ACIT, BIKANER V. M/s. Dwarka Dass Agarwal, BIKANER

ITA 531/JODH/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5300 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 27-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L MOURYA
• Keywords: Rejection of books of accounts; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 53 1 / JODH /201 4 (ASST. YEAR : 20 11 - 12 ) AC IT, CIRCLE - 1, BIKANER . VS. M/S. DWARKA DAS S AGARWAL MUNDH A R A SEWAGON KA CHOWK, BIKANER. PAN NO. AAAFD 8719 M (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE . DEPARTMENT BY : SHRI S.L. MOURYA - DR DATE OF HEARING : 09 / 0 3 /201 6 . DATE OF PRONOUNCEMENT : 09 / 03 /201 6 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , BIKANER , DATED 2 8 /0 8 /201 4 . 2. THE GRIEVANCE OF THE REVENUE IN GROUND NO.1 OF THE APPEAL IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERR ED IN ALLOWING RELIEF OF RS. 19,87,472/ - BY APPLYING NET PROFIT RATE OF 11 % AS AGAINST 9.74% DECLARED BY THE ASSESSEE. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR AND HAS SHOWN TOTAL CONTRACT RECEIPTS FOR THE YEAR AT RS. 15,77,35,899/ - AND NET PROFIT @ 9.74 1 % , AS AGAINST THE CONTRACT RECEIPTS OF RS.6,05, 86,788/ - AND NET PROFIT @ 9.739 % IN THE IMMEDIATELY PRECEDING 2 ITA NO. 531 / JODH /201 4 ASSESSMENT YEAR. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE ON THE GROUND THAT NO STOCK - REGISTER FOR CONSUMPTION OF MATERIAL WAS MAINTAINED BY THE ASSESSEE, LABOUR REGISTER IN RESPECT OF LABOUR PAYMENTS WAS NOT MAINTAINED BY THE ASSESSEE, CLAIMS UNDER VARIOUS HEADS ARE NOT SUPPORTED BY COMPLETE VOUCHERS AND THEREFORE, NOT FULLY VERIFIABLE , JUSTIFICATION FOR CONSUMPTION OF RAW MATERIAL IN RESPECT OF EACH CONTRACT WAS NOT FURNISHED AND LOG B OOKS OR PROPER RECORDS ARE NOT MAINTAINED IN RESPECT OF VEHICLE . THE ASSESSING OFFICER AFTER REJECTING THE BOOKS OF ACCOUNTS ESTIMATED THE NET PROFIT OF THE ASSESSEE BY COMPARING THE RESULTS OF THE EARLIER ASSESSMENT YEAR S 2008 - 09 TO 2010 - 11 WHEREIN THE ASSESSEE HAD SHOWN NET PROFIT @ 9.41%, 9.89%, 9.73% . THE ASSESSING OFFICER ESTIMATED THE NET PROFIT UNDER APPEAL AT 11% . 4 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), WHO HELD THAT THE ASSESSEE HAS SHOWN NET PROFIT OF 9.74 % IN THE CURRENT YEAR AS AGAINST 9.73 % IN THE IMMEDIATELY PRECEDING YEAR . IN THE DECISION S OF THE JAIPUR BENCH OF THIS TRIBUNAL IN THE CASE S OF LAKH A NI SHOES PVT. LTD. VS. ACIT (34 TW 32) AND J.C. SHARMA VS. ITO (33 TW 82) AND ITO VS. HITESH KUMAR PACHORI (113 TTJ 357) HAS HELD THAT THE ASSESSEE HAD SHOWN BETTER NET PROFIT AS COMPARED TO LAST YEAR , T HEREFORE, NO TRADING ADDITION WAS SUSTAINABLE. THE ESTIMATION OF NET PROFIT BY THE ASSESSING OFFICER IS FOUND TO BE WITHOUT CONSIDERING THE PAST HISTORY OF THE ASSESSEE. FURTHER , THE ISSUE IS ALSO COVERED BY THE ORDER OF THE JODHPUR BENCH OF THIS TRI B UNAL IN THE CASE OF ASSESSEE ITSELF VIDE ORDER DATED 12/09/2013 FOR THE ASSESSMENT YEAR 2009 - 10 IN ITA NO. 2 2 1/JODH/2013 . THEREFORE, KEEPING IN VIEW THE RATIO OF THE ABOVE SAID DECISION AND THE RESULTS SHOWN BY THE ASSESSEE , WHICH ARE BETTER THAN THE PRECEDING YEAR , HE DELETED THE TRADING ADDITION . 3 ITA NO. 531 / JODH /201 4 5. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE OF HEARING SERVED ON THE ASSESSEE. 6 . AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE AND PERUSING THE MATERIAL AVAILABLE ON RECORD , WE FIND THAT THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SEC. 145(3) OF THE ACT AND THEREAFTER ESTIMATED THE NET PROFIT OF THE ASSESSEE @ 11%. THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2010 - 11, THE ASSESSEE HAD SHOWN NET PROFIT @ 9.73 % ON CONTRACT REC E IPTS AND IN THE PRESENT YEAR, THE NET PROFIT WAS SHOWN @ 9.74% WHICH WAS BETTER THAN THE EARLIER YEAR. THEREFORE, FOLLOWING THE DECI SION S OF THE JAIPUR BENCH OF THIS TRIBUNAL IN THE CASE OF LAKHANI SHOES PVT. LTD. (SUPRA) , J.C. SHARMA (SUPRA), AND HITESH KUMAR PANCHORI (SUPRA) AND THE DECISION OF THE JODHPUR BENCH OF THIS TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR ASSESSMENT YEAR 2009 - 10 , HE HELD THAT SINCE THE NET PROFIT RATE SHOWN BY THE ASSESSEE ON CONTRACT RECEIPTS DURING THE YEAR UNDER CONSIDERATION WAS BETTER THAN THE NET PROFIT RECEIPTS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR , NO ADDITION COULD BE MADE BY THE ASSESSING OFFICER AND THEREFORE, DELETED THE ADDITION. 7. DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY MATERIAL ON RECORD TO CONTROVERT THE ABOVE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) . T HEREFORE, WE FIND THAT NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 8. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING RELIEF OF RS. 17,03,191/ - ON ACCOUNT OF INTEREST PAID TO THIRD PARTY . 4 ITA NO. 531 / JODH /201 4 9. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER ESTIMATED THE NET PROFIT RATE OF THE ASSESSEE AFTER REJECTING THE BOOK RESULTS AT 11% IN PLACE OF 9.74% SHOWN BY THE ASSESSEE DURING THE YEAR . HE, H OWEVER, DID NOT ALLOW DEDUCTION ON ACCOUNT OF INTEREST PAYMENT OF RS. 17,03,191/ - MADE TO THIRD PARTY . 10. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND ARGUED TH A T SINCE THE COMMENCEMENT OF ITS BUSINESS, THE NET PROFIT IS WORKED OUT SUBJECT TO APPROPRIATION OF DEPRECIATION, INTEREST AND SALARY PAID TO PARTNERS AND INTEREST PAID TO THIRD PART IES ON LOANS TAKEN FOR THE PURPOSE OF BUSINESS , T HE INCOME OF THE ASSESSEE WAS BEING COMPUTED IN THIS MANNER BY THE ASSESSING OFFICER , THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE TRIBUNAL WHICH IS CLEAR FROM COMPARATIVE STUDY OF THE PAST HISTORY . IT WA S SUBMITTED THAT ASSESSING OFFICER APPLIED NET PROFIT OF 11% AS AGAINST 9.74% SHOWN BY THE ASSESSEE AND OUT OF PROFIT, SO WORKED OUT , DEDUCTION ON ACCOUNT OF INTEREST PAID TO THIRD PARTY HAS NOT BEEN ALLOWED. THE DEPARTURE FROM THE PAST HISTORY OF THE CASE IN NOT ALLOWING DEDUCTION ON ACCOUNT OF INTEREST PAID TO THIRD PARTY HAS BEEN MADE WITHOUT GIVING ANY REASON . THE ASSESSEE RELIED ON THE DECISION OF THE JODHPUR BENCH OF TH IS TRIBUNAL IN THE CASE OF ASSESSEE ITSELF IN ITA NO. 221/ JODH/ 2013 AND CO NO. 13/JODH/2013 IN THE ASSESSMENT YEAR 2009 - 10 , ORDER DATED 12/09/2013 WHEREIN IT WAS HELD THAT AFTER REJECTING THE BOOK RESULTS OF THE ASSESSEE AND ESTIMAT ED THE NET PROFIT @ 9.89% , INTEREST TO THIRD PARTIES WERE FURTHER ALLOWA B LE FROM THE INCOME , SO COMPUTED . 11. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN N O T ALLOWING THE INTEREST OF RS. 17,03,191/ - PAID BY THE ASSESSEE ON LOANS TAKEN FROM THIRD PARTIES FOR THE PURPOSE OF BUSINESS KEEPING IN VIEW THE PAST HISTORY OF THE ASSESSEE. HE HELD THAT THE 5 ITA NO. 531 / JODH /201 4 MATTER IS ALSO COVERED BY THE ORDER OF THE JODHPUR BENCH OF THIS TRIBUNAL IN THE ASSESSEE S OWN CASE VIDE ORDER DATED 12/09/2013 IN ASSESSMENT YEAR 2009 - 10 IN ITA NO. 2 21/JODH/2013 , THEREFORE, HE ALLOWED THE DEDUCTION OF INTEREST PAID TO THIRD PARTIES OF RS. 17,03,191/ - OUT OF THE NET PROFIT RATE . 12. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). HE ALSO COULD NOT GIVE ANY COGENT REASON TO NOT TO FOLLOW THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF I N THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2009 - 10 . THEREFORE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 0 9 TH DAY OF MARCH , 201 6 AT JODHPUR . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER D ATED : 0 9 TH MARCH , 201 6 . VR/ - COPY TO: 1. THE ASSESS E E. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER