M/s. Maa Kanak Durga Construction, Koraput V. ITO, Ward-1, Jeypore, Jeypore

ITA 537/CTK/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77523 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 25-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P K MISHRA SHRI S C MOHANTY
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK . . , . . , BEFORE SHRI P.K.BANSAL , AM & SHRI D.T.GARASIA , JM ./ ITA NO. 53 7 / C TK /20 1 3 ( / ASSESSMENT YEAR : 20 0 9 - 10 ) M/S MAA KANAK DURGA CONSTRUCTION BYE PASS ROAD, JEYPORE, DISTRICT KORAPUT, ODISHA VS. ITO , WARD - 1 , JEYPORE, AT/ PO, JEYPORE, KORAPUT ./ ./ PAN/GIR NO. : A A JFM 7893 C ( / APPEL LANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI P.K.MISHRA /REVENUE BY : SHRI S.C.MOHANTY / DATE OF HEARING : 30 TH APRIL , 201 4 / DATE OF PRONOUNCEMENT : 02/05 /2014 / O R D E R PER BENCH : TH IS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 4 - 7 - 2013 BY TAKING FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT, THE IMPUGNED ORDER AS PASSED BY THE LEARNED A.O AS WELL AS OF LEA RNED C.I.T(A) ARE NOT JUST AND PROPER UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS SUCH IS LIABLE TO BE QUASHED IN THE INTEREST OF JUSTICE. 2. FOR THAT, THE LEARNED C.I.T (A) SHOULD NOT HAVE CONFIRMED THE ARBITRARY ESTIMATION MADE BY THE LEARNE D A.O. IGNORING THE FACTS AND THE CIRCUMSTANCES EXPLAINED BEFORE HIM CAUSING LOW PROFIT MARGIN. 3. FOR THAT, THE LEARNED A.O AS WELL AS THE LEARNED C.I.T(A) SHOULD HAVE CONSIDERED THE CLAIM OF THE ASSESSEE AND SHOULD HAVE REDUCED THE PROFIT ESTIMATED BY THE L EARNED A.O IN A HIGHER PERCENT AS THE SAME IS NOT BASED ON ANY REASON. 4. FOR THAT, THE ESTIMATION OF NET PROFIT @ 8% OF THE GROSS RECEIPT 2 ITA NO. 53 7 /CTK /201 3 IS EXCESSIVE, ARBITRARY WITHOUT ANY WEIGHT OF EVIDENCE, HENCE NEEDS TO BE REDUCED SUITABLY IN THE INTEREST OF JUSTICE 5. FO R THAT, THE LEARNED C.I.T(A), WHILE CONFIRMING THE IMPUGNED ACTION OF THE LEARNED A.O HAS NOT ADVANCED ANY COGENT REASON NOR HAS ALSO REFERRED PREVIOUS YEAR PROFIT DECLARED BY THE LEARNED A.O, THE IMPUGNED ACTION OF THE LEARNED C.I.T(A) BEING ILLEGAL NEEDS TO BE DELETED IN THE INTEREST OF JUSTICE. 6. FOR THAT, THE LEARNED C.I.T(A) SHOULD HAVE ALLOWED THE APPEAL IN FULL INSTEAD OF ALLOWING IT IN PART AS THE FINDINGS OF THE LEARNED A.O ARE NOT SUSTAINABLE IN THE EYE OF LAW. 2 . AT THE OUTSET, LEARNED AR BEFORE U S VEHEMENTLY CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED UNDER THE FACTS AND CIRCUMSTANCES TO SUSTAIN THE ORDER OF THE AO ESTIMATING THE NET PROFIT @8%. HE FURTHER CONTENDED THAT THE ASSESSEE HAS MAINTAINED THE REGU LAR BOOKS OF ACCOUNT. THE BOOKS HAS BEEN VERIFIED BY THE AUDITOR. AUDIT REPORT WAS FILED. IN THE PREVIOUS YEAR, THE NET PROFIT WAS ACCEPTED @5%. 3. LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 4. WE HEARD THE RIVAL SUBMISSIONS AND CONSIDERED THE SAME CAREFULLY ALO NG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT IN THIS CASE THE ASSESSEE HAS FILED THE RETURN. THE AO CALLED FOR THE PRODUCTION OF THE BOOKS OF ACCOUNT, DOCUMENTS ALONG WITH THE ORIGINAL COPY OF THE AUDITED REPORT AND PROFIT AND LOSS ACCOUN T AND BALANCE SHEET . N OTICE U/S. 142(1) AS WELL AS NOTICE U/S. 143( 2 ) WERE ALSO SERVED ON THE ASSESSEE. THE AO REJECTED THE BOOKS OF ACCOUNT AS THE ASSESSEE COULD NOT PRODUCE THE SAME. THE REJECTION OF THE BOOKS OF ACCOUNT HAS BEEN CONFIRMED BY THE CIT(A) . T HE ASSESSEE EVEN THOUGH 3 ITA NO. 53 7 /CTK /201 3 HAS TAKEN AS MANY AS SIX GROUNDS OF APPEAL BUT HAS NOT CHALLENGED THE REJECTION OF THE BOOKS OF ACCOUNT BY THE AO. THE ONLY ISSUE BEFORE US RELATES TO THE ESTIMATION OF THE NET PROFIT BY THE AO . WE NOTED THAT THE AO BEFORE ESTIMATI NG THE INCOME HAS SERVED DRAFT ASSESSMENT ON THE ASSESSEE EVEN AFTER THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT. THE AO ESTIMATED THE PROFIT @8% BUT ALLOWED THE DEDUCTION TO THE ASSESSEE IN RESPECT OF THE INTEREST AND REMUNERATION AS CLAIMED BY HIM. THE AO FURTHER MADE THE FOLLOWING ADDITIONS : - 1) UNEXPLAINED LABOUR & WAGES PAYMENT SHOWN IN THE BALANCE SHEET AT RS. 3,13,622 AS PER SHOW CAUSE LETTER NO.897, DTD. 16.05.2011 RS. 3,13,172/ - 2) UNEXPLAINED SUNDRY CREDITOR AT RS. 3,60,756/ - STANDS IN THE NAME OF M/S MAGMA FINANCE AS DETERMINED VIDE L.NO. 897 DTD.16.05.2011 RS. 3,60,756/ - BOTH THESE ADDITIONS WERE DELETED BY THE CIT(A) , AGAINST WHICH THE REVENUE HAS NOT COME IN APPEAL. WE ARE OF THE VIEW THAT ONCE THE ASSESSEE CLAIMED TH AT HE HAS MAINTAINED THE BOOKS OF ACCOUNT, THE ONUS IS ON THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS, SO THAT THE BOOKS RESULTS DISCLOSED BY HIM CAN BE ACCEPTED BY THE AO. THE ASSESSEE NOT ONLY PRODUCE THE BOOKS OF ACCOUNT BUT ALSO DID NOT PRODUCE D THE BILL S AND VOUCHERS IN RESPECT OF THE EXPENSES. THEREFORE, WE CONFIRM THE ACTION OF THE AO ESTIMATING THE NET PROFIT . ESTIMATION OF NET PROFIT CANNOT ALWAYS BE ON A HIGHER SIDE. THE ESTIMATION OF TH E NET PROFIT MUST BE BASED ON T HE BASIS OF THE MATERIAL AVAILABLE ON RECORD. IN THE CASE OF THE ASSESSEE, THE ASSESSEE DERIVED NET PROFIT @5% IN THE 4 ITA NO. 53 7 /CTK /201 3 PRECEDING ASSESSMENT YEAR WHICH HAS BEEN ACCEPTED BY THE REVENUE KEEPING IN VIEW THIS PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR OPINION, IT WILL BE FAIR AND REASONABLE IF THE NET PROFIT BE ESTIMATED @6.5%. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES, SET ASIDE THE ORDER OF THE CIT(A) SO FAR AS IT RELATES TO ESTIMATION OF THE NET PROFIT @8% AND DIRECT THE AO TO ESTIMATE THE NET PROFIT IN THE CASE OF T HE ASSESSEE @6.5% OF THE GROSS RECEIPTS. 6 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 02/05 / 201 4 . 02/05 /2014 SD/ - SD/ - ( . . ) ( D.T.GARASIA ) ( . . ) ( P.K.BANSAL ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 02/05 /2014 . . /PKM , . / PS / COPY OF THE ORDER FORWARD ED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, CUTTACK 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) , BERHAMPUR 4. / CIT , BHUBANESWAR 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//