The Income Tax Officer, Kashmir V. M/s. Shalimar Engg. works, Kashmir

ITA 504/ASR/2013

• Counselvise Citation: 50420914 RSA 2013
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 01-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M A MIR
• Keywords: Unexplained cash credit; Depreciation; Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 504(ASR)/2013 ASSESSMENT YEAR: 2008-09 PAN: AFJFS3008Q INCOME TAX OFFICER, VS. M/S SHALIMAR ENGINEERING ANANTNAG, KASHMIR(J&K) WORKS, NAI BASTI, ANANTNAG , KASHMIR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. MAHAVIR SINGH, SR.DR RESPONDENT BY: SH. M.A. MIR, CA DATE OF HEARING: 23.04.2014 DATE OF PRONOUNCEMENT: 28.04.2014 ORDER PER BENCH 1. THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 21.05.2013 PASSED BY LEARNED CIT(A), JA MMU, FOR THE ASSESSMENT YEAR 2008-09 ON THE FOLLOWING GROUNDS: I. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LEARNED CIT(A) WAS RIGHT IN TREATING UNEXPLAINED CREDITS FOUND IN THE BANK ACCOUNT OF THE ASSESSEE AS CONTRACTUAL RECEIPTS WHEN NO SUCH DOCUMENTS/EVIDENCES WERE FILED BY THE ASSESSEE DURI NG THE ASSESSMENT PROCEEDINGS REGARDING SOURCES OF RECEIPT S OF DEPOSIT IN THE BANK ACCOUNT AND EX-PARTE ASSESSMENT U/S 144 WA S MADE. II. THE APPELLANT CRAVES TO AMEND OR ADD ANY ONE OR MOR E GROUNDS OF APPEAL. 2 I.T.A. NO. 504(ASR)/2013 ASSESSMENT YEAR: 2008-09 2. FACTS NARRATED BY THE REVENUE AUTHORITY ARE NOT DISPUTED BY BOTH THE PARTIES; THEREFORE THERE IS NO NEED TO REPEAT T HE SAME. 3. LEARNED DR STATED THAT THE ASSESSEE HAS NOT FILE D ANY EVIDENCE BEFORE THE ASSESSING OFFICER FOR SUBSTANTIATING ITS CLAIM BUT THE LEARNED FIRST APPELLATE HAS WRONGLY DELETED THE ADDITION IN DISPUTE BY ACCEPTING THE EVIDENCE FILED BY THE ASSESSEE BEFORE HIM WITHO UT CONFRONTING THE SAME TO THE ASSESSING OFFICER. THEREFORE, THE IMPUG NED ORDER MAY BE CANCELLED BY ACCEPTING THE APPEAL FILED BY THE REVE NUE. 4. ON THE CONTRARY, LEARNED COUNSEL FOR THE ASSESSE E RELIED UPON THE ORDER PASSED BY THE LEARNED FIRST APPELLATE AUT HORITY AND STATED THAT THE ASSESSEE IS A CIVIL CONTRACTOR ENGAGED IN CONTRACT BUSINESS. ASSESSMENT FOR THE ASSESSMENT YEAR IN DISPUTE WAS COMPLETED UN DER SECTION 144 BY APPLYING A NET PROFIT RATE OF 10% ON THE GROSS RECE IPTS AND NO DEDUCTION WAS ALLOWED ON ACCOUNT OF INTEREST ON CAPITAL, SALA RIES PAID TO THE PARTNERS AND DEPRECIATION. LEARNED FIRST APPELLATE AUTHORITY CONFIRMED 10% OF THE RATE. AFTER CONSIDERING THE DETAILS FURNISHED WITH REGARD TO THE PAYMENTS OF RS. 23,91,017/- FOUND THAT SAID PAYMENTS WERE TH E PAYMENTS RECEIVED DURING NORMAL COURSE OF CONTRACT. HE FURTHER STATED THAT THE LEARNED FIRST APPELLATE AUTHORITY RIGHTLY TREATED THE DEPOSITS AS CONTRACT RECEIPTS AFTER CONSIDERING THE SAID STATEMENT WHICH IS QUITE EXPLA NATORY OF THE FACT THAT 3 I.T.A. NO. 504(ASR)/2013 ASSESSMENT YEAR: 2008-09 THE PAYMENTS ARE RECEIVED FROM DIFFERENT GOVERNMENT DEPARTMENTS. FURTHER NO SEPARATE ADDITION CAN BE MADE ONCE BOOKS OF ACCOUNTS ARE REJECTED AND A NET PROFIT RATE IS APPLIED. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE IMPUGNED ORDER PA SSED BY THE LEARNED FIRST APPELLANT AUTHORITY. FOR THE SAKE OF CONVENIE NCE, THE RELEVANT FINDINGS OF LEARNED FIRST APPELLATE AUTHORITY ON TH E ISSUES IN DISPUTE I.E. IN PARA NOS. 3 & 4( PAGE NOS. 2 TO 4), ARE REPRODUCED AS UNDER: 3. SUBMISSION OF THE APPELLANT THE APPELLANT, A CONTRACTOR FIRM, FILED ITS RETURN OF INCOME ELECTRONICALLY DECLARING NET INCOME OF RS. 50,240/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED EX-PARTE U/S 144 OF TH E INCOME TAX ACT, 1961 AT AN INCOME OF RS. 33,56,283/-AFTER REJECTING THE BOOKS OF ACCOUNTS U/S 145(3). AGGRIEVED WITH THE ADDITIONS MADE BY T HE LEARNED A.O. TO THE RETURNED INCOME OF THE APPELLANT, THE APPELLANT PRE FERRED THIS APPEAL BEFORE YOUR HONOUR. SUBMISSIONS MADE ON VARIOUS GRO UNDS OF APPEAL ARE AS UNDER:- 1. GROUND NO. 1 COMPLETION OF ASSESSMENT U/S 144 & REJECTION OF BOOKS THE LEARNED A.O. COMPLETED THE ASSESSMENT PROCEEDI NG EX-PARTE U/S 144 OF THE INCOME TAX ACT, 1961 AS, ALLEGED BY HER IN T HE ASSESSMENT ORDER THAT SEVERAL OPPORTUNITIES WERE AFFORDED TO THE APP ELLANT TO COMPLETE THE ASSESSMENT PROCEEDINGS BUT HE FAILED TO AVAIL THES E OPPORTUNITIES. IT IS PERTINENT TO MENTION HERE THAT THE WHOLE YEAR OF 20 10 WITNESSED A HUGE TURMOIL IN THE ENTIRE VALLEY WHEN ALMOST 120 PEOPLE WERE KILLED AND THE ENTIRE VALLEY WAS STAND STILL DUE TO HARTALS/BHANDS /CIVIL & OFFICIAL CURFEW. THERE WAS HARDLY ANY ACTIVITY BEING CARRIED OUT AND EVEN GOVT. OFFICES WERE BADLY AFFECTED DUE TO THE TURMOIL. THE DISTRI CT ANANTNAG WAS IN NO 4 I.T.A. NO. 504(ASR)/2013 ASSESSMENT YEAR: 2008-09 WAY LAGGING BEHIND IN THIS UNREST AND ALL THE MOVEM ENTS GOT RESTRICTED. EVEN THE ANNUAL AMARNATH YATRA WAS CONDUCTED UNDER SECURITY. IN SPITE OF THESE FACTS THE APPELLANT ATTENDED THE PROCEEDIN G TWO TIMES PERSONALLY & FILED THE REQUIRED DOCUMENTS AS IN EVIDENT FROM T HE ASSESSMENT ORDER ITSELF. SO THE PLEA TAKEN BY THE LEARNED A.O. IS MA KING AN EX-PARTE ORDER AND REJECTING BOOKS OF ACCOUNTS IS NOT JUSTIFIED AN D NEEDS TO BE QUASHED. 2. GROUND NO. 2 APPLICATION OF 10% PROFIT RATE THE LEARNED A.O. APPLIED A NET PROFIT RATE OF 10% O N TOTAL TURNOVER OF RS. 96,52,667/- AND DETERMINED NET INCOME OF APPELLANT AT RS. 9,65,266/-. DEPRECIATION, INTT. PAID TO PARTNERS ON THEIR CAPIT AL AND SALARY PAID TO PARTNERS AND DEBITED TO P&L A/C WERE ALSO NOT ALLOW ED. THE ACTION OF LEARNED A.O. IN APPLYING 10% NET PROFIT RATE AND DI SALLOWING THE AFORESAID DEDUCTION IS UNJUSTIFIED AS THERE WAS NO REASON FOR HER TO REJECT THE BOOKS OF ACCOUNT KEEPING IN VIEW LAW & ORDER SI TUATION IN THE VALLEY. THE ADDITION MADE IS BAD IN LAW & NEED TO BE DELETE D. 3. GROUND NO. 3. ADDITION ON ACCOUNT OF UNEXPLAINE D CREDITS THE LEARNED A.O. HAS MADE AN ADDITION OF RS. 23,91, 017/- ON ACCOUNT OF ALLEGED DIFFERENCE BETWEEN THE TOTAL RECEIPTS AND B ANK CREDITS. THE APPELLANT SUBMITS THAT THESE CREDITS ARE IN THE MON TH OF APRIL 2007 ARE ACTUALLY PERTAINING TO THE PREVIOUS YEAR BUT CREDIT ED IN THE BANK ACCOUNT IN THE MONTH OF APRIL, 2007. ALL THESE PAYMENTS ARE REFLECTED IN THE RETURN OF INCOME FILED BY THE APPELLANT IN THE PREVIOUS YE AR AND CREDIT OF TDS MADE ON THESE PAYMENT HAVE ALSO BEEN TAKEN IN THAT YEAR. THE DETAIL OF PAYMENTS PERTAINING TO THE PREVIOUS YEAR AMOUNTING TO RS. 22,66,906/- RECEIVED IN THE CURRENT YEAR IS ENCLOSED HEREWITH. THE PAYMENTS ARE DULY REFLECTED IN THE LAST YEARS RETURN OF INCOME. HENCE THE ADDITION OF RS. 23,91,017/- MADE BY LEARN ED A.O. IS BAD IN LAW AND NEEDS TO BE DELETED. IN THE LIGHT OF ABOVE SUBMISSION IT IS PRAYED THAT THE APPEAL OF THE APPELLANT BE ALLOWED IN THE INTEREST OF JUSTICE. 4. DETERMINATION I HAVE CONSIDERED THE ARGUMENT OF THE APPELLANT AND FINDINGS OF THE A.O. IN THE ASSESSMENT ORDER. PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT 5 I.T.A. NO. 504(ASR)/2013 ASSESSMENT YEAR: 2008-09 DESPITE SEVERAL NOTICES TO COMPLIANCE WAS MADE (REF . PAGE-2) OF THE ASSESSMENT ORDER. THE A.O. HAS THEN ISSUED SHOWCAUS E NOTICE AND PROPOSED DRAFT ASSESSMENT U/S 144 WHICH WAS ALSO NO T COMPLIED WITH. THUS, THE A.O. HAS MADE A BEST JUDGMENT ASSESSMENT AFTER REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE I.T. ACT. THE A. O. HAS QUOTED CERTAIN CASE LAWS AND CAME TO THE FINDINGS THAT 10% OF THE GROSS RECEIPT SHOULD BE ASSESSED AS INCOME. THE A.O. HAS MADE A FURTHER ADDITION OF RS. 23,91,017/- ON ACCOUNT OF UNEXPLAINED CREDIT AS PER PARA-8 OF THE ASSESSMENT ORDER. THESE CREDITS WERE FOUND IN THE F ORM OF DEPOSITS IN THE BANK ACCOUNT CD 4944 OF THE APPELLANT WITH J&K BA NK ANANTNAG. THE APPELLANT BEFORE ME HAS SUBMITTED THAT THE DIST URB CONDITION IN THE VALLEY AND IMPOSITION OF CURFEW WERE THE REASONS FO R NOT RESPONDING TO THE A.O.S NOTICES. THE APPELLANT HAS CONTESTED THE ASSESSMENT U/S 144/. THE APPELLANT HAS ALSO OBJECTED TO THE APPLICATION OF 10% PROFIT RATE, WHICH IS EXCESSIVE? ADDITIONALLY THE APPELLANT HAS OBJECTED TO THE ADDI TION OF RS. 23,91,017/- ON ACCOUNT OF DIFFERENCE BETWEEN TOTAL RECEIPT IN T HE BOOKS AND BANK STATEMENTS. THE APPELLANT SUBMITTED THAT THESE CRED ITS RECEIVED IN THE MONTH OF APRIL IN THE BANK ACCOUNT ARE ACTUALLY PER TAINING TO PREVIOUS YEAR BUT PHYSICALLY RECEIVED AND CREDITED IN SUBSEQ UENT YEAR IN THE BANK ACCOUNT. ALL THESE PAYMENTS ARE DULY REFLECTED IN THE RETURN OF INCOME FILED BY THE APPELLANT FOR THE PREVIOUS YEAR AND CR EDIT OF TDS OF THESE PAYMENTS HAVE ALSO BEEN TAKEN IN THAT YEAR. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIND TH AT THE A.O. HAS GIVEN PROPER OPPORTUNITY TO THE APPELLANT. THE DISTURB CO NDITION WERE NOT PRESENT THROUGHOUT THE PERIOD FROM APRIL, 2010 TO O CTOBER, 2010. THUS, THE ARGUMENT OF THE APPELLANT IS WITHOUT ANY SPECI FIC INSTANCES OF DISTURBED CONDITIONS IN ANANTNAG. THE A.O. HAS QUOT ED COMPARABLE CASES AND DONE HIS BEST TO GIVE OPPORTUNITY WHICH THE APP ELLANT COULD NOT AVAIL. IN VIEW OF THIS I FIND THE BEST JUDGMENT ASSESSMENT IS VALID AND ADOPTION OF 10% PROFIT OF GROSS RECEIPT IS JUSTIFIED. SO FAR ADDITION OF RS. 23,91,017/- IS CONCERNED. I FIND THAT THESE PAYMENT S WERE RECEIVED IN THE YEAR UNDER CONSIDERATION IN THE BANK ACCOUNT OF THE APPELLANT AND THE APPELLANT COULD NOT ESTABLISH WITH THE EVIDENCE BEF ORE ME THAT THESE RELATE TO PREVIOUS YEAR. THE SOURCES OF RECEIPT OF APPELLA NT ARE CONTRACTUAL RECEIPTS, MAINLY FOR GOVT. DEPARTMENTS AND SUCH CRE DITS IN BANK A/C CANNOT 6 I.T.A. NO. 504(ASR)/2013 ASSESSMENT YEAR: 2008-09 BE HELD AS UNEXPLAINED. THE CREDITED AMOUNT IN THE BANK ACCOUNT FOR RS. 23,91,017/- IN EXCESS OF DECLARED RECEIPTS SHOULD B E TREATED AS ADDITIONAL TURNOVER AND A PROFIT RATE OF 10% IS TO BE APPLIED ON ADDITIONAL SUM OF RS. 23,91,017/- TO ARRIVE AT PROFIT. THEREFORE, OUT OF TOTAL ADDITION OF RS. 23,91,017/- AN ADDITION OF RS. 2,39,101/-(10% OF RS . 23,91,017/-) IS SUSTAINED AND THE REST IS DELETED. 6. AFTER GOING THROUGH THE ABOVE FINDINGS GIVEN BY LEARNED FIRST APPELLATE AUTHORITY, WE ARE OF THE VI EW THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS ACCEPTED SOME RECEIPTS WHICH THE ASSESSEE HAS FILED BEFORE US ALONG WITH H IS WRITTEN ARGUMENT. THE STATEMENT SHOWING THE RECEIPTS FROM P REVIOUS YEARS DEBTORS DURING THE YEAR 2007-08 IS REPRODUC ED BELOW: STATEMENT SHOWING RECEIPTS FROM PREVIOUS YEARS DEB TORS DURING THE YEAR 2007-08. SL. NO. DATE OF RECEIPT AMOUNT PRAYER 1. 22.04.2007 1,79,600.00 EXECUTIVE ENGINEER PHE MECH. SOUTH VIDE CV NO. 337OF 03/2007 2. 27.04.2007 9,12,460.00 EXECUTIVE ENGINEER MECH. RURAL SRINAGAR VIDE CV. NO. 254 OF 03/2007 RS. 7,25,360.00 VIDE CV NO. 255 OF 03/2007 RS. 1,87,100.00 3. 28.04.2007 1,97,458.00 EXECUTIVE ENGINEER MID SOUTH, AWANTIPORA 4. 07.05.2007 2,30,638.00 EXECUTIVE ENGINEER PHE MECH. NORTH SAPORE 5. 14.05.2007 3,04,000.00 EXECUTIVE ENGINEER PHE 7 I.T.A. NO. 504(ASR)/2013 ASSESSMENT YEAR: 2008-09 MECH. NORTH SOPORE VIDE CV NO. 532 OF 03/2007 6. 22.08.2007 4,42,750.00 EXECUTIVE ENGINEER PHE MECH. NORTH SOPORE VIDE CV NO. 59 OF 02/2007 TOTAL 22,66,906.00 7. LEARNED FIRST APPELLATE AUTHORITY HAS ACCEPTED T HE RECEIPTS AS STATED BY BOTH THE PARTIES WITHOUT CONF RONTING THE SAME TO THE ASSESSING OFFICER, WHICH IS CONTRARY TO THE PROVISIONS OF RULE 46 OF THE INCOME TAX RULES, 1962 . IN OUR VIEW, THE IMPUGNED ORDER IS NOT SUSTAINABLE IN THE EYE OF LAW BECAUSE THE LEARNED FIRST APPELLATE AUTHORITY HAS A CCEPTED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WITHOUT G IVING OPPORTUNITY TO THE ASSESSING OFFICER AND CANCELLED THE ADDITION IN DISPUTE BY PARTLY ALLOWING THE APPEAL F ILED BY THE ASSESSEE. THEREFORE, THE ISSUE IN DISPUTE IS SET AS IDE TO LEARNED CIT(A), JAMMU, TO CONFRONT TO THE ASSESSING OFFICER WITH ALL ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AND THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE SAME AND GIVE RE PORT IN RESPONSE TO THE SAME AND THEREAFTER, LEARNED FIRST APPELLATE AUTHORITY IS DIRECTED TO DECIDE THE ISSUE IN DISPUT E AFRESH 8 I.T.A. NO. 504(ASR)/2013 ASSESSMENT YEAR: 2008-09 UNDER THE LAW. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES, AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL, 2014 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH APRIL, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S SHALIMAR ENGINEERING WORKS, NAI BASTI, ANANTNAG, KASHMIR 2. ITO, ANANTNAG, KASHMIR(J&K) 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.