ACIT, Jaipur V. CHOUDHARY & BROTHERS, Jaipur

ITA 58/JPR/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2201 (ITAT-JAIPUR)
• Duration Of Justice: 5 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: RAJJEV SAGONI; ROHAN SAGONI
• Keywords: Business income; Depreciation
• Section: 143(3); 37; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 58/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 THE ACIT, CIRCLE-7, JAIPUR. CUKE VS. M/S CHOUDHARY & BROTHERS VILLAGE- LADANA, PHAGI, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAEFC0190M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAJJEV SAGONI & SHRI ROHAN SAGONI (C. A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 15/01/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 18/01/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 08.10.2012 OF CIT (A) FOR THE ASSESSMENT YEAR 2009- 10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- I. THE CIT(A) HAS ERRED IN LAW AND ON FACTS AND IN PERVERSITY, RESTRICTED THE VARIOUS DISALLOWANCE OF EXPENSES ON WAGES, PETROL, HIRE CHARGES ETC. TOTALING RS. 1,30,41,580/- TO APP LY NET PROFIT ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 2 RATE OF 11.5% ON AN ADHOC BASIS INSTEAD OF HEAD-WIS E DISALLOWANCES MADE BY THE A.O. II. THE CIT(A) HAS ERRED IN LAW AND ON FACTS AND IN PERVERSITY, DELETED THE ADDITION OF RS. 19,30,332/- MADE BY THE A.O. U/S 40(A)(IA), IGNORING THE FACT THAT PAYMENT OF RS. 17 ,24,553/- TO M/S G.R. CONTRACTORS AND RS. 1,31,730/- TO M/S JASW ANT ROAD CARRIER WERE MADE WITHOUT TDS U/S 194C. III. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D, WITHDRAW OR INSERT ANY GROUND OR GROUNDS OF APPEAL BEFORE AT TH E TIME OF HEARING OF THE APPEAL. 2. GROUND NO. 1 IS REGARDING THE ADDITION MADE BY T HE AO WAS RESTRICTED BY THE LD. CIT(A) BY APPLYING NET PROFIT RATE 11.5%. THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE B USINESS OF CIVIL CONTRACTOR FOR CONSTRUCTION OF ROADS, BRIDGES AND O THER WORKS. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE FI LED ITS RETURN OF INCOME AND DECLARED NET PROFIT @ 5.22% AS AGAINST 5 .48% SHOWN IN THE LAST YEAR. THE ASSESSING OFFICER WHILE COMPLETING T HE SCRUTINY ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT DISALLO WED VARIOUS EXPENSES ON ACCOUNT OF WAGES, PETROL AND HIRE CHARG ES TO THE EXTENT OF 5% AND 10% TOTAL AMOUNTING RS. 1,30,41,580/- AFTER REJECTING OF BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT. ON APPEAL, THE L D. CIT(A) HAS RESTRICTED THE DISALLOWANCE MADE BY THE AO BY APPLY ING THE NET PROFIT RATE OF 11.5% BEFORE ALLOWING DEPRECIATION AND INTE REST. THE LD. CIT(A) ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 3 HAS FOLLOWED THE DECISION OF THIS TRIBUNAL IN ASSES SEES OWN CASE FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. 3. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE TH AT THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT OF THE AS SESSEE BY INVOKING THE PROVISIONS OF SECTION 143 IN PARA 4 AS UNDER:- 4 IN VIEW OF THE ABOVE DEFECTS, IT IS EVIDENT THAT THE CORRECT STATE OF AFFAIRS OF THE BUSINESS OF THE ASSESSEE CANNOT B E DEDUCTED FROM THE BOOKS OF ACCOUNTS MAINTAINED. HENCE, THE B OOKS OF ACCOUNTS ARE LIABLE TO BE REJECTED U/S 145(3). FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN A NET PROFIT RATE OF 5.22% AS AGAINST 5.48% FOR A.Y. 2008-09. THE NET PROFIT R ATE HAS DECREASED MARGINALLY BUT THE DEFECTS NOTICED AS ABO VE CANNOT BE COMPENSATED BY APPLYING 5.48% NET PROFIT RATE. HERE , IN VIEW OF THE ABOVE DISCUSSION, THE FOLLOWING SPECIFIC DISALL OWANCES ARE BEING MADE: HEAD OF EXPENSE AMOUNT CLAIMED % DISALLOWED AMOUNT DISALLOWED. PURCHASE 5,35,60,237/- - 26,83,716 WAGES 4,05,75,824 10 40,57,582 REPAIR & MAINTENANCE 91,43,014 10 9,14,301 DIESEL & PETROL 4,36,76,943 10 (INCLUDES DISALLOWANCE U/S 40A(3)) 43,67,694 FREIGHT 9,09,360 5 45,468 TOUR 96,394 10 9,639 ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 4 VEHICLE HIRE 65,56,955 10 INCLUDES DISALLOWANCE U/S 40A(3)) 6,55,695 JOB WORK 4,10,265 10 41,025 STAFF WELFARE 1,03,763 10 10,376 TRANSPORTATION 19,50,083 10 1,95,008 MISCELLANEOUS 6,10,766 10 61,076 TOTAL 15,00,35,031 1,30,41,580 THE ASSESSING OFFICER AFTER REJECTING THE BOOKS OF ACCOUNTS HAS PROCEEDED TO MAKE THE DISALLOWANCE OF CERTAIN EXPEN SES TO THE EXTENT OF 10% IN MOST OF THE CASE EXCEPT THE FREIGHT EXPEN SES WERE DISALLOWED AT 5%. THUS, THE AO MADE AN ADDITION OF RS. 1,30,41 ,580/- BY DISALLOWING VARIOUS EXPENSES AND ADDING TO THE RET URN OF INCOME OF THE ASSESSEE. ONCE, THE BOOKS RESULTS ARE REJECTED BY T HE AO THEN THE ONLY RECOURSE AVAILABLE TO THE ASSESSING IS TO ASSESS TH E INCOME OF THE ASSESSEE ON ESTIMATE BASIS AND BEST DECISION. THERE FORE, THE ACTION OF THE AO TO MAKE THESE ADDITION BY DISALLOWING THE SP ECIFIC ITEM OF EXPENDITURE IS NOT IN ACCORDANCE WITH THE PROVISION S OF SECTION 145(3) R.W.S. 144 OF THE ACT. THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO TO THE EXTENT OF REJECTION OF BOOKS U/S 145(3) OF T HE ACT HOWEVER, THE LD. CIT(A) HAS APPLIED THE NET PROFIT RATE 11.5% A S AGAINST 5.22% ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 5 DECLARED BY THE ASSESSEE. THE RELEVANT FINDING OF T HE LD. CIT(A) ON THIS ISSUE ARE AS UNDER:- 2.3. I HAVE DULY CONSIDERED THE SUBMISSIONS OF LD. AR AND MATERIAL AVAILABLE ON RECORDS. SIMILAR DISALLOWANCE S/ADDITIONS ON THE SAME SET OF FACTS WERE MADE IN THE EARLIER YEAR S. IN A.Y. 2007-08, AO MADE THE DISALLOWANCE OF VARIOUS EXPENS ES RESULTING INTO ADDITION OF RS. 1,39,94,870/-. HONBLE ITAT DI SAGREED WITH THESE DISALLOWANCES AND HELD THAT INSTEAD OF DISALL OWING EXPENSES HEAD-WISE, A REASONABLE NET PROFIT RATE SHOULD BE A PPLIED. TRIBUNAL DIRECTED THE A.O. TO APPLY NET PROFIT RATE OF 11.5% BEFORE ALLOWING DEPRECIATION AND INTEREST. THIS TRI BUNALS ORDER WAS SUBSEQUENTLY FOLLOWED BY MY PREDECESSOR IN THE APPELLANTS CASE FOR A.Y. 2008-09 IN ITA NO. 208/JPR/2010-11 DA TED 18.07.2011, WHERE DISALLOWANCES OF RS. 3,09,63,950/ - WERE DELETED AND A.O. WAS DIRECTED TO APPLY NET PROFIT R ATE OF 11.5% SUBJECT TO DEPRECIATION, INTEREST AND REMUNERATION TO PARTNERS. 3. JUDICIAL DISCIPLINE REQUIRES ME TO FOLLOW THE DE CISIONS OF MY PREDECESSOR AND OF HONBLE ITAT IN THE APPELLANTS OWN CASE FOR EARLIER YEAR, THE FACTS AND CIRCUMSTANCES BEING SAM E. ACCORDINGLY, THE HEAD-WISE DISALLOWANCES ARE DELETE D AND A.O. IS DIRECTED TO APPLY NET PROFIT RATE OF 11.5% AS DIREC TLY BY HONBLE ITAT IN A.Y. 2007-08. THE GROUND RAISED BY THE APPE LLANT IS PARTLY ALLOWED. SINCE, NEITHER OF THE PARTIES HAS CHALLENGED THE AC TION OF THE AO AND LD. CIT(A) REGARDING THE REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT, THEREFORE, THE DECISION OF THE LD. CIT(A) IN A PPLYING THE NET PROFIT RATE BY FOLLOWING THE EARLIER ORDERS OF THIS TRIBUN AL IN ASSESSEES OWN CASE CANNOT BE FAULTED WITH. THE TRIBUNAL IN ASSESS EES OWN CASE FOR ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 6 THE A.Y. 2008-09 VIDE ORDER DATED 25 TH MAY, 2012 IN ITA NO. 879 OF 2011 HAS CONSIDERED AND DECIDED AN IDENTICAL ISSUE . WE FURTHER NOTE THAT FOR THE ASSESSMENT YEAR 2010-11 VIDE ORDER DAT ED 30.06.2017 IN ITA NO. 722/JP/2014 THE TRIBUNAL HAS AGAIN CONSIDE RED AND DECIDED AN IDENTICAL ISSUE IN PARA 10 IS AS UNDER:- 10. IF WE LOOK AT THE ABOVE PAST HISTORY OF THE AS SESSEE FOR LAST TWO ASSESSMENT YEARS WHERE THE MATTER HAS REACHED T HE TRIBUNAL, IT IS CLEAR THAT THE AO HAS DISALLOWED VA RIOUS EXPENSES AFTER REJECTION OF THE BOOKS OF ACCOUNTS. AT THE SA ME TIME, THERE HAS BEEN NO DISALLOWANCE OF THIRD PARTY INTEREST BY THE AO IN ANY OF THESE YEARS. THEREAFTER, INSTEAD OF SPECIFIC DI SALLOWANCES, THE LD CIT(A) AS WELL AS TRIBUNAL HAVE CONSIDERED THE P OSITION OF NET PROFIT RATE OFFERED BY THE ASSESSEE AND HAVE THEREA FTER DIRECTED TO APPLY NET PROFIT RATE OF 11.5%. AS WE HAVE HELD ABOVE, KEEPING THE PAST HISTORY OF THE ASSESSEE INTO ACCOU NT, THE NET PROFIT RATE OF 11.5% IS UPHELD FOR THE IMPUNGED ASS ESSMENT YEAR. FURTHER, THE PAST HISTORY OF THE ASSESSEE DOESNT S UGGEST DISALLOWANCE OF THIRD PARTY INTEREST EITHER BY THE AO OR BY THE COORDINATE BENCHES. THE COORDINATE BENCHES HAVE CO MPARED NET PROFIT RATE AS OFFERED BY THE ASSESSEE WHICH IS CLAIMED TO BE BEFORE DEPRECIATION, REMUNERATION AND INTEREST PAYM ENT TO PARTNERS AS WELL AS INTEREST TO THIRD PARTIES AND T HEREAFTER, DIRECTED TO APPLY 11.5%. FOR THE IMPUNGED ASSESSME NT, WE SEE NO REASON TO DEVIATE FROM THE SAID SETTLED POSITION AS BOTH REVENUE AND THE ASSESSEE HAS RELIED ON THE PAST HIS TORY AS WE HAVE DISCUSSED ABOVE. THE AO IS DIRECTED TO APPLY NET PROFIT RATE OF 11.5% BEFORE DEPRECIATION, REMUNERATION AND INTE REST PAYMENT TO PARTNERS AND INTEREST TO THIRD PARTIES (BANK). ACCORDINGLY, THERE WOULD NOT BE ANY FURTHER DISALLOWANCE OF INTE REST PAID TO ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 7 THIRD PARTIES AMOUNTING TO RS 24,10,948. IN THE RE SULT, GROUND NO. 1 IS DISMISSED AND GROUND NO. 2 IS ALLOWED. ACCORDINGLY IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WHEN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE REJECTED U/S 145(3) OF THE ACT THEN, THE INCOME OF THE ASSESSEE IS REQUIRED TO BE ASSESSED ON ESTIMATE BASIS AND BEST JUDGMENT OF THE AO. THEREFO RE, THE FOLLOWING EARLIER DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDERS OF T HE LD. CIT(A) QUA THIS ISSUE. 4. GROUND NO. 2 IS REGARDING DELETION OF DISALLOWAN CE U/S 40(A)(IA) OF THE INCOME TAX ACT. THE ASSESSING OFFICER HAS DI SALLOWED RS. 19,30,332/- U/S 40(A)(IA) OF THE ACT FOR NON DEDUCT ION OF TAX AT SOURCE. ON APPEAL, THE LD. CIT(A) HAS DELETED THE SAID DISA LLOWANCE ON THE GROUND THAT THE ENTIRE EXPENDITURE CLAIMED BY THE A SSESSEE WAS PAID AND NOTHING WAS PAYABLE AT THE END OF THE YEAR. 5. BEFORE US, THE LD. DR HAS SUBMITTED THAT THE ISS UE IS NOW COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S PALAM GAS SERVICE VS CIT 394 ITR 300 WHEREBY THE HONBLE SUPREME COURT HAS REVERSED THE DECISION IN THE CASE OF VECTOR SHI PPING SERVICE P. LTD. VS. CIT 357 ITR 642. ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 8 6. ON THE OTHER HAND, LD. AR OF THE ASSESSEE HAS NO T DISPUTED THAT THE ISSUE REGARDING APPLICABILITY OF SECTION 40(A)( IA) OF THE ACT ON THE AMOUNT ALREADY PAID IS NOW COVERED BY THE DECISION OF HONBLE SUPREME COURT IN CASE OF M/S PALAM GAS SERVICE VS. CIT (SUP RA). HOWEVER, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT ONCE THE AO REJECTED THE BOOKS OF ACCOUNT AND THE INCOME OF THE ASSESSEE WAS ESTIMATED BY THE LD. CIT(A) BY APPLYING THE NET PROFIT THEN, NO FURT HER DISALLOWANCE IS CALLED U/S 40(A)(IA) OF THE ACT. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON VARIOUS DECISIONS INCLUDING THE DECISIO N OF THE COORDINATE BENCH OF THIS TRIBUNAL DATED 08.01.2018 IN CASE OF M/S POWER LINDER VS. ACIT IN ITA NO. 194/JP/2017. THE LD. DR IN HIS REJOINDER HAS RAISED AN OBJECTION THAT NO SUCH ISSUE WAS RAISED BY THE A SSESSEE BEFORE THE LD. CIT(A) OR BEFORE THE AO. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE FIND THAT SO FAR AS THE ISSU E OF THE AMOUNT PAID OR PAYABLE AT THE END OF THE YEAR FOR THE PURPOSE OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT IS CONCERNED, THE SAME IS NOW COVERED BY THE DECISION OF HONBLE SUPREME COURT IN CASE OF M/S PA LAM GAS SERVICE VS. CIT (SUPRA). THEREFORE, THE ORDER OF THE LD. CIT(A) QUA THIS ISSUE IS NOT SUSTAINABLE AND LIABLE TO BE SET ASIDE. HOWEVER, TH E ASSESSEE HAD ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 9 CONTESTED BEFORE THE LD. CIT(A) AGAINST THE DISALLO WANCE MADE U/S 40(A)(IA) OF THE ACT AND THE LD. CIT(A) HAS ALLOWE D THE CLAIM OF THE ASSESSEE ON ONE ASPECT OF THE ISSUE WITHOUT GOING I NTO THE ISSUE OF DISALLOWABILITY U/S 40(A)(IA) OF THE ACT WHEN THE INCOME OF THE ASSESSEE IS ESTIMATED BY APPLYING NET PROFIT RATE. EVEN IF T HE SAID PARTICULAR ASPECT OF THE ISSUE WAS NOT BEFORE THE LD. CIT(A) I T IS TO BE SEEN WHETHER ANY DISALLOWANCE U/S 40(A)(IA) WOULD BE MAD E WHEN THE INCOME OF THE ASSESSEE IS ASSESSED ON THE BASIS OF NET PROFIT ESTIMATED BY THE LD. CIT(A) AFTER REJECTION OF THE BOOKS OF A CCOUNTS OF THE ASSESSEE U/S 145(3). AT THE OUTSET, WE NOTE THAT TH E COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF M/S POWER LINER VS. AC IT HAS CONSIDERED THIS ISSUE IN PARA 5 AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIALS AVAILABLE ON THE RECORD. THERE I S NO DISPUTE THAT THE INCOME OF THE ASSESSEE WAS DETERMINED BY T HE ASSESSING OFFICER ON THE BASIS OF THE ESTIMATION AND BEST JUD GMENT AFTER REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE AC T. THE ASSESSING OFFICER HAS APPLIED N.P. RATE OF 8% ON TH E TOTAL RECEIPTS OF RS. 1,53,44,942/- AND ACCORDINGLY, THE ADDITION OF RS. 2,18,277/- WAS MADE BY THE ASSESSING OFFICER. THE L D CIT(A) HAS CONFIRMED THE ADDITION OF THE ASSESSING OFFICER BY REJECTING THE CONTENTION OF THE ASSESSEE. THE AMOUNT WAS ALREADY PAID DURING THE PREVIOUS YEAR AND NOT PAYABLE AT THE END OF THE YEAR. THUS, IT IS CLEAR THAT THE CONTENTION RAISED BY THE ASSESSEE BEFORE US THAT AFTER REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF INCOME OF ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 10 THE ASSESSEE, NO FURTHER ADDITION CAN BE MADE BY TH E ASSESSING OFFICER, HAS NOT BEEN CONSIDERED OR DECIDED BY THE LD. CIT(A). WE FIND THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF RAKESH CONSTRUCTION CO. VS. ACIT (SUPRA) WHILE DEAL ING WITH THE IDENTICAL ISSUE HAS HELD IN PARA 2.4 AS UNDER: 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE BOOKS OF ACCOUNTS WERE REJECTED U/S 145(3) OF THE ACT AND THEREAFTER THE A O HAS ESTIMATED NET PROFIT @ 5.05% ON CONTRACT RECEIPT AFTER DEDUCTION OF DEPRECIATION, INTEREST AND REMUNERATION PAID TO PARTNERS AS AGAIN ST NET PROFIT OF 2.39% DECLARED BY THE ASSESSEE. FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS NOTED THAT THERE HAVE BEEN DISCUSSIONS BETWEEN THE AO AND THE ASSESSEE IN TERMS OF ESTIMATING THE NET PROFIT RATE ONCE THE BOOKS OF ACCOUNT HAVE BEEN REJECTED. AS PART OF THAT DISC USSION, IT IS NOTED THAT IN RESPONSE TO AO'S SHOW-CAUSE AS TO WHY 8.5% NET PROFIT RATE SHOULD NOT BE ALLOWED, THE ID. AR HAS SUBMITTED THA T IF THE NET PROFIT AT THE RATE OF 8.5% IS APPLIED, THEN THE DEDUCTION ON ACCOUNT OF PAYMENT OF HIRING CHARGES FOR MACHINERY TAKEN ON RENT AMOUN TING TO RS. 22,41,600/- AND RS. 21,60,000/- ARE ALSO TO BE ALLO WED. THE LD. AO FINALLY DECIDED TO APPLY NET PROFIT OF 5.05% WHICH HAS BEEN AGREED UPON BY THE ASSESSEE. IT IS THEREFORE SEEN THAT ISS UE OF ALLOWANCE OF PAYMENTS OF MACHINERY HIRE CHARGES HAS BEEN DULY TA KEN INTO CONSIDERATION BY THE AO WHILE ESTIMATING THE N.P. R ATE OF 5.05% FURTHER, IT IS NOTED THAT THE DECISION OF HON'BLE K OLKATTA HIGH COURT IN THE CASE OF ARJUN BHOWMICK (SUPRA) DIRECTLY SUPPORT THE CASE OF THE ASSESSEE. IN THAT CASE, THE VIEW TAKEN BY THE KOLKO TTA BENCH OF THE ITAT HAS BEEN CONFIRMED BY THE HONBLE HIGH COURT WH EREIN IT HAS HELD THAT 'ONCE THE N.P. RATE IS ESTIMATED, THE AO CANNOT BASED THIS DISALLOWANCE ON THE SAME BOOKS OF ACCOUNTS FOR THE PURPOSE OF DISALLOWANCE BY INVOKING PROVISIONS OF SECTION 40(A )(IA) OF THE ACT OR GENERAL DISALLOWANCE U/S 37 OF THE ACT. THE ESTIMAT ION MADE BY THE AO OF NET PROFIT WILL TAKE CARE OF EVERY ADDITION R ELATED TO BUSINESS INCOME OR BUSINESS RECEIPTS AND NO FURTHER DISALLOW ANCE CAN BE MADE.' IT IS ALSO NOTED THAT JAIPUR BENCH OF ITAT IN THE CASE OF BANAS SAND TOLL TAX COLLECTION (SUPRA) HAS TAKEN A SIMILA R VIEW IN THE MATTER FOLLOWING THE DECISION IN CASE OF HON'BLE ANDHRA PR ADESH HIGH COURT IN ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 11 THE CASE OF INDWELL CONSTRUCTION (232 ITR 776). IN LIGHT OF ABOVE, WE SEE NO REASON FOR AO TO INVOKE PROVISIONS OF SECTIO N 154 OF THE ACT. HENCE, THE ORDER PASSED BY THE AO U/S 154 IS QUASHE D AND THE ORIGINAL ORDER PASSED U/S 143(3) OF THE ACT IS SUSTAINED. FOLLOWING THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL (SUPRA) WE DELETE THE ADDITION MADE BY THE ASSESSIN G OFFICER ON THIS ACCOUNT. THUS, IT IS CLEAR THAT THE TRIBUNAL IN THE ABOVE SA ID CASE AS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REV ENUE BY FOLLOWING THE EARLIER DECISION OF THIS TRIBUNAL AS WELL AS TH E DECISIONS OF HONBLE KOLKATTA BENCHES OF TRIBUNAL IN CASE OF DCIT VS. AR JUN BHUMIK 55 SOT 82 AS WELL AS DECISION OF HONBLE ALLAHABAD HIGH CO URT IN CASE OF GEEP INDUSTRIAL LTD. VS. CIT 232 ITR 456. FOLLOWING THE EARLIER DECISION OF THIS TRIBUNAL WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSE SSEE AND AGAINST THE REVENUE. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/01/2018 SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/01/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: ITA NO. 58/JP/2013 ACIT V M/S CHOUDHARY & BROTHERS, JAIPUR 12 1. VIHYKFKHZ@ THE APPELLANT- ACIT), CIRCLE-7, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S CHOUDHARY & BROTHERS, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 58/JP/2013} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR