M/s Jagannath Chaudhury, Bhubaneswar V. ITO, Bhubaneswar

ITA 511/CTK/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2672 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 04-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 19-10-2012
• Court: TRIBUNAL
• Department Lawyers: N K NEB
• Assessee Lawyers: B K MAHAPATRA
• Keywords: Depreciation
• Section: 44AD; 143(3); 145

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRIK.K.GUPTA,ACCOUNTANT MEMBER. /AND , HONBLE SHRI GEORGE MATHAN, JUDICIAL MEMBER / I.T.A.NO. 511/CTK/2012 / ASSESSMENT YEAR 2008 - 09 M/S.JAGANNATHCHAUDHURY, PLOT NO.8, KHARAVELA NAGAR, KESHARI TALKIES COMPLEX, BHUBANESWAR 751 001. PAN: AADFJ 8103 A - - - VERSUS - INCOME - TAX OFFICER, WARD 1(1), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI B.K.MAHAPATRA, AR / FOR THE RESPONDENT: / SHRI N.K.NEB, SR.DR / DATE OF HEARING: 04.06.2013 / DATE OF PRONOUNCEMENT: 04.06.2013 / ORDER . . , , SHRIK.K.GUPTA,ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE RAISES THE FOLLOWING GROUNDS. 1. THAT THE ORDER DATED 26.07.2012 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN DISMISSING THE APPEAL BEFORE HIM IS ARBITRARY, ERRONEOUS AND BAD IN LAW. 2. THAT THE ESTIMATION OF INCOME FROM EXECUTION OF CONTRACTS @10.5% BY THE LEARNED ASSESSING OFFICER IS ARBITRARY, EXCESSIVE, ERRO NEOUS AND BAD IN THE LAW AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT NOT HAVE DISMISSED THE GROUND NO.1 BEFORE HIM. 3. THAT WHILE ESTIMATING INCOME FROM EXECUTION OF CONTRACTS, THE VAT OUGHT BE DEDUCTED BEFORE APPLYING THE RATE OF PROFIT. 4. THAT THE ESTIMATION OF INCOME FROM EXECUTION OF CONTRACTS IS EXCESSIVE AND OUGHT BE MADE AT 8%. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DISMISSING OF GROUND NOS. 3 &4 BY THE LEARNED COMMISSIONER OF INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK 2 I.T.A.NO. 511/CTK/2012 INCOME TAX (APPEALS) IS, ARBITRARY, EXCESSIVE, ERRONEOUS AND BAD IN LAW. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD TO, SUPPLEMENT, MODIFY THE GROUNDS HEREIN ABOVE BEFORE OR AT THE HEARING OF THE APPEAL. 2. THE BRIEF FACTS AS POINTED OUT BY THE LEANED COUNSEL FOR THE ASSESSEE AR E THAT THE ASSESSEE FI RM IS ENGAGED IN BUSINESS OF EXECUTION OF CONTRACT WORKS WITH GOVT . DEPARTMENTS AND GOVT. AGENCIES AND ALSO RECEIVES RENT FROM HOUSE PROPERTY. FOR THE ASSESSMENT YEAR 2008 - 09 (PREVIOUS YEAR 2007 - 08) THE INCOME TAX RETURN OF THE ASSESS EE WAS FILED WITHIN THE DUE DATE U/S.139(1) OF THE INCOME TAX ACT, 1961 ON A TOTAL INCOME OF RS.1,55,53,920 WHEREIN TDS OF R S.63,86,487 HAS BEEN CLAIMED. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(1) BHUBANESWAR ( FOR SHORT ACIT) ISSUED NOTICE U/S.143(2) OF THE ACT. THE ASSESSEE FILED VARIOUS DOCUMENTS, PARTICULARS, DETAILS, SUBMISSIONS INCLUDING COPIES OF TDS CERTIFICATES. THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER U/S. 143(3) OF THE I.T.ACT VIDE ORDER DAT ED31.12.2010 WHEREIN HE ESTIMATED THE INCOME FROM EXECUTION OF CONTRACT WORKS @10.5% AND ASS ESSED THE INCOME AT RS.2,04,63, 138 AND RAISED A DEMAND OF RS.69,10,140 INCLUDING INTEREST O F RS.9,57,059 AND RS.1,52,874 U/ S.234B AND 234C OF THE ACT RESPECTIVELY W ITHOUT GIVING CREDITFOR TDS OF RS.52,31,300 I.E.(RS.63,86,487 - RS.11,55,187) AS CLAIMED IN RETURN. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHEN HE DISMISSED THE APPEAL OF THE ASSESSEE. 3. THE LEARNED COUNSEL FOR THE A SSESSEE CONTINUED THAT AS PER THE FACT FINDING OF THE LEARNED ASSESSING OFFICER AND LEARNED CIT(A) IT WILL BE A POINT INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK 3 I.T.A.NO. 511/CTK/2012 ON DEBATE WITH RESPECT TO THE NET PROFIT RATE TO BE DETERMINED AT 10.5% OF THE GROSS RECEIPTS IN VIEW OF THE BASIC NATURE OF ACTIVITIES CA RRIED OUT BY THE ASSESSEE BEING A CIVIL CONTRACTOR. HE POINTED OUT THAT THE AVERAGE PROFIT FOR THE EARLIER YEAR AND THE LATER YEAR ON THE BASIS OF PROJECT COMPLETION METHOD ALSO WAS ACCEPTED BY THE ASSESSING OFFICER RANGING FROM 7% TO 11% WHICH WAS NOT ON THE BASIS OF POSTPONING THE TAXABLE INCOME IN A PARTICULAR YEAR WHEN THE ASSESSING OFFICER REJECTED THE BOOKS RESULT INVOKING PROVISIONS OF SECTION 145 WAS TO ESTABLISH THE PROJECT COMPLETION METHOD THEREFORE CONTRADICTED HIS OWN FINDING. HE POINTED OUT TH AT THE AVERAGE COMES TO LESS THAN 10.5% WHEN HE HAS BEEN INSTRUCTED TO AGREE FOR DETERMINATION OF NET PROFIT AT 10% AS COMPUTED BY THE ASSESSING OFFICER. THE DEPRECIATION, INTEREST AND SALARY TO PARTNERS HAVE ALREADY BEEN ALLOWED BY THE ASSESSING OFFICER AFTER DETERMINATION OF THE NET PROFIT WHICH HE SUPPORTED WAS CONSIDERED ACCEPTABLE TO THE LEARNED CIT(A) AS WELL. WITH RESPECT TO THE TAX DEDUCTED AT SOURCE NOT CONSIDERED BYTHE ASSESSING OFFICER THE LEARNED CIT(A) HAS DISPOSED OFF THE GROUND BY DIRECTING THE ASSESSING OFFICER TO GIVE CREDIT TO THE ASSESSEE ON THE VERIFICATION OF TDS CERTIFICATES FOR THE ASSESSMENT YEAR WHICH MAY BE DIRECTED TO BE CARRIED OUT AS PER THE DIRECTION OF THE LEARNED CIT(A). 4. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITI ES BELOW FOR HIS PART OF SUBMISSIONS. HE SUBMITTED THAT 0.5% AS CLAIMED TO BE REDUCED FROM THE ESTIMATION BY THE ASSESSING OFFICER MAKES A DIFFERENCE INSOFAR AS THE GROSS CONTRACT RECEIPTS ARE MORE THAN RS.25 CRORES. HE THEREFORE LEFT IT TO THE DISCRETIO N OF THE BENCH FOR CONSIDERATION IN THE LIGHT OF THE LEARNED CIT(A)S ORDER UPHOLDING THE ESTIMATION THEREAT BY THE ASSESSING OFFICER . INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK 4 I.T.A.NO. 511/CTK/2012 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AFTER CONSIDERATION O F THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO ACCEDE TO THE PRAYER OF THE LEARNED COUNSEL FOR THE ASSESSEE INSOFAR AS THE ASSESSE HAS CLAIMED THAT ON REJECTION OF BOOKS OF ACCOUNT U/S.145, THE PROVISIONS OF SECTION 44AD WERE TO BE CONSIDERE D F OR COMPUTING THE CORRECT INCOME S PROVIDED UNDER THE I.T.ACT. IT IS NOT THE CASE OF THE ASSESSEE TO NOT HAVE MAINTAINED THEBOOKS OF ACCOUNT BUT THE ESTIMATION HAS BEEN RESORTED TO BY THE ASSESSING OFFICER ON THE REJECTION OF THE BOOKS RESULT U/S.145 WITH OUT POINTING OUT ANY SPECIFIC DEFECT ON THE MAINTENANCE THEREOF . FURTHERMORE THE ADOPTION OF 10.5% NET PROFIT RATE WHEN HE AGREED TO ALLOW DEPRECIATION AND INTEREST AND SALARY TO THE PARTNERS THEREAFTER. WE SEE NO IN JUSTIFICATION IN THE LEARNED COUNSEL FOR THE ASSESSEES SEEKING THE ESTIMATION TO BE CONSIDERED AT 10% INSTEAD OF 10.5% INSOFAR AS THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ACCOUNTING STANDARD AND THE REJECTION WAS WITHOUT ANY SPECIFIC DEFECT POINTED OUT EXCEPT NO N - PRODUCTION OF THE BOOKS OF ACCOUNT. THE ASSESSEE HAD FILED THE AUDITED BALANCE SHEET AND FINANCIAL STATEMENTS WHICH WERE CERTIFIED AS WERE IN ACCORDANCE WITH THE BOOKS OF ACCOUNT AUDITED BY THE CHARTERED ACCOUNTANT UNDER THE PROVISIONS OF SECTION 44AB. T HEREFORE, WE ARE INCLINED TO UPHOLD AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE NET PROFIT AT 10% OF THE GROSS RECEIPTS AND THEREAFTER ALLOW DEPRECIATION, INTEREST AND SALARY TO THE PARTNERS FOR THE IMPUGNED ASSESSMENT YEAR. WE ALSO UPHOLD THE ORDER OF THE LEARNED CIT(A) DIRECTING THE ASSESSING OFFICER TO VERIFY THE CREDIT TO BE GIVEN TO THE ASSESSEE ON THE BASIS OF TDS INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK 5 I.T.A.NO. 511/CTK/2012 CERTIFICATES TO BE PRODUCED AND VERIFIED BY HIM IN SUPPORT OF THE INCOME WHICH HAS BEEN BROUGHT TO TAX BY THE ASSESSING OFFICER HERE AF TER. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. SD/ - SD/ - ( ) , (GEORGE MATHAN),JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 04.06.2013 (PRONOUNCED IN OPEN COURT) - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : M/S.JAGANNATHCHAUDHURY, PLOT NO.8, KHARAVELA NAGAR, KESHARI TALKIES COMPLEX, BHUBANESWAR 751 001. 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 1(1), BHUBANESWAR. 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 04.06.2013 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04.06.2013 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 05.06.2013 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 05.06.2013 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.