P. RATE OF 8% SUBJECT TO INTEREST AND REMUNERATION TO PARTN ERS AND DEPRECIATION. NOW THE DEPARTMENT IS IN APPEAL. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CA SE, IT IS NOTICED THAT THE ASSESSING OFFICER WHILE APPLYING THE NET PROFIT RAT E OF 10% AFTER REJECTING THE BOOKS OF ACCOUNT HAD NOT GIVEN ANY BASIS AND EVEN H E HAD NOT CONSIDERED THE PAST HISTORY OF THE ASSESSEE IN RIGHT PERSPECTI VE. THEREFORE, THE NET PROFIT RATE OF 10% SUBJECT TO THE DEPRECIATION, INTEREST A ND REMUNERATION TO THE PARTNERS, WITHOUT ANY BASIS WAS NOT JUSTIFIED. IN T HE PRESENT CASE, THE LEARNED CIT(A) AFTER CONSIDERING THE PAST HISTORY OF THE AS SESSEES OWN CASE AND THE VARIOUS DEFECTS NOTICED IN THE BOOKS OF ACCOUNT BY THE ASSESSING OFFICER WAS FAIR AND REASONABLE TO APPLY NET PROFIT RATE OF 8% SUBJECT TO INTEREST AND [5] REMUNERATION TO THE PARTNERS AND DEPRECIATION. WE, THEREFORE, DO NOT SEE ANY MERIT IN THE APPEAL OF THE DEPARTMENT. 8. AS REGARDS TO THE CROSS OBJECTION FILED BY THE A SSESSEE, THE LEARNED COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARI NG, STATED THAT HE HAS THE INSTRUCTION NOT TO PRESS THE CROSS OBJECTION. ACCOR DINGLY, THE CROSS OBJECTION IS DISMISSED AS NOT PRESSED. 9. IN THE RESULT, APPEAL OF THE DEPARTMENT AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 02/08/2013) . SD/- SD/- ( HARI OM MARATHA ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 02/08/2013 *RANJAN COPY FORWARDED TO: 1. APPELLANT- DCIT, CIRCLE-2, BIKANER. 2. RESPONDENT- M/S MOTI RAM ARJUN RAM & CO., BIKANE R. 3. CIT(A) 4. CIT 5. D.R. 6. GUARD FILE (I.T.A NO. 50/JODH/2013 AND C.O. 14/ JODH/2013) ASSISTANT REGISTRAR