DCIT, BARMER V. M/s. Tan Singh Chouhan, BARMER

ITA 519/JODH/2008

• Counselvise Citation: 51923314 RSA 2008
• Duration Of Justice: 3 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 26-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U C JAIN
• Assessee Lawyers: DR BANWARI LAL
• Keywords: Depreciation
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH : JODHPUR BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.519/JU/2008 ASSESSMENT YEAR : 2006-07 DY. COMMISSIONER OF INCOME- TAX, CIRCLE BARMER (RAJ). VS. M/S TAN SINGH CHOUHAN, GANDHI NAGAR, BARMER (RAJ). PAN : AADFT6642E (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. BANWARI LAL, DR REVENUE BY : SHRI U.C. JAIN, ADVOCATE ORDER PER RAJPAL YADAV, JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER OF LEARNED CIT (A) DATED 24 TH JUNE, 2008 PASSED FOR ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS TAKEN TWO GROUNDS OF APPEAL IN THE ORIGINAL MEMORANDUM OF APPEAL ATTACHED TO FORM NO.36. IT H AS FILED REVISED GROUNDS OF APPEAL VIDE LETTER DATED 7 TH FEBRUARY, 2011. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED CIT (A) HAS ERRED IN DELETING THE TRADING ADDITION OF ` 76,57,377/- WHICH WAS ADDE D BY THE ASSESSING OFFICER AFTER REJECTING THE BOOK RESULT OF THE ASSESSEE U/S 145 (3) OF THE INCOME-TAX ACT. 3. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HA VE GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE IS A PARTNER SHIP FIRM ENGAGED IN THE BUSINESS OF EXECUTION OF CIVIL CONTRACT WORK WITH ITA NO.519/JU/2008 2 GOVERNMENT DEPARTMENTS. IT HAS FILED ITS RETURN OF IN COME ON 31.10.2006 DECLARING INCOME OF ` 30,31,840/-. THE ASSESSING OFFICER HAS REJECTED THE BOOK RESULT OF THE ASSESSEE ON THE GROUN D THAT TRUE INCOME CANNOT BE DEDUCED FROM THE ACCOUNTS SUBMITTED BY THE ASSESSEE. HE PROCEEDED TO ESTIMATE THE INCOME OF THE ASSESSE E. THE LEARNED FIRST APPELLATE AUTHORITY HAS UPHELD THE REJE CTION OF THE BOOK RESULT. THE ASSESSEE IS NOT CHALLENGING THE REJECTION OF BOOK RESULT. THEREFORE, THE SOLE ISSUE REQUIRED TO BE ADJUDICATED U PON BY US IS WHETHER THE GP RATE ADOPTED BY THE ASSESSING OFFICER IS TO BE APPLIED OR THE INCOME WORKED OUT BY THE LEARNED CIT (A) ON AN ESTIMATE BASIS AFTER LOOKING INTO THE PAST HISTORY IS TO BE UPHELD. 4. BEFORE ADVERTING TO THE APPROPRIATE RATE TO BE A PPLIED ON THE GROSS CONTRACT RECEIPT DECLARED BY THE ASSESSEE, IT IS WOR THWHILE TO TAKE NOTE OF THE DETAILS CONSIDERED BY THE LEARNED CI T (A) IN A TABULAR FORM ON PAGE 8 OF THE IMPUGNED ORDER WHICH READ AS U NDER:- THE PROFIT RATES AS DISCLOSED BY THE APPELLANT IN THE A. Y. 06-07, 05-06 AND 04-05 ARE AS BELOW: ITEM ITEM ITEM ITEM A.Y. 2004 A.Y. 2004 A.Y. 2004 A.Y. 2004- -- -05 0505 05 A.Y. 2005 A.Y. 2005 A.Y. 2005 A.Y. 2005- -- -06 0606 06 A.Y. 2006 A.Y. 2006 A.Y. 2006 A.Y. 2006- -- -07 0707 07 GROSS CONTRACT RECEIPTS AS DECLARED RS.14,72,43,477 /- RS.16,97,65,376/- RS.23,07,91,249/- ABSOLUTE NET PROFIT DECLARED RS. 16,48,167/- R S. 23,59,044/- RS. 30,31,835/- REMUNERATION TO PARTNERS RS. 4,50,000/- RS. 3,00,000/- RS. 3,00,000/- INTEREST TO PARTNERS RS. 6,19,347/- RS. 24, 77,979/- RS. 25,34,874/- INTEREST TO THIRD PARTIES RS. 4,81,202/- RS. 11,68,893/- RS. 49,75,383/- DEPRECIATION RS. 47,39,395/- RS. 51,54,104/- RS. 48,13,123/- NET PROFIT BEFORE THE CLAIM OF REMUNERATION AND INTEREST TO PARTNERS, DEPRECIATION AND INTEREST TO THIRD PARTIES. RS. 79,38,111/- (5.39%) RS.1,14,60,020/- (6.75%) RS. 1,56,55,215/- (6.78%) IT IS OBSERVED THAT THE HONBLE ITAT, JODHPUR BENCH IN THE APPELLANTS OWN CASE FOR THE A.Y. 05-06 VIDE ORDER DA TED 25.3.2008 IN ITA NO.874/JDPR/2007 HELD THAT NO ADDITIO N COULD BE MADE FOR THE REASON THAT THE NP RATE WAS BETTER AS COMP ARED TO PRECEDING A.Y. 04-05. WHILE HOLDING SO THE HONBL E BENCH RELIED ON THE DECISION OF THE SPECIAL BENCH AT DELHI I N THE CASE OF DCIT VS. ALLIED CONSTRUCTION REPORTED IN 105 ITD 1. IN THE LIGHT OF THE ABOVE FACTS, I AM OF THE VIEW THAT SIN CE THE DECLARED RESULTS IN THE A.Y. 06-07 ARE BETTER AS COMPAR ED TO THE ITA NO.519/JU/2008 3 PRECEDING A.Y. 04-05 AND 05-06, NO TRADING ADDITION C AN BE VALIDLY AND JUSTIFIABLY MADE. IN THE LIGHT OF THE ENTIRE DISCUSSION AS ABOVE, I HOLD THAT THE LD. JCIT WAS NOT JUSTIFIED IN APPLYING NP RATE OF 9.5%. T HE DECLARED TRADING RESULTS REQUIRES TO BE ACCEPTED SUBJECT TO OTHER DISALLOWANCES MADE. 5. THE LD. ASSESSING OFFICER HAS WORKED OUT THE ADDITION AFTER APPLYING A NP RATE OF 9.5% WHEREAS LEARNED CIT (A) H AS OBSERVED THAT THE ASSESSEE HAS DECLARED 6.78% NP IN THIS YEAR WHICH IS B ETTER THAN THE PRECEDING TWO ASSESSMENT YEARS. THE RESULT OF ASSESSMENT YEAR 2005-06 AT AN NP OF 6.75% HAS BEEN UPHELD BY THE ITA T, JODHPUR IN ITA NO.874/JU/2007. WE CONFRONTED THE LEARNED DR TO SHO W US THE MATERIAL WHICH PERSUADED THE ASSESSING OFFICER TO ADOPT A NET PROFIT RATE OF 9.5% FOR WORKING OUT THE INCOME OF THE ASSESSEE . HE WAS UNABLE TO POINT OUT ANY SUCH CIRCUMSTANCE. ADMITTEDL Y, THE BOOKS OF ACCOUNT ARE REJECTED AND THE INCOME OF THE ASSESSEE HAS TO BE ESTIMATED BY TAKING INTO CONSIDERATION THE SURROUNDING CIRCUMSTANCES. IT HAS BEEN PROPOUNDED TIME AND AGAIN BY THE HONBLE HIGH COURTS AS WELL AS THE HONBLE SUPREME COURT THAT EVEN FOR EXE RCISING BEST JUDGEMENT THE APPROACH OF THE ASSESSING OFFICER SHOULD B E RATIONAL AND REASONABLE. THERE SHOULD BE LIVE LINK BETWEEN TH E FACTS AND CIRCUMSTANCES COLLECTED BY HIM ON THE BASIS OF HIS KNOWL EDGE OF AREA, THE RESULT SHOWN BY OTHER SIMILARLY SITUATED ASSESSEES AND T HE PAST HISTORY OF THE ASSESSEE ITSELF. IN THE PRESENT CASE, WE FI ND THAT LEARNED CIT (A) HAS UPHELD THE RESULT SHOWN BY THE ASSESSEE ON THE BASIS OF ITS OWN PAST HISTORY. THE NET PROFIT RATE DISCLOSED IN THE PRESENT YEAR IS FAR BETTER THAN THE PRECEDING TWO YEARS. NO ADVERSE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER FOR DEVIATIN G FROM THE EARLIER YEARS RESULT WHICH HAS BEEN UPHELD UPTO THE IT AT. CONSIDERING THE DETAILED ORDER OF LEARNED CIT (A) AND THE DETAI LS EXTRACTED (SUPRA), WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF THE LEARNED CIT (A). ITA NO.519/JU/2008 4 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.08.20 11. SD/- SD/- [K.D. RANJAN] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 29.08.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSTT. REGISTRAR, ITAT, JODHPUR BENCH