DCIT 7(3), V. VASTU KIRTI ENTERPRISES P.LTD, MUMBAI

ITA 5533/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3577 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 31-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 02-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K DHONDIAL
• Keywords: Tax effect
• Section: 44AD; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F , MUMBAI , , BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI ASHWANI TANEJA , ACCOUNTANT MEMBER ITA NO. : 5 5 33 /MUM/201 4 (ASSESSMENT YEAR: 20 1 0 - 1 1 ) DY. COMMISSIONER OF IN C OME TAX - 7 ( 3 ), ROOM NO. 61 5, 6 TH FLOOR, AAY A KAR BHAVAN, M K MARG, MUMBAI - 400 020 VS VASTU KIRTI ENTERPRISES P LTD , S HOP NO. 8, OPP SADGURU TERRACE, SION KOLIWADA, MUMBAI - 400 0 22 PAN: AAAC V 1268 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A K DHONDIAL RESPONDENT BY : SHRI HITESH SHAH /DATE OF HEARING : 25 - 0 7 - 201 6 / DATE OF PRONOUNCEMENT : 25 - 07 - 2016 ORDER , : PER AMIT SHUKLA , J M: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED 2 6.06. 2014 , PASSED BY LD. CIT(A PPEALS ) - 13, MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) FOR THE ASSESSMENT YEAR 2010 - 11, ON THE FOLLOWING GROUNDS: - (I) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN GIVING RELIEF TO THE ASSESSEE WITHOUT PRO PERLY APPRECIATING THE FACTUAL AND LEGAL MATRIX AS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICER. (II) THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT BECAUSE OF NON PRODUCTION OF VARIOUS DOCUMENTS, THIS WAS A FIT 2 VASTU KIRTI ENTERPRISES P LTD ITA 5 5 33 /MUM/201 4 CASE FOR INVOKING SECTION 114(G) OF INDIAN EV IDENCE ACT IN RESPECT OF ESTIMATION OF INCOME BY APPLYING SECTION 44AD, WHICH THOUGH TECHNICALLY NOT APPLICABLE, PROVIDED THE REASONABLE BASIS FOR ESTIMATION OF INCOME IN CASE OF RECALCITRANT ASSESSEE S WHO REFUSES TO PRODUCE DOCUMENTS WHICH ARE EXPECTED T O BE IN HIS POSSESSION. (III) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT NON - PRODUCTION OF DETAILS WAS EQUAL TO ITS NON - MAINTENANCE AND, THEREFORE, BASIS OF ESTIMATION OF INCOME AS GIVEN IN SECTION 44AD BEING REASONABLE BASIS CO ULD BE ADOPTED BY ASSESSING OFFICER EVEN THOUGH SECTION 44AD WAS NOT APPLICABLE. (IV) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN GOING BY THE LETTER OF LAW THAT SECTION 44AD IS NOT APPLICABLE BECAUSE THE ACCOUNTS OF THE ASSESSEE WERE AUDITED BUT HAS FAILED TO GIVE EFFECT TO SPIRIT OF AW WHICH IS THE BASIS FOR ENACTMENT OF SECTION 44AD NAMELY, NON - AVAILABILITY OF BOOKS OF ACCOUNTS/DOCUMENTS 2. THE LD. CIT(A)S ORDER IS CONTRARY IN LAW AND ON FACTS AND DESERVES TO BE SET ASIDE. 2. AFTER HEARING BO TH THE PARTIES, IT IS NOTICED THAT, THE TAX EFFECT ON THE DISPUTED ISSUE IS LESS THAN RS.10 LAKHS , WHICH IS APPARENT FROM THE FACTS DISCUSSED HEREIN AFTER . FROM THE PERUSAL OF THE IMPUGNED ORDER, IT IS SEEN THAT, ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVI L ENGINEERING AND CONTRACT WORK. FROM SUCH ACTIVITIES IT HAD SHOWN TOTAL TURNOVER OF RS.14 , 26 , 96,823/ - . T HE TAXABLE INCOME FROM SUCH ACTIVITIES WAS SHOWN AT RS.69,86,417/ - , WHICH IN TERMS OF THE NET PROFIT RATE COMES TO APPROXIMA TELY 5% . THE AO AFTER DETAI LED DISCUSSION IN THE IMPUGNED ORDER HAD REJECTED THE BOOKS OF ACCOUNT UNDER SECTION 145(3) AND PROCEEDED TO MAKE BEST JUDGMENT ASSESSMENT TO DETERMINE THE INCOME OF THE ASSESSEE . TAKING CUE FROM SECTION 44AD, AO ADOPTED THE NET PROFIT RATE OF 8% AND ACCOR DINGLY, HE ESTIMATED THE ADDITION OF RS.1,14,15,745/ - , AS AGAINST THE INCOME OF RS. 69,86,417/ - . 3 VASTU KIRTI ENTERPRISES P LTD ITA 5 5 33 /MUM/201 4 3. IN THE FIRST APPEAL, THE LD. CIT(A) CONFIRMED THE REJECTION OF BOOKS OF ACCOUNT BY THE AO, HOWEVER PROCEEDED TO ESTIMATE THE PROFIT AS PER HIS OBSERVATION AND FINDING AND THEREBY SUSTAINED THE ADDITION OF RS.32,88,740/ - . THUS, IF THE SAME IS ADDED TO THE NET PROFIT SHOWN BY THE ASSESSEE, THAT IS, RS. 69,86,417/ - , THEN THE AGGREGATE AMOUNT OF INCOME FROM CONTRACT WORK EXCEEDS RS.1 CRORE, WHICH HAS LED TO NET PROFIT RATE OF APPROX @ 7.2% , AS AGAINST THE INCOME ESTIMATE BY THE AO AT RS.1.14 CRORES BY ADOPTING @ 8% . AGAINST THE SAID ADDITION AS CONFIRMED BY THE CIT(A), ASSESSEE IS NOT APPEAL AS ADMITTED BY THE LD. COUNSEL FOR THE ASSESSEE. THUS, THE ORDER OF CIT( A) HAS BEEN ACCEPTED BY THE ASSESSEE. NOW, THE DISPUTED ADDITION ON WHICH THE REVENUE HAS FILED AN APPEAL IS MUCH LESS THAN RS.14 LAKHS AND THE TAX EFFECT ON SUCH DISPUTED ADDITION WOULD ADMITTEDLY BE MUCH LESS THAN RS.10 LAKHS. 4. LD. DR ALSO ADMITTED T HAT THE TAX EFFECT ON THE DISPUTED ADDITION IN THE IMPUGNED APPEAL WOULD BE LESS THAN RS.10 LAKHS. 5. IN VIEW OF THE AFORESAID FACT THAT THE TAX EFFECT IN THE IMPUGNED APPEAL IS LESS THAN RS.10 LAKHS AND IN THE WAKE OF CBDTS CIRCULAR NO. 21 OF 2015 DATED 10.12.2015, WE ACCORDINGLY HOLD THAT THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. FURTHER IT HAS ALSO BEEN CLARIFIED BY THE SAME CIRCULAR THAT THIS MONETARY LIMIT WILL APPLY ON PENDING APPEALS ALSO WHICH IS EVIDENT FROM PARA 10 OF THE IMPUGNED CIR CULAR, WHICH READS AS UNDER: - 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE 4 VASTU KIRTI ENTERPRISES P LTD ITA 5 5 33 /MUM/201 4 GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. THUS, THE APPEAL OF THE REVENUE IS TREATED AS DISMISSED AS NON - MAINTAINABLE. 6. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 5 TH JULY, 2016 . SD/ - SD/ - ( ) ( ) ( ASHWANI TANEJA ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICI AL MEMBER MUMBAI, DATE: 2 5 TH JULY, 2016 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3 ) THE C IT 13 , MUMBAI . 4 ) THE C IT - 7 , MUMBAI 5 ) , , / THE D.R. F BENCH, MUMBAI. 6 ) \ CO PY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS