Appeal details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 5310 (ITAT-JODHPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 4 month(s) 8 day(s)
Appellant
Respondent
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
31-10-2014
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. 549 / JODH /201 4 (ASST. YEAR : 20 11 - 12 ) AC IT, CIRCLE - 1, UDAIPUR . VS. M/S. RAVI INFRA BUILD PROJECTS PVT. LTD., 95, SECTOR - 11, HIRAN MAGRI, UDAIPUR. PAN NO. AAECR 2780 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI A R DEPARTMENT BY : SHRI S.K. MADHU - 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 COMMISSIONER OF INCOME TAX (APPEALS) , UDAIPUR , DATED 01 /0 8 /201 4 . 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE TRADING ADDITION OF RS. 30,91,196/ - MADE BY APPLYING THE NET PROFIT RATE OF 4.9% AFTER INVOKING THE PROVISIONS OF SEC. 145(4). 3 . BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS , ON VERIFICATION OF COMPUTER PRINTOUTS OF BOOKS OF ACCOUNTS , BANK STATEMENTS, SITE EXPENSES STATEMENTS BILLS ETC. , T HE ASSESSING OFFICER OBSER VED THAT FULL VOUCHERS OF VARIOUS EXPENSES DEBITED IN THE 2 ITA NO. 549 / JODH /201 4 PROFIT & LOSS ACCOUNT ARE NOT AVAILABLE. THE CHARTERED ACCOUNTANT IN HIS AUDIT REPORT UNDER SEC. 44AB IN SCHEDULE N TO THE BALANCE SHEET AT ITEM NO.5 HAS OBSERVED THAT SOME EXPENSES CLAIMED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT ARE SELF MADE VOUCHERS/STATEMENTS OF EXPENSES PREPARED AT SITE AS EXPLAINED BY THE M ANAGEMENT THAT DUE TO NATURE OF THE BUSINESS , NO SUPPORTING OF THESE EXPENSES WERE AVA ILABLE FOR VERIFICATION. NO SITE - WISE STOCK REGISTER AND QUANTITY TALLY WAS AVAILABLE . THE ASSESSEE WAS NOT EVEN ABLE TO BIFURCATE VARIOUS MAJOR EXPENSES, SITE - WISE CONSUMPTION OF BITUMEN/EMULSION, CEMENT, DIESEL/ LDO/OIL AND OTHER MATERIAL ETC. W ERE ALSO NOT AVAILABLE SITE - WISE . THEREFORE, THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC. 145(3) OF THE ACT REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND APPLIED NET PROFIT RATE OF 4.9 0 % ON TOTAL CONTRACT RECEIPTS OF RS. 74,90,77,617/ - AS AGAI NST THE NET PROFIT RATE DECLARED BY THE ASSESSEE AT 4. 4 9% AND MADE ADDITION OF RS. 30,91,196/ - TO THE INCOME OF THE ASSESSEE. 4 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BY OBSERVING AS UNDER: - I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FINDINGS OF THE _D. AO, VARIOUS CASE LAWS OF THE HIGHER APPELLATE AUTHORITIES AND THE HONBLE COURTS AND REMAND REPORT. IT IS WORTH HERE TO MENTION THAT I HAD ALLOWED THE ABOVE GROUNDS OF APPEAL IN THE APPELLANT S OWN CASE FOR AY 2010 - 11 VIDE ORDER DATED 10.06.2014 IN A.NO.109/IT/UDR/2013 - 14 WITH THE FOLLOWING FINDINGS : - THE LD. AR OF THE APPELLANT APART FROM OTHER JUDICIAL PRONOUNCEMENTS HAS RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL ITAT, JODHPUR IN CASE OF A CONTRACTOR NAMELY SHRI AMOL AGARWAL, B - 65, BAPU NAGAR, CHITTORGARH , ABGPA6736J ASSESSMENT YEAR 2009 - 10, WHERE FOR THE IDENTICAL DEFECTS POINTED OUT AND DIS CUSSED BY THE LD. AO , THE APPLICATION OF PROVISIONS OF SECTION 145 (3) OF THE ACT AND ACCORDINGLY APPLICATION OF NET PROFIT RATE AT 3.06% WAS UPHELD BY THE UNDER SIGNED VIDE APPELLATE ORDER IN A.NO. 268/IT/UDR/2011 - 12 DATED 28 TH MARCH, 2013. THE 3 ITA NO. 549 / JODH /201 4 HONOURABL E JURISDICTIONAL TRIBUNAL, HAS DECIDED THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION FILED BY THE APPELLANT VIDE THEIR ORDER IN ITA NO.391/JODH/2013 AND C.O. NO.25/JODH/2013 DATED 25.09.2013. WHILE DECIDING THE APPEAL, THE HONOURABLE JURISDICTIONAL TRI BUNAL HAS HELD THAT THE PROVISIONS OF SECTION 145(3) OF THE ACT ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT BY OBSERVING AS UNDER: - WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORD, WE FIND THAT THE REASON GIVEN BY THE ID. CIT(A) FOR UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT IS NOT JUSTIFIED AS THE ASSESSMENT ORDER ITSELF MENTIONS THAT THE ASSESSEE PRODUCED ALL THE BOOKS OF ACCOUNT ALONG WITH SUPPORTING VOUCHERS. WE ALSO FIND THAT THE ID. AO HAD NOT POINTED OU T ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS OR VOUCHERS MAINTAINED BY THE ASSESSEE ON DAY TO DAY BASIS IN REGULAR COURSE OF BUSINESS. THE REMARKS GIVEN BY THE A.O. ARE NEITHER SUFFICIENT FOR REJECTING THE DULY AUDITED BOOKS OF ACCOUNT NOR THE AO HAS SH OWN THAT HOW THESE REMARKS WOULD HAVE A BEARING IN GIVING A FINDING THAT TRUE INCOME CANNOT BE COMPUTED ON THE BASIS OF BOOKS OF ACCOUNTS MAINTAINED BY ASSESSEE ON DAY TO DAY BASIS IN REGULAR COURSE OF BUSINESS. HOWEVER, THE AO HAS ALSO NOT CONSIDERED THES E DEFECTS AT TIME OF TAKING THE BASIS OF ESTIMATION OF INCOME OF THE ASSESSEE. THE AUDITOR OF THE ASSESSEE HAS SPECIFICALLY STATED IN HIS STATUTORY AUDIT REPORT IN FORM 3CB U/S 44AB OF THE ACT THAT THE PROFIT AND LOSS ACCOUNT GIVES A TRUE AND FAIR VIEW OF THE PROFITS OF THE ASSESSEE FOR THE YEAR. ON THE OTHER HAND, THE LD. AO HAS NOT POINTED OUT ANY INSTANCE OF ANY MISSTATEMENT OF ANY EXPENDITURE DEBITED IN THE P & L ACCOUNT. HE HAS NOT POINTED OUT THAT HOW THE NON - MAINTENANCE OF PROJECT WISE ACCOUNTS WOULD RESULT IN DISCLOSING LOWER PROFITS THAN ACTUALLY EARNED. HE HAS ALSO NOT POINTED OUT THAT WHY THE ASSESSEE NEEDS TO SHOW CLOSING STOCK OR WORK IN PROGRESS WHEN THE ASSESSEE CONSUMES WHATEVER MATERIAL IS PURCHASED WITHIN A VERY SHORT SPAN OF TIME AND SUBMI TS THE BILLS ON PROGRESSIVE BASIS ON SHORT INTERVALS. HE HAS NOT UTTERED ANY WORD AS TO HOW OR HOW MUCH SUCH FINDINGS COULD AFFECT THE ASSESSEES RESULTS. WE FURTHER FIND THAT THE A. O HAS APPLIED THE NET PROFIT RATE OF 5.85% ON THE BASIS OF A.Y. 2007 - 08 EV EN WHEN THE SAME IS WITHOUT GIVING ANY REASON TO REJECT THE ASSESSEES VIEW POINT OF REDUCTION IN NET PROFIT BECAUSE OF INCREASE IN COST OF BITUMEN. THE RATE HAS BEEN APPLIED DEVOID OF ANY BEARING THEREON OF THE REASONS GIVEN FOR REJECTION OF BOOKS OF ACCO UNT. WE ALSO FIND THAT THE ORDER PASSED BY THE CIT UDAIPUR U/S 2 63 OF THE ACT FOR THE A.Y. 2008 - 09 DOES NOT 4 ITA NO. 549 / JODH /201 4 GIVE ANY CONCLUSIVE FINDING REGARDING ANY SPECIFIC DISALLOWANCE. HE HAS ONLY GIVEN A DIRECTION TO VERIFY CERTAIN EXPENDITURE, WHICH ARE CLAIMED AT AN AMOUNT HIGHER THAN THE PRECEDING YEARS. SUCH DIRECTIONS IN ABSENCE OF ANY 1 CONCLUSIVE FINDING WOULD NOT HAVE A BEARING ON THE CASE FOR A.Y.2009 - 10. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT REJECTION OF BOOKS OF A CCOUNT U/S 145(3) OF THE ACT IS NOT JUSTIFIED. WE ACCORDINGLY, DELETE THE ENTIRE ADDITION AND ALLOW THE ASSESSEES GROUND NO. 1 IN CROSS OBJECTION AND DISMISS THE APPEAL OF THE REVENUE. AS REGARDS THE REJECTION OF BOOKS OF ACCOUNT INVOKING THE PROVISIONS OF SECTION 145(3)OF THE ACT, IT MAY BE MENTIONED HERE THAT THE SYSTEM OF ACCOUNTING FOLLOWED BY THE APPELLANT IS THE SAME AS THAT OF EARLIER YEARS. THE MAINTENANCE OF BOOKS OF ACCOUNT HAS BEEN ACCEPTED BY THE LD. A.O. WHICH IS CLEAR FROM THE ASSESSMENT ORD ER THAT SUCH BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE LD. A.O. WHO EXAMINED THE SAME . AS MENTIONED ABOVE, THE METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT DURING THE YEAR UNDER APPEAL AND THE DEFECTS POINTED OUT BY THE LD. A.O. WHILE INVOKING THE PROVIS IONS OF SECTION 145(3) OF THE ACT FOR THE YEAR UNDER APPEAL IN THE CASE OF THE APPELLANT ARE IDENTICAL AS POINTED OUT BY THE LD. AO IN CASE OF ANOTHER CONTRACTOR NAMELY SHRI AMOL AGARWAL, B - 65, BAPU NAGAR, CHITTORGARH , ABGPA6736J FOR ASSESSMENT YEAR 2009 - 10. I RESPECTFULLY FOLLOWING THE DECISION OF THE HONOURABLE JURISDICTIONAL TRIBUNAL MENTIONED ABOVE HELD THAT IN THE ASSTT. YEAR UNDER APPEAL, THE PROVISIONS OF SECTION 145(3) ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT PARTICULARLY IN VIEW OF THE FACT THAT THE A.O. HAS NOT MADE OUT A CASE THAT FROM AUDITED BOOKS OF ACCOUNT OF THE APPELLANT, THE CORRECT INCOME EARNED BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION CANNOT BE ADDUCED. IN VIEW OF THE ABOVE DISCUSSIONS I INCLINE TO AGREE WITH THE CONTE NTION / SUBMISSIONS OF THE LD. AR THAT THE LD. AO IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC 145(3) OF THE ACT AND IN REJECTING BOO K RESULTS DECLARED BY THE ASSESSEE. TH EREFORE, THE ENTIRE TRADING ADDITION MADE ON ACCOUNT OF APPLICATION OF NET PROF IT @ OF 4.9% I.E. RS.1,02,04,739/ - ON ACCOUNT OF HIGHER ESTIMATION OF NET PROFIT IS DESERVES TO BE DELETED AND I ORDER ACCORDINGLY. HENCE, THE ABOVE GROUNDS OF APPEAL ARE ALLOWED. THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE ARE SAME AND IDENTICAL TO THAT OF AY 2010 - 11, THEREFORE, I HAVE NO REASON TO DEVIATE FROM THE ABOVE MENTIONED DECISIONS AND FINDINGS IN THE APPELLANTS OWN CASE FOR AY 2010 - 11. IN VIEW OF THE ABOVE DISCUSS IONS I INCLINE TO AGREE WITH THE CONTENTION / SUBMISSIONS OF THE LD. AR THAT THE LD. AO IS NOT JUSTIFIED IN 5 ITA NO. 549 / JODH /201 4 INVOKING THE PROVISIONS OF SEC 145(3) OF THE ACT AND IN REJECTING BOOK RESULTS DECLARED BY THE ASSESSEE. THEREFORE, RESPECTFULLY FOLLOWING THE JUDIC IAL PRONOUNCEMENTS RELIED ON BY THE LD. AR, THE TRADING ADDITION MADE ON ACCOUNT OF APPLICATION OF NET PROFIT @ OF 4.9% I.E. RS. 30,91,196/ - ON ACCOUNT OF HIGHER ESTIMATION OF NET PROFIT DESERVES TO BE DELETED AND I ORDER ACCORDINGLY. HENCE, THE ABOVE GROU NDS OF APPEAL ARE ALLOWED. 5. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 6 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE , THE ASSESSING OFFICER AFTER POINTING OUT CERTAIN DEFECTS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE , BY INVOKING THE PROVISIONS OF SEC. 145(3 ) OF THE ACT, REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE PROFIT FROM CONTRACT RECEIPTS AT THE RATE 4.90% IN PLACE OF 4.49% SHOWN BY THE ASSESSEE, THEREBY MAKING AN ADDITION OF RS. 30,91,196/ - TO THE INCOME OF THE ASSESSEE. ON APPEAL, COMMISSIONER OF INCOME T AX (APPEALS) FOLLOWING THE VARIOUS JUDICIAL PRONOUNCEMENTS , THE REMAND REPORT AND HIS ORDER IN ASSESSEES OWN CASE IN THE ASSESSMENT YEAR 2010 - 11 , DATED 10/06/2014 HELD THAT THE PROVISIONS OF SEC. 145(3 ) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE IN VIEW OF THE FACT THAT THE ASSESSING OFFICER HAS NOT MADE OUT A CASE THAT FROM AUDITED BOOKS OF ACCOUNT OF THE ASSESSEE, THE CORRECT INCOME EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION CANNOT BE ADDUCED. HE ACCORDINGLY HELD THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE UNDER SEC. 145(3) OF THE ACT. THEREAFTER, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION OF RS. 30,91,196/ - ON ACCOUNT OF HIGHER ESTIMATION OF NET PROFIT. THE R EVENUE IN THE GROUNDS OF APPEAL HAS NOT CHALLENGED THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE REJECTION OF BOOKS OF ACCOUNTS BY THE ASSESSING OFFICER UNDER SEC. 145(3) O F THE ACT WAS NOT 6 ITA NO. 549 / JODH /201 4 JUSTIFIED. THEREFORE, IN OUR CONSIDERED VIEW, WHEN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COULD N O T BE REJECTED, THERE CAN BE NO ESTIMATION OF INCOME OF THE ASSESSEE. HENCE, THE DELETION OF ADDITION OF RS. 30,91,196/ - MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF HIGHER ESTIMAT ION OF NET PROFIT BY THE COMMISSIONER OF INCOME TAX (APPEALS) WAS JUSTIFIED . THEREFORE, WE DISMISS THE GROUND OF APPEAL OF THE REVENUE. 7. 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 SR. PRIVATE SECRETARY I.T.A.T., JODHPUR .
