Deputy Commissioner of Income-tax, Jalgaon V. Shri Mahendra Murlidhar Patil, Jalgaon

ITA 587/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4361 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-06-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 31-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Unexplained expenditure; Depreciation; Additional evidence
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 2 92 /P U N/201 6 / ASSESSMENT YEAR : 20 1 2 - 13 SHRI MAHENDRA MURLIDHAR PATIL, PROP. OF M/S. CHAKRADHAR CONSTRUCTION, AT. - KERHALE, TAL. - RAVER, DISTT. - JALGAON - 425508 PAN : AASPP8378E ....... / APPELLANT / V/S. DY. COMMISSIONER OF INCOME TAX, CIRCLE 2, JALGAON / RESPONDENT . / ITA NO .587/PUN/2016 / ASSESSMENT YEAR : 2012 - 13 DY. COMMISSIONER OF INCOME TAX, CIRCLE 2, JALGAON ....... / APPELLANT / V/S. SHRI MAHENDRA MURLIDHAR PATIL, PROP. OF M/S. CHAKRADHAR CONSTRUCTION, AT. - KERHALE, TAL. - RAVER, DISTT. - JALGAON - 425508 PAN : AASPP8378E / RESPONDENT ASSESSEE BY : S HRI S UNIL GANOO REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 2 0 - 06 - 201 8 / DATE OF PRONOUNCEMENT : 08 - 0 8 - 201 8 2 ITA NO S.292 & 587/PUN/2016, A.Y. 2012 - 13 / ORDER PER VIKAS AWASTHY, JM : TH IS CROSS APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 2, NASHIK DATED 07 - 01 - 2016 FOR THE ASSESSMENT YEAR 2012 - 13. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) : [1] ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ESTIMATED ADDITION OF RS.2,96,75,198/ - @10% OF CONTRACT RECEIPT), AS AGAI NST ESTIMATED ADDITION MADE BY THE A.O OF RS.4,45,L2,797/ - @15% OF CONTRACT RECEIPT), WITHOUT CONSIDERING THE NATURE OF BUSINESS AND WITH ANY COMPARABLE CASES IN THE SIMILAR LINE OF BUSINESS OF CONTRACTS. THEREFORE, ADDITION MAY PLEASE BE DELETED. THEREFORE, ESTIMATED ADDITION SUSTAINED AT RS.1,45,64,777/ - (2,96,75,198 ( - )1,51,10,421) BY CIT(A) MAY PLEASE BE DELETED. [2] ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE AND IN LAW, IF THE ESTIMATED ADDITION AS PER APPELLATE ORDER OF CIT(A) IS CONSIDERED, THEN NET PROFIT WOULD BE AT R S. 6,46,59,347/ - [RS. 2,96,75,198/ - AS PER CIT(A) + DEPRECIATION RS . 83,14,920/ - + INTEREST. RS.L,86,69,432&RS.79,99,797 / - ], WHICH WILL BE RATED AT 21.78% % [RS.6, 46,59,347/RS. 29,67,51,978 .X100], AS AGAINST PROFIT SHOWN BY APPELLANT AT RS.5, 00,94,570 - [ RS. 1 ,51,10,421. + DEPRECIATION RS.83,14,920/ - INTEREST .RS.L,86,69,432 & RS.79,99,797.] WHICH IS RATED @ 16.88%% [RS. 5,00,94,5701 RS . 29,67,51,978 .X10 0.] AS THE APPELLANT HAS SHOWN REASONABLE PROFIT, FURTHER ESTIMATED ADDITION RETAINED AT RS.1,45,64,766/ - (2,96,75,198 ( - )RS.L,51,L0,421) BY THE CIT(A) IS NOT JUSTIFIED AND HENCE, ADDITION MAY PLEASE BE DELETED [3] ON THE FACTS AND IN THE PREVAILING CIR CUMSTANCES OF THE CASE AND IN LAW AND AS THE APPELLANT HAS SHOWN NET PROFIT @16.88%,SUBJECT TO INTEREST AND DEPRECIATION IS MORE THAN 8%, NO SEPARATE. TRADING ADDITION IS REQUIRED TO BE MADE. THEREFORE, ESTIMATED ADDITION SUSTAINED AT RS.1,45,64,777/ - (2, 96,75,198( - )1,51,10,421) BY CIT(A) MAY PLEASE BE DELETED. [4] THE APPELLATE CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF THE APPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3. THE REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ESTIMATING THE NET INCOME OF THE ASSESSEE @10% AS 3 ITA NO S.292 & 587/PUN/2016, A.Y. 2012 - 13 AGAINST 15% ESTIMATED BY THE ASSESSING OFFICER WITHOUT APPRECIATING VARIOUS DEFECTS AS POINTED OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE INC RIMINATING MATERIAL IMPOUNDED DURING THE COURSE OF SURVEY ACTION U/S 133A OF THE INCOME TAX ACT, 1961 AND VARIOUS DEFECTS POINTED OUT DURING THE ASSESSMENT PROCEEDINGS. 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED' IN IGNORING THE FACT THAT THE ASSESSEE HIMSELF HAS REQUESTED TO FINALIZE THE ASSESSMENT INVOKING THE PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961. 4. THE ORDER OF THE LD. CIT(A) BE CANCELLED AND THAT OF THE A.O BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, DELETE, AMEND ANY OF THE GROUNDS WITH PRIOR PERMISSION OF THE PR. COMMISSIONER OF INCOME TAX, AS PER CIRCUMSTANCES OF THE CASE. 6. THE APPELLANT PRAYS TO ALLOW TO FILE ANY ADDITIONAL EVIDENCE(S) WITH PRIOR PERMISSION O F THE PR. CO M M ISSIONER OF INCOME TAX. 4. SHRI SUNIL GANOO APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE SHORT ISSUE RAISED IN THE APPEAL BY THE ASSESSEE IS AGAINST ESTIMATION OF NET PROFIT @ 10% OF THE GROSS CONTRACT RECEIPT BY THE COMMISSIONER OF INCOME TAX (APPEALS) . IN ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER AFTER REJECTING BOOKS OF ACCOUNT ESTIMATED NET PROFIT @ 15% OF THE TOTAL CONTRACT RECEIPT S. THE COMMISSIONER OF INCOME TAX (APPEALS) REDUCED THE SAME TO 10%. IN THE EARLIER ASSESS MENT YEARS I.E. ASSESSMENT YEARS 2008 - 09, 2009 - 10 AND 2011 - 12 NET PROFIT WAS ESTIMATED BY THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) IN SIMILAR MANNER @ 15% AND 10%, RESPECTIVELY . THE ASSESSEE CARRIED THE MATTER IN APPEAL TO THE TR IBUNAL IN ITA NOS. 1566, 1563 & 1565/PUN/2014 FOR THE ASSESSMENT YEARS 2008 - 09, 2009 - 10 AND 2011 - 12, RESPECTIVELY AGAINST FIXING NET PROFIT @ 10%. THE REVENUE ALSO CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL IN ITA NO. 1689 TO 1692/PUN/2014 FOR THE ASSESSMENT YEARS 2008 - 09 TO 2011 - 12 . THE REVENUE ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN REDUCING THE NET PROFITS FROM 15% TO 10%. THE TRIBUNAL 4 ITA NO S.292 & 587/PUN/2016, A.Y. 2012 - 13 VIDE ORDER DATED 22 - 09 - 2017 DISPOSED OF ALL THE APPEALS OF THE ASSESSEE AND THE REVEN UE BY ESTIMATING NET PROFIT @ 9% OF THE TOTAL CONTRACT RECEIPT. IN THE PRESENT CROSS APPEALS THE SAME ISSUE HAS BEEN AGITATED BY BOTH THE SIDES BY RAISING SIMILAR GROUNDS . THE LD. AR FURNISHED THE COPY OF TRIBUNAL ORDER DATED 22 - 09 - 2017 (SUPRA) IN ASSESS EES OWN CASE IN EARLIER ASSESSMENT YEARS . 5. SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE ASSESSMENT ORDER. HOWEVER, THE LD. DR FAIRLY ADMITTED THAT THE ISSUE RAISED BY THE REVENUE AND ASSESSEE IN PRESENT SET OF APPEALS IS SIMI LAR TO THE ONE DECIDED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2008 - 09, 2009 - 10 AND 2011 - 12. 6. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES B ELOW . WE HAVE ALSO CONSIDERED THE DECISION OF CO - ORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NOS. 1566, 1563 & 1565/PUN/2014 (SUPRA) AND ITA NOS. 1689 TO 1692/PUN/2014 (SUPRA). THE SOLITARY ISSUE RAISED IN THE PRESENT CROSS APPEALS IS THE RATE OF NET PROFIT EARNED BY THE ASSESSEE IN THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE ASSESSING OFFICER AFTER REJECTING BOOKS OF ACCOUNT HAS ESTIMATED NET PROFIT @ 15% OF GROSS CONTRACT RECEIPT S . IN FIRST APPEAL THE COMMISSIONER OF INCOME TAX (AP PEALS) REDUC ED THE SAME TO 10% OF THE GROSS CONTRACT RECEIPT S . IN THE EARLIER ASSESSMENT YEARS THE TRIBUNAL HAS ESTIMATED THE NET PROFIT @ 9% OF THE TOTAL GROSS RECEIPT S . THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL ARE AS UNDER : 7. IT IS AN UNDISP UTED FACT THAT THE ASSESSEE HAS MADE IRREGULARITIES IN RECORDING FINANCIAL TRANSACTIONS. THERE ARE CERTAIN UNEXPLAINED EXPENDITURE AND INVESTMENTS. THE ASSESSEE IN GROUNDS OF APPEAL AS AGREED FOR ESTIMATED ADDITION OF NET PROFIT @ 8%. CERTAINLY, ESTIMAT ION OF INCOME @ 15% OF GROSS CONTRACT RECEIPTS IS ON HIGHER SIDE AND WITHOUT ANY RATIONAL. THE LD. DR HAS NOT BEEN ABLE TO SUBSTANTIATE THE ACTION OF ASSESSING OFFICER IN ADOPTING 15% RATIO. AFTER TAKING INTO CONSIDERATION TOTALITY OF FACTS, WE ARE OF CO NSIDERED VIEW THAT IF THE ESTIMATION OF NET PROFIT AS PROPOSED BY COMMISSIONER OF INCOME TAX (APPEALS) IS FURTHER REDUCED BY 1% (ONE PERCENT) 5 ITA NO S.292 & 587/PUN/2016, A.Y. 2012 - 13 I.E. BROUGHT DOWN TO 9% OF TOTAL GROSS CONTRACT RECEIPTS FOR ALL THE ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2008 - 0 9 TO 2011 - 12, IT WOULD MEET THE ENDS OF JUSTICE. WE HOLD AND DIRECT, ACCORDINGLY. 7. BOTH THE SIDES ARE UNANIMOUS IN STATING THAT THE FACTS IN THE ASSESSMENT YEAR UNDER APPEAL ARE SIMILAR TO EARLIER ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2008 - 09 TO 2011 - 12. FOLLOWING THE DECISION OF CO - ORDINATE BENCH , WE ESTIMATE NET PROFIT OF THE ASSESSEE @ 9% OF THE TOTAL GROSS CONTRACT RECEIPT S IN THE ASSESSMENT YEAR UNDER APPEAL AS WELL. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE A PPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 08 TH DAY OF AUGUST, 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 08 TH AUGUST, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, NASHIK 4. THE PR. COMMISSIONER OF INCOME TAX - 2, NASHIK 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE