Vijay Kumar Contractor, Karnal V. ITO, Karnal

ITA 500/DEL/2012

• Counselvise Citation: 50020114 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 08-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 01-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L ANEJA ITP
• Section: 44AD

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 500/DEL/2012 ASSTT. YR: 2008-09 VIJAY KUMAR CONTRACTOR, VS. INCOME-TAX OFFICER, 157, PREM NAGAR, KARNAL. WARD-3, KARNAL. PAN: AKFPK 3373 B ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI K.L. ANEJA ITP RESPONDENT BY : SHRI SUNIL GAUTAM DR O R D E R PER R.P. TOLANI, J.M : THIS IS ASSESSEES APPEAL AGAINST CIT(A)S ORDER D ATED 14-10- 2011 RELATING TO A.Y. 2008-09. SOLE EFFECTIVE GROU ND RAISED IS AS UNDER: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A DDITION OF RS. 420000/- BY DISALLOWING PURCHASES MATERIAL AND ADDITION OF RS. 1393000/- AND RS. 63000/- BY DISALLOWING LABOUR CHARGES HAVE WRONGLY AND ARBITRARILY BEEN MADE, WHICH ARE W ITHOUT ANY BASIS AND THE LEARNED CIT(A) ERRED IN COMPUTING AT FLAT RATE OF 12% OF GROSS PAYMENTS. 2. BRIEF FACTS ARE: THE ASSESSEE IS A CIVIL CONTRA CTOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT PROD UCE BOOKS OF ACCOUNTS. THE ASSESSMENT WAS FRAMED U/S 144. ASSESSING OFFICE R ON AD HOC BASIS DISALLOWED THE FOLLOWING EXPENDITURE OF THE ASSESS EE: (I) 10% OUT OF MATERIAL PURCHASED; AND (II) 30% OUT OF LABOUR EXPENSES. 2 2.1. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, DE TAILED SUBMISSIONS WERE MADE TO ADOPT A REASONABLE VIEW, CONTENDING THAT EV EN AS PER SECTION 44AD, THE PRESUMPTIVE RATE OF NET PROFIT ON CIVIL CONSTRU CTIONS HAS BEEN FIXED AT 8%. THEREFORE, A LENIENT VIEW WAS REQUESTED TO BE T AKEN. 2.2. CIT(A), HOWEVER, RELIED ON THE ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF PRABHAT KUMAR CONTRACTOR WHICH IS MENTI ONED IN CIT(A)S ORDER, FOR THE PROPOSITION THAT THE CIVIL CONTRACTORS CAN BE ASSESSED AT PROFIT @ 12% OF GROSS RECEIPT. AGGRIEVED, ASSESSEE IS BEFORE US. 3. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT BY TH E CASE OF PRABHAT KUMAR CONTRACTOR, A LEGAL GENERAL PROPOSITION OF LA W HAS NOT BEEN LAID DOWN THAT IN EVERY CASE OF ESTIMATION OF CIVIL CONTRACTO R, NET PROFIT RATE OF 12% IS TO BE APPLIED. IN ANOTHER CASE OF SHRI SUKHVINDER S INGH VS. ACIT (ITA NO. 1233/CHD/2011 DATED 24-9-2012), IT HAS BEEN HELD T HAT NET PROFIT RATE OF 6% SHOULD BE APPLIED. SIMILARLY, IN THE CASE OF GURMAI L SINGH CONTRACTOR VS. ITO (ITA NO. 1247/CHD/2010 DATED 26-3-2012) NET PRO FIT RATE OF 8% WAS DIRECTED TO BE ADOPTED. FURTHER RELIANCE IS PLACED ON HARJIT SINGH GOVT. CONTRACTOR VS. ACIT (ITA NO. 1011/CHD/2010 DATED 15 -3-2013) ADOPTING THE NET PROFIT RATE OF 7%; AND M/S DIAMOND CONSTRUC TION CO. VS. ACIT (ITA NO. 1010/CHD/2011 DATED 15-3-2013) ADOPTING THE NET PROFIT RATE OF 9%. IN ALL THESE CASES THE SAID JUDGMENT OF PRABHAT KUMAR CONTRACTOR HAS BEEN CONSIDERED. LD. COUNSEL CONTENDS THAT APPLICATION O F 8% NET PROFIT PRESUMPTIVE RATE HAS BEEN HELD TO BE REASONABLE BY THE INCOME-TAX ACT ITSELF. THE ASSESSEE HAD FILED AUDITED BALANCE-SHEE T BUT COULD NOT PRODUCE BOOKS OF ACCOUNTS, HOWEVER, THE FACTOR OF A REGULAR AUDIT HAS NOT BEEN CONSIDERED BY CIT(A) WHILE ESTIMATING 12% NET PROFI T. THEREFORE, A LENIENT VIEW WAS URGED TO BE TAKEN. 4. LD. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES . 3 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. THE CIT(A) ONLY RELIED ON THE CASE OF PRABHAT KUMAR CONTRACTOR TO UPHOLD THE ASSESSMENT @ 12%. IN OUR CONSIDERED VIEW, THE ITAT IN THAT CASE HAS NOT LAID DOWN A GENERAL PROPO SITION OF LAW TO FOLLOW 12% NET PROFIT IN CASE OF EVERY KIND OF CIVIL CONTR ACTOR. BY SECTION 44AD PRESUMPTIVE RATE OF NET PROFIT HAS BEEN PROVIDED BY THE INCOME-TAX ACT @ 8%. LOOKING AT THE ENTIRETY OF FACTS AND CIRCUMSTAN CES OF THE CASE ENDS OF JUSTICE WILL MEET IF THE NET PROFIT RATE IN THIS CA SE IS ADOPTED AT 8% ON THE TERMS OF SECTION 44AD. THE ASSESSING OFFICER SHALL COMPUTE THE INCOME OF THE ASSESSEE BY ADOPTING THE NET PROFIT RATE OF 8%. 6. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON 08-08-2013. SD/- SD/- ( B.C. MEENA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08 TH AUGUST 2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR