Sudhir Kumar Singh, Ballia V. ITO, Ballia

ITA 552/ALLD/2014

• Counselvise Citation: 55220714 RSA 2014
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI S. V. MEHROTRA , ACCOUNTANT MEMBER I.T.A .NO. 5 52 / ALLD /201 4 (ASSESSMENT YEAR - 2010 - 1 1 ) M/S SUDHIR KUMAR SINGH VS. IT O MADHAW NIWAS, BHRIGU ASHRAM, 2 - (4) BALLIA, U.P. - 27700 1 BALLIA. PAN: A BUFS1440B (APPELLANT) (RESPONDENT) ASSESSEE BY: - NONE REVENUE BY: - SHRI A.K. PANDEY , DR DATE OF HEARING: 26/1 0 /2015 ORDER PRONOUNCED ON: 03 /1 1 /2015 ORDER T HIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 2 7 . 0 8 .201 4 PASSED BY THE LD. CIT (A) , VARANASI , IN RELATION TO THE ASSESSMENT YEAR 20 10 - 1 1 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , A PARTNERSHIP FIRM , IN THE RELEVANT ASSESSMENT YEAR , WAS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION WORK . I T HA D FILED ITS RETURN OF INCOME DECLARING NET INCOME OF RS.3,61,010/ - . 3. THE AO NOTICED THAT THE ASSESSEE HAD SHOWN GROSS RECEIPTS FROM CONTRACT RS.3,44,67018/ - AND AFTER DEDUCTION EXPENSES NET PROFIT OF RS.3,61,000/ - HAD BEEN SHOWN , BEFORE DEDUCTION OF REMU NERATION AND INTEREST PAID TO PARTNER , WHICH WAS 5.06% OF THE TOTAL TURNOVER. THE AO NOTICED FROM THE EXAMINATION OF BOOKS OF ACCOUNT THAT ALL THE PAYMENTS WERE I.T.A .NO.552/ALLD/2014 2 MADE IN CASH FOR PURCHASE OF MATERIAL RS.22097291/ - AND LABOUR CHARGES RS.9024690/ - . AFTER EXAM INATION OF EXPENSES IN PROFIT & LOSS ACCOUNT HE OBSERVED THAT THEY WERE NOT OPEN FOR VERIFICATION. HE FURTHER OBSERVE D THAT ASSESSEE HAD NOT FURNISHED DETAILS OF ADVANCE S AND RECEIVABLE S RS.15 LAC AND ALSO DID NOT SHOW INTEREST INCOME THERE O N . HE , ACCORDIN GLY , SHOW CAUSE D THE ASSESSEE AS TO WHY PROVISIONS OF SECTION 145(3) BE NOT INVOKED AND NP RATE OF 8% BE APPLIED. 4. IN REPLY , THE ASSESSEE RELIED ON SIMILAR CASE OF M/S YADAV CONSTRUCTION AND SUPPLIERS PAN - AAAFY1888N IN A.Y. 2008 - 09 WHEREIN 6% NP RATE H AD BEEN APPLIED BY LD. DCIT WHICH WAS IN APPEAL REDUCED TO 4.8%. THE AO , HOWEVER , DID NOT ACCEPT THE ASSESSEES CONTENTION AND , AFTER REJECTING BOOKS OF ACCOUNT U/S 145(3) , APPLIED THE NET PROFIT RATE OF 6% ON TOTAL RECEIPT OF RS.3,4467018/ - BEFORE DEDUCTI ON OF REMUNERATION AND INTEREST PAID TO PARTNERS. 5. THE LD. CIT(A) DECIDED THE ASSESSEES APPEAL EX PARTE AS ASSESSEE DID NOT APPEAR ON VARIOUS DATES FIXED FOR HEARING. LD. CIT(A) AFTER CONSIDERING THE MERITS OF THE CASE, PARTLY ALLOWED THE ASSESSEES APP EAL. 6. BEING AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE ME AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS NOT GIVEN REASONABLE AND SUFFICIENT I.T.A .NO.552/ALLD/2014 3 OPPORTUNITY TO BE HEA RD AND DENIED THE PRINCIPLE OF NATURAL JUSTICE. 2. THE LEARNED CIT(A) IS ERRONEOUS IN CONFIRMING THE ADDITION OF LEARNED A.O. BY APPLYING THE NET PROFIT RATE OF 6% ON THE TOTAL RE CEIPTS IN THE ASSESSMENT. 3. THE STATEMENT OF LEARNED CIT(A) IS AMBIGUOUS. 4. THE LEARNED CIT(A) HAS ERRED IN ASCERTAINING DISALLOWABLE DEDUCTION/EXPENSES. 5. THE ADDITIONS MADE ARE ON THE BASIS OF CONJECTURE AND SURMISE. 6. THAT THE ORDER PASSED BY THE LEARNED CIT(A) IS AGAINST THE LAW. 7. I HAVE CONSIDER ED THE SUBMISSIONS OF LD . DR AS REGARDS TH E REJECTION OF BOOKS OF ACCOUNT. I FIND THAT THE SAID FINDING OF LOWER REVENUE AUTHORITIES HA S NOT BEEN ASSAILED BEFORE ME AND , THEREFORE, THE ONLY ISSUE BEFORE ME IS REGARDING RATE OF NET PROFIT TO BE APPLIED FOR DETERMINING THE ASSESSEE S TOTAL INCOME. THE ASSESSEE HAD RETURNED THE NET PROFIT RATE OF 5.06% AS AGAINST WHICH AO HAS ADOPTED A NET PROFIT RATE OF 6%. THE ASSESSEE HAD RELIED ON SIMILAR CASE OF M/S YADAV CONSTRUCTION AND SUPPLIER WHEREIN THE NET PROFIT RATE OF 6% WAS REDUCED TO 4.8% IN APPEAL. THE FACTS AND CIRCUMSTANCES OF EACH CASE V A RY DEPENDING UPON LOCATIONAL ADVANTAGES/DISADVANTAGES, OF SUPPLY OF MATERIAL /LABOUR, INFRASTRUCTURE AND SO MANY OTHER FACTORS. THEREFORE, NO THUMB RULE CAN BE LAID DOWN IN SUCH CASES. CONSIDERIN G THE FACT THAT ASSESSEE ITSELF HAD DISCLOSED NP RATE OF 5.06% AND THE FINDINGS OF AO REGARDING NON VERIFICATION OF EXPENSES BEING NOT ASSAILED BY ASSESSEE , I CONSIDER IT IN THE INTEREST OF JUSTICE TO ESTIMATE THE NET PROFIT RATE AT 5.25%, AS I.T.A .NO.552/ALLD/2014 4 AGAINST 6% DE TERMINED BY LOWER REVENUE AUTHORITIES I DIRECT ACCORDINGLY. IN THE RESULT, GROUND NO. 2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 8. AS FAR AS THE ISSUE REGARDING ADDITION ON ACCOUNT OF MISCELLANEOUS INCOME OF RS.70,000/ - IS CONCERNED , I FIND THAT ASSESSE E HAD RETURNED THE MISCELLANEOUS INCOME AT RS.63,446/ - WHICH WAS REVISED TO RS.70,000/ - AND THE ADDITION OF RS.6,554/ - HAS BEEN DELETED BY LD. CIT(A). THEREFORE, THERE IS NO REASON TO INTERFERE WITH THE FINDING S OF LD. CIT(A) ON THIS GROUND. 9. AS FAR AS THE NEXT ISSUE REGARDING ADDITION OF RS.111551/ - MADE IN RESPECT OF PROVISION OF INCOME TAX ACT IS CONCERN ED I DIRECT THE AO TO EXAMINE THE ASSESSEES CONTENTION REGARDING THE SAME BEING NOT CLAIM ED AS DEDUCTION OR ALLOWABLE EXPENDITURE IN THE PROFIT AND L OSS ACCOUNT . I F THE CLAIM OF ASSESSEE IS FOUND TO BE CORRECT, THE N NO ADDITION IS CALLED FOR. 10. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03 /1 1 /201 5 . SD / - ( S. V. MEHROTRA ) ACCOUNTANT MEMBER DATED: 03 /1 1 /2015 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT I.T.A .NO.552/ALLD/2014 5 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTR AR